My 'economic solution' will be coming to pass, the question is will there be a hyper-inflationary depression between the crash and restructuring or not.
It would be hundreds of patents of specific use of Graphene, not of Graphene itself.
What Geim needs to do is open a small production facility, produce this Graphene and sell it to different companies / research institutes, see what they can come up with.
-- Oh, as to patents, all patents should be abolished.
Well of-course inflation is a way to raise taxes without saying it, but when your currency is distributed through the world and international deals happen in it (like purchases of oil/weapons etc.) then it's not as simple as taxing just your own population. It's taxing the entire world.
That's taxation that is definitely without any representation.
However it is not going to be the same as it was in the '70s because then USA was a net exporter of goods and could sustain such politics, it was also a net creditor.
Now USA is a net debtor and net importer on huge volumes of money and products, both, so raising inflation now will have a different effect. Looks to me that Japan is going down the drain by trying to prop up the US dollar and eventually many other currencies will as well, but again, as USA is a net importer of goods, it does not have the production capacity to get out of this hole once the bond bubble bursts and USD is printed out of existence, but other countries do have that production capacity, so it will be a much deeper problem in USA than anywhere else.
Oh, and if you want to see a bubble being pumped in action, it's easy.
US bonds. Government is promoting them. Fed is printing. Everybody is buying, all asset management firms, all pension funds, mutual funds, banks are buying etc.
Speculator in stocks, speculators unlike investors, don't bother with actual commodities. So a speculator moves into stock to trade it quickly and pump the price up.
I have no idea why you are mentioning Glen Beck, who has provided people with a terrible advice of using Goldline without telling them they should not be buying gold that is marked up by 70% (even with goldline you can buy gold that is only marked up by less than 5%, but it's still expensive. You can actually buy gold and only pay 1% premium for resale.) But I suppose you actually think I am a republican and care about republicans and their talk show hosts, then you have completely missed my points and you do not understand my reasoning.
Currency decoupling means that spot gold prices go up in all currencies when gold goes up and not only in USD. That's decoupling.
Bubble in gold will happen when everybody and their mommas are buying gold, which is nowhere near the case, otherwise we'd see gold stocks and index rallies in double digits per day.
Corporations do far more spending and lobbying (with far more success, as is easily visible) than unions
- yes, as I said earlier I am against gov't being involved in all aspects of economy.
To de-escalate both, you must regulate the corporations FIRST (which also almost completely strips the unions of their reasons to exist). Doing it the other way around is, of course, what the corporations are spending their lobbying dollars on.
- no, you have to let the market take care of it by creating competition.
It's the same way you can tell that "I want to cut taxes and cut spending" Republicans are lying right to your face. The only way to REALLY do that would be to cut the budget first and dial down the taxes in proportion, but, of course, the Republicans always want to do the full tax cut immediately with a promise to cut the budget later and the budget never gets cut. Clearly they only ever intended to cut the taxes, and ran with the other promises to get more votes.
- no argument. I am for cutting 99% of all government spending immediately.
Ask yourself that same kind of question any time a politician is proposing something. How hard are each of the things they want to do, and what order do they want to do them in? Don't forget to ask the same questions of the Libertarians; the endgame they promise doesn't jive with the things they say they want to do and the order they want to do them in.
- as a libertarian you can ask me.
I'd fire 99% of all gov't workers, stop the wars and bring all troops home and reduce the size of military force by 99%, cut all spending on all programs that subsidize any and all businesses, remove SS, EI, FDIC, Freddie/Fannie, sell all government assets, liquidate everything and pay the debt.
Immediately stop collecting all income taxes, implement a flat sales tax on goods that are not essential for survival. I would eliminate all government programs and would only provide these services:
1. Justice department. 2. Minimum military to avoid foreign threats. 3. Cops/prisons.
Unions didn't cause the Great Depression, it was a recession due to an asset bubble caused by the Fed monetary policy. The recession could have ended in a year, just like a recession of 1920 and many many many other recessions before that in the 19 century, that lasted for 3 months to maybe 3 years. Recessions are OK, they are needed to reallocated resources that are incorrectly used. But gov't came in and caused a depression with Keynesian shamanism, printing, setting low interest rates, taking away people's actual savings (gold), creating all these public projects that further mis-allocated more resources and didn't let the economy restructure itself.
When the war ended there was a surplus of cheap labor coming back home and since the US didn't have its infrastructure destroyed, it quickly was able to retool its war factories to make actual goods people wanted and to export those, that was the reason depression ended.
There is very little actual buying going on in gold, there is even less happening in gold miners. When bubbles actually occur, there is a lot of speculative buying, much more than what we are looking at in the HUI index.
You will know it's a bubble when the prices start moving up by huge factors in a day, not 3 percent up, 2 percent down, but actual moves like 10% up, 15% up, one after the other.
People have been telling me for years that gold is in a bubble. When gold cost 320 they told me that. When gold was 600 they told me that. When gold hit 800 and then 1000 they told me that. At some point gold came down to 750 after hitting 1000, they told me: see, it's a definite bubble, look at that correction.
Bull market climbs a wall of worry. Gold price is going up in USD terms and in other currencies, it's showing inflation in all currencies. It's decoupling from currencies. Saying something like: oh, gold is rising because of increased demand, not because of inflation.
