Wilson Siu

If U.S. Stopped Issuing Treasuries, Would It Go Broke?

You have basically written a bunch of "sophisticated vocabularies" which all sums up to zero conclusion. Congragulations Mr. PHD.

Try learning Warren Buffet or Peter Schiff. Simple understadable language and straight to the point.
Usually the only reason people can not go straight to the point is because he can't!

So what is your point?


On Nov 20 01:14 PM flow5 wrote:

> No, you are wrong. There is a difference. It should not be confused
> by the doomsters. In fiat system the volume of currency issued is
> dictated by the deficit-financing requirements of the issuing government.
> In a fiat system the volume of currency is not self-regulatory. In
> a fiat system the more money that is issued, the higher prices will
> rise. In a fiat system the government's credit is put in jeapordy.
> I.e., a fiat system eliminates currency as a medium of exchange,
> and leads to hyperinflation.
>
> In a managed-currency system (our current system), the volume of
> currency in circulation is determined by the public's desire to hold
> whatever volume of currency it needs for the exchange of goods &
> services. This is the cash-drain factor, or the process by which
> the volume of currency put into circulation, or taken out of circulation,
> through our banking system.
>
> I.e., the volume the money stock remains the same, but it's composition
> changes (e.g, currency or demand deposits), depending upon the needs
> of trade. The currency-deposit ratio typically rises during recessions
> (it was .73% in June 06 & .85% in November 09). And there is
> no expansion coefficient associated with an increase in the volume
> of currency held by the non-bank public, (it is dollar for dollar).
>
>
> The volume of our money stock is determined by monetary policy objectives,
> but the level of currency held by the non-bank public is lawfully,
> and properly, left unregulated.
>
> All currency gets into circulation, directly or indirectly, through
> the liquidation of time deposits, by the cashing of demand deposits.
> There is one exception in demand deposit creation; those rare instances
> when the U.S. Treasury borrows from the Federal Reserve Banks. However
> it cannot be said, as of time deposits, that increases in the public’s
> holdings of currency reflect prior commercial bank credit creation.
> It is more appropriate to say that expansions of currency are accompanied
> by concurrent expansions of reserve bank credit.
>
> And any expansion or contraction of the monetary base [sic], is neither
> proof that the Fed intends to follow an expansive, nor a contractive
> monetary policy. Furthermore any expansion of the non-bank public’s
> holdings of currency merely changes the composition, (but not the
> total volume), of the money supply. There is a shift out of demand
> deposits, NOW or ATS accounts, into currency. But this shift does
> reduce member bank legal (required), reserves by an equal, or approximately
> equal, amount.
>
> An expansion of the non-bank public’s holdings of currency will cause
> a MULTIPLE CONTRACTION OF BANK CREDIT and checking accounts (relative
> to the increase in currency outflows from the banks) ceteris paribus.
>
>
> To avoid such a contraction the Fed typically offsets currency withdrawals
> by open market operations of the buying type (e.g., purchases of
> governments for the portfolios of the Reserve Banks). The reverse
> is true if there is a return flow of currency to the banks. Since
> the trend of the non-bank public’s holdings of currency is up (ever
> since 1930), return flows are purely seasonal and cannot therefore
> provide a permanent basis for bank credit and money expansion....&...

The Weak Dollar Crowd Is Too Confident

Pls notify us and remind us about not being too bearish in USD when the economy is really growing again and when the unemployment rate drops back to at least 8%, with underemployment rate also dropping back down to at least 5-6%.

The Weak Dollar Crowd Is Too Confident

If the Fed hikes the interest rate:

-confidence in housing will be shaken as people will not be sure about the direct going forward.

- interest payment on both persoanl and national debt will go up.

- economic growth will be slowed and unemployment rate will rise further.

Wishing someone to do something and someone actually being able to do that are two different animal species from two different planet.

If all children in the world would not visit any internet games or Play stations, and focus only in academics, their GPA will go up significantly. ( will they?)

