Balderdash

The Dollar May Not Be Doomed

an interesting perspective, but in my opinion misses the mark. does a dollar crash really hurt the elite? no freaking way. the elite have gotten out of dodge using loan securitization. they've pushed the debt onto the public's books via fed purchases of MBS and treasuries. they've left greater asia as the ultimate bagholder.

just because they have a disproportionate amount of income doesn't mean they're fate is tied to the dollar. their theft is denominated in dollars to be sure. but perhaps it's in their best interest to have a 'steady' dollar decline? keep the masses happy by inflating away their debt but slowly enough for the elite to get out of the way (their hopes).

Is the U.S. Dollar Finished?

*yawn* this call is SOOO 2008

Predicting the Next Great Bubble

Oh yeah dude... Zimbabwe's economy is roaring!


On Jul 01 09:29 AM stocknerd wrote:

> The inflation bubble is so....so....predicted now that it can't happen.
>
> In any case inflation will not, can not happen, this year or maybe
> next.
> You must have a viable economy for inflation to happen. You need
> housing to get out of ER---mortage applications were way down meaning
> more life support for housing. Prices for homes is still dropping.
> Sales down most everywhere. Banks still need help. When housing
> prices rise in Vegas please post. No more bloody charts with money
> supply please. It is meaningless and your guess only.

Dollar Gains as Fed Runs Out of Room to Cut Rates

Wood is a real resource while money is arbitrary. You're forgetting that central bank/sovereign credibility affects a currency value. So if we replace only 50% of the 'destroyed' (in the fractional reserve sense) money with freshly printed cash, it still may negatively affect the dollar value.

Take person A and B and a bank. Person A has $100 and a loaf of bread and deposits the cash it in the bank. Now person B borrows $50 of this and buys a slice of bread from A. A then deposits $50 and his bank account balance is $150 (the money supply increased by $50). B eats the bread and defaults on the loan.

The bank prints up the deficit $50 and gives all $150 it to A, and the money supply remains permanentely higher and now represents a higher base to pyramid credit on. Eventually he deposits this back in the bank and the cycle restarts.

Eventually A catches on because as the new $50 circulates his cost of flour and yeast are rising and he loses confidence in the amount of money he's receiving for his bread slices, plus there's less bread overall and more money.

But more to your point -- let's say the bank only re-prints 50% of the 'lost' deposits because A isn't demanding ALL of his money, just some of it. As long as A doesn't notice, that's fine, but if A finds out that B is essentially eating his bread for free, he won't take any amount of money for his loaf. Either way, there are now $125 in the system, more than we originally started with.

On Jan 28 09:16 PM CJJ wrote:

> Actually, If you have 100 pieces of wood and fire destroys 80 of
> them and you replace 60 of the burned pieces with new pieces it is
> still a net loss of 20 pieces of wood. But thanks for bringing economics
> into the mix. Can we start to write off classical, macro, basically
> all economics at this point. It seems to forget markets involve people.
> Odd, you'd think some of these "smart" people would have figured
> that out by now.

Evidence That Big Inflation Is Coming

ever hear of stagflation?


On Jan 28 07:13 PM jrs87sch wrote:

> I think we have to have some major moves in economic growth before
> we have to worry about any significant changes in inflation.
>
> If you have an opinion, tell me about it at www.InvestorPitStop.co...

Evidence That Big Inflation Is Coming

ever hear of stagflation?


On Jan 28 07:13 PM jrs87sch wrote:

> I think we have to have some major moves in economic growth before
> we have to worry about any significant changes in inflation.
>
> If you have an opinion, tell me about it at www.InvestorPitStop.co...

Evidence That Big Inflation Is Coming

On Jan 27 01:21 AM Dirk McCoy wrote:

> First, prices wouldn't multiply by the same factor- principle on
> debt, for one example. Another would be certain currencies. Another
> would be goods with higher investment requirements, like automated
> flat panel TV factories, as opposed to those with lower investment
> requirements, like boomer middle managers.