Well hello, that's the demand - fiat money is losing value. I bet those stupid central banks of those stupid governments that were following the stupid Keynesian shamanism are pulling their hair out now. Good. They are buying now. But there is no real bubble until your average investor/speculator moves into the trade.
When your average investor/speculator moves into the trade you'll know. They'll be behind the wave, buying a bear market as usual.
That comes from you not understanding that gold is not just a commodity, it's actual money. It was always used as money when other fiat currencies failed. It was what made it possible to jump from one fiat currency to another.
Gold is an indicator of inflation of the fiat currency. You are thinking gold is in a bubble?
Ha. The prices of gold are going up for a decade while the gold stocks (HUI index) is lower than it was in 2008.
There is almost nobody actually buying gold. Nobody really own gold. There may be a bubble in gold sometime, but probably not very soon, not in the next 5 years certainly.
I could just stop reading there and know the rest of the post is bullshit because you have no understanding of economics. You think gold prices are an indication of inflation, when they are really an indication of increased demand for gold.
- idiot. Increased demand for gold is inflation. Gold is capital on strike, it means that fiat currencies are inflating, what the hell is the size of your brain? You should try shooting yourself in the head, I bet you won't hit it.
You can check on inflation predictions by checking U.S. bond prices.
- yes, the next huge asset class that is being pumped and will soon burst in such a huge explosion, the Internet bubble, the mortgage bubble, even the stock bubble of 1929 will look like cheap fireworks compared to this nuclear option.
China can't afford high U.S. inflation (i.e. a devaluation of the dollar) and will keep buying bonds.
- China is not a Free Market, what it will do and why is not driven by free market but by the polit-bureau so I wouldn't make such bold predictions on how it will behave.
But what a dumbass you are, saying that China buying bonds will keep the inflation down! China buying bonds increases the bond bubble, but it only SPREADS the inflation into its own population, it does not reduce inflation. As we speak, China is allowing its citizens to run away from inflation and for the first time allows its citizens to buy actual gold. So again, you have not a single clue on what's going on, what economics is, how it works, it's amazing. You must have studied economics from some insane Marxist and Keynesian.
China would be SO MUCH BETTER OFF if it allowed its currency to float. Chinese PEOPLE would be better off because because they would finally see their money appreciate and prices fall for goods they produce in the country.
USA will be left without those goods, without money, without any way to get any credit. USA will see its quality of life diminish.
The currency would collapse to zero and unemployment would hit 80 percent.
- as it should.
USA has no useful production capacity that it can trade for, so all it does is inflating the money supply and the bonds. USA NEED TO LOSE 80% OF JOBS. Those are non-productive jobs.
USA needs to lose 99% of all government jobs and have those people allocated back into the private sector. USA needs this, it's very bad and it will happen. But the more inflation USA creates, the worse the situation will be for the USA at the end, when this bubble bursts.
Some believe that US will then just start a big war, but with what money? How will they pay their soldiers and how will they pay the companies that supply them, how will they pay for anything? No, when this bubble bursts, USA will be left with no army, 99% of gov't will be gone anyway on its own, the interest rates will skyrocket, the jobs will fall, I don't know if it's going to be 80%, but it will hit over 40% for sure.
THEN USA will be able to restructure by saving money FIRST because it won't be able to get any loans, no credit. So they will save money and start building factories, etc., and will restructure the economy.
All these measures that the Fed was taking, that the gov't was doing starting from Nixon was leading to this. The low interest rates from Clinton time, through Bush and now with Obama, all of this made the situation much worse while the gov't increased by a huge factor, more than 2 times from 2000 to 2009. The wars, the stimulus, the bailouts, the regulations, the taxes, etc.etc.etc., all of this will have to disappear before the economy restructures.
But most of all your post is a sad commentary on the state of education in this country.
- exactly CORRECT. Because I never went to any school in USA but you did. It's YOUR commentary that is the sad testimony on where the problems are in your society.
Yes, currencies went down in flames but that was a symptom of the collapse, not a cause. The cause of the collapse was austerity plans (sound familiar? Europe is doing it again!) which reduced government spending and caused economies to shrink, which caused further austerity plans.
- what a dunce.
The actual cause of the great depression was the exact opposite of what your Keynesian shaman friends told you. The cause of the Great Depression was government inflating the currency and mis-allocating labor and existing credit to public projects and not allowing the economy to restructure.
The cause of Great Depression came from government trying to fix a recession, which resulted from a burst of an asset bubble, which government actually created.
The Fed was creating an asset bubble in stocks, the bubble burst. If the gov't stood to the side and didn't actually do anything, it would have been gone in a year, just like a recession that started and ended in the 1920. Gov't got involved, followed the inflationary principles and Keynesian shamanism and created an actual Great Depression.
There was no Great Depressions before that in USA, guess why? There were recessions and some depressions (deep recessions that lasted a year to 3 years) but a global Great Depression? That takes government involvement.
Countries that increased government spending weathered the depression better than those that decreased it.
- stupid bullshit. USA wouldn't even come out of the depression if there wasn't all that cheap labor available after the end of the war and if USA wasn't one of the countries that didn't have a destroyed infrastructure. But it didn't have a destroyed infrastructure and when the war ended it had a huge supply of cheap labor and it started producing quickly and came out of the depression.
