Attention : Americans

[Dejavu]

...and anyone else that holds dollars or is somehow tied to dollars.

You should listen to me , this is why:

http://goldprice.org/NewCharts/gold/images/gold_1d_b_o_l_USD.png?0.42087161469953516

This is a gold ticker. Watch this carefully. Gold just hit all time highs and its value is now rapidly accelerating. This means horrible news for the dollar and it means that ( mainly foreigners) are buying up gold like crazy ( which means they want to get rid of their dollars.) I'm talking about foreign central banks. I implore you to put ideology aside and think about yourselves here for a second. Buy this stuff before it gets even more expensive. The train is leaving dollar destructionville folks. We are now literally on the brink of hyperinflation. Tie all your assets away from dollars and, if possible, get out of this country.

I've just made plans to move out of this country in a few months. It was going to be a couple years but this thing is gonna go down sooner than I expected.

I leave you all with this news to ponder on :

India Buys 200 Tons of IMF's Gold Allotment

Move Seen as Effort to Diversify Reserves Away From the Dollar


By ABHRAJIT GANGOPADHYAY (http://online.wsj.com/search/search_center.html?KEYWORDS=ABHRAJIT+GANGOPADHYAY&ARTICLESEARCHQUERY_PARSER=bylineAND) and ELISABETH BEHRMANN (http://online.wsj.com/search/search_center.html?KEYWORDS=ELISABETH+BEHRMANN&ARTICLESEARCHQUERY_PARSER=bylineAND)

NEW DELHI -- India's central bank bought 200 metric tons of gold from the International Monetary Fund last month, in the first major move by a major central bank to diversify its foreign-exchange reserves.
Analysts said the move is potentially bullish for gold, but it is by no means the start of a significant shift away from U.S. dollar holdings.(THEY'RE LYING , THEY JUST GOT RID OF A BUNCH OF DOLLARS LOL) The Reserve Bank of India said in a statement that the move was part of its effort to manage its foreign-exchange reserves.
"I would have advised the governor of RBI to buy gold as our forex reserve is comfortable," said Indian Finance Minister Pranab Mukherjee. "The RBI has done just that. That doesn't mean we don't prefer dollar any more or like gold any better."(LIES)
http://s.wsj.net/public/resources/images/AM-AH120_RBIGOL_NS_20091103112542.jpg
( THIS IS MADNESS ^^ LOOK AT THAT SHIT)




Sonal Varma, an economist at Nomura Financial Advisory & Securities in Mumbai, said the purchase won't create a substantial mismatch between the Reserve Bank's assets and India's obligations. "Dollar will continue to be a significant part of foreign-exchange holdings, as most of India's external debt is in dollars," the economist said. "The gold buying, as of now, seems just an asset-diversification strategy."( LIES, LIES, LIES)
A senior finance ministry official said the central bank may seek to buy more gold from the IMF directly. "It makes sense to buy gold as it will appreciate more than the U.S. dollar," he said.
News of the purchase of nearly half of the 403.3 metric tons of gold earmarked for sale by the IMF boosted gold prices, reminding investors that central bank reserve diversification will continue to fuel demand for the metal.
In late morning in New York, gold for December delivery on the Comex division of the New York Mercantile Exchange was up $22.90 per ounce, or 2.2%, at $1076.30.
The off-market deal also reinforced the view that little or none of the IMF gold may eventually reach the open market, limiting the bearish impact such a big sale might have had otherwise.
The Reserve Bank bought the gold between Oct. 19 and Oct. 30, an IMF statement said. The $6.7 billion in proceeds from the sale indicate an average estimated price of $1,045 a troy ounce, far higher than the $850 per ounce the IMF expected to get a few months ago, when its executive board approved the sale.
Sue Trinh, currency strategist at RBC Capital in Sydney, said the announcement supported the view that central banks are looking for ways to diversify their reserves away from the dollar.
The Reserve Bank is "still a buyer at current high-price levels, indicating gold is likely to move up further," said Kunal Shah, an analyst at Normal Bang Commodities in Mumbai. "This is positive."
The IMF declined to comment on buyers for the remaining amount, but said it is still in "an initial period to sell gold directly to central banks and other official holders that may be interested in such sales."
There has been speculation that Chinese and Russian central banks may also be interested in buying gold directly from the IMF. Open-market sales will be conducted only if any gold is left after the "initial period" and "the Fund will inform markets before any on-market sales commence," the statement said.
Janet Kong, managing director at Goldman Sachs's commodities investment research division in Hong Kong, pointed out that central banks,once a source of concern to gold bulls as they sold their reserves of the metal, have become net buyers, and exchange-traded funds have become big buyers as well.
"Gold's investor base is broadening, which is positive for gold," Ms. Kong said.
Gold holdings in the SPDR Gold Trust, the world's largest gold ETF, have reached 1,103.52 tons, making SPDR the seventh-largest gold holder in the world.
"Diversification has been an ongoing story for Asian central banks, and gold is one of the possible diversifiers. Gold holdings in comparison to dollar holdings are low," said Justin Smirk, a commodity analyst at Westpac.

[Bud Struggle]

Excellent post and thank you. Everyone should always have gold in their portfolio just to be diversified, but the rate of gold prices rising is and has been WAY higher than the stock market for some time, actually it's almost the only place that you can get a good return on your investment right now.

The problem though is that gold is like a one shot investment--it goes up it goes down. There are no hedges in "other golds" like there are in stocks. Deja is right--BUY but be careful about committing everything into one product.

Again, great post Deja Vu.

[Havet]

Actually I recently heard that the USA government is keeping interest rates low and that a new kind of bubble is emerging: Commodity bubble

So be careful with Gold. Its definitely a good investment for the future, but not the only one, and there's a risk. Palladium is also a good one, or Oil, or Tobacco.

[Dejavu]

You guys are not getting the consequences of this and why its bad for dollar savers and Americans. Tom , its not an everyday occurrence that an emerging economy we are highly dependent on buys 200 metric tons of freaking gold. Gold , just a couple months ago was still sitting comfortably under 1000 and now we're at almost 1100. IN ONE DAY GOLD SHOT UP $30/ OUNCE. I'm not praising gold , its horrible for most Americans right now as they are so intertwined with dollars and only a few have a portfolio that benefits from the dollar falling. I'm not giving investment advice , I'm giving a warning. By New Years, I'm gone. I promised myself I'd leave the country when gold reached over $1,000/ ounce and kept on rising dramatically afterwords. These are the signs of eminent hyperinflation. I'm leaving because of the social unrest that will result.

I'm going to Gibraltar. That is all.

[Havet]

You guys are not getting the consequences of this and why its bad for dollar savers and Americans. Tom , its not an everyday occurrence that an emerging economy we are highly dependent on buys 200 metric tons of freaking gold. Gold , just a couple months ago was still sitting comfortably under 1000 and now we're at almost 1100. IN ONE DAY GOLD SHOT UP $30/ OUNCE. I'm not praising gold , its horrible for most Americans right now as they are so intertwined with dollars and only a few have a portfolio that benefits from the dollar falling. I'm not giving investment advice , I'm giving a warning. By New Years, I'm gone. I promised myself I'd leave the country when gold reached over $1,000/ ounce and kept on rising dramatically afterwords. These are the signs of eminent hyperinflation. I'm leaving because of the social unrest that will result.