You're right ... prices won't multiply by the same factor with an injection of money into the banking system. Rather, it will mutilate savers and reduce the value of debt. Point here is though, society can't get something for free here; you're always robbing peter to pay paul unless you manage to multiply all prices, debts, etc, by the same factor, which is not only impossible but totally pointless.

>
> Second, as people saw their asset values recover relative to debt,
> wealth effect would kick in, and spending resume. As banks had fewer
> loans defaulting, their performance would recover as well.
>

This is tantamount to kicking the can down the street. If the banks are the source of the new captial, it will originate as loans and encourage people to go deeper into debt. Until people reach their new debt ceilings, banks will get repaid, essentially through the loans they just provided. But without a parallel increase in real wealth and productivity the result will be the same and performance would deteriorate 'post-stimulus'.

> Third, increase in supply and demand lead to greater specialization
> and division of labor- this is where real productivity and improved
> living standards emerge. This only leads to collapse and liquidation
> when interventionists show up with their every 7-8 year or so Fed
> interest rate hikes to slow down an "overheating" economy and create
> another Latin/Asian/global financial crisis. If they just stop meddling,
> then instead of wholesale economic destruction, just a few less productive
> producers- usually the late entrants, not the early- will have to
> turn over management/ownership to more productive players.

Would you have us permanantely suppress interest rates? The fed does this by monetizing treasury and other debt instruments . At some point a currency crisis would ensue and not any amount of dollars would buy you a lollipop as people realized it's all a sham. What leads to higher living standards is increased production of goods, services and technology which can't possibly be properly encouraged through capital injections and attempts to prop up home prices.
>
> On Jan 26 08:57 PM Balderdash wrote:

Evidence That Big Inflation Is Coming

On Jan 27 01:21 AM Dirk McCoy wrote:

> First, prices wouldn't multiply by the same factor- principle on
> debt, for one example. Another would be certain currencies. Another
> would be goods with higher investment requirements, like automated
> flat panel TV factories, as opposed to those with lower investment
> requirements, like boomer middle managers.

You're right ... prices won't multiply by the same factor with an injection of money into the banking system. Rather, it will mutilate savers and reduce the value of debt. Point here is though, society can't get something for free here; you're always robbing peter to pay paul unless you manage to multiply all prices, debts, etc, by the same factor, which is not only impossible but totally pointless.

>
> Second, as people saw their asset values recover relative to debt,
> wealth effect would kick in, and spending resume. As banks had fewer
> loans defaulting, their performance would recover as well.
>

This is tantamount to kicking the can down the street. If the banks are the source of the new captial, it will originate as loans and encourage people to go deeper into debt. Until people reach their new debt ceilings, banks will get repaid, essentially through the loans they just provided. But without a parallel increase in real wealth and productivity the result will be the same and performance would deteriorate 'post-stimulus'.

> Third, increase in supply and demand lead to greater specialization
> and division of labor- this is where real productivity and improved
> living standards emerge. This only leads to collapse and liquidation
> when interventionists show up with their every 7-8 year or so Fed
> interest rate hikes to slow down an "overheating" economy and create
> another Latin/Asian/global financial crisis. If they just stop meddling,
> then instead of wholesale economic destruction, just a few less productive
> producers- usually the late entrants, not the early- will have to
> turn over management/ownership to more productive players.

Would you have us permanantely suppress interest rates? The fed does this by monetizing treasury and other debt instruments . At some point a currency crisis would ensue and not any amount of dollars would buy you a lollipop as people realized it's all a sham. What leads to higher living standards is increased production of goods, services and technology which can't possibly be properly encouraged through capital injections and attempts to prop up home prices.
>
> On Jan 26 08:57 PM Balderdash wrote:

Evidence That Big Inflation Is Coming

check your math


On Jan 26 05:27 PM RVN-VET wrote:

> 360 billion would give each american 1 million to be given on a ration
> card for specific items (only) and only so much a year (to meat out
> over time) to save their homes, and to buy only american products.
> This would be the only grass roots program that would insure BIG
> MONEY would not just blow more BIG MONEY...or make more big money.
> The payback here from grass roots is that all americans would be
> insured against loseing their homes.
>
> Any auto MFG should explain to BIG OIL they should take a vested
> interest in their companies because without them there would not
> be a BIG OIL. I don't know where the BIG OIL become so independant
> they think they can artifitially inflate prices by restricting output
> to insure income levels but this is totally an independant idea from
> somewhere that has too much control over OIL. So if they want to
> continue they should care about their future and INVEST.