As the saying goes "Those who don't learn from history are brain dead morons who deserve to repeat it."
- yeah. Only in your case it's this: Those who rewrite history never learn from it, so they are guaranteed to repeat its mistakes.
Fannie Mae, Freddie Mac and the FDIC all existed at that time. What was different was that banks hadn't yet been given the go ahead to speculate in risky investments like stocks and derivatives.
- FDIC created the moral hazard that allowed banks to gamble with deposits. Glass Steagall was a 'fix' to this moral hazard, that should never have existed in the first place.
Fannie/Freddie were a moral hazard that stamped the mortgages with "will be bailed out by the government of US of A" seal of approval. Obviously if it is guaranteed by the US government then there is no risk in landing and handling these mortgages, so this allowed the banks to speculate with those without any risk of losing money (or so they thought).
US government has been creating moral hazard since the creation of the Fed. Fed should never have existed. FDIC should never have existed. FDIC was 'solving' a non-problem. Only 2% of all bank deposits during the bank runs were affected, FDIC should never have been created, it caused the entire banking system not to care to earn trust of the customers and caused customers not to care about which bank they are lending money to.
In other words regulation worked.
- no. The Glass Steagall was holding the dam of gambling with deposits, but it was the Freddie and Fannie that increased the stream of money to gamble with. And of-course the low interest rates. What better way to create an asset bubble in house prices than to lower interest rates to nothing and to create gov't agencies to remove the risk of lending the free money? Only a gov't can be so stupid.
Unfortunately that regulation was removed in 1999 by a Republican congress and a conservative Democratic president.
- it's not unfortunate, it's inevitable. Once a gov't messes with economy, it will eventually be completely bought out and will mix with corporations in a way that will remove any at all barriers to make as much profit as possible. Gov't should never be in economy in the first place, it inevitably leads to complete corruption and destruction of the Free Market and destruction of economy.
The banks wanted to invest in those things because they could make them a lot of money.
- no. The banks didn't want to invest. You see, you are completely off on all aspects of understanding of economy and politics and you want to teach me something? It's not working.
Investment implies that banks would be expecting a return on the money invested. Banks didn't want to invest, it was the old business model. Banks understood that it's better to subvert the government because it is ready to be subverted so they could take the money and give all the risk to the gov't. This had nothing to do with investing. Investing implies presence of RISK. This took all risk out of the deal AND provided banks with unlimited funding due to 0-1% interest rates.
Unfortunately, as we saw, it can loose them a lot of money, too.
- No. I didn't see the major banks 'looooosing' anything. However they did get bailed out. So their assessment of the situation was correct. There was no risk in that behavior, because gov't took the risk out.
The removal of that regulation is primarily what gave us this crash.
- No. The crash was caused by a blown up asset bubble. In that case the assets were home prices and the gov't acted as the pump. Eventually the bubble burst. EVEN if there wasn't any derivative trading that bubble would have burst, just like the Internet bubble a decade earlier.
Again, you have not a slightest understanding of economy, you should put a sock in it.
But of course, conservatives such as yourself think that going back to the regulations that kept us depression free from 1937 to 1999 would be equivalent to Communism.
Useless sarcasm. Comparing a tiny country that was constantly messed with by the US, excellent comparison. Haiti has actually inflated its currency into non-existence as well, and is suffering from lack of capital investment. That's what is going to happen to USA.
the main reason why the government will be happy about inflation is that it also reduces the amount of debt you have.
- it does not reduce the amount of debt you have. It distributes the debt to all the existing money and devalues the money. I am arguing that it is exactly what the government is aiming at and they will cause a currency crisis, USD will be destroyed, US bonds will be destroyed, US will no longer have credit and since US has a 50billion/month trade deficit, 75% of which is goods coming from various countries like China, US is going to have prices going through the roof and BTW the interest rates will skyrocket into high number, double digits, so this will limit the available credit. There will be shortages of actual goods, people won't be able to buy anything with their dollars. Zimbabwe dollars.
you can work on making that debt worse less. In theory this will piss of the people who loaned the money to you, but if their economy is also dependent on you using the borrowed money to buy stuff from them then they may not have a choice.
- see, that's the belief and many governments are doing the wrong thing right now devaluing their currencies to make it go down as fast as the USD, they believe they need US to buy the goods they produce.
They do not.
They need to let the manufacturers aim at local markets, and other markets that are not the US. By devaluing your currency you are taking away purchasing power from the people in your country, so your citizens end up paying for the inflation of the other country's currency and end up sharing their goods with people from country that produces nothing but inflation.
Japan is doing this right now, buying US bonds and dollars at increased rate by printing their own currency, but they are wrong in doing so. Unfortunately most governments are ran in way of Keynesian shamanism and are not willing to do the correct thing.
However it doesn't matter, even when all currencies devalue, what will be left is this: countries WITH productive capacity and countries WITHOUT productive capacity.
Countries with productive capacities will be fine, they'll aim at their own markets and their quality of life will suffer initially, but eventually will go up.
Countries without productive capacities will not be fine. They have nothing to offer even to their own citizens, they will have shortages of everything. All goods and services will become scarce and quality of life will go down.
forgot to mention this: many other countries are also printing a lot of money not to be left behind, it's a race to the bottom in terms of inflating one's currency.