If I shall wake up everyday in the morning, and work out two hours in the gym, while skipping every weekdnend's beer drinking, I will be ripped like Rocky Balboa or Bruce Lee. (but I miss out the party with friends, and social life, so will I?)

To be more clear, if I work during the day time, skip sleeping, and work a second job at night, my income would increase by a substantial percentage. But is this possible and if possible how long will it last? I will be so tired during my day job that I will be fired very soon, and sure I can work on my lower paying night job all the time!

Thus if the economy and unemployment rate and both personal and nation debt level does not fit nor tolerate an increase in interest rate, why mention the possibility of all the kids stop touching any playstation and focus only in academics or the dim possibility of me skipping weekend drinking and only visit the gym to stay lean like Rocky in his prime or like Bruce Lee!

Btw, what species of animal is that from which planet?

Marc Faber Is Conflicted About the Price of Gold

I have this month's Gloom Doom& Boom report in front of me. It says:
" should also mention some concerns (for now of short-term nature) I have about commodity prices including gold (see Figure 19). A large number of commodities including oil (see Figure 13), the CRB Index, and gold broke out on the upside in early October. I would regard a failure to hold above the “upside breakout points” in the period directly ahead with great concern. In the case of gold a decline below $1000 would likely lead to further more meaningful weakness (possibly down to between $800 and $900).
Finally a rebound in the US dollar seems to be underway, which is
consistent with weak asset markets as I have explained in the past on numerous occasions. Particularly vulnerable would seem to be
commodities related currencies (see Figure 20).
Gold Must Hold Around $ 1000 Otherwise a More
Pronounced Correction Could Take Place!"

This report was sent out on Nov1st 2009, and during the convention in London on Nov 11th, Dr. Faber says Gold would not touch US$1000 per ounze again.

Dr. Faber used the opportunity in London to correct his view in regard to his forecast on gold.

Always, ordinary people change their minds. Sometimes even extraordinary people do change their mind too. We are all human afterall regardless if we are considered by others to be ordinary or extraordinary.

Do We Goldbugs Finally Have Your Attention?

How much gold did the Hong Kong Monetary Authority buy? Can you please provide the source of this information? Thanks!


On Nov 13 11:51 AM hanumanhojo wrote:

> Gold definitively broke above $1K after Hong Kong took delivery of
> their gold from England.
>
> Then the move above $1.1K after India took delivery of gold from
> the IMF.
>
> These two milestones do seem to indicate to me that the wood got
> snatched out from under the gold shorting cauldron. May be a good
> time to accumulate silver and more gold shares as the time lag catches
> up to them.

Wall Street: Dumb as It Ever Was

If you want economists who can predict forward looking economic conditions, you have to follow Austrian Economist such as Peter Schiff, Jim Rogers. Also Marc Faber.

The Dollar Coin: Two Sides of the Reserve Dollar

Speaking about short term versus long term.

LOL. The writer says in the short term if the Fed changes its interest rate and quantitative easing policy the US dollar will reverse its decline.

True, if the Fed does change its policy the dollar will reverse its decline, but HOW THE HECK CAN THE FED CHANGE ITS POLICY WHEN UNEMPLOYMENT RATE IS 10.2% AND UNDEREMPLOYMENT RATE IS LIKE 9%?

SO THE CONCLUSION IS THAT UNTIL EMPLOYMENT RATE IMPROVES, THE FED WILL NOT CHANGE ITS POLICY. THUS IN THE SHORT TERM THE FED WILL NOT CHANGE ITS POLICY.

If Peter Schiff sees this article, I do not think he shall be as polite as me in replying to the author's article.

Gold Is Not in a Bull Market

The demand of Gold is "still" at current level because it is not yet percieved by the public as being the ultimate source of money.

Just picture this: A robber sees two streets leading to two possible steals. Route A to House A is a check of US$1m. Route B is to House B which has 2 gold bars at 200 ounzes each, which is worth about US$0.5m at US$1080/ounze.