Evidence That Big Inflation Is Coming

Don't confuse money with demand. We could multiply all prices in the world by a factor of 100, and that wouldn't spur demand; it would simply change the basis of price. If we did this, would it change the ratio of value of various goods? No! 1 chicken would still be worth 1/250 of a piano, despite the 100-fold increase in price of both.

What matters here is profit margin -- the producer will increase production to the extent that the input prices -- raw materials, labor, etc, lag the output prices. If we simply multiplied all prices by 100, there would be no harm done because all prices would rise in equal proportion.

The reason that inflation is so dastardly is that the prices don't always rise in equal proportions.. those who get the money first get to buy stuff at low prices and screw the rest of us who saved our dollars. Indeed, inflation encourages malinvesment because the producer that increases production in response to inflation due to a temporary iniquity will soon see his newfound profit margins collapse and lead to liquidation.

Hope this helps

On Jan 25 07:49 AM [e-mail] wrote:

> Your comment -- "When a central bank doubles the monetary base in
> a matter of months, a lot more money is going to be flooding into
> the real economy. It will compete for finite goods, services, and
> investments, driving up prices" -- doesn't this instance send a message
> to manufacturers and service providers to rehire and crank up production
> to satisfy demand, thereby correcting the problem?? What am I missing?

Evidence That Big Inflation Is Coming

Don't confuse money with demand. We could multiply all prices in the world by a factor of 100, and that wouldn't spur demand; it would simply change the basis of price. If we did this, would it change the ratio of value of various goods? No! 1 chicken would still be worth 1/250 of a piano, despite the 100-fold increase in price of both.

What matters here is profit margin -- the producer will increase production to the extent that the input prices -- raw materials, labor, etc, lag the output prices. If we simply multiplied all prices by 100, there would be no harm done because all prices would rise in equal proportion.

The reason that inflation is so dastardly is that the prices don't always rise in equal proportions.. those who get the money first get to buy stuff at low prices and screw the rest of us who saved our dollars. Indeed, inflation encourages malinvesment because the producer that increases production in response to inflation due to a temporary iniquity will soon see his newfound profit margins collapse and lead to liquidation.

Hope this helps

On Jan 25 07:49 AM [e-mail] wrote:

> Your comment -- "When a central bank doubles the monetary base in
> a matter of months, a lot more money is going to be flooding into
> the real economy. It will compete for finite goods, services, and
> investments, driving up prices" -- doesn't this instance send a message
> to manufacturers and service providers to rehire and crank up production
> to satisfy demand, thereby correcting the problem?? What am I missing?

A Way to Keep People Buying Treasuries

Hiking interest rates to support the currency will kill treasuries but may incentivise people to purchase them in the future. But it would simultaneously stop the federal government from digging our hole deeper because borrowing would be so costly in terms of real purchasing power. Of course, without forcing our currency value to zero there is no way to pay of the trillions we owe without an outright default. What should be clear right now is that the government is out of options and it can't have its cake and eat it too.

The only way out of this mess is to stop selling treasuries alltogether, slash government spending by 70-80% and start servicing our debt.

Main U.S. Creditors Rub Shoulders

proofread please

Where Was the Inflation?

the inflation manifested itself in a unprecedented housing orgy

that's not measured by CPI

The U.S. Dollar Is Following Argentina's Path

The only missing piece here is the dollar status as the world reserve currency. Not that there won't be a run on the dollar -- there will -- but that it will need to surmount a greater hurdle than Argentina to kill it.

China and Japan and OPEC have to get sufficiently angry in unison.