It's what created the Great Depression. So really, all currencies may go down in flames. Buy gold, load up on ammo and various non-perishable items including foods. It's not necessary that all countries will cause their currencies to go down the drain, but some will. Japan is doing everything it can to prop up the US dollar by devaluing its own currency for example.
The fake boom was all that USA had ever since it started shedding off the productive manufacturing jobs that really were the core of export economy USA had.
Since then US had one stimulus after another, don't forget, Clinton stimulated with low interest rates, there was internet bubble caused by that 'stimulus', then it burst, but that time there was no Freddie/Fannie/FDIC to propagate the bursting of that bubble and so it was basically contained to the individual and some institutional investors losing money.
Bush did 2 or 3 stimulus packages as well, he inherited the crash from the internet bubble and again, followed the same Keynesian principles and stimulated and lowered the interest rates. However Bush also increased spending.
Since 2000 to 2009 spending increased by a factor of MORE than 2. So that's size of gov't, it's growing fast. At the same time the trade deficit increased by more than a factor of 2 due to losing more and more of productive capacity that offsets trade deficit.
The so called service sector economy is only good as long as services can be actually exported, but most services cannot. The Freddie/Fannie created a moral hazard that allowed the Bush stimulus (low interest rates and more spending) to create a bubble in another asset class - houses.
Now Obama is printing and Bernanke said that his SOP from now on will be on growing prices. The Feds mandate used to be price stability. Currently price stability only shows how much inflation there is, because in real terms there should have been deflation happening, but because there is so much inflation the prices are stable.
It's not good enough for the Fed, they want prices to increase! They think they'll take away your purchasing power and make you more competitive, but that's only a small part of a competitive economy - your purchasing power as it is related to your nominal salary. The other parts of it are (in no particular order): income taxes, payroll taxes, regulations, wage controls, price controls, subsidies to monopolies, laws that make it too difficult to start businesses, high costs of insurance, medical insurance costs, high costs of education, high cost of labor, high cost of rent/ownership of land/buildings. All of those prices are high because of gov't holding them hostage. As an example, Nixon caused prices for medical procedures to skyrocket because he turned insurance from insurance into basically NHS. The moral hazard is in everything, the regulations around new businesses are insurmountable, the taxes are high, it's not a good competitive environment.
So given all that and looking at what the gov't is doing, the potential and at this point a very likely outcome is hyper inflationary depression no less, because really, the gov't is actually bankrupt right now.
That's right, if the gov't cannot refinance its debt at low cost (and eventually they won't be able to) they won't be able to pay even the interest on the debt, forget about the principal. So gov't is juggling credit cards. It's bankrupt. Never mind the wars and troops, once the credit cannot be refinanced the spending will stop, the wars will stop.
Also note that SS is gone, it was spent on wars. I think wars are started to steal money that gov't has in possession, so I am always against gov't possessing money.
Nothing that the gov't is doing can actually make things better, they only have one tool: the printing press. They can print cash or bonds, it's money now or money later, but it's all the same thing.
The next asset class to have a burst is going to be US government bonds. That's going to be bubble of all bubbles and burst of all bursts. US Fed will obviously print USD to buy back all those bonds, so it'll guarantee hyper inflation.
Private companies are not standing on sidelines, they are investing, only they are investing into economies that are actually competitive - abroad.
No, spending money that the country does not have by borrowing and printing and creating inflation (check gold prices) is not going to get the country with a 50 billion/month trade deficit and declining production job market out of this hole. There is no amount of money that can be spent to make the economy better. If you don't believe it, check out Zimbabwe dollars. USA can do the same - print trillions and trillions and to what end? USD will become useless in no time flat and the economy will not improve one iota.
The correct way to fix the economy is to cut 99% of all government spending, fire 99% of government workers, stop all wars of-course, bring all troops home from all over the world, get rid of SS, EI, all regulations, wage laws, all subsidies and all income taxes. Finally let the interest rates go up to award the savers and punish the spenders.
Let the economy crash, it needs to restructure. Economy needs to restructure and rebuild, at this point it will involve a crash, no matter what, many companies will go under. The capital needs to be restructured, new companies need to be created with new ideas and with saved money.
This will happen with or without stimulus, only with stimulus and spending and printing there will be hyper-inflationary depression in between the incoming crash and the incoming restructuring of the economy.
So I see, may I ask if your plan includes a Glock and a single bullet or is it a bar of soap and a rope? Or do you prefer something more exotic, like self-immolation?
I had to make a massive effort to get rid of most currencies, not just the USD, but too much USD had to be converted to something else and I recognize that all fiat currencies are being inflated and some are probably being hyper inflated, thus move to commodities. I was born in the USSR, moved around many countries, lived in North America for 15 years and am living in a European country right now with no federal income tax, it's easy to figure out.
Yeah yeah, only people who should be worried about authority asking them anything are those people who have nothing to hide and to worry about, sure sure.
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My 'economic solution' will be coming to pass, the question is will there be a hyper-inflationary depression between the crash and restructuring or not.
That's all.
It would be hundreds of patents of specific use of Graphene, not of Graphene itself.
What Geim needs to do is open a small production facility, produce this Graphene and sell it to different companies / research institutes, see what they can come up with.