The robber is smart, thus he chose to get the US$1m check because it is "worth more".

One day when the US$ depreciates at a rapid value, and the robber wants to use it but then its value is worh so little, next time the robber will certainly choose one gold bar over the US$1m check.

When that happens my friend, demand will shoot up so strong. It has not yet happened on a broadscale yet, but certainly at least for the Indian government, they chose 200 tonnes of gold instead of holding US$2.6b.

The games of dominos can sometime take a while before all the cards or blocks are down.

Nouriel Roubini, One on One: More Doom and Gloom

Pls note: a good fisherman does not make him also a good farmer.

Roubini is a proven economist, yet that does not make him a necessary execellent investor (asset manager).

He was able to analyze the irrational exuberence of 2007 based on the statistics of the housing market, interest rate, cap yield of real estate, the balance sheet of Fanne and Freddie etc.

You got to pick the best out of each person, but not all from one person.

Kennesian Economics ( Roubini)
Austrian Economics ( Peter Shiff)
Real Estate ( Shiller)
Short/long/sudden trend (Soros, Marc Faber)
Medium/long term fundamental shift of an industry or asset class or a company ( Jim Rogers, Marc Faber)
Micro, individual company analysis ( Warren Buffet)

Don't buy both fish and tomato from the fisherman.

Don't expect the farmer to provide you with the highest quality fish either.

The media is streching Roubini's expertise a bit too far. And are expecting Micahel Jordon to bat just like Ken Griffy Jr.

On Oct 24 12:21 PM Joe Shareholder wrote:

> Roubini predicted the economic collapse in 2008, but he's been wishy
> washy since then. The story keeps changing. Initially he predicted
> 2009 Dec as the end of the recession. Now he's predicting another
> crash. Why pick an end date to the recession if you're predicting
> another crash? Regardless, this is a depression, and it will get
> worse so if I were a betting man, I'd stick with his second prediction.

U.S. Economy Will Suffer Simultaneous Inflation and Deflation

Jospeh, excellent article.

U.S. Economy Will Suffer Simultaneous Inflation and Deflation

To Fanatical Yankee, you call stocks as liquid assets, that is only true when the market is presummed to function in a fashion called "normal".

The author, Jospeh, and Exter classify something as liquid, does not simply based on the ability to sell it, but based on the ability to sell something fast and at a stable price.

Anything can be sold, but it is a matter of price. If the price is not relatively stable, it is not liquid. Gold has been relatively stable in price for a few thousand years, and it has only have a high fluctuation since the beginning of the US$ being a fiat currency.

Gold have always been able to purchase lets say silver or oil at a certain ratio, but shares of Goldman Sachs, or Yahoo or Lehman Brothers certainly do not have a stable conversion ratio.

Pls do not call someone a clown when the fundamental basis of your argument is flawed.

I run a hedge fund, and I can tell you that stocks under cetain sceanarios and market conditions are certainly not liquid.

Sure if you only sell US$10000 worth of Yahoo in the market it is relatively liquid at a fluctuating price. Try selling US$1bn worth of Yahoo or even US$300m and see how liquid it is and most important of all, at what price.

Jim Rogers on the Next 10 Years

Backing my teacher and investing master here again. (I am certainly not officialy his recognized student, but I do think he is my official master in investing) LOL.

1970-1983 4000% return
1983-1998 Enjoyed life alot after 13 years of consecutive 80-90hours week ( why not?)
1999-2009 The first person who openly saw the coming commodity trend.
2005 noted the housing bubble.

Mr. Roger is certainly better than only being able to "spot the long-term shift in civilization's center to Asia."

BTW I am Chinese and certainly I wish where I live will have prosperity and peace, but for the time being, I would not call it a long term trend yet, but merely a medium term trend.

