Here It Comes - Peak Money

Discussion in 'Political Opinions & Beliefs' started by frodo, Jan 2, 2012.

  1. frodo

    frodo New Member

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    I have to say, it has been the best Two Hundred I've ever spent. The newsletter I've been following now for a few years has never put a foot wrong. It got me out of the stock market. It got me into other investments. It told me what was going to happen to the world financial system, and it told me this a long time ago.

    It now appears that some folk are coming to the same realization - Four years too late. The same folk predict that the riots will start in America in 2013 - after people realize that their standard of living is permanently ruined without wholesale economic and social reform - which isn't going to happen no matter who you elect in America.

    Folks, this isn't about Europe - it's about the end of Wall Street.

    The guy who wrote this finally gets it.....Read on, there is much more at the link. This isn't about "Communism", "Republicans" , "Democrats" "Socialism" and "Liberals". This is about the failure of Congress to govern sensibly for decades and the complete failure of the American media to explain what has been happening to a badly educated public..




    http://agonist.org/numerian/20120102/peak_money_arrives
     
  2. Xanadu

    Xanadu New Member

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    The ruling elite and their lackeys have gathered all the wealth (to reach absolute power over the capitalistic system), and now the end is nearing, the last power the system needs is the power of the people, historical elections 2012.
    The talk (propaganda) about the FED was never so intense as the last years, a clear sign that it can be ended (remember the 'end the FED' propaganda), could be in 2013, the year that the FED has existed exactly one hundred years (founded in 1913)
     
  3. Subdermal

    Subdermal Banned

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    OP had better inform, akphidelt, who doesn't believe this is possible.

    This is manifest failure of Keynesian and MMT schools of economics.
     
  4. frodo

    frodo New Member

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    Subdermal, it's not about Keynes and economic schools, its about the failure of regulation, law enforcement and an inability of Congress to make sensible decisions.

    To put that another way, we are talking about the banking system.

    We are talking about trust and confidence.

    We are talking about LIBOR - which is again increasing - which is not good.

    How about you get back to us when you understand what LIBOR means?
     
  5. hoytmonger

    hoytmonger New Member

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    Just out of curiosity, what difference does LIBOR make when the US dollar is still the world's reserve currency and the Fed sets the interest rates that best suit their interest.
     
  6. frodo

    frodo New Member

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    LIBOR (The London Inter Bank Offer Rate) tells us about the level of trust between banks in the entire banking system. At present, LIBOR is increasing, which indicates that the levels of trust are decreasing - which is not good.

    You need to understand that banks typically have assets that cover only 8% - 10% of their total exposure to debt. This has Two immediate effects:

    (a) A single default on 10% of the debts they hold will wipe them out without Lender-of-last-resort support of the associated Central Bank.

    (b) Banks sometimes struggle to balance their books each night - which is why they borrow and loan money to each other at LIBOR.

    Now consider that the banking system is INTERNATIONAL. The U.S. is a chunk of it, but U.S. banks have lent to and borrowed from foreigners and vice versa. The U.S. banking system cannot insulate itself from the rest of the world anymore than those foreign banks can insulate themselves from what happens in the U.S.

    That is why Wall Street is watching Europe and Europe is watching the U.S. all debt is spread around; Australian banks may hold U.S. dollar treasury bonds, American banks may hold Australian Government bonds, all may hold some of those toxic CDS's. If nobody knows if they are going to be repaid in full then we have a nightmare.

    By nightmare, I mean that liquidity disappears from the system because nobody will lend or borrow because they are too scared. This means businesses can't get working capital and trade, domestic and International, just stalls because the finance just isn't there. Homes can't be bought and sold. That spells "depression". In 2007/2008, the American federal Reserve "bailed out" the banks by providing them with cheap loans to prevent the system from crashing. They can't really do it again and the European Central Bank won't do much more than it already has done - which is to give European banks a little breathing space Six hundred billion Euros worth.

    For example, I'm in the process right now of buying an American designed and manufactured aircraft. I have money sitting in my Australian accounts to complete the purchase. When the aircraft is ready to ship in February, I need to (1) Convert Australian dollars into U.S. dollars (2) Arrange for my Australian Bank to send that money to an American Bank. (3) Arrange for the American Bank to deposit that money in the manufacturers account to pay the balance of the price, plus shipping and insurance to Australia. This requires a lot of trust between all parties to the sale, starting with me and extending through every link in the chain that gets the aircraft to my door. No trust, then no sale. This is just a trivial example of the processes we all take for granted every day.
     
  7. jhffmn

    jhffmn New Member

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    I think the problem is much deeper than government debt. The problem is how we belive we can drive the economy with low interest rates. Consumer debt is extremely high because money is unnaturally cheap.

    The solution will be catastrophic. The solution will be to raise interest rates to ecourage savings over lending and a massive cut to government spending. That's the way forward in the long term but the transition will be unimaginably bad for many people.

    And we can either choose that path, or it will be chosen for us.
     
  8. Subdermal

    Subdermal Banned

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    You can stuff your veiled insult. I understand extremely well what the LIBOR is - and I now question if you understand it fully, if you do not think that Keynesian monetism cannot manipulate LIBOR!

    It absolutely has everything to do with Keynesian monetary manipulation via its new and more dangerous iteration: MMT. MMT (Modern Monetary Theory - aka: what posters like akphidelt blindly believe) proposes that money can be indefinitely printed, and - of course - Governments are like willing junkies to the FED's and IMF's pushing.

    What would you expect to happen in such an environment?

    Confidence is dwindling. It should be obvious why: where posters like akphidelt claim "everything is fine" this type of currency manipulation runs completely counter to most's instinctive notion reviling the idea that one can simply print money to create prosperity.