--
Oh, as to patents, all patents should be abolished.
Well of-course inflation is a way to raise taxes without saying it, but when your currency is distributed through the world and international deals happen in it (like purchases of oil/weapons etc.) then it's not as simple as taxing just your own population. It's taxing the entire world.
That's taxation that is definitely without any representation.
However it is not going to be the same as it was in the '70s because then USA was a net exporter of goods and could sustain such politics, it was also a net creditor.
Now USA is a net debtor and net importer on huge volumes of money and products, both, so raising inflation now will have a different effect. Looks to me that Japan is going down the drain by trying to prop up the US dollar and eventually many other currencies will as well, but again, as USA is a net importer of goods, it does not have the production capacity to get out of this hole once the bond bubble bursts and USD is printed out of existence, but other countries do have that production capacity, so it will be a much deeper problem in USA than anywhere else.
Oh, and if you want to see a bubble being pumped in action, it's easy.
US bonds. Government is promoting them. Fed is printing. Everybody is buying, all asset management firms, all pension funds, mutual funds, banks are buying etc.
Speculator in stocks, speculators unlike investors, don't bother with actual commodities. So a speculator moves into stock to trade it quickly and pump the price up.
I have no idea why you are mentioning Glen Beck, who has provided people with a terrible advice of using Goldline without telling them they should not be buying gold that is marked up by 70% (even with goldline you can buy gold that is only marked up by less than 5%, but it's still expensive. You can actually buy gold and only pay 1% premium for resale.) But I suppose you actually think I am a republican and care about republicans and their talk show hosts, then you have completely missed my points and you do not understand my reasoning.
Currency decoupling means that spot gold prices go up in all currencies when gold goes up and not only in USD. That's decoupling.
Bubble in gold will happen when everybody and their mommas are buying gold, which is nowhere near the case, otherwise we'd see gold stocks and index rallies in double digits per day.
Corporations do far more spending and lobbying (with far more success, as is easily visible) than unions
- yes, as I said earlier I am against gov't being involved in all aspects of economy.
To de-escalate both, you must regulate the corporations FIRST (which also almost completely strips the unions of their reasons to exist). Doing it the other way around is, of course, what the corporations are spending their lobbying dollars on.
- no, you have to let the market take care of it by creating competition.
It's the same way you can tell that "I want to cut taxes and cut spending" Republicans are lying right to your face. The only way to REALLY do that would be to cut the budget first and dial down the taxes in proportion, but, of course, the Republicans always want to do the full tax cut immediately with a promise to cut the budget later and the budget never gets cut. Clearly they only ever intended to cut the taxes, and ran with the other promises to get more votes.
- no argument. I am for cutting 99% of all government spending immediately.
Ask yourself that same kind of question any time a politician is proposing something. How hard are each of the things they want to do, and what order do they want to do them in? Don't forget to ask the same questions of the Libertarians; the endgame they promise doesn't jive with the things they say they want to do and the order they want to do them in.
- as a libertarian you can ask me.
I'd fire 99% of all gov't workers, stop the wars and bring all troops home and reduce the size of military force by 99%, cut all spending on all programs that subsidize any and all businesses, remove SS, EI, FDIC, Freddie/Fannie, sell all government assets, liquidate everything and pay the debt.
Immediately stop collecting all income taxes, implement a flat sales tax on goods that are not essential for survival. I would eliminate all government programs and would only provide these services:
1. Justice department.
2. Minimum military to avoid foreign threats.
3. Cops/prisons.
but I am not a politician.
He is not right, he is wrong that's my reply.
Unions didn't cause the Great Depression, it was a recession due to an asset bubble caused by the Fed monetary policy. The recession could have ended in a year, just like a recession of 1920 and many many many other recessions before that in the 19 century, that lasted for 3 months to maybe 3 years. Recessions are OK, they are needed to reallocated resources that are incorrectly used. But gov't came in and caused a depression with Keynesian shamanism, printing, setting low interest rates, taking away people's actual savings (gold), creating all these public projects that further mis-allocated more resources and didn't let the economy restructure itself.
When the war ended there was a surplus of cheap labor coming back home and since the US didn't have its infrastructure destroyed, it quickly was able to retool its war factories to make actual goods people wanted and to export those, that was the reason depression ended.
OK, I will chew it out.
There is very little actual buying going on in gold, there is even less happening in gold miners. When bubbles actually occur, there is a lot of speculative buying, much more than what we are looking at in the HUI index.
You will know it's a bubble when the prices start moving up by huge factors in a day, not 3 percent up, 2 percent down, but actual moves like 10% up, 15% up, one after the other.
People have been telling me for years that gold is in a bubble. When gold cost 320 they told me that. When gold was 600 they told me that. When gold hit 800 and then 1000 they told me that. At some point gold came down to 750 after hitting 1000, they told me: see, it's a definite bubble, look at that correction.
Bull market climbs a wall of worry. Gold price is going up in USD terms and in other currencies, it's showing inflation in all currencies. It's decoupling from currencies. Saying something like: oh, gold is rising because of increased demand, not because of inflation.
Well hello, that's the demand - fiat money is losing value. I bet those stupid central banks of those stupid governments that were following the stupid Keynesian shamanism are pulling their hair out now. Good. They are buying now. But there is no real bubble until your average investor/speculator moves into the trade.