If business policies gradually changes towards a backward fashion in Asia, and if people somehow gets lazy in Asia, the trend could easily move to somewhere else.

On Oct 19 07:53 AM Anthony Alfidi wrote:

> Chinese central bankers aren't Bernanke fans either. But Iowa farmers
> getting rich enough for exotic cars? That's a stretch if rising oil
> prices keep costs high for energy-intensive American agribusiness.
> BTW, Jim Rogers isn't any better than average on timing market swings.
> His value lies in spotting the long-term shift in civilization's
> center to Asia.

Jim Rogers on the Next 10 Years

Well said Mad Fundmanager!

What is happening now often reminds me about the computer game called Dune, where 3 different houses namely House Atredias ( back then it was conceived/implied to be either American or British), House Harkonan ( conceived/implied to be USSR) and House "something I forgot the name".

These three different countries competed for "Spice" which was the natural resources required for building all sorts of things. In the game, the nations built armies to fight in battle to control the Spice.

These days public/private sectors compete to get contrel of natural resources via their bulid up of capital. I pray to God that it will only be an arm wrestle via capital, but not war.

Given the historic treck record of who the US had done to the Native Americans to "educate them and liberalize them" then in recent history " again in the name to liberalize all those people suffering in Iraq"

Honestly, I do sometimes worry that someday in the future, a charlatan leader may lead the US and use another excuse via propaganda to fool all the citizens into have another excuse to liberalize another country.

It is not a bad idea to prepare myself a place in Australia, since it is one of the countries where ppl will have little excuse to liberalize it!


On Oct 19 11:18 AM Mad Hedge Fund Trader wrote:

> vhu Those of you searching for the “new normal” better take a close
> look at the China National Offshore Oil Company’s (seekingalpha.com/symbo...)
> efforts to top Exxon Mobil’s (seekingalpha.com/symbo...)
> $4 billion bid for development rights to a giant new field off West
> Africa. This is only the latest chapter in a global bidding war for
> essential resources they, and we need. Long gone is the day when
> the Standard Oil Company only needed to deliver King Saud a new Cadillac
> every year to assure rights to his kingdom’s oil supplies, even though
> it often had to be towed by teams of camels, as there was then no
> refining capacity yet on the peninsula. Decades later I was part
> of a swat team at Morgan Stanley who made sure the crude kept flowing
> and the cash surpluses recycled. Having grown up in the desert near
> Indio, California, I was the only one in the company who actually
> liked caravanning out into the desert to scoop up cooked rice with
> my fingers and guzzle illicit Johnny Walker Red, said to be smuggled
> in by a wayward member of the royal family. I never did get used
> to the sheep brains, though. But I digress. To the current generation
> of oil traders I might as well be talking about the Pax Romana than
> the Pax Americana, which is now equally ancient history. The hard
> truth is that they are out there bidding against the new 800 pound
> gorilla in the market, as are others for coal, iron ore, copper,
> gold, silver, wheat, corn, soybeans, and myriad other essentials.
> If you have any doubts about China’s acquisitive determination, look
> at the chart below showing that the Middle Kingdom’s outbound direct
> investment is about to outstrip inbound investment for the first
> time. For you and I, this means we can count on the price of everything
> to go up in the future, a lot. Keep food, commodity, and energy ETF’s
> permanently on your radar, like the PowerShares agricultural (seekingalpha.com/symbo...),
> the Rogers International Commodities (seekingalpha.com/symbo...),
> and the Oil Trust (seekingalpha.com/symbo...). Jim Rogers,
> are you listening?

Jim Rogers on the Next 10 Years

I got to back Roger here. Mandarin is the official language in China and is spoken all over China. So when Roger talks about Chinese, he means Mandarin.

If one talks about speaking "American" one would not think about Cherookee, Spanish or French or German or Italian, would you?

Relatively speaking, Roger is certainly a real expert in China as compared with many of those who call themselves expert. You got to give this guy credit, he is one of the very first who started investing in China since early 90s.

