The Ultimate Destruction of the US Dollar and World Markets Will Not Happen

[explod]

What do you mean by this comment:

"Unless value goes back to a measure of physical output (which is the real GDP) there will be no recoveries."

My Marxist bent "A fair(productive) days work for a fair (and equal) days pay" or, not making money by going short in a falling property market for example. Or money being made from nothing, or that's how it seems to me..

 

[tothemax6]

someone recently attempted to label me as a lunatic (ie insane). my father in law is a psychologist and one of his definitions of insane is "doing the same thing over and over and expecting a different outcome/result"

Lucky you, this must cut down on your treatment costs .
OK maybe your not insane, but 'excessively excitable', if you will.

Just on the QE comment explod, QE hasn't really created any new money IMO, all it's done is create a bucketload of excess reserves in the banking system. Whilst the fed is paying interest on excess reserves, it's most likely going to stay that way too.

The theory that this money is simply being sat in banks, to keep them comfortable, and is not 'entering circulation', and will be withdrawn from the banks when they are comfortable - has issues.
Firstly, on the evidence side, from where is the money coming to cause the huge rise in the s&p500? From where is the money coming to bid up the price of commodities (across the board) to these levels? Why are Chinas USD reserves ballooning, as they maintain their loose peg? I suspect those funds are being lent out by banks - that's how they make money after all.

Secondly, how does the fed create these reserves? The fed purchases government debt (lends the money to the government). The government spends this straight away, effectively putting the fresh money straight into the markets. What happens when people have received this money, and put it in their bank accounts (increasing the banks reserves), is secondary.

 

[bandicoot76]

Lucky you, this must cut down on your treatment costs .
OK maybe your not insane, but 'excessively excitable', if you will.
.

i am passionate about my freedom, & maintaining it free from encroachment by all parasites, and consider anyone who trys to inhibit that freedom as an enemy

if you consider that to be 'excessively excitable' thats your opinion... at least i have the heart & passion to stand up for what i believe in... whats your passion? baiting people who have real passions & heartfelt beliefs because you have none of your own?

snideness & sarcasm doesnt = intelligence in my book!

 

[bandicoot76]

The theory that this money is simply being sat in banks, to keep them comfortable, and is not 'entering circulation', and will be withdrawn from the banks when they are comfortable - has issues.
Firstly, on the evidence side, from where is the money coming to cause the huge rise in the s&p500? From where is the money coming to bid up the price of commodities (across the board) to these levels? Why are Chinas USD reserves ballooning, as they maintain their loose peg? I suspect those funds are being lent out by banks - that's how they make money after all.

Secondly, how does the fed create these reserves? The fed purchases government debt (lends the money to the government). The government spends this straight away, effectively putting the fresh money straight into the markets. What happens when people have received this money, and put it in their bank accounts (increasing the banks reserves), is secondary.

the first decent post of substance without malice from you on this thread.... congratulations!

 

[bandicoot76]

words of wisdom that have fallen on deaf ears:


"The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of lending institutions and moneyed incorporations."
”” Thomas Jefferson

"To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude."
”” Thomas Jefferson

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children wake up homeless on the continent they conquered."
”” Thomas Jefferson

"A wise and frugal government which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government."
”” Thomas Jefferson

 

[professor_frink]

My Marxist bent "A fair(productive) days work for a fair (and equal) days pay" or, not making money by going short in a falling property market for example. Or money being made from nothing, or that's how it seems to me..

ok then I see where you are going now. You might find the chart below interesting. Comments that the US doesn't actually make anything anymore isn't entirely true and just a little exaggerated. It's not exactly growing at a rapid clip at the moment, but the country is still a long way away from not actually making anything.

 

[professor_frink]

The theory that this money is simply being sat in banks, to keep them comfortable, and is not 'entering circulation', and will be withdrawn from the banks when they are comfortable - has issues.
Firstly, on the evidence side, from where is the money coming to cause the huge rise in the s&p500? From where is the money coming to bid up the price of commodities (across the board) to these levels? Why are Chinas USD reserves ballooning, as they maintain their loose peg? I suspect those funds are being lent out by banks - that's how they make money after all.

A couple of charts that might help:

Firstly, monetary base and excess reserves:



There may be some leakage out of the banking system(I don't have exact figures, just grabbed the chart from a website), but for the main part they are moving together here.