I'm going to Gibraltar. That is all.

What kind of social unrest do you think Americans will witness?

[Dejavu]

What kind of social unrest do you think Americans will witness?

http://www.usagold.com/germannightmare.html

[Havet]

Isn't the Euro in jeopardy as well?

[bcbm]

well now it seems like an even better time to be broke and unemployed.

[Dejavu]

Isn't the Euro in jeopardy as well?

Eventually but not now. Euro is in fantastic shape compared to the dollar. Europe's days are numbered as well but I think they still have some years left before their house of cards comes down. Eventually I will probably move back to Japan or maybe Singapore or Thailand. but I can use Europe as a launch pad and get organized for a few years.

[Jia]

Shit, and we got metric fucktonnes of these dollars

worthless bits of fucking paper :cursing:

[#FF0000]

Shit, and we got metric fucktonnes of these dollars

worthless bits of fucking paper :cursing:

Yeah that is sort of what we don't want to hear from someone in the PRC.

[Dejavu]

Shit, and we got metric fucktonnes of these dollars

worthless bits of fucking paper :cursing:

But you guys are good. Sure , the US going under is going to cause a recession for you guys too but you'll recover just fine. ( Not true for the U.S. though) All you need to is devalue you currency and you have a whole world plus your own people to trade to. Finally you guys will stop exporting to America , and then lending to America ( at interest) , only to have Americans buy your products with the money you lent them. The Chinese people could maybe now enjoy a lot more of the prosperity they created. China has real stuff , a trade surplus , and a lucrative positive savings rate. On the international stage , they are the ideal market , internally ...well... that might be another issue.

[Havet]

I'd like to argue against some of your explicit and implicit arguments, Dejavu.

Most governments are not as naive as Zimbabwe or the Weimar Republic.

The dollar is certainly going to devalue, but that's the way the government likes it.

If the dollar got devalued to a point where it could damage the government, they'd simply switch off the presses, and dry up government credit for a time.

Like I said:


Actually I recently heard that the USA government is keeping interest rates low and that a new kind of bubble is emerging: Commodity bubble

So be careful with Gold. Its definitely a good investment for the future, but not the only one, and there's a risk. Palladium is also a good one, or Oil, or Tobacco.

If you mark Gold versus other precious metals, its clear that the current gold price is alot to do with speculation. And of course, all this economic hysteria is only making the speculation worse. Its very unlikely for Gold to get much higher than 1,100 for a good few years. I'd expect a correction back down to the 700-900 range fairly soon.

http://goldprice.org/charts/history/gold_all_data_o_usd.png

As you can see from long term trending, its historically unprecedented for there to be such a sharp increase in value and for it to last for any significant amount of time. Of course I don't know so much about the gold industry so perhaps my prediction is off. Also, the number of people buying gold, while significant, is not exactly enough to put down the dollar. The dollar is still one of the most traded currencies in the world.

The main danger for the dollar is people switching from the dollar to the euro, not people selling it for gold.

All these doomsday warnings appeal to a certain mindset, but aren't really based on accurate predictions, much like with Peak Oil.

Governments want to keep things stable. Instability is when governments get voted out.

While most of the governmental practices are self destructive, they are more like a slow rolling juggernaut than a runaway train.

Just like with Peak Oil, dollar devaluation is not something that will happen over night.

What libertarians tend to forget is, although government crush a large proportion of economic growth and freedom, the super rich are largely unaffected, and the top 20% of rich generate more wealth than the bottom 80%. and the top 1% generate far more than the 9% below them. If it were not for these super rich, the US would have sunk already, but since they all pay around less than 10% tax (some pay closer to 0%), they'll keep the US going for some time to come.

I'd be much more concerned about increasing government involvement in the banks than any devaluation of the dollar.

When the problems eventually start to stack up, there won't be anything to do but a good 20-50 years of low taxes and solid economic growth to fix it (although the rate of technological change may change this), although this merely puts a band-aid on the consequences rather than a meaningful change on the root of the problem.

As Aubrey De Grey mentioned in his talk (http://www.revleft.com/vb/technocrats-rejoice-t121603/index.html), we're much better at predicting small incremental refinements, than major breakthroughs, so who knows, there could be a massive break through in computers or nanotechnology that will add so much wealth to the world that Governments won't have to pay for the past 100 years of irresponsibility.

[Robert]

its clear that the current gold price is a lot to do with speculation.Amen, though many expect gold to increase in "value" even more next year with the hyper-inflation that can be expected in 2010, this as a result of the 2008-09 growths in money supply (http://www.economicsjunkie.com/money-supply-growth-march-2009/). If food prices stay under control, and we produce a LOT of food in the USA, we'll survive. I think. Fuel prices may be another matter.

I too thought of leaving the USA this year. For China. But ... nah. Too much pollution. Too much government.

Farewell, Déjavu. Send us a post card from ... Gibraltar?

[Revy]

Meh...don't have much to say about this. Except that the gold standard contributed in large part to the Great Depression.

[Dejavu]

I'd like to argue against some of your explicit and implicit arguments, Dejavu.

Most governments are not as naive as Zimbabwe or the Weimar Republic.You really think so? I am talking abuot the U.S. government in particular here.
http://www.stubbycandles.com/images/1950dollar.gif
Its even lower now. The value of our dollar is pretty much 0.08 cents or so to the dollar in 1950.
This means that if your grandparents saved money for the family future (your future) in 1950, lets say they saved $100,000 and put it in a savings account to appreciate with interest, that $100,000 is only worth probably $7,000-$9,000 today and that doesn't even include general prices adjusted for inflation.

Here is another way of looking at it.
Fig 2: Consumer Price Index Levels (1950-2003)
http://www.getobjects.com/Graphics/Figure2.gif
Source: US Bureau of Labor Statistics
All Items, Seasonally Adjusted; 1982-1984=100;

The only reason we haven't turned into Zimbabwe yet is because we have developed enough real wealth in this country over time ( late 19th-20th century) to function as collateral for our debts plus we had the only currency in the world which was directly linked to gold and all other currencies , in turn , were linked to the dollar. The latter reason is why we didn't turn into the Wiemar Republic , not yet anyway. Post-War Germany had to pay out all their debts on demand, our creditors are not making us do that yet and even if they don't , they will just consider us a bad credit liability and start rejecting dollars. The demand for gold by foreign central banks should be great cause for alarm now, especially when an economy we are so dependent on ( India) buys up 200 metric tons of the stuff and merely claims ' Oh, we will still keep dollars in our reserve , all this gold is to just help us 'diversify' our inventory. LOL'

When China and Russia start buying up , just watch the gold price.