When your average investor/speculator moves into the trade you'll know. They'll be behind the wave, buying a bear market as usual.
That comes from you not understanding that gold is not just a commodity, it's actual money. It was always used as money when other fiat currencies failed. It was what made it possible to jump from one fiat currency to another.
Gold is an indicator of inflation of the fiat currency. You are thinking gold is in a bubble?
Ha. The prices of gold are going up for a decade while the gold stocks (HUI index) is lower than it was in 2008.
There is almost nobody actually buying gold. Nobody really own gold. There may be a bubble in gold sometime, but probably not very soon, not in the next 5 years certainly.
I could just stop reading there and know the rest of the post is bullshit because you have no understanding of economics. You think gold prices are an indication of inflation, when they are really an indication of increased demand for gold.
- idiot. Increased demand for gold is inflation. Gold is capital on strike, it means that fiat currencies are inflating, what the hell is the size of your brain? You should try shooting yourself in the head, I bet you won't hit it.
You can check on inflation predictions by checking U.S. bond prices.
- yes, the next huge asset class that is being pumped and will soon burst in such a huge explosion, the Internet bubble, the mortgage bubble, even the stock bubble of 1929 will look like cheap fireworks compared to this nuclear option.
China can't afford high U.S. inflation (i.e. a devaluation of the dollar) and will keep buying bonds.
- China is not a Free Market, what it will do and why is not driven by free market but by the polit-bureau so I wouldn't make such bold predictions on how it will behave.
But what a dumbass you are, saying that China buying bonds will keep the inflation down! China buying bonds increases the bond bubble, but it only SPREADS the inflation into its own population, it does not reduce inflation. As we speak, China is allowing its citizens to run away from inflation and for the first time allows its citizens to buy actual gold. So again, you have not a single clue on what's going on, what economics is, how it works, it's amazing. You must have studied economics from some insane Marxist and Keynesian.
China would be SO MUCH BETTER OFF if it allowed its currency to float. Chinese PEOPLE would be better off because because they would finally see their money appreciate and prices fall for goods they produce in the country.
USA will be left without those goods, without money, without any way to get any credit. USA will see its quality of life diminish.
The currency would collapse to zero and unemployment would hit 80 percent.
- as it should.
USA has no useful production capacity that it can trade for, so all it does is inflating the money supply and the bonds. USA NEED TO LOSE 80% OF JOBS. Those are non-productive jobs.
USA needs to lose 99% of all government jobs and have those people allocated back into the private sector. USA needs this, it's very bad and it will happen. But the more inflation USA creates, the worse the situation will be for the USA at the end, when this bubble bursts.
Some believe that US will then just start a big war, but with what money? How will they pay their soldiers and how will they pay the companies that supply them, how will they pay for anything? No, when this bubble bursts, USA will be left with no army, 99% of gov't will be gone anyway on its own, the interest rates will skyrocket, the jobs will fall, I don't know if it's going to be 80%, but it will hit over 40% for sure.
THEN USA will be able to restructure by saving money FIRST because it won't be able to get any loans, no credit. So they will save money and start building factories, etc., and will restructure the economy.
All these measures that the Fed was taking, that the gov't was doing starting from Nixon was leading to this. The low interest rates from Clinton time, through Bush and now with Obama, all of this made the situation much worse while the gov't increased by a huge factor, more than 2 times from 2000 to 2009. The wars, the stimulus, the bailouts, the regulations, the taxes, etc.etc.etc., all of this will have to disappear before the economy restructures.
But most of all your post is a sad commentary on the state of education in this country.
- exactly CORRECT. Because I never went to any school in USA but you did. It's YOUR commentary that is the sad testimony on where the problems are in your society.
Yes, currencies went down in flames but that was a symptom of the collapse, not a cause. The cause of the collapse was austerity plans (sound familiar? Europe is doing it again!) which reduced government spending and caused economies to shrink, which caused further austerity plans.
- what a dunce.
The actual cause of the great depression was the exact opposite of what your Keynesian shaman friends told you. The cause of the Great Depression was government inflating the currency and mis-allocating labor and existing credit to public projects and not allowing the economy to restructure.
The cause of Great Depression came from government trying to fix a recession, which resulted from a burst of an asset bubble, which government actually created.
The Fed was creating an asset bubble in stocks, the bubble burst. If the gov't stood to the side and didn't actually do anything, it would have been gone in a year, just like a recession that started and ended in the 1920. Gov't got involved, followed the inflationary principles and Keynesian shamanism and created an actual Great Depression.
There was no Great Depressions before that in USA, guess why? There were recessions and some depressions (deep recessions that lasted a year to 3 years) but a global Great Depression? That takes government involvement.
Countries that increased government spending weathered the depression better than those that decreased it.
- stupid bullshit. USA wouldn't even come out of the depression if there wasn't all that cheap labor available after the end of the war and if USA wasn't one of the countries that didn't have a destroyed infrastructure. But it didn't have a destroyed infrastructure and when the war ended it had a huge supply of cheap labor and it started producing quickly and came out of the depression.
As the saying goes "Those who don't learn from history are brain dead morons who deserve to repeat it."
- yeah. Only in your case it's this: Those who rewrite history never learn from it, so they are guaranteed to repeat its mistakes.
