Darrell

Q3 GDP: Obviously Fictional

The reason the Indian Policy Wonks gave for buying 200 tons of gold was they thought our economy will collapse so, to be safe, they want to reduce their dollar holdings; obviously the Indian Policy Wonks read your postings.

Foreign dollar holders currently have over 50% of the dollar supply; our policy wonks think that tax revenues will come in a tidal stream once these dollars are spent on American made goods, services and/or assets. These tax revenues will be used to pay down the government’s huge debt load. And once the debt load is paid off, the smoke screen numbers they gave will not even be a footnote in history books.

And once again our political leaders will be in control of events.

President Obama and Congress will revise the bankruptcy laws so that individuals can use legal means to get out from under their debt load.

And the above is the scenario that will supposedly play out in the coming months and years.

We’re Paying for Health Reform with Another 'Alternative Minimum Tax'?

What your analysis fails to take into consideration is many Americans cannot afford health care; therefore they do not seek treatment for their health problems.

My questions are: How many Americans die each year because they lack adequate health care? How many Americans suffer permanent health problems because they cannot afford the cost of medical care?

Public option is the solution to the problems of lack of financing by people with health care needs.

My suggestion is to put funding of public option health care above funding for foreign aid, funding for overseas military bases, above funding for unjust wars, and I sure your readers can list many other government programs whose funding should be below public health care

Dollar Danger: Iran's Oil Bourse Steps Up Activity

I don’t think that the Iranian Bourse would have open for business if the owners did not think they could make a profit operating the business. Being in the digital age, and being located in an area where most of the world’s oil and gas is produced, one wonders why it told them so long to begin the business.

I wish them the best.

U.S. Economy Is Growing Again?

I have owned a Ford Escort for nearly 20 years and I traded it in for a 09 Ford Focus. With the Ford Escort they recommended that I change my oil every 3,000 miles with my Ford Focus they recommend that I change my oil every 6,000 miles. Is this progress or what?

By the way, I am more than satisfied with my Ford Focus.

The dollar is accepted as legal tender by most central bankers: and, as I watch a squire climb a tree in my neighbor’s backyard, I know the central banks are the store house for excess dollars. I think that our economy is not experiencing the economic dislocations caused by too much currency because these central banks act as the black hole for excess dollars.

I also think that national currencies being used as a global currency is an un-stainable way of conducting global trade, so the global currency system must be changed in order for global trade to function effectively.

Your analysis does not take into consideration this global currency imbalance and, once the currency change does occur, the consequence to the US economy. So it is easy for you to say our economy is improving, when, in reality, our economy will imploded once the dollar is not longer accepted as global legal tender.

U.S. Dollar Now Testing $1.50 Per Euro

You made good points, but the fact still remains that the dollar is accepted by most central bankers as legal tender in their country. When I paid for my hotel bill in Prague I was paying in dollars (through my Chase Visa Card) and the hotel then converts the dollars into their currency. The central bank then keeps the dollars in their vault, to be reinvested, usually in American debt securities, and usually treasury debt.

For a long time foreign investors and foreign institutions invested in dollars because our dollar remained stable while their country’s currency depreciated.

Now the world is a-washed in dollars, and central bankers are powerless to stop the continued flow of dollars into their treasury. Our policy wonks think that eventually foreign dollar holders will be forced to spend their dollar holdings buying American made goods, services, and/or assets thus creating the tax revenues needed to pay down our large debt.

And we do see foreign dollar holders spending dollars on commodities, on goods, on services, etc. but they are buying from other countries or foreign companies so the transactions are not taxed by the IRS. At the same time we see more and more Americans retire abroad because they cannot live on their meager pensions in the US.

By now, most investors know that central bankers no longer want to use the dollar as a global currency, or, for that matter, any other national currency as a global currency. Our former enemies and now our competitors: China, Russia, etc. are leading the charge, but other countries have joined the quest to change the current global currency system into a currency system that will be independent of national control.

The dollar is now in a transition stage, and I expect at some point in this transition the American government will no longer be able to dominated debt from foreign lenders in their own currency. And, this, my friends, is why I think the dollar is going down in value.

Friday's Employment Numbers: No Visible Recovery

Hi Howard:

Your points are well taken but I think they are a consequence of the dollar being a global currency that is not subject to external economic controls. The “free world” accepted the dollar as legal tender at the beginning of the cold war, when the focus was fighting communist ideology and not on the type of currency system needed to manage global trade.