The dollar is certainly going to devalue, but that's the way the government likes it.The top echelons, sure, but who cares? Its not like they have assets tied into dollars. The Wall Street tycoons and the top echelons of the state have their assets secured in non-dollar markets. Most of the people here , however , have most everything they have tied into dollars including retirement , 'savings' , college money for kids , etc. All that will evaporate ( it already mostly has , we're just running on credit right now.)

And no , I wouldn't say most politicians particularly appreciate a devalued dollar aside from halting the backlash of a gigantic trade deficit. Most are still instructed by worthless economists in methods that do not work such as spending our way into prosperity. The idea is we can borrow and/or print money as much as we want but that money will eventually be used to create wealth in terms of jobs. As long as someone is doing something somewhere , its counted and GDP growth and everybody with 'the plan' is patting themselves on the back. Supposedly this 'wealth' will be able to absorb the inflation and 'back up' the dollar and even when there is inflation , they can blame it on a source not the cause ( 'free market greed,' etc.) Hayen , its basically our old friend The Broken Window fallacy.

Ofc this is an epic fail but what else are they going to do, hayen? Politicians have what the Austrians would call a 'high time preference' or more simply ' they lack long term incentives to fix things up.' I am quite confident that some of them know what needs to be done ( let the recession play out) but that would make them an unpopular administration/congress. They want the money now to create the illusion of continued prosperity and when the house of cards falls down they can just blame it on the next administration/congress.


If the dollar got devalued to a point where it could damage the government, they'd simply switch off the presses, and dry up government credit for a time.
Read above , starting measures to rescue the dollar and actually letting the market work would make them an unpopular administration because the recession is going to be tough to weather out and things might be better by the next administration, but then that administration will get credit. In other words , most of the American public is quite ignorant of how economics works and expect the government to just 'do something' and 'make it go away.' If politicians were honest , they would be massively unpopular and probably voted out of office.

And they did that in the GD , they contracted 1/3 of the money supply sort of like 'deflation shock therapy' instead of letting the market make the correction by liquidating all bad business. Again, massively unpopular. Aside from all that , the people that profit from these conditions in government, wall street , and the fed all have secured assets that have nothing to do with dollars , in fact , as the dollar fails , they personally profit. ( IMF controls much of the worlds gold along with central banking cartels.)


If you mark Gold versus other precious metals, its clear that the current gold price is alot to do with speculation. And of course, all this economic hysteria is only making the speculation worse. Its very unlikely for Gold to get much higher than 1,100 for a good few years. I'd expect a correction back down to the 700-900 range fairly soon.
All indices have to do with speculation. That isn't the point. What we do know is that 200 metric tons of gold was purchased by a significant emerging economic power at the expense of the dollar. This isn't necessarily a common occurrence with gold speculation , lol. I would say that the forecasts for gold are pretty solid given gold's track record and the empirical facts on the ground ( i.e. the extreme likelihood of China and Russia's massive central banks to buy up gold at the expense of the dollar), Keep an eye on the dollar index though I imagine there will be a lot leveraging here and government interference in terms of guarantees and subsidies as it is probably not in the best interest of the state to have people lose confidence in the dollar. Too bad M3 accounting isn't included into the official measuring of the dollar's pricing, that would be LOL.


As you can see from long term trending, its historically unprecedented for there to be such a sharp increase in value and for it to last for any significant amount of time. Of course I don't know so much about the gold industry so perhaps my prediction is off. Also, the number of people buying gold, while significant, is not exactly enough to put down the dollar. The dollar is still one of the most traded currencies in the world.I like your optimism but I don't share it. When was there that much gold suddenly bought by a massive central bank before? There was the FDR admin which forced people to sell their gold and look where that got us? The dollar's days are numbered and I am now more confident than ever that we are very close to the end.


The main danger for the dollar is people switching from the dollar to the euro, not people selling it for gold.Why is this the major danger? How do you 'switch' to the Euro? You mean officially declaring our currency the Euro? Euro reserves? Nah, it would be some kind of currency easier to devalue , probably a new currency. Gold is internationally traded for dollars. When a central bank buys 200 metric tons of gold , they are paying for it with dollars. This is a strong expression of loss of confidence in the dollar and two other emerging economic superpowers are now expressing the same intent. I don't understand how you don't see this for what it is.


All these doomsday warnings appeal to a certain mindset, but aren't really based on accurate predictions, much like with Peak Oil.We have historical precedence to be concerned. Nearly all powerful civilizations in the past vanished not because lacking a few resources , but because their money was debauched. Not that I would be all to sad if America went down the shithole politically but I am worried about the social consequences. Hitler after the Wiemar Republic should not be forgotten and the U.S. still controls large stockpiles of weapons that can eliminate all traces of civilization on Earth several times over.


Governments want to keep things stable. Instability is when governments get voted out.Which is why if you read what I just said a few responses up, they will stay the course of destruction.


While most of the governmental practices are self destructive, they are more like a slow rolling juggernaut than a runaway train.
Oh really?

This doesn't look like a runaway train to you?

Whosale Price Index of the Wiemar Republic

July 1914 -1.0
Jan 1919 -2.6
July 1919 - 3.4
Jan 1920 -12.6
Jan 1921 -14.4
July 1921 -14.3
Jan 1922 -36.7
July 1922 -100.6
Jan 1923 -2,785.0
July 1923 -194,000.0
Nov 1923 - 726,000,000,000.0

http://www.usagold.com/germannightmare.html

That's how the exponential function works. Its really devious in the sense that when it takes off ( i.e. the amount of growth increase with each smaller and smaller increment of time) there is no stopping it and by the time people see it happen , its too late.

For more clarification , watch this again :
http://www.chrismartenson.com/crashcourse/chapter-4-compounding-problem


What libertarians tend to forget is, although government crush a large proportion of economic growth and freedom, the super rich are largely unaffected, and the top 20% of rich generate more wealth than the bottom 80%. and the top 1% generate far more than the 9% below them. If it were not for these super rich, the US would have sunk already, but since they all pay around less than 10% tax (some pay closer to 0%), they'll keep the US going for some time to come.

I'd be much more concerned about increasing government involvement in the banks than any devaluation of the dollar.

When the problems eventually start to stack up, there won't be anything to do but a good 20-50 years of low taxes and solid economic growth to fix it (although the rate of technological change may change this), although this merely puts a band-aid on the consequences rather than a meaningful change on the root of the problem.The last link I posted about compounding should answer these issues. The U.S. is a means to an end for the elites and it will be changed , altered , or destroyed when they see fit with no regard to the human or social costs. What good is not regulating banks if you provide them with incentives to spend this place into oblivion? Its amazing to me , that you , a person that understands markets , does not see the debauchery of the currency as the primary issue here. It is the money which is the common denominator in all markets and this means all other things that effect peoples' lives. ( Fuel , Medicine, Food , etc).