Fannie Mae, Freddie Mac and the FDIC all existed at that time. What was different was that banks hadn't yet been given the go ahead to speculate in risky investments like stocks and derivatives.
- FDIC created the moral hazard that allowed banks to gamble with deposits. Glass Steagall was a 'fix' to this moral hazard, that should never have existed in the first place.
Fannie/Freddie were a moral hazard that stamped the mortgages with "will be bailed out by the government of US of A" seal of approval. Obviously if it is guaranteed by the US government then there is no risk in landing and handling these mortgages, so this allowed the banks to speculate with those without any risk of losing money (or so they thought).
US government has been creating moral hazard since the creation of the Fed. Fed should never have existed. FDIC should never have existed. FDIC was 'solving' a non-problem. Only 2% of all bank deposits during the bank runs were affected, FDIC should never have been created, it caused the entire banking system not to care to earn trust of the customers and caused customers not to care about which bank they are lending money to.
In other words regulation worked.
- no. The Glass Steagall was holding the dam of gambling with deposits, but it was the Freddie and Fannie that increased the stream of money to gamble with. And of-course the low interest rates. What better way to create an asset bubble in house prices than to lower interest rates to nothing and to create gov't agencies to remove the risk of lending the free money? Only a gov't can be so stupid.
Unfortunately that regulation was removed in 1999 by a Republican congress and a conservative Democratic president.
- it's not unfortunate, it's inevitable. Once a gov't messes with economy, it will eventually be completely bought out and will mix with corporations in a way that will remove any at all barriers to make as much profit as possible. Gov't should never be in economy in the first place, it inevitably leads to complete corruption and destruction of the Free Market and destruction of economy.
The banks wanted to invest in those things because they could make them a lot of money.
- no. The banks didn't want to invest. You see, you are completely off on all aspects of understanding of economy and politics and you want to teach me something? It's not working.
Investment implies that banks would be expecting a return on the money invested. Banks didn't want to invest, it was the old business model. Banks understood that it's better to subvert the government because it is ready to be subverted so they could take the money and give all the risk to the gov't. This had nothing to do with investing. Investing implies presence of RISK. This took all risk out of the deal AND provided banks with unlimited funding due to 0-1% interest rates.
Unfortunately, as we saw, it can loose them a lot of money, too.
- No. I didn't see the major banks 'looooosing' anything. However they did get bailed out. So their assessment of the situation was correct. There was no risk in that behavior, because gov't took the risk out.
The removal of that regulation is primarily what gave us this crash.
- No. The crash was caused by a blown up asset bubble. In that case the assets were home prices and the gov't acted as the pump. Eventually the bubble burst. EVEN if there wasn't any derivative trading that bubble would have burst, just like the Internet bubble a decade earlier.
Again, you have not a slightest understanding of economy, you should put a sock in it.
But of course, conservatives such as yourself think that going back to the regulations that kept us depression free from 1937 to 1999 would be equivalent to Communism.
- No. I am a libertarian. In the 1929 the bad r
Useless sarcasm. Comparing a tiny country that was constantly messed with by the US, excellent comparison. Haiti has actually inflated its currency into non-existence as well, and is suffering from lack of capital investment. That's what is going to happen to USA.
the main reason why the government will be happy about inflation is that it also reduces the amount of debt you have.
- it does not reduce the amount of debt you have. It distributes the debt to all the existing money and devalues the money. I am arguing that it is exactly what the government is aiming at and they will cause a currency crisis, USD will be destroyed, US bonds will be destroyed, US will no longer have credit and since US has a 50billion/month trade deficit, 75% of which is goods coming from various countries like China, US is going to have prices going through the roof and BTW the interest rates will skyrocket into high number, double digits, so this will limit the available credit. There will be shortages of actual goods, people won't be able to buy anything with their dollars. Zimbabwe dollars.
you can work on making that debt worse less. In theory this will piss of the people who loaned the money to you, but if their economy is also dependent on you using the borrowed money to buy stuff from them then they may not have a choice.
- see, that's the belief and many governments are doing the wrong thing right now devaluing their currencies to make it go down as fast as the USD, they believe they need US to buy the goods they produce.
They do not.
They need to let the manufacturers aim at local markets, and other markets that are not the US. By devaluing your currency you are taking away purchasing power from the people in your country, so your citizens end up paying for the inflation of the other country's currency and end up sharing their goods with people from country that produces nothing but inflation.
Japan is doing this right now, buying US bonds and dollars at increased rate by printing their own currency, but they are wrong in doing so. Unfortunately most governments are ran in way of Keynesian shamanism and are not willing to do the correct thing.
However it doesn't matter, even when all currencies devalue, what will be left is this: countries WITH productive capacity and countries WITHOUT productive capacity.
Countries with productive capacities will be fine, they'll aim at their own markets and their quality of life will suffer initially, but eventually will go up.
Countries without productive capacities will not be fine. They have nothing to offer even to their own citizens, they will have shortages of everything. All goods and services will become scarce and quality of life will go down.
Nice troll.
As a libertarian I do not care if you have a private union and people join it.
My concern would start when you'd use lobbying and money and connections to subvert the laws to achieve your particular goals.