The cold war is over and our previous enemies are now our competitors, and they think, because our dollar is used as global legal tender that is not subject to any form of economic control, we have a competitive advantage over other nations participating in global trade.

I agree, as I think the central banks are the black hole that stores excess dollars, thus sparing our economy the economic dislocations that are created when too much currency circulates in the economy.

Our competitors want to change the world’s currency system so that no one nation has control over it.

The points you made are the consequence of the dollar being thought of as capital, as being wealth onto itself, and not as a currency whose value must be measured according to predetermined economic measurements. Also, Howard, you must remember that all our debt is dominated in dollars so we simply pay it off by printing more dollars, not by taxing earnings.

The US dollar is in transition, going from a global currency to a national currency only. More and more nations are committed to changing the current currency system and adopting a new system that will be faired and controlled by an international body of policy wonks that do not report to a national government. The question is not when, but how?

Friday's Employment Numbers: No Visible Recovery

For far too long the world’s central bankers have accepted the dollar as legal tender for the purposes of buying goods, services and/or assets in their country. When this practice ends, when an American consumer, an American business person, can no longer use their dollars to acquire what they need or want, then our trade deficit will end.

One has to think that our policy wonks, our political leadership understand that one cannot resolve social, political, or whatever problems by debasing the currency. Brazil and Argentina are countries that tried to resolve their problems through currency debasement. Have they learned their lesson?

One can see today that Brazil is on the road to a sustainable recovery and ongoing prosperity. Brazil, I think, understands that they acquire what they need by creating things that other people need, thus generate the earnings needed to acquire what they want.

I think the attitude of the majority of our political leadership and of our policy wonks is that central bankers, who have a large stockpile of dollars, will eventually spend the dollars, and through this spending process create a US trade surplus!

Dream on!

Xerox Bets on Services, Buys ACS

Ms. Burns made the right decision, we are in the digital age, meaning that all documents, government and otherwise, will be stored in digital format.

What do storing digital documents mean to our everyday life? It means that the traffic ticket you got 30 years ago in a different state, so you never bother to pay the fine, is now stored in a computer. If you go back to that state and a cop does a warrant check on you, you will be liable for arrest and in all probability be required to pay the fine.

With the acquisition of ACS, Ms. Burns allows Xerox the flexibility to pursue revenue creating opportunities that are still in the idea stage. Xerox’s best days are in the future.

U.S. vs. China: Has Trade War Begun?

My take is that China and all the other nations in our global commerce community cannot continue to accept the dollar as legal tender, as a medium of exchange for their goods, services and/or asset, without placing severe controls on the number of dollars that can be placed in circulation for use.

For way to long we have been prolonging our false prosperity by exchanging a valueless currency for goods, services and/or assets that continues our false prosperity; as people have stated for far too long: we have been kicking the can down the road.

Right now central bankers are acting as the black hole for excess dollars, dollars that are not needed to conduct global commerce. China is using some of their dollar stockpile to buy commodity assets all over the world with the warning that they think the dollar is valueless and it is part of a flawed global currency system.

China, France, Japan, Brazil, India, and other nations have been developing a new global currency system that will replace the existing system,

Central bankers are committed to changing the current global currency system so it is now just a matter of time before the dollar is no longer accepted as legal tender for the purposes of global commerce.

The only remaining question is will the dollar’s demise be the result of investors, institutions, central bankers, etc. manically abandoning the dollar or will the dollar’s demise be the result of planned transition.

Your guess is as good as mine.

And I agree with TheresaE, China thinks their political system is far superior to ours. And, I disagree with China’s viewpoint, the fact that we can share our views and grow and change from our ethical lapses, is the hallmark of democracy.

China Urges Citizens to Buy Gold and Silver

A lot of dollars are held by foreign investors as protection against their own currency. The investors acquired their dollar holdings in an era when the dollar was the only currency used as legal tender for international transactions. We are in a new era, but the mine set of these investors are still fixated on the past era.

China is doing the prudent thing: informing their citizens that they should reduce their dollar holdings now while it is still accepted as legal tender by the world’s central bankers.

For the last several years, Russia government leaders have been encouraging their citizens to exchange their dollar holdings for gold; In America and Canada, commentators, such as you, have been telling investors for years and years to convert as much dollars as possible to gold and silver as this is the true currency and the only currency that can withstand the ravages of inflation.