Even Lenin and Keynes understood this:


Keynes on Lenin:
Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens … Lenin was certainly right. There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. – John Maynard Keynes (via quoty)

As Aubrey De Grey mentioned in his talk, we're much better at predicting small incremental refinements, than major breakthroughs, so who knows, there could be a massive break through in computers or nanotechnology that will add so much wealth to the world that Governments won't have to pay for the past 100 years of irresponsibility.Of course not , the government never pays , its always the people.

[Rosa Provokateur]

So, in layman terms, could we be looking at a potential economic collapse?

[Dejavu]

So, in layman terms, could we be looking at a potential economic collapse?


In layman's terms: Yes but also social collapse.

[IcarusAngel]

That was a good post above dejavu thanks for posting it. I'd note that the US was also producing 'real wealth' even into the 1950s and 60s as well. I agree with Schiff et al. when they say the US has a serious problem with its manufacturing base now. Interestingly I did a quick google and found this:

"
America is teetering on the precipice of economic disaster. Commentators blame deregulated markets and a few bad apples at the top. But these are symptoms of deeper problems. Eminent social scientist and bestselling author Riane Eisler points the way to a sustainable and equitable economy that gives value to caring for our greatest economic assets: people and our natural environment.
This powerful book shows that the great problems of our time - such as poverty, inequality, war, terrorism, and environmental degradation - are due largely to flawed economic systems that set the wrong priorities and misallocate resources. Conventional economic models fail to value and support the most essential human work: caring and caregiving. So basic human needs are increasingly neglected, despair and ecological destruction escalate, and the resulting social tensions fuel many of the conflicts we face today."

from 'the real wealth of nations.'

There is another economists they were talking about at scienceblogs who purposes an ALTERNATIVE model altogether although I keep forgetting his name.

[IcarusAngel]

So, in layman terms, could we be looking at a potential economic collapse?

A whole new system is needed. Modern capitalism is done. The gold standard I don't believe will say Western capitalism. Part of these problems are not just economical but political; the way the political structures are set up.

Probably capitalism will re-emerge seriously reformed ala 1950s (and late 1800s and 1900s in Western Europe).

lol I always get Green Apostle and Green Dragon mixed up even though they spew completely different rhetorc. Sometimes I expect to see semi-authoritarianism political ideology but instead get a dose of social anarchism.

[IcarusAngel]

Had the industry put together a reform program, or even fessed up to the damage they hath wrought? Heavens no, it’s clear that if they huff and puff enough, they can block any serious measures. That does not mean that absolutely nothing will happen, mind you. The industry may have to submit to some indignities so that the politicians can say they have collected a few scalps, but these changes are certain to be in areas that have high PR value but will not inconvenience the bankers overmuch.
In fact, the banksters are better situated than they were before. Now they enjoy explicit state support, a huge web of safety nets, and super low interest rates with virtually no strings attached. The onus is on the officialdom to claw back from this industry-favoring position. Even if the financiers have to concede a little ground, they seem if anything to have benefitted from this wreck-the-global-economy exercise. No reason not to do it again.
An egregious argument for doing little to nothing comes from Josef Ackermann, chairman of Deutsche Bank via the Financial Times (http://www.ft.com/cms/s/0/af58e2a8-af7d-11de-ba1c-00144feabdc0.html):

A deluge of financial regulations threatens to harm economic growth, one of the world’s top bankers said on Friday, in what appeared to be the start of a concerted fightback by the industry against feared regulatory overkill.
Josef Ackermann, chairman of the Institute of International Finance, the global bankers’ association, and head of Deutsche Bank, said governments were not paying enough attention to the aggregate impact of the reforms being proposed.
“There is a trade-off between maximising stability of banks and optimising growth of the real economy. That balance [should] not be forgotten,” Mr Ackermann told the Financial Times. He warned that the entire economy would “pay a high price” if regulation went too far.
Is there an iota of proof for this assertion? We are suffering from a financial sector that has become preoccupied with serving its own interests as opposed to providing services essential to modern economies. At least in the US and UK, banks take a larger chunk of GDP than they did in the early 1980s, and that result probably holds across advanced economies.
Has growth been any better in the era of lightly regulated banking than during the immediate post World War II era of heavily regulated banking? Even before you threw in the cost of the global financial crisis, the answer is no. Now you can argue, correctly, that the years right after World War II saw conditions not in place now (rebuilding war-ravaged countries). But we’ve had some special circumstances of our own, namely, two technology revolutions, first personal computers, then the Internet. But the general point nevertheless holds: the premise behind Ackermann’s remark is wildly counterfactual, and the onus should lie with the bankers to prove otherwise.

http://www.nakedcapitalism.com/category/free-markets-and-their-discontents


Capitalism after the crisis:

Naked capitalism is a pretty good blog.

First, some key elements of Zingales’ argument (http://www.nationalaffairs.com/publications/detail/capitalism-after-the-crisis):

The nature of the crisis, and of the government’s response, now threaten to undermine the public’s sense of the fairness, justice, and legitimacy of democratic capitalism. By allowing the conditions that made the crisis possible (particularly the concentration of power in a few large institutions), and by responding to the crisis as we have (especially with massive government bailouts of banks and large corporations), the United States today risks moving in the direction of European corporatism and the crony capitalism of more statist regimes. This, in turn, endangers America’s unique brand of capitalism, which has thus far avoided becoming associated in the public mind with entrenched corruption, and has therefore kept this country relatively free of populist anti-capitalist sentiment.
In fact, corruption and concentration of power are all relative; America has had a proud tradition of robber barons of various sorts. But Zingales stresses that the US has avoided, at least so far, having an entrenched upper class...

http://www.nakedcapitalism.com/2009/09/capitalism-after-the-crisis-and-free-markets-newspeak.html

[Dejavu]

A gold standard would destroy much of what we know as capitalism which is why I think its a step in the right direction. Of course, there are many commodities other than gold which can A) Retain a store of value , B) Universal accepted medium of exchange , C) Be a unit of account. Gold and other precious metals were/are ideal for this because they were rare and took a lot of labor power to produce. Modern technology has given us some other options to consider as well. Personally , I care about sound money so this does not necessarily have to be gold.

Graduating to sound money needs to be incremental and not done all at once since deflation would result ( which is good) but its immediate effects will be hard on people. Its sort of like heroin withdrawal.

I see us inching more towards fascism from capitalism. Things will get worse before they get better. Lets hope after this grueling experience people will have enough sense not to devise archaic and barbaric forms of social and economic organization again. One can only hope.

[Dejavu]

http://www.nakedcapitalism.com/category/free-markets-and-their-discontents


Capitalism after the crisis:

Naked capitalism is a pretty good blog.