This is the same truth for all entities, unions and corporations and private individual alike.
forgot to mention this: many other countries are also printing a lot of money not to be left behind, it's a race to the bottom in terms of inflating one's currency.
It's what created the Great Depression. So really, all currencies may go down in flames. Buy gold, load up on ammo and various non-perishable items including foods. It's not necessary that all countries will cause their currencies to go down the drain, but some will. Japan is doing everything it can to prop up the US dollar by devaluing its own currency for example.
The fake boom was all that USA had ever since it started shedding off the productive manufacturing jobs that really were the core of export economy USA had.
Since then US had one stimulus after another, don't forget, Clinton stimulated with low interest rates, there was internet bubble caused by that 'stimulus', then it burst, but that time there was no Freddie/Fannie/FDIC to propagate the bursting of that bubble and so it was basically contained to the individual and some institutional investors losing money.
Bush did 2 or 3 stimulus packages as well, he inherited the crash from the internet bubble and again, followed the same Keynesian principles and stimulated and lowered the interest rates. However Bush also increased spending.
Since 2000 to 2009 spending increased by a factor of MORE than 2. So that's size of gov't, it's growing fast. At the same time the trade deficit increased by more than a factor of 2 due to losing more and more of productive capacity that offsets trade deficit.
The so called service sector economy is only good as long as services can be actually exported, but most services cannot. The Freddie/Fannie created a moral hazard that allowed the Bush stimulus (low interest rates and more spending) to create a bubble in another asset class - houses.
Now Obama is printing and Bernanke said that his SOP from now on will be on growing prices. The Feds mandate used to be price stability. Currently price stability only shows how much inflation there is, because in real terms there should have been deflation happening, but because there is so much inflation the prices are stable.
It's not good enough for the Fed, they want prices to increase! They think they'll take away your purchasing power and make you more competitive, but that's only a small part of a competitive economy - your purchasing power as it is related to your nominal salary. The other parts of it are (in no particular order): income taxes, payroll taxes, regulations, wage controls, price controls, subsidies to monopolies, laws that make it too difficult to start businesses, high costs of insurance, medical insurance costs, high costs of education, high cost of labor, high cost of rent/ownership of land/buildings. All of those prices are high because of gov't holding them hostage. As an example, Nixon caused prices for medical procedures to skyrocket because he turned insurance from insurance into basically NHS. The moral hazard is in everything, the regulations around new businesses are insurmountable, the taxes are high, it's not a good competitive environment.
So given all that and looking at what the gov't is doing, the potential and at this point a very likely outcome is hyper inflationary depression no less, because really, the gov't is actually bankrupt right now.
That's right, if the gov't cannot refinance its debt at low cost (and eventually they won't be able to) they won't be able to pay even the interest on the debt, forget about the principal. So gov't is juggling credit cards. It's bankrupt. Never mind the wars and troops, once the credit cannot be refinanced the spending will stop, the wars will stop.
Also note that SS is gone, it was spent on wars. I think wars are started to steal money that gov't has in possession, so I am always against gov't possessing money.
Nothing that the gov't is doing can actually make things better, they only have one tool: the printing press. They can print cash or bonds, it's money now or money later, but it's all the same thing.
The next asset class to have a burst is going to be US government bonds. That's going to be bubble of all bubbles and burst of all bursts. US Fed will obviously print USD to buy back all those bonds, so it'll guarantee hyper inflation.
Private companies are not standing on sidelines, they are investing, only they are investing into economies that are actually competitive - abroad.
No, spending money that the country does not have by borrowing and printing and creating inflation (check gold prices) is not going to get the country with a 50 billion/month trade deficit and declining production job market out of this hole. There is no amount of money that can be spent to make the economy better. If you don't believe it, check out Zimbabwe dollars. USA can do the same - print trillions and trillions and to what end? USD will become useless in no time flat and the economy will not improve one iota.
The correct way to fix the economy is to cut 99% of all government spending, fire 99% of government workers, stop all wars of-course, bring all troops home from all over the world, get rid of SS, EI, all regulations, wage laws, all subsidies and all income taxes. Finally let the interest rates go up to award the savers and punish the spenders.
Let the economy crash, it needs to restructure. Economy needs to restructure and rebuild, at this point it will involve a crash, no matter what, many companies will go under. The capital needs to be restructured, new companies need to be created with new ideas and with saved money.
This will happen with or without stimulus, only with stimulus and spending and printing there will be hyper-inflationary depression in between the incoming crash and the incoming restructuring of the economy.
So I see, may I ask if your plan includes a Glock and a single bullet or is it a bar of soap and a rope? Or do you prefer something more exotic, like self-immolation?
you sure know a bunch of useless people
I had to make a massive effort to get rid of most currencies, not just the USD, but too much USD had to be converted to something else and I recognize that all fiat currencies are being inflated and some are probably being hyper inflated, thus move to commodities. I was born in the USSR, moved around many countries, lived in North America for 15 years and am living in a European country right now with no federal income tax, it's easy to figure out.
Nah, but the currency is funky colors with heads of people on it.
Why the hell did you decide I am in US? I am somewhere where there are not even federal income taxes.
I am doing what I must do, first of all living in a place that collects no income tax, imagine that for a change.
Yeah yeah, only people who should be worried about authority asking them anything are those people who have nothing to hide and to worry about, sure sure.