The idea that the S&P 500 and commodity rally is evidence that this is happening doesn't make any sense IMHO. Chart below is the SPX highlighting where it was first announced and where it began:



Note on the chart the announcement of QEII led to a 15%+ rise in the S&P. Since it actually began, the S&P has risen roughly 10%(chart is a couple of days old but you get the idea)

Secondly, how does the fed create these reserves? The fed purchases government debt (lends the money to the government). The government spends this straight away, effectively putting the fresh money straight into the markets. What happens when people have received this money, and put it in their bank accounts (increasing the banks reserves), is secondary.

When the fed wants to buy bonds, they just go ahead and do it, and then credit the banking system with excess reserves. It's pretty well that simple. Bernanke explained this in a Q&A he gave last November at Jacksonville University. You can watch it here if you want:

http://www.c-span.org/Events/Fed-Ch...iversity-Students-on-Monetary-Policy/19670-1/

Around the 19 minute mark he explains it.

EDIT: just found the piece of the discussion I was talking about:

“What the purchases do… is… if you think of the Fed’s balance sheet, when we buy securities, on the asset side of the balance sheet, we get the Treasury securities, or in the previous episode, mortgage-backed securities. On the liability side of the balance sheet, to balance that, we create reserves in the banking system. Now, what these reserves are is essentially deposits that commercial banks hold with the Fed, so sometimes you hear the Fed is printing money, that’s not really happening, the amount of cash in circulation is not changing. What’s happening is that banks are holding more and more reserves with the Fed. Now the question is what happens the economy starts to grow quickly and it’s time to pull back the monetary policy accommodation. There are several tools that we have”

 

[konkon]

Another rally on Wall Street. But why? They are really living in a world of their own. Quantitative Easing, and yes, even the thought of QE (before it actually happens) was/is positive for stocks. But there is no word yet of whether there will be another QE (or something equivalent). Tonight's Fed 'press conference' might give us some indication as to what the Fed might do in the foreseeable future.

All this kind of reminds me of one of the best films ever made, The Wizard of Oz in 1939, where Dorothy and her friends went to see the Wizard himself with all the hype and expectations of having their problems solved, only to be disappointed to find that the Wizard was nothing more than an old guy frantically trying to control machines, levers, strings etc.

Going back to QE or the Fed's thoughts. The removal of QE might mean that the Fed might not back Wall Street's thirst for more. So why would the rally continue? Why did they rally last night when we might be at some crossroads?

No matter what is suggested or said tonight, it will all be forgotten in a week. It will be up to the current or next President to move things in the 'right' direction. I see no real easy fix by the Wizard tonight.

I wonder if the Fed will lay some of the blame at China? A possible interest rate move up and more than 25 basis points in the foreseeable future? Disastrous for stock markets and his Wall Street mates will once again dislike him. But I can see Bernanke raving-on about what the Fed does technically and hypnotising us with his fancy terms and spin.

 

[professor_frink]

Another rally on Wall Street. But why? They are really living in a world of their own. Quantitative Easing, and yes, even the thought of QE (before it actually happens) was/is positive for stocks. But there is no word yet of whether there will be another QE (or something equivalent). Tonight's Fed 'press conference' might give us some indication as to what the Fed might do in the foreseeable future.

All this kind of reminds me of one of the best films ever made, The Wizard of Oz in 1939, where Dorothy and her friends went to see the Wizard himself with all the hype and expectations of having their problems solved, only to be disappointed to find that the Wizard was nothing more than an old guy frantically trying to control machines, levers, strings etc.

Going back to QE or the Fed's thoughts. The removal of QE might mean that the Fed might not back Wall Street's thirst for more. So why would the rally continue? Why did they rally last night when we might be at some crossroads?

No matter what is suggested or said tonight, it will all be forgotten in a week. It will be up to the current or next President to move things in the 'right' direction. I see no real easy fix by the Wizard tonight.

I wonder if the Fed will lay some of the blame at China? A possible interest rate move up and more than 25 basis points in the foreseeable future? Disastrous for stock markets and his Wall Street mates will once again dislike him. But I can see Bernanke raving-on about what the Fed does technically and hypnotising us with his fancy terms and spin.

konkon,

your posts don't make any sense whatsoever. What on earth are you trying to say here

 

[konkon]

konkon,

your posts don't make any sense whatsoever. What on earth are you trying to say here

Of course they make sense.

 

[Smurf1976]

ok then I see where you are going now. You might find the chart below interesting. Comments that the US doesn't actually make anything anymore isn't entirely true and just a little exaggerated. It's not exactly growing at a rapid clip at the moment, but the country is still a long way away from not actually making anything.