I have persoanlly met Rogers three times, and he is a very straight forward person. He does not favor China simply because he likes CHinese food or whatever, he favors China's business direction. If China reverses its business policies to a backward fashion, Rogers would be one of the first person to openly complain and mock the Chinese officials on bloomberg.


On Oct 17 10:23 AM Mafeking wrote:

> Actually there is no such language as 'Chinese'. Does Rogers mean
> Mandarin or Cantonese . Mandarin is most widely spoken, but Cantonese
> is most common in Southern China and HK.
>
> Such a blunder seems strange from people who purport to be experts
> on China.

Jim Rogers on the Next 10 Years

Twitee,

I am a Chinese and I agree to most of your observations in regard about the average low education Chinese working people. They do have slave mentality. This has to do with the recent history of China being such a poor country and they way they were taught was to be "yes man".

Having said that, the yes man slavery mentality are the older generations, to be more precise, they are more like the Baby Boomers of China or perhaps a little also for some of the generation X.

But for the generation Y in Shanghai, Beijing, Shenzhen, they will discuss human rights to you if anybody try to abuse them.

For those of us who have had at least a college degree from overseas or in China, we are no "yes man"( my response to your post shows I am certainly no yes man). LOL.

In regard to the rich gets richer, the poor gets poorer, well that is the same as in most places( same in the US, no?). But relatively speaking, the number of Mcdonald eaters, and the number of Nike Air wearers in China must have increased by 100times over the past 10 years, thus the living standard despite widening rich/poor gap, is improving at a rapid speed.

In regard to the rich moving to the US, well it was mainly during late 90s and early to mid 2000s. We may consider buying a vacation house in Hawaii or an apartment in NY, but most of us prefer to stay in China because our childhood friends and family are still there, and we are making money here. Not to be rude, only fools will want to leave a place that is booming and have so much opportunities. It was in the late 90s and early 2000s that living in the US is much more comfortable and the variety of stuff that can be purchased is much more.

But now, in China, you can get Angus Rib Eye for dinner, Nike air shoes for basketball, Doublecheese Mcdees burger for quick lunch,
Ralph lauren polo shirt, basically everything is accesible.

Yes, the older generations did that and most of those who left have regrettrd because they have lost lots of entreprenerial opportunities that would have made them rich.

Your understanding of China is somewhat correct, but you are using Microsoft 2000 version, time to upgrade to Microsoft XP version my buddy.

Last but not least, yes some of them work very inefficiently. My secretary was relatively quite inefficient when she first started working for me, but after some training and she has improved alot. I understand your previous frustration with Chinese employees. Well, just like anywhere else, it takes a little bit of time.


On Oct 13 04:15 PM twitee wrote:

> Jim Rogers has a major investment in agricultural commodities, I
> don't blame him for appearing in so many interviews just to protect
> his investment at any cost!
>
> China has a long way to become the world financial power.
>
> I have many years of first hand experience working with manufacturers
> in china. The number one flaw with Chinese is their slavery mentality
> of saying yes and agree to everything they are told. During my early
> years, I was very impressed with their speed of work and commitment
> to rapid delivery, but what they were delivering was a disaster.
> We had to start over to make them understand of our design and manufacturing
> intent.......
>
> Below are the list of flaws with China
>
> 1. Slavery mentality
> 2. The rich get richer and the poor gets poorer
> 3. They work hard, but very inefficient
> 4. They steal and pirate any technology they can
> 5. Have no innovation of their own
> 6. The rich ones move to California (go to San Jose, and
> San Francisco, as if you are in China!!!!!)
> 7. They are the biggest gamblers in the world (go to Vegas for proof)
>
> 8. The government is couple of century behind with their dictatorship
> mentality
> 9. They have billions of people still looking for $1 a day wage<br/>10.
> Their main wealth is in dollar!!!!!!!!!!
>
> They better spend all that dollar before it becomes worthless.......
>