allan skye

Waiting for the Next Fed Apology

Wow,Bruce ew. That goes down as one of the most impenetrable pieces of text I have ever had the privilege of reading.If I get this right you are against the bestowing of oodles of new money printed at our expense apon an innercircle of wall st buddies having the effect of making more divided an already divided society .Im sure most would agree.What do you suggest instead? Perhaps auditing the fed would be a start.
The big problem is that as long as America and her allies have military supremacy America is able to extract value from having the worlds reserve currency and get first use of the new money they print allowing the western world to get everything made in china and abroad .Generally speaking that beats work! Therefore as our industries decline due to our high overhead theres less investment in the next generation of higher technology industry,expectations are continually raised regarding standard of living and we become more dependant on extracting value from abroad which cant go on for ever.The pendulum must start to swing back at some point and that is a point of extreme pain for hundreds of millions of people who produce nothing that otherpeople will voluntarily pay for but who expect to have a middle class lifestyle.By all the inflating we are bringing that day of inflexion closer.Reflexivity is at work here.Since reading George Soros books I now see that reflexivity is a continuous process which may cause but definately enhances cycles.THis idea is very interesting when applied to the state and its attempts to influence reality.

The Coming Economic Collapse, Part 1

untrusting investor is of course right that the productive economy benefits to some extent from public spending but that is not to say that the private sector might not produce alot of these benefits more cheaply ,better and more efficiently.The example of two large corporations in bed with government in Iraq(military industrial complex) is not an argument against free trade and open markets ,quite the opposite.With public spending it is not a black and white issue but a matter of degree like Goldilocks porridge -not too hot and not too cold,Same with the creating of more money.Too little public spending and we could have beggars in the street,more robbing ,public health issues,too much and we face bankruptcy as work goes else where.We need to establish an affordable level of total taxation (including hidden costs of bureaucracy ,borrowing and regulation) Say 35% and a transparent level of money creation say a constant of 5% per annum that cant be fiddled about with.

China's Gold Reserves Almost Doubled

Firstly,Uk only has around 400 tons of gold which is at least half of chinas gold so I hardly think that selling that 400 tons is likely to make sterling stronger.With regard to USA if 8000 tons represents approx 80% of USA reserves and China with approx 1000 tons represents around 2% of its foreign reserves then we are in a position wher china(and/or Japan ) can buy every bit of gold USA has to sell-even better if the price falls a bit in the process for them because when the dust settles China could buy all of USAs gold reserve and that would still comprise only approx 16% of chinas reserve.Then where do you think the dollar would be? answer -down the pan,while chinas currency would be numero uno.So selling gold would be a massive blunder for USA and would in fact be end game for USA.


On Apr 24 06:13 PM History Buff 24/7 wrote:

> vishal0soni,
>
> In the olden days countries held on to gold to make sure their currency
> was strong (i.e., backed by something). Even today, selling gold
> is not likely to make their currency any stronger, especially considering
> the currency is backed by NOTHING.

Gold Is Going to Gain

excellant piece Preston.

Spend, Spend, Spend - But Who Pays?

On the subject of stimulus.Unless Ive got this wrong the purpose of it is to increase the velocity of money to get growth going again.If this is the case it will be most effective(and therefore require less electronically created new money) if it is given to those who will spend it quickly and less effective(requiring more electronically created new money) if it is given to failed institutions who will hoard it.Extra new money causes inflation once velocity picks up and the more new money the more inflation,therefore there is a double benefit to giving stimulus to those who will spend it and a double punishment for giving it to those who wont.In my opinion it is also a matter of natural justice.Since we are all going to pay the price of the stimulus package in the form of inflation further down the line we should all get to spend some of the money before it is devalued.So I say distribute the extra money equally among the population and it will be spent faster requiring less new money and therefore less inflation further down the line.

Which Black Swan Will Pop the Treasury Bubble?

It looks pretty obvious to me that the peak of the treasury is happening simultaneously to what is probably the final low of the stock market,also the obama bounce effect which will trigger off a big rally is due in a few days time therefor its a no brainer,the stocks will burst the treasury bubble.

New Bargaining Power for Organized Labor?

Increased unionisation in the service industries etc is a perfect rerun of the 30s in the aftermath of the 29crash the new deal 25% unemployed the other 75% employed by the state or heavily unionised.Fine for the 75%of workers not so good for the 25% of workers unemployed and the other poor folk.This illustrates the main problem with democracy which is that 51% can enslave ,imprison,abuse or kill the other 49% perfectly legally and respectably.Democracy must be tempered with a constitution or strong second unelected chamber or suchlike otherwise(religion perhaps) it can become a repressive institution especially in times like these when the state exagerated boom turns to bust

Grading Paulson and Bernanke

chiotlune,you are so wrong about Ben Bernanke .He is the furthest from monetarism that it is possible to be.Hence the financial crisis although Alan Greenspan and some before him must shoulder some of the responsibility also.I recommend you read FREE TO CHOOSE by MILTON and ROSE FRIEDMAN>They are monetarists and monetarists are usually called in to rectify the mess the inflaters cause and to restore the western economies back to financial health.

Which Inflation Is It Anyway?

Regarding promises to pay,letters of credit etc .Several points- People stop believing the promise to pay the bearer when the bank prints too much extra money unbacked in an easily understood way -which leads to financial crisis.Politicians do have a role to play in keeping the belief going.One of the first acts of William Wallace in the 10th century apon becoming protector of Scotland was to bring Scottish wine merchants to court to pay their supplyiers in Bordeaux after they defaulted on their accounts and alot of reassurance was needed before they would let the scots have any more wine on credit.What a very high standard of writing on this comments page I must say!

Which Inflation Is It Anyway?

Well put ozzy 43!This is also a form of malinvestment if overindulged in,which of course causes bubbles in its own way and can depress profitability in the private sector and therefore proves the adage that public spending displaces private spending if indulged in excessively.

Is the Gold Rally Really Over?

One more point on the subject of printing copious quantities of new money .Could this be seen as a form of taxation in two ways1Someone is paying interest to(the government?)or quazi governmental body on all this new money that has just appeared from nowhere2By the devaluation that follows old people ,children and other trusting people are getting heavily taxed by the value of their savings declining.Its a double whammy.If we start to look at the finance houses and banks as an extension of the state or essentially part of the state then the proportion of gdp raised and spent by the government rises dramatically into the realms of sociallism and we all know what happens to socialist(command)econ... is a lot more than a financial crisis it is a crisis in which the size of the state is increasing to unsustainable proportions and complete collapse looks possible in the medium term,similar to the fall of the soviet union.

Is the Gold Rally Really Over?

Gold is a store of wealth(ie surplus resources) during financial meltdown,irresponsible fiscal policies,war and other forms of instability.You may not be able to buy gas or groceries with gold right now but were the potential total collapse ever to occur you can be sure gold would get you whatever you wanted before dollars or anything else made of paper.Paper is only a promise and is not worth anything if the promiser is unable to deliver the promise.Gold however is a physical substance that you can carry around in your pocket and wont evaporate during times of upheaval like for example paper money,share certificates etc.Once the upheaval is over ,sure the price of gold will drop but youll still have the gold for the next upheaval if you keep it.It is liquid internationally and Im sure that you could buy any larger asset with gold anytime any place worldwide.