User 142738

Savings Rates Surge: Who Is Going to Consume?

"Savings," in the absolute simplest terms used by the Fed, is income minus expenditures. This excludes investments (even in savings bonds) and any debt payments, which would merely be lowering debt in exchange for raising equity. (Assets equal liabilities minus equity.)

If savings was defined as raising equity then the savings rate wouldn't have been zero since people were borrowing money to buy houses and stocks that were appreciating in value faster than the debt was appreciating in value.

China Counterattacks With a 'Buy China' Policy

coreopsis: U.S. Steel has won at least one case recently. Companies typically go up to the World Trade Organization to press charges if the government is not cooperative.

U.S. Hyperinflation: Is Faber's Prediction Realistic?

On May 28 09:17 AM Did U Think The Ponzi Scheme Would Last? wrote:

> "It is hard to equate the market savvy Obama administration with
> the corrupt court of Robert Mugabe..."
>
> WHAT???? You have to be kidding!
Mugabe’s reign of terror is decades in the making. Unless Obama makes it illegal for white people to own farmland and denies the existence of cholera I would say the Zimbabwe-U.S. comparison is ridiculous at the very least.

> It is not the new money printing that causes hyperinflation.
You are partially correct. An extremely high money supply growth rate is merely a symptom of hyperinflation. The loss of faith in the currency is also a symptom. Like influenza, nobody knows how it started: it just exists.

> People outside the US are not obliged to accept our currency in trade for their stuff.
Actually, they are. Zimbabwe’s rampant inflation was a result of the breakdown of the agricultural trade between Zimbabwe and other countries. Mugabe confiscated fertile land and gave it to inexperienced farmers, which caused the agricultural sector to shrink slightly every year. The rate of shrinkage accelerated in the late 1990’s, which coincided with the sudden rise in inflation. With lower demand for Zimbabwean goods and a constant money supply, the value of the Zimbabwean dollar began to fall. Mugabe (actually, Gideon Gono, the president of the Reserve Bank of Zimbabwe) actually instated a policy where military personnel would receive continuous pay raises. Most of the printed money simply went into the hands of militants, who then used it to buy South African rand, Botswanan pula and the U.S. dollar almost immediately after being paid. Very high money velocity multiplied by very high money supply growth equals very high inflation.

The amount of debt relative to the economy (tens of thousands of percent in Zimbabwe versus 80% or so in the U.S.) and the money supply growth (several quintillion percent in Zimbabwe versus about 12% in the U.S.) The money supply growth in China is 26% — does this mean China will experience superhyperinflation? Russia's money supply growth, as well as the money velocity, is even higher than that. Will Russia experience megasuperhyperinflation?

No economist can possibly give a solid definition of hyperinflation. Its definition can only be compared to the definition of “obscene material” as by the U.S. Supreme Court (“I know it when I see it”). We know the symptoms and the damage, but there are so many exceptions to every rule that it simply cannot be defined.

> I cannot believe the level of gullibility that some Americans display.
Leading by example, I see.

The Seduction of America

User 283977: “For example, back in 1955, bread cost 30 cents per loaf, it now costs over $4 per loaf!”

[citation needed]

The Shedlock-Schiff Affair: A Chronicle

“Asia (who has money in the bank, savings, burgeoning industry)”

(You heard it here first, folks. The Nikkei is going back up to 40,000 — possibly to 80,000! Why? Because Japan has money in the bank! They have savings! They have burgeoning industry!)

I would give Peter Schiff until January 2012 to either be proven right or wrong. It took investors four years (from 1989 to 1993) to finally be proven wrong about the stock market and real estate bubble in Japan. Shedlock had started picking apart Schiff’s investment portfolio as early as January 2008 when talk of “decoupling” was still strong.

Global Stock Markets: We All Fall Down!

mdmrjsds: Are you referring to Japan?

Miscalculating Inflation: The Link to Global GDP

romorris: The GDP numbers appear to have been adjusted for purchasing parity, though PPP adjustments should have put the U.S. above the EU by about a trillion international dollars. Japan should have also "shrunk" by the adjustment.

Shifting Emphasis from Inflation to Growth

JDL51: The Chinese and Russians have quite a bit of experience defaulting on foreign debt, and Japan is doing a better job than the U.S. in going further into it (debt). Your postulate is negated by something called “recent history.”

The Euro's Long Run Is Finally Over

eh: The EU member countries can only wish that they could lower their collective government deficits to below $1,000,000,000,000.

The Euro's Long Run Is Finally Over

eh: The EU member countries can only wish that they could lower their collective government deficits to below $1,000,000,000,000.

End of Quarter Dollar Assessment

"For example, did you know that the US financial system has more debt than an entire gross domestic product?"

As long as the total debt in the U.S. is below 800% of GDP, they're doing better than France. And Germany. And Portugal. And Monaco. And Spain. And the United Kingdom.

Oddly enough, Turkey is being given a hard time by the European Union because of their debt problems. Turkey is doing much better than France. Maybe Turkey should keep the new lira.

U.S. Decouples From Global Markets - in Reverse

The pound sterling is falling faster than the dollar, but thank you for playing.

Why the U.S Dollar Won't Die

“China: An overpopulated, corrupt regime; Russia: A benevolent dictatorship; India: A dysfunctional democracy.”

Amazingly brief; incredibly true.

Global 'Oil Shock' Rattles World Stock Markets

I normally have no opinion about the "peak oil" theory, but the chart shown in the article clearly shows production, not proven reserves. The "peak" was considered to be at 1981 in 1979. Now it's predicted to be at 2010 in 2008.

I'm also incredibly skeptical about numbers coming out of China about oil consumption (as well as any other number). The Chinese Communist Party's motto should be: "If at first we don't succeed, lower the standards." The worldwide poverty line is set, rather arbitrarily, at living on less than $1 (adjusted for purchasing parity) per day. The Party defines their poverty line at living on less than $0.70 per day. I contrast this with poverty lines defined by individual first-world governments that go up to $33 a day!

Considering how notorious the "big four" emerging markets are for putting price ceilings on commodities like cooking oil and gasoline, I'd predict 1970's-style shortages and rations, not to mention riots in the streets of Peking and Bombay.

It's Getting Harder to Keep on Truckin'

Something tells me Michael Shedlock couldn’t afford the health insurance premiums he would need if he said this stuff to truckers face–to–face instead of blogging anonymously.

Take this commentary tripe to one of the many anti–American sites out there.