First, some key elements of Zingales’ argument (http://www.nationalaffairs.com/publications/detail/capitalism-after-the-crisis):
The nature of the crisis, and of the government’s response, now threaten to undermine the public’s sense of the fairness, justice, and legitimacy of democratic capitalism. By allowing the conditions that made the crisis possible (particularly the concentration of power in a few large institutions), and by responding to the crisis as we have (especially with massive government bailouts of banks and large corporations), the United States today risks moving in the direction of European corporatism and the crony capitalism of more statist regimes. This, in turn, endangers America’s unique brand of capitalism, which has thus far avoided becoming associated in the public mind with entrenched corruption, and has therefore kept this country relatively free of populist anti-capitalist sentiment.
In fact, corruption and concentration of power are all relative; America has had a proud tradition of robber barons of various sorts. But Zingales stresses that the US has avoided, at least so far, having an entrenched upper class...

http://www.nakedcapitalism.com/2009/09/capitalism-after-the-crisis-and-free-markets-newspeak.html

Schiff said it the best. The Wall Street tycoons got drunk with power and raped society dry but it was indeed the state that supplied them with the alcohol.

[Skooma Addict]

A gold standard would destroy much of what we know as capitalism which is why I think its a step in the right direction. Of course, there are many commodities other than gold which can A) Retain a store of value , B) Universal accepted medium of exchange , C) Be a unit of account. Gold and other precious metals were/are ideal for this because they were rare and took a lot of labor power to produce. Modern technology has given us some other options to consider as well. Personally , I care about sound money so this does not necessarily have to be gold.

I think that eventually, gold or any other commodity currency will naturally be replaced by fiat currency. Do you support free banking or 100% reserve banking? Or maybe something else perhaps?

[Dejavu]

Free banking of course. I think internal market regulation would have the successful banks keep around 80% reserves for liable accounts anyway.

[ellipsis]

I think the OP is a government spy sent to spread confusion and terror among Revleftians.

[Dejavu]

Vermont secessionist, eh? That's cool , we have the same goal here in New Hampshire as well. Keep up the good fight , brother.

[MarxSchmarx]

I think the OP is a government spy sent to spread confusion and terror among Revleftians.


Confusion, certainly. This is a scare tactic, folks. The value of the dollar is going to be stable for some time to come. Certainly compared to other major currencies.

Why? The biggest holder of dollar reserves, apart from the American fed, is the Chinese government. If any thing happens that threatens to devalue the dollar, the Chinese "communists" would use their sizable surpluses to shore up the dollars value. Thus, if the value of the dollar starts to go down, the Chinese will buy more dollars. If euro or commodities start devaluing the dollar, the chinese can sell their holdings in those to lower prices. Over the long-haul, they are trying to diversify very, very slowly. But for the foreseeable future, they have too much of their assets in dollars, that any attempt to get rid of it would devalue their assets further.

[Dejavu]

Confusion, certainly. This is a scare tactic, folks. The value of the dollar is going to be stable for some time to come. Certainly compared to other major currencies.

Why? The biggest holder of dollar reserves, apart from the American fed, is the Chinese government. If any thing happens that threatens to devalue the dollar, the Chinese "communists" would use their sizable surpluses to shore up the dollars value. Thus, if the value of the dollar starts to go down, the Chinese will buy more dollars. If euro or commodities start devaluing the dollar, the chinese can sell their holdings in those to lower prices. Over the long-haul, they are trying to diversify very, very slowly. But for the foreseeable future, they have too much of their assets in dollars, that any attempt to get rid of it would devalue their assets further.

The real world seems to contradict your analysis. The Chinese simply need devalue their own currency to make it more fluent in the world market. Why would China want to buy up more debt which loses value in the long run? It does not make sense that they would buy up dollars just to lose in the end.
China is beyond depending on an American consumer base anymore and our credit is running dry. How many more treasury bonds do you expect them to keep on buying up?
The fact that China is buying , mining , and storing gold at an increasing magnitude directly contradicts what you said. In fact, when the dollar fell significantly ( according to the DX alone) 20 points with the housing bust why did China increase their gold stockpile and lesson their dollar reserves as a consequence?
http://goldnews.bullionvault.com/files/China_gold_ii_1.png

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," -Cheng Siwei, former vice-chairman of the Standing Committee (http://www.rgemonitor.com/asia-monitor/257631/china_to_diversify_out_of_us_dollars)


Check out these links:

Why China wants to buy $93 billion worth of gold (http://www.commodityonline.com/news/China-on-gold-buying-spree-to-grab-bullion-market-15578-3-1.html)
China pushes silver and gold investment to the masses (http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=88452&sn=Detail)
Gold mania in China (http://www.sovereignman.com/finance/gold-mania-in-china/)
After India, China may buy IMF gold (http://www.commodityonline.com/news/After-India-China-may-buy-IMF-gold-22585-3-1.html)

[Dejavu]

The value of the dollar is going to be stable for some time to come. Certainly compared to other major currencies.

http://fxmadness.com/wp-content/uploads/2009/10/dolar-index-long-term-e.png

Stable eh? And we are at the point of injecting trillions/yr into the money/credit expansion. Yes , that's yearly incremental now the time will only get shorter.

http://brokersfirstrealty.com/wp-content/uploads/Image/money-supply.gif


You must have some miraculous wisdom if you forecast smooth sailing for the dollar. Any idea what the next bubble is going to be? Hmm...

http://goldnews.bullionvault.com/files/Bubbles2.png

[Dejavu]

All indicators suggest that China wants to gradually and then more intensly dump dollars. Then China will basically devalue the Yuan with its massive reserves and/or dominate another currency such as the Euro in nearly any market of their choosing. Once the dollar becomes insolvent on the world market , or at least in international gold markets , its presumed that China will have significant influence in the direction of global money markets.

[Havet]

Its even lower now. The value of our dollar is pretty much 0.08 cents or so to the dollar in 1950.
This means that if your grandparents saved money for the family future (your future) in 1950, lets say they saved $100,000 and put it in a savings account to appreciate with interest, that $100,000 is only worth probably $7,000-$9,000 today and that doesn't even include general prices adjusted for inflation.

You seem to be confusing hyperinflation (http://en.wikipedia.org/wiki/Hyperinflation) with inflation (http://en.wikipedia.org/wiki/Inflation)


Definitions used by the media vary from a cumulative inflation rate over three years approaching 100% to "inflation exceeding 50% a month."

As you can see from the graph you linked to, we're further away from hyper inflation now than we were 40 years ago.

Its the rate of inflation that defines hyper inflation.

According to that graph, the US dollar has only lost 5-10 cents value in the last 20 years.

Between 1960 and 1980 it lost 55 cents. So the rate of inflation in the past 20 years is 10 times less than the rate of inflation in the 20 years between 1960 and 1980.

That data in fact shows exactly that the US government is not as naive as Zimbabwe. If they had carried on devaluing currency at the same rate as the 1960-1980s, then hyper inflation might actually be a significant risk.

But what can you see from the graph? The government has excessively eased off on the rate of currency devaluation. Its still devalued, but as long as they don't increase the rate of inflation, economic growth should catch up and compensate for the inflation.

Hyper inflation being defined as 50% inflation per MONTH, according to that graph, in America its been more like 50% per 25 years, and the past 20 years have seen much less devaluation than the 20 years before that.