I personally wouldn't consider "utilities" to be a form of manufacturing. Technically I suppose a power station is a factory, but it doesn't really fit with what most would think of in terms of manufacturing and there's little direct international trade in electricity (though there's a lot of indirect trade via the choice of location for smelters etc).

I make this point because with utilities included, Americans buying Chinese plasma TV's would be pushing up the "manufacturing" figures simply by using more electricity.

 

[professor_frink]

I personally wouldn't consider "utilities" to be a form of manufacturing. Technically I suppose a power station is a factory, but it doesn't really fit with what most would think of in terms of manufacturing and there's little direct international trade in electricity (though there's a lot of indirect trade via the choice of location for smelters etc).

I make this point because with utilities included, Americans buying Chinese plasma TV's would be pushing up the "manufacturing" figures simply by using more electricity.

Point taken Smurf, though the main reason for this chart using it is due to the Chinese data coming out this way. I know the 2008 data didn't have manufacturing data separated from the mining and utility data, most analysis I saw on it simply used the % of manufacturing to manufacturing, mining and utilities data to try and estimate the growth in manufacturing for that year. This one has gone a slightly different way and just added on mining and utilities for other countries to complete the picture.

Overall, if you include that data or not, the end result is still the same as far as I'm aware, though happy to be corrected by anyone who has access to the data.

 

[professor_frink]

Of course they make sense.

I'm glad they make sense to someone then!

 

[konkon]

I'm glad they make sense to someone then!

Re: SILVER
"Personally I think the Silver story is just as much about rampant speculation these days as USD weakness" from professor_frink

professor_frink, your comments don't make sense. Are you aware of what is going on in the US, Europe etc?

 

[professor_frink]

Re: SILVER
"Personally I think the Silver story is just as much about rampant speculation these days as USD weakness" from professor_frink

professor_frink, your comments don't make sense. Are you aware of what is going on in the US, Europe etc?

yes.

 

[konkon]

yes.

Really?

 

[professor_frink]

Really?

yes

 

[bandicoot76]

looking around the world at the moment, and being an avid 'student of history' i have pondered alot on how things got to this point, one of the conclusions i have reached i will share with you now and value any CONSTRUCTIVE feedback... i know it is more philosophical than financial/economic but i still feel its relevant to this thread:

"people today are so caught up in the LEFT (socialist) Versus RIGHT (capitalist) paradigm that they cannot look outside the square and see that it is a totally misleading & bogus situation that is being manipulated and controlled by an unseen third party, who is neither the working class, middle class, nor the business/upper class but who i shall name as the parasite 'authority' class

it is my belief that the 'workers' (L) V's the 'bosses' (R) situation was created by Karl Marx & Co as a bastardisation of a previous concept, that being the situation of 'the people' versus 'the authority' (wether it be aristocratic, beaurocratic, democratic or religious rule)

by changing this power-balancing status to 'the workers' V's 'the bosses' it allowed 'the authority' of the future (in whatever form) to go about the business of ruling (and whatever else took their fancy) free of interuption while 'the people', both workers and bosses, were divided, to busy squabbeling over an issue that could be solved by one sentance: 'a fair days work for a fair days pay!'

surely this is evident when we compare the two worst leaders in modern history.. hitler and stalin... both butchered millions of innocent people for no reason comprehensible to a sane person, both claimed to be 'the father' of their respective peoples, one claimed to represent the Left... the other the Right however in my opinion neither one did... i believe in reality they were both representitives a new 'hidden' class the elitest parasite 'authority' class! THEY WERE BOTH EXACTLY THE SAME JUST DRAPED IN DIFFERENT SYMBOLS OF POWER!

an interesting by-note is that both despots war-chests were also financed from the same banking organisations that funded the "western" war effort!"

 

[explod]

I think its past the time of looking at all the charts and the so called (in my head) fancy stuff.

We have unprecedented riots across the globe by people who have been marginalised and exploited. And Buddhism for example is merely a symptom of deprevation and a lack of opportunity. Put a dollar in a pocket and give a lad meaningful and productive job and it would all in my view go away.

I get this gut feel that the markets are going to explode down soon and they wont give it a GFC number , it will be "The Armageddon".

Dan Norcini posted up the following quote of Karl Marx today which brought me back to our discussions here and my rant above:-

"Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism. (Das Kapital, 1867)

See;- http://traderdannorcini.blogspot.com/

 

[qldfrog]

Of course they make sense.

Konkon and prof: I am really open to get some views there but maybe with a bit more details and less personal attack?
konkon, seriously, what did you want to express?
I got lost as well: I agree with some of your points but ?