    It doesn't work that way because people naturally recoil at it. And - as this system continues to propagate inflation, and stratify classes in the process - we continually require larger and larger numbers to sustain this travesty.

    And now the numbers are large enough that they're causing alarm in the last place that it needs to be: the street. People know that this is a debacle, and that very knowing creates the reality of it.

    LIBOR is merely a final phase symptom of this system's failure.

    You post this like it is supposed to be some sort of revelation. Those who have opposed Keynesian/MMT economics have foretold of this for a very long time, all while fiddlers fiddled while Rome burned.

    Well: Rome is now burning.
     
  9. frodo

    frodo New Member

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    Subdermal, this isn't about Keynesian economics at all.

    This is about the international banking system.

    This is about loading investors with toxic CDS's.

    This is about deliberate creation of exploding investment vehicles so that the Hedgies could short the markets.

    This is about the Greek Government conspiring with Goldman Sachs to conceal their borrowings.

    This is about the Euro not having a mechanism apart from deflation to fix structural problems without getting hard working Germans to subsidise lazy Greeks and Italians.

    This is about Governments not applying strict prudential controls on their banks.

    This is about countries, including the United States, living beyond their means.

    This is not about Lord Keynes who merely stated that when private consumption is too low for full employment, Government should borrow and spend to increase demand and provide employment. What Keynes also said was that when the private sector recovers, Governments must reduce spending so as not to create inflation and pay back every cent of their debt.

    It would not matter if you were practicing calathumpian economics - once the Governments have borrowed up to their eye teeth, there is no way out of a recession by borrowing more. Of course you can print more money, but the markets are already wise to that little trick and you can't do it again.

    The Europeans have the money, but not the political will just yet to fix their own problems. The IMF has enough money to bail out Britain. But no one has the money to bail out the United States. Nor do they see any prospect of America reforming itself to avoid leaching off the rest of the world.

    Personally, I am out of stock markets and into cash, so I guess I should be satisfied with what is happening - we are going to see the greatest fire sale of assets the world has ever seen - for those with the cash to take advantage of it. Millions more will go broke and lose their homes.

    If we are very lucky, as that article indicates, by 2017 the crisis should have worked itself out.
     
  10. skeptic-f

    skeptic-f New Member

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    This is what makes me think the global crisis predicted in the OP is not going to occur quite so quickly. The problem is that the US Dollar and Dollar Instruments should NOT be the world's reserve currency as there are far too many such dollars and instruments out there in the world compared to the size of America's economy and the future strength of that economy and of the balance sheet of the federal government.

    The status of the US Dollar is a bit like a metaphorical Hoover Dam, retaining massive amounts of water and generating tons of electricity. America has been neglecting its maintenance so badly that part of the power plant no longer works and the whole dam has weakened through lack of repair. When the dam eventually ruptures (world loses confidence in the US Dollar and a cascade of selling trashes the value of the dollar) the results will be catastrophic for America and it won't do the rest of the world any good either (can you say Second Great Depression?) .

    Ironically, a crisis in Europe may help the U.S., as nervous investors will buy dollars because they have always been a good buy (regardless of any evidence to the contrary). What I have absolutely no faith in is the wisdom of Congress and the President (present and near-future) to tackle this grave problem.
     
  11. Bain

    Bain New Member

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    I read that beast, really good thanks for posting.

    I don't know about the rest of you but reading stuff like this upsets me! I work most of my early years really fricken hard and I save and save and save, And then I have to read stuff like this and it makes me so mad towards my government, my fellow man, politicians, banks etc.

    Thankfully I am an optimist, so I say "it's one big experiment that we are all in together".
     
  12. unrealist42

    unrealist42 New Member

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    Indeed. The Fed and the government bailed out Wall Street in the mistaken belief that by giving the banks a few $Trillion to prevent their collapse the banks would mend their ways and actually invest that money in growing the economy.

    Since the banks used that money to shore up their balance sheets so they could double down on their speculative activities none of that money reached the rest of the economy. As a result the markets recovered but the economy did not.

    Wall Street has left the entire world economy teetering on the brink of collapse and the financial system in chaos. As far as they are concerned this is a good thing since they can make piles of money when fear and uncertainty drives markets and economies into extreme volatility. The more volatile the economy the more opportunities for those with vast resources.

    Unfortunately for them there is a limit to how much people will put up with and there will come a point where their vast wealth will no longer be able to overcome popular will in the calculations of the politicians. Many people are beginning to realize that the entire financial system has become nothing but a sophisticated scheme to strip the middle class and working people of their wealth. The people of Greece are gaining an intimate understanding of how it works.

    In the US people are beginning to wake up. Many are angry but misplace their anger onto the feckless politicians due to a not so subtle campaign of misdirection. Another financial crises is coming soon because the causes of the last have been accelerated, not ameliorated. The vast transfer of wealth from the middle class to the wealthy in the last collapse will be repeated and repeated until all the middle class is destroyed. We will see how willing the people of the US are to accept that after a few closely spaced repetitions.
     
  13. Subdermal

    Subdermal Banned

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    Being into cash will not save you. Our money is being devalued.

    I snipped what wasn't germane to the point I'm making - and to be fair to you, this isn't about what Keynesianism is supposed to be ideally.

    It's about what Keynesianism wrought in actuality. Your innocuous definition of Keynesianism doesn't accurately reflect how it has been implemented, nor does it touch upon the dire consequences of instituting the notion that money can simply be printed, and somehow retain the former values of wealth and credit. All these ills are linked to Keynesianism, and it's steroided spinoff: MMT.
     

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