HYPER INFLATION IMMINENT sounds simply bunk, the data does not support such a prediction.

Maybe in the future the government will go crazy on the presses and hyper inflation will occur, but the past 20 years have showed a trend of decreasing rate of inflation, not increasing.

A fairly stable democracy simply isn't going to risk destroying its power base for.

You talk about Historical precedents, but the cases of hyper inflation are rare for precisely those reasons. In the modern world there is only Zimbabwe, and possible a couple of other countries that have hyper inflation, the hundreds of other governments don't do it because it would destroy their power.

Weimar Republic is not a precedent showing that governments often cause hyper inflation, its a precedent that they rarely do. The Weimar Republic got into hyper inflation under an extraordinary set of circumstances, largely the massive reparations it was ordered to pay under the treaty of versaille.

To pay the billions in reparations, it simply printed the money, and the country was already in a very poor economic state after WW1.

However, how many governments have their been since then that have caused hyper inflation? You can count them on one hand. How many governments have their been that haven't caused hyper inflation? Hundreds, the overwhelming majority keep their currency stable while gradually devaluing it for the political reasons that it is better for elections to print more money than to increase taxes.

The Inflation the US government is causing is a problem, not least because it acts as a stealth tax on all dollar owners, but its irresponsible to cry doomsday over hyper inflation when theres no data to support the prediction.

Here's free talk live on the subject (http://cdn3.libsyn.com/ftl/FTL2009-11-05.mp3?nvb=20091106181530&nva=20091107182530&t=0efff879a2b208be20e7c) (listen to first minutes)

[Pogue]

more evidence that OI is full of fucking wierdos

[Havet]

more evidence that OI is full of fucking wierdos

As always, your contribution is thought-provoking :rolleyes:

[Pogue]

As always, your contribution is thought-provoking :rolleyes:

did i say it was?

[Havet]

did i say it was?

Not really

Just thought that "poor" (http://www.revleft.com/vb/showpost.php?p=1559614&postcount=15) workers (http://www.revleft.com/vb/showpost.php?p=1559620&postcount=17) had (http://www.revleft.com/vb/showpost.php?p=1559643&postcount=23) better things to do than to waste their time posting these kind of thoughtful posts.

[Robert]

This is a scare tactic, folks.

Well, if it is, it's working remarkably well. :blushing:

As for China, do you not need to factor in China's appetite for American exports (http://www.uschina.org/statistics/tradetable.html) before assuming they are totally indifferent to our collapse? I suppose there are other markets where they can buy optical equipment, transportation equipment, corn, pork, cattle, and so on. But there has been a marked increase just from 2008 in our exports to China in several areas. Note that pork bellies, cattle and grain aren't even among our "top" exports to China, though they are substantial.

And a declining dollar will make our exports even cheaper for them. How does this factor in to the doomsday scenarios?

[Rosa Provokateur]

In layman's terms: Yes but also social collapse.

Well it's about time :redstar2000:

[Rosa Provokateur]

A whole new system is needed. Modern capitalism is done. The gold standard I don't believe will say Western capitalism. Part of these problems are not just economical but political; the way the political structures are set up.

Probably capitalism will re-emerge seriously reformed ala 1950s (and late 1800s and 1900s in Western Europe).

lol I always get Green Apostle and Green Dragon mixed up even though they spew completely different rhetorc. Sometimes I expect to see semi-authoritarianism political ideology but instead get a dose of social anarchism.

Spews completely different rhetoric huh? I'm guessing Hoaxist, Stalinist, fascist, etc.

[Dejavu]

You seem to be confusing hyperinflation with inflationNo I am not. I understand the difference just fine. I hold the classical definition that inflation is caused by the increased supply of money/credit/ medium of exchange. Increasing prices are a symptom. These inflationary symptoms take effect over time. I hold hyperinflation to be fundamentally the same thing only with a key difference, the increments of time relative to the amount of inflation are severely shortened which eventually the change of rate will show , but not immediately.


As you can see from the graph you linked to, we're further away from hyper inflation now than we were 40 years ago.I don't think you can necessarily determine that by the rate of inflatin.


Its the rate of inflation that defines hyper inflation.
Sure , once it happens but I don't see how the rate can 'see it coming in time.' ( Btw, I did not claim we are in hyperinflation yet, lol) I think its more important to focus on the AMOUNT of change with each additional unit of time. You can have a steady rate , it might even fluctuating , but that is not really focusing on the amount. As long as there is a rate of change ( inflation) there is some amount being added with each additional unit of time , does this make sense to you? Thats why I think unlike the rate of inflation, the amount of inflation is not constant; it grows larger and larger with every passing unit of time, and that’s why it is more important for us to appreciate than the rate. This is why it is important to also understand compounding.
http://www.federalreserve.gov/pubs/ifdp/2004/804/Figure1.gif
Here is a chart of the rate of inflation over time. This is of course taking the Fed's own statistics which omits certain facts into their calculations but this is fitting for this example. Could you possibly tell that inflation is a problem from this chart judging from the rate? Maybe a little stormy weather , thats it.

http://www.dollardaze.org/blog/posts/2007/July/24/1/USMTotal.gif
Now here is a chart of the amount of inflation ( not rate) over each additional unit of time, notice the severe compounding. We definitely see that for every passing year , we have inflate by a greater amount.

http://www.oxan.com/worldnextweek/2007-07-05/g/HyperinflationGraph2.png
This is a graph of the Zimbabwe's rate of inflation. Zimbabwe started printing money in the early 2000s and the inflation rate was high but still manageable because the rate , while high , remained between 200-500% and people declared it a bad storm to weather. And then, boom, it takes off into hundreds of thousands of percent, and quite suddenly too. All this sudden the observed rate of change did not stack up with the sudden observed super increasing rate. When one considers the amount of change with each passing year, one sees a better picture.


According to that graph, the US dollar has only lost 5-10 cents value in the last 20 years.Who cares? The big picture is important and it lost over 90% of its value in 60 yrs. This point is rather irrelevant. You would expect it to slow down eventually when it gets closer to zero. I'll tell you one thing , its not because we decreased the amount of money we printed , we've still increased the amount substantially ( even if we slowed and accelerated the rate) as shown on the graphs I provided.


Between 1960 and 1980 it lost 55 cents. So the rate of inflation in the past 20 years is 10 times less than the rate of inflation in the 20 years between 1960 and 1980.But the amount is significantly higher.


That data in fact shows exactly that the US government is not as naive as Zimbabwe. If they had carried on devaluing currency at the same rate as the 1960-1980s, then hyper inflation might actually be a significant risk.Another thing is to be said here. If the U.S. had as poor of an economy as Zimbabwe , our monetary practices that we have been doing would've put the nail in the coffin a long time ago. The fact is that we had real wealth as collateral for the debt we took on. Remember , inflation is the relation of the amount money to the amount of real goods and services in the economy. We've gradually and increasingly lost the former but got a lot of the prior. Also , much of the late 70s and on was a degree of 'false prosperity' due to spending borrowed credit/money actually buying foreign produced goods rather than produced here. I wonder what the path of this country would've been like if Nixon didn't close the gold window in 71? Perhaps our markets would have prevented this current level of debt from occurring? Hayen, our current economy has lost a lot of that real wealth that we had generated before , we don't even have a positive savings rate , we are running off borrowed credit. The only thing , right now , preventing a very likely hyperinflation scenario is other countries still willing to extend credit to the U.S. by still holding out on dollars in their reserves.


