Posted on 01/11/2009 12:11:51 PM PST by An Old Man
To get to the nitty gritty, the argument boils down to the fact that the monetary base, M0 (actual currency in circulation) can not and will not expand fast enough, if the Federal Reserve went on a “printing” rampage, to make up for the contraction in the broadest measures of money supply, i.e., money AND credit, such as M3. It is argued that because of the credit crunch, any M3-like measure will decrease substantially, much more so than what the Fed can “print” into circulation, bringing on deflation.
Consider that we also have what has been dubbed the ‘Shadow Banking System’, an unregulated market with its slew of derivatives and CDO’s circling the globe. There is also the trillions in credit default swaps (CDS), which are supposed to insure against losses to banks and bondholders when companies fail to pay their debts. The market for these securities is enormous – it now dwarfs the value of US Treasuries outstanding. Since 2000 to early 2008, it has ballooned from $900 billion to more than $45.5 trillion, roughly twice the size of the entire US stock market.
It is therefore argued that if this expanded credit market -- both official and shadow -- implodes tens of trillions will be lost. A Fed creating a meager 1 or 2 trillion would be meaningless, and we would get deflation, because “broad” money measures would decrease by much more than 1 or 2 trillion of “narrow” money infusions by the Fed.
It is obvious that 1 or 2 trillion would not be enough if tens of trillions were lost in the credit markets, all else being equal. But the key question here is how such an outcome would impact our investments, namely gold, silver, energy and the shares of companies in those sectors.
(Excerpt) Read more at murkymarkets.com ...
Goldbug BS is every bit as stupid as real estate BS.
It’s never not the right time to BUY GOLD!!!!!
In a pig’s eye.
I love this bozo’s bio...
“An independent investor and commentator who first entered the investment arena as a college student in the 80s buying and selling gold stocks, Mr. Galakoutis has over 20 years experience investing in markets around the world having lived in financial capitols such as New York City, Toronto, Hong Kong and others.”
SO let me get this straight... his claim to fame isn’t a track record of success, but rather, “having lived in financial capitols”...???
ROFLMAO!
Kinda like being a community organizer makes you qualified to be President.
The United States Supreme Court has ruled time and again against the legal authority for banking institutions to lend credit. Both Federal and state laws allow banks to lend money, but banks do NOT have the authority to loan credit.
When you use your credit card, the bank is loaning you credit, NOT money. They can’t lend you something they don’t have, and they can’t charge you interest when they did NOT lend you money in the first place.
Your credit is an asset to the bank.
Banks have assets. A huge asset on the books of the biggest American banks is your credit card debt. Interest rates paid on these cards is far higher than rates obtainable by banks from any other class of loans.
Few people understand that the minimum monthly payment required by banks kept the borrower in debt for over two decades. Now, that’s a loan that pays and pays and pays!
The borrowers, not understanding compound interest and paying attention only to the monthly payment’s effect on their budgets, willingly locked themselves into a long-term debt contract.
The written credit card debt contracts are beneficial to banks. Low card rates can be hiked without warning overnight to 20% or even 30% per annum if a borrower misses a payment to his mortgage company or any other creditor. This missed-payment information goes from the third-party creditor to a credit rating agency, and from there, to the bank.
But did the banks really loan you money? And do you really owe them anything?
You can fight back. Legally discharge that debt, and get your life back.
I did. The banks already got a bail out that they could have used to pay off the debts of their credit card holders. But they preferred to give themselves bonuses. Fine, they’ve gotten all the unsecured debt they’ll ever get from me. See Tagline. The program is lawful and legitimate. There is a nominal (comparatively) fee. I’m free of unsecured debt and I’ll never run up a charge card bill I can’t pay off in 60-days.
Your ‘canadian mild weather’ analogy is appropriate. Many will put away the warm clothes, thinking the worst is behind them.
I also liked the linbe about the devil’s greatest feat is convincing the world that he doesnt exist. Lull folks in complacency and you can really take ‘em...
By the time something is obvious, it is too late to do much.
Those that are properly positioned usually are early and many are ridiculed.
I enjoyed your articles.
I pay all my credit cards down to zero every month and have done so for over 20 years.
If I can't pay cash (my CCs are really just a convenience), I do something very un-American: I do WITHOUT (excluding my Mortgage -- how I handled the cars is for another day)!
A don't even advise a 60 day cycle. If you can't pay cash, don't get it.
And I have an 820 Credit Rating, so I guess it works.
Here are some thoughts on economic stimulus.
Gold is money. IOU’s are money. What we have today is a vigorous contraction in the IOU component of the money aggregate.
A bubble is bursting. Governments can crank up the printing presses but only God knows when to stop to prevent inflationary overshoots.
Give Mr Market a shot at economic stimulus in a recession, depression, or that old fashioned word panic..
Distribute certificates whose dollar value declines at say 10% year. Misers won’t hang on to them. One would spend them immediately. If the grocer won’t accept one if he couldn’t pay the farmer with one he could pay his taxes with it.
T’was known as the velocity dollar in 1936. Google Aberhart. As the IOU money aggregate resurges one just stops making velocity dollars.
There are multiple factors at work here:
1) They broke the yardstick!
The standard definitions for M1, M2, and now M3, have changed so much in the passed 20 years as to prove meaningless in attempting to track “progress”.
2) Gravity provides its own momentum.
Rising markets require fuel, falling markets can collapse on their own weight.
The "future" is going to be different than the "past" in ways we can barely imagine.
“Distribute certificates whose dollar value declines at say 10% year.”
That is one of the dumbest ideas I have heard all day. Who would accept such money? And if you accepted it, where would you be able to spend it?
If you want money that regularly depreciates, try Zimbabwe. The have been having inflation faster than 10% a day, so if this is a good idea, everyone there should be fabulously wealthy due to Keynesian demand. Instead, they are near starvation. Almost a third of the working-age people have fled the country looking for some way to stay alive.
So although super atoms are nothing new, thanks to TU Delft the particles can now be collected in a very pure form and selected according to size, thereby making them suitable for chemical experiments.
A detailed account can be read in the new edition of TU Delft magazine Delft Outlook
Is this what you are referring to?
There's so much money to be made in this discovery it's simply beyond belief.
It is truly amazing what we humans can conceive of and successfully sell to our fellow man.
I gather what these guys do is make fake silver, then collect it in sufficient quantities to "do stuff".
They didn't say they "can't" make gold, just that they "aren't" making gold.
There's really much more industrial use for the "silver" products they can secure than there is for gold.
I think the Goldbugs are doomed anyway.
Not just yet. I still have a few good years ahead of me.
It’s coming ~
I believe you intended to respond to Post #7 rather than my Post #8.
I have enough “dumb ideas” without accepting extra credit.
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