Skip to comments.Is the dollar beginning it's decline?
Posted on 05/04/2009 1:13:38 PM PDT by mikelets456
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Bob Brinker has his, and that's all that's important to him.
Just listening to him, I realized he was a liberal.
Wealthy liberal, but just as ignorant as all the other liberals.
Printing new money is only part of the equation. The other part is Credit.
Cash + Credit = Money Supply.
If credit availability is destroyed (e.g. no more sub-prime home loans) faster than new money is printed, then you get Deflation because the Money Supply shrank.
That is all correct, but don't look for any deflation in this lifetime.
Deflation just means that prices deflated. Well, prices on homes and stocks are quite a bit down from their peak. They've deflated.
Salaries are down. And because employment is down, wages and overtime hours are down in aggregate.
Less credit being available generally brings prices down, too.
Stocks and homes are big-ticket items. So are salaries and wages.
They are all down.
Oil has fallen from $147/barrel down into the $50's.
Copper is half of its peak.
The daily rate for supertankers making the crude run from Saudi Arabia to Japan has plunged from $177,000 last year to $16,000 this month.
That's substantial deflation.
I don't know...maybe you could find some grandma to tell you that she's paying a few pennies more for milk...but not much is going up in price compared to the peaks last year.
Deflation is here in a big way.
I don’t know if he is a liberal. I DO KNOW that I have NEVER heard him make mention of any family member ever having served in the military. Interesting.
We shall see what happens when the treasury tries to fund the deficit. It will be interesting.
Bob Brinker totally missed the market downturn.
That's been going on already. You're 2 months behind the times.
Just like Japan for the past 20 years.
Not in ernest, the real spending and the debt to finance it has yet to begin.
The U.S. has poured $12.8 Trillion in new cash and credit into the economy since May of 2008.
That’s 100% of GDP. Huge!
From a year ago.
You’re stuck claiming the same thing as every other discredited inflationist...that somehow inflation is “just around the corner.”
Not even close.
Inflationists have been wrong for at least a year here in the U.S., and have been wrong each year for the past 20 years in Japan.
Yes, well the problem is that the credit is not flowing by and large, not yet at least.
Indeed, and propping up zombie banks is the same as pouring money into a black hole.
The zombie banks need to keep every dime poured in because that improves their balance sheets. They have no interest in loaning money out because their ratios are still so bad. About all that they can do is fund mortgage refinances that are immediate repurchased by the government (e.g. FNMA).
This is precisely what Japan saw for the past 20 years. They’ve been pouring money into zombie banks since 1989.
Sure. Run the printing presses. But if you prop up zombie airlines and zombie car manufacturers and zombie newspapers and zombie banks (instead of creating a brand new bank that has no prior liabilities) you will just get DEflation.
The opposite of INflation.
I grant that it is counter-intuitive to see a currency increase in value while you are running the printing presses full speed, but that’s what we saw with the wealth destruction globally in 1945...and it’s what Japan has seen since 1989.
Deflation is not sustainable. It destroys equity investment paradigms. You can’t make money during deflationary times by buying and holding a building whose rent is less each year than the amount of value that the building loses.
The whole reason to have central banks in the first place is to prevent deflation from destroying entire national economies as demonstrated by the “buy and hold” process failing to work during deflation...that triggers a race to the bottom.
The Fed and Central banks have failed. Politicians and the news media have failed to point out the above to the leaders of the world’s central banks, too.
This will lead to global rioting if left unchecked.
Just looking for people who might have an insight as to whether gold / silver or (?) is the best investment to fight inflation.
I worry about Gold because if the Government tries to seize it like they did in the past we are screwed. Silver or (?).
I have to invest somewhere and I don’t want to invest what little I do have in the stock market.
the increases in (unpublished but obvious) m3 and in the federal debt over the coming years is not a trivial change - the government expects to possibly run a 2 TRILLION dollar deficit this year, and given the party in power, I certainly would expect 1T deficits for the rest of his term.
The US has (has not had since the bush deficits, certainly) any politically possible answer to the federal debt besides inflating, and with the currently monstrosity, it is even worse.
Longer-term this is something I take quite seriously now. As far as I can tell, the US treasury is being looted under the pretext of crisis. These are times that have certainly not been seen in living memory.
“Unemployment hitting for a year the levels western Europe has lived with for a generation is not catastrophe. This too shall pass.”
I have been told by a number of folks in finance that if we used the assumptions in calculations that some (germany or france?) countries use for unemployment, we would have their numbers.
I’d like to know as well. The limited reading I have done suggests you buy pure Silver and store it in your house...safely. Make sure it’s from a reputable dealer and 99.99% pure. Not silver coins or anything like that.
However, if you find more about this, please let me know as I am “stalling” right now. I have money in so many different things, but not in commodities. I don’t know how to go about that...anyone want to chime in?
gold over 920 ... silver over 14.25 ... see my profile page for current spot prices
It is meaningless shuffling. The government will sustain final demand as everyone else tries to improve their balance sheets by reducing big ticket expenditure and paying down debt - or defaulting, which gets rid of it just the same. And that will happen - the treasury will have more debt outstanding while households and businesses have less; households and businesses will have higher net worth on their own sheets but future taxpayers will have an offsetting liability deferred far into the future at near zero rates of carry.
How is any of that supposed to impoverish the country?
All the houses are still there. They aren't worth what silly people hoped in 2006 but they aren't worth zero either. They go on producing rent-like shelter services for 30 year or more. What is paid for those services can bounce this way and that as the terms change, but that is just people playing poker with each other. The real capital and its real services are there, somebody or other gets them.
After all the money creation or federal cash payments sloshes through the economy this way and that, the folks who wind up with it will not be looters or deadbeats, they will be those who provided useful services to everyone else. Same as it ever was. They will then pay a portion of it in debt service tax payments of course. Much of it to others who provided that useful service, a trickle of it to foreign investors or whatever. None of it can seriously or lastingly change the terms of trade between effective producers and non-producers.
In the end, our productivity has not been seriously changed by any of it so neither will our standard of living be seriously changed. Our prosperity doesn't ride on accounting or gimicry or public anything. It comes simply from our effort and sweat. We will continue to sweat and we will continue to be rich because of it.
None of that means we should excuse profligacy, or put up with dumb policies. But our basic life is not at stake in such things. It is a matter of prudential economy at the edges and about standards and fairness to keep incentives solid for later productive work, and the like.
Conservatives used to pride themselves on their realism and sense of proportion. Get that back. It was always the most adult thing about the party and movement, and this "me too" doom-mongering contest is just plain embarassing.