But what can you see from the graph? The government has excessively eased off on the rate of currency devaluation. Its still devalued, but as long as they don't increase the rate of inflation, economic growth should catch up and compensate for the inflation.What economic 'growth?' lol.


Hyper inflation being defined as 50% inflation per MONTH, according to that graph, in America its been more like 50% per 25 years, and the past 20 years have seen much less devaluation than the 20 years before that.You seem to not be connecting the dots. As shown , Zimbabwe's runaway rate of inflation was quite sudden and far beyond the average rate of inflation they had ( which was still ridiculously high but it remained around an average). The only way to explain Zimbabwe in a proper context would to be to examine the amount of inflation over each additional unit of time , not just the rate. I argue the same is true for the U.S.


HYPER INFLATION IMMINENT sounds simply bunk, the data does not support such a prediction.Depends on how you look at the data but I believe I've provided data for every single thing I have claimed in this thread so far.


Maybe in the future the government will go crazy on the presses and hyper inflation will occur, but the past 20 years have showed a trend of decreasing rate of inflation, not increasing.Yet have shown a sick increase in the amount of inflation with each additional unit of time. You can actually halt the rate of inflation and still print money , at least temporarily ( price controls ,etc). You seriously don't think the trillion dollar bailouts and stimulus' will have a severe penalty for the dollar and you don't think the dollar is endangered from losing its status as a world currency? Then what happens hayen? What are all these countries gonna do with those dollars? That's right , spend while the spending is hot! They are going to flood our markets with all this reserve paper they've been holding, buying up anything we actually have of value here , and then watch the rate of inflation.


A fairly stable democracy simply isn't going to risk destroying its power base for.Sure they would. Especially if the people in power stand to profit from a failing dollar ( i.e. have wealth tied up in anti-dollar ventures). Or, it could be a dose of ignorance as well. They might believe they are helping the economy and are assured of this by the so called 'professional economists' but are realy being fed misinformation and are destroying the economy they claim to want to save.


You talk about Historical precedents, but the cases of hyper inflation are rare for precisely those reasons. In the modern world there is only Zimbabwe, and possible a couple of other countries that have hyper inflation, the hundreds of other governments don't do it because it would destroy their power.Depends on where the people in power have their vested interest. If you don't think massive printing of money , now moreso than ever , especially if you look at the amount they create relative to the time they do it in, foreign wars , welfare state , negative savings rate , offshore capital investments, are all a recipe for this , then I don't know what you're reasoning is out of this if you somehow fail to see the logical conclusions.


Weimar Republic is not a precedent showing that governments often cause hyper inflation, its a precedent that they rarely do. The Weimar Republic got into hyper inflation under an extraordinary set of circumstances, largely the massive reparations it was ordered to pay under the treaty of versaille.We have an empire around the world we're trying to upkeep , we are expanding both foreign and domestic spending way beyond our means, we are financing it with debt and destroying our currency in the process. Rome had similar conditions in antiquity. I wouldn't say that we are in an 'ordinary set of circumstances' as a country.


However, how many governments have their been since then that have caused hyper inflation? You can count them on one hand. How many governments have their been that haven't caused hyper inflation? Hundreds, the overwhelming majority keep their currency stable while gradually devaluing it for the political reasons that it is better for elections to print more money than to increase taxes.You don't see the danger of debauching the currency and hyperinflation and their correlation. Which is fine , I guess. But this isn't really an argument your making. I merely pointed out the example to show that it can and does happen. You point out ' not a lot' but that has nothing to do with whether the United States is in danger or not , its not really an argument.


The Inflation the US government is causing is a problem, not least because it acts as a stealth tax on all dollar owners, but its irresponsible to cry doomsday over hyper inflation when theres no data to support the prediction.I beg the differ and I think I made a valid case.

[MarxSchmarx]

The real world seems to contradict your analysis. The Chinese simply need devalue their own currency to make it more fluent in the world market. Why would China want to buy up more debt which loses value in the long run? It does not make sense that they would buy up dollars just to lose in the end.
China is beyond depending on an American consumer base anymore and our credit is running dry. How many more treasury bonds do you expect them to keep on buying up?


Well the capitalist press, who has a considerable interest in this thing, begs to differ:
http://blogs.wsj.com/chinarealtime/2009/10/29/replacing-the-us-consumer-is-china-up-to-the-job/

The Chinese middle class is still too small to support a local consumer economy. Worse, this middle class seeks foreign goods and Chinese goods are increasingly priced competitively to other developing markets without any devaluation of the yuan.



The fact that China is buying , mining , and storing gold at an increasing magnitude directly contradicts what you said. In fact, when the dollar fell significantly ( according to the DX alone) 20 points with the housing bust why did China increase their gold stockpile and lesson their dollar reserves as a consequence?
http://goldnews.bullionvault.com/files/China_gold_ii_1.png

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," -Cheng Siwei, former vice-chairman of the Standing Committee (http://www.rgemonitor.com/asia-monitor/257631/china_to_diversify_out_of_us_dollars)


Ummm.... that quote directly supports my view that the Chinese are treading very, very carefully on diversifying out of the dollar from their own self interests.

Moreover, most of the investments in gold from China are largely domestic purchases anyway, and are still (relatively speaking) miniscule:
http://news.goldseek.com/MerkInvestments/1257429909.php


However, because the gold market is much smaller than the currency market, China’s gold reserves as a percentage of total reserves has actually been going down.

Also, in re your links, none of them contradict the idea that CHina is seeking to gradually disentangle itself from the dollar; gold is but one of many such strategic reinvestments. They will only do so until it entails devaluation of their dollar assets.

[Dejavu]

The Chinese middle class is still too small to support a local consumer economy. Worse, this middle class seeks foreign goods and Chinese goods are increasingly priced competitively to other developing markets without any devaluation of the yuan.

I agreed with everything above except this ^^ part. ( Also I think they will start speeding up their 'diversification' out of the dollar - I call it for what it is , dumping)
With China's massive reserves they can easily devalue the Yuan once they boot the dollar, that is not a major issue actually. Americans' greatest defense ' exports to China' and 'the American consumer' are both very weak arguments. China will open up more of its own markets on its own citizens once the Americans are declared bankrupt , I mean , why would they not? Citizens are already strongly encourage to stock up on gold presumably for savings to absorb a booming inward economy. Btw, with the weakening of the American consumer, the overall international price of exported goods will decrease significantly making local consumption lucrative in China.