In my view, China is rather late to the game in recognizing gold and silver as a currency, but not too late in warning their citizens to convert their dollars and/or other currencies into gold and silver.

China's 'Problem': Too Much Money

Currency is simply a medium of exchange: one can invest it, one can save it or one can spend it.

When China exchanges their goods and/or services for our currency one has to ask: why? After all they have no need for the dollar; they simply use it to buy mainly US government debt. Recently, they have used their vast dollar hoard to buy minerals from other countries, exchanging the dollar for that country’s assets.

China accepted the dollar because they needed our expertise in training their managerial workforce; they needed our expertise in developing their professional class to function effectively in a global competitive environment. China is now at the edge of being able to function effectively in a global competitive environment.

Because China thinks they are no longer are dependent on American assistance for building their economy they want to break free of the dollar, they no longer want to exchange their goods and services for a worthless currency.

But the question is how?

America, on the other hand, has used creative destruction tactics, to transform their industrial economy. By transferring our industrial production overseas, we essentially broke the backs of the unions that controlled our industrial workforce. It remains to be seen if the new industrial workforce will be nonunion. But it is certain, they will be highly skilled, well educated, and be focused on outcomes.

As far as the dollar, we will tell China how they will use it. Instead of the taxpayer subsidizing the farmer, we will simply allow China use some of their dollar hoard to buy our farm products. Instead of bailing out our natural gas producers we will allow China to buy natural gas. We are in the driver’s seat; we will tell them how they can use our currency if they want to spent it or invest it. Buy our bonds, no problems. But if you want to invest it or spent it, get our permission first. Otherwise no go.

China understands their predicament and this is why they want a universal currency for global trade, a currency that will be regulated by policy wonks who is not tied to a national government. Other nations understand the problems of national currencies being used as a global currency and they want to see changes in the global currency situation.

Changes will occur, and we are in the start of a transition stage.

Private Prisons: A Reliable American Growth Industry

If one reads the book by Dmitry Orlou Reinventing Collapse, one would avoid investing in the prison industry. Once the dollar becomes a national currency only, tax revenues will not be available to support such a large prison population, so invest accordingly.

CalPERS Is Unsustainable

One should understand what the government pension system means at the individual level: San Francisco’s police chief recently retired at age 53; her lifetime retirement income is a over $26,000 a month, and the city’s taxpayers are paying over $300,000 to her for her accumulated time off earned but not used.

One should be reminded that the San Franciscan voters had the opportunity to vote on these retirement benefits for municipal employees; these retirement packages became law and a benefit only after voter approval. The chief in no way manipulated the process to get her retirement benefits, the voters approved these benefit increases and she earned it fair and square.

Since the voters approved these benefit packages, they must now vote for more stringent benefit packages; this is how the system must reforms itself. In any case, bankruptcy should not be a way out for state and local governments to not pay for these retirement benefits; increasing taxes is the most viable option.

Will 'Self-Preservation' Work After Decades of Fiscal Suicide?

Jeff is correct, America is fast approaching the point where central bankers will no longer accept the dollar as legal tender; once this happening occurs, our policy wonks will no longer be in charge of their own destiny, their focus will be on getting the best deal possible.

Before the dollar goes from a global currency to a national currency, I expect interest rates to go up dramatically, budget management a priority, and the Americans to finally understand that it is earnings, and not money production, that creates wealth and fuels prosperity.

Why Is the Fed Buying Treasuries?

Jeff, you are rather late to the game of “qualitative easing” or the Federal Reserves power to print money to pay off debt, to buy shares of companies, and their power to issue debt to create money.

Because of the cold war, the free world central bankers never placed restrictions on the dollar as a global currency. Now that Russia, China, India, Brazil, etc. have entered into the global competitive market as competitors they understand how the dollar, as global legal tender, gives the US an enormous competitive advantage in the world’s market place.

Rightly, they want a change in the global currency system. France, the first country to oppose the dollar as a global currency, and Germany has joined as early participants in the quest to create a new global currency. So the focus will be how this change will come about: will currency panic induce policy wonks to act hastily? Or can the policy wonks establish priorities and develop a plan of currency change that will be the bellwether a smooth transition?

We are in the early stages of currency transition, it remains to be seen how this currency transition will occur and how the losers will react once they understand their privileged position is no longer.