[Havet]

No I am not. I understand the difference just fine. I hold the classical definition that inflation is caused by the increased supply of money/credit/ medium of exchange. Increasing prices are a symptom. These inflationary symptoms take effect over time. I hold hyperinflation to be fundamentally the same thing only with a key difference, the increments of time relative to the amount of inflation are severely shortened which eventually the change of rate will show , but not immediately.

I don't think you can necessarily determine that by the rate of inflatin.

Sure , once it happens but I don't see how the rate can 'see it coming in time.' ( Btw, I did not claim we are in hyperinflation yet, lol) I think its more important to focus on the AMOUNT of change with each additional unit of time. You can have a steady rate , it might even fluctuating , but that is not really focusing on the amount. As long as there is a rate of change ( inflation) there is some amount being added with each additional unit of time , does this make sense to you? Thats why I think unlike the rate of inflation, the amount of inflation is not constant; it grows larger and larger with every passing unit of time, and that’s why it is more important for us to appreciate than the rate. This is why it is important to also understand compounding.
http://www.federalreserve.gov/pubs/ifdp/2004/804/Figure1.gif
Here is a chart of the rate of inflation over time. This is of course taking the Fed's own statistics which omits certain facts into their calculations but this is fitting for this example. Could you possibly tell that inflation is a problem from this chart judging from the rate? Maybe a little stormy weather , thats it.

http://www.dollardaze.org/blog/posts/2007/July/24/1/USMTotal.gif
Now here is a chart of the amount of inflation ( not rate) over each additional unit of time, notice the severe compounding. We definitely see that for every passing year , we have inflate by a greater amount.

http://www.oxan.com/worldnextweek/2007-07-05/g/HyperinflationGraph2.png
This is a graph of the Zimbabwe's rate of inflation. Zimbabwe started printing money in the early 2000s and the inflation rate was high but still manageable because the rate , while high , remained between 200-500% and people declared it a bad storm to weather. And then, boom, it takes off into hundreds of thousands of percent, and quite suddenly too. All this sudden the observed rate of change did not stack up with the sudden observed super increasing rate. When one considers the amount of change with each passing year, one sees a better picture.

Who cares? The big picture is important and it lost over 90% of its value in 60 yrs. This point is rather irrelevant. You would expect it to slow down eventually when it gets closer to zero. I'll tell you one thing , its not because we decreased the amount of money we printed , we've still increased the amount substantially ( even if we slowed and accelerated the rate) as shown on the graphs I provided.

But the amount is significantly higher.

Another thing is to be said here. If the U.S. had as poor of an economy as Zimbabwe , our monetary practices that we have been doing would've put the nail in the coffin a long time ago. The fact is that we had real wealth as collateral for the debt we took on. Remember , inflation is the relation of the amount money to the amount of real goods and services in the economy. We've gradually and increasingly lost the former but got a lot of the prior. Also , much of the late 70s and on was a degree of 'false prosperity' due to spending borrowed credit/money actually buying foreign produced goods rather than produced here. I wonder what the path of this country would've been like if Nixon didn't close the gold window in 71? Perhaps our markets would have prevented this current level of debt from occurring? Hayen, our current economy has lost a lot of that real wealth that we had generated before , we don't even have a positive savings rate , we are running off borrowed credit. The only thing , right now , preventing a very likely hyperinflation scenario is other countries still willing to extend credit to the U.S. by still holding out on dollars in their reserves.

What economic 'growth?' lol.

You seem to not be connecting the dots. As shown , Zimbabwe's runaway rate of inflation was quite sudden and far beyond the average rate of inflation they had ( which was still ridiculously high but it remained around an average). The only way to explain Zimbabwe in a proper context would to be to examine the amount of inflation over each additional unit of time , not just the rate. I argue the same is true for the U.S.

Depends on how you look at the data but I believe I've provided data for every single thing I have claimed in this thread so far.

Yet have shown a sick increase in the amount of inflation with each additional unit of time. You can actually halt the rate of inflation and still print money , at least temporarily ( price controls ,etc). You seriously don't think the trillion dollar bailouts and stimulus' will have a severe penalty for the dollar and you don't think the dollar is endangered from losing its status as a world currency? Then what happens hayen? What are all these countries gonna do with those dollars? That's right , spend while the spending is hot! They are going to flood our markets with all this reserve paper they've been holding, buying up anything we actually have of value here , and then watch the rate of inflation.

Sure they would. Especially if the people in power stand to profit from a failing dollar ( i.e. have wealth tied up in anti-dollar ventures). Or, it could be a dose of ignorance as well. They might believe they are helping the economy and are assured of this by the so called 'professional economists' but are realy being fed misinformation and are destroying the economy they claim to want to save.

Depends on where the people in power have their vested interest. If you don't think massive printing of money , now moreso than ever , especially if you look at the amount they create relative to the time they do it in, foreign wars , welfare state , negative savings rate , offshore capital investments, are all a recipe for this , then I don't know what you're reasoning is out of this if you somehow fail to see the logical conclusions.

We have an empire around the world we're trying to upkeep , we are expanding both foreign and domestic spending way beyond our means, we are financing it with debt and destroying our currency in the process. Rome had similar conditions in antiquity. I wouldn't say that we are in an 'ordinary set of circumstances' as a country.
You don't see the danger of debauching the currency and hyperinflation and their correlation. Which is fine , I guess. But this isn't really an argument your making. I merely pointed out the example to show that it can and does happen. You point out ' not a lot' but that has nothing to do with whether the United States is in danger or not , its not really an argument.

I beg the differ and I think I made a valid case.

The only useful definition of hyper inflation is in a situation like Zimbabwe/Weimar republic where inflation is above 50% a month, where the rapid devaluation of money is actually causing major problems.

The only problems that are going to be caused by US inflation are the ones that are already current, a small but significant devaluation of the value of the currency. HYPER INFLATION IMMINENT is clearly an attempt to appeal to this kind of panic.

Your comments on compound interest don't seem to make much sense. Pretty much every country in the world has inflation of +1% every year. The means its compounded on the previous years inflation. Is hyper inflation imminent for them too?

The government manipulation of the bank system is a much much graver concern than the inflation that is happening.

US isn't even in the top 100 for most inflation by country (http://www.indexmundi.com/g/r.aspx?t=100&v=71). The rate of inflation is much lower than it was.

[Jazzratt]

more evidence that OI is full of fucking wierdos

Fucking weirdos and stockbrokers. It frays ones sanity after a while.

[Bud Struggle]

Fucking weirdos and stockbrokers. It frays ones sanity after a while.

Is there any chance you would let us have our own stock and commodity picking club here on RevLeft?


We could promise to give 10% of our profits to he support of RevLeft.

[Il Medico]

I read though this thread, now I have a headache. Okay, stock brokers of OI, how is any of this mumbo jumbo going to effect a guy making less then 10 K a year? And please, no more freaking charts.

[Robert]

how is any of this mumbo jumbo going to effect a guy making less then 10 K a year?You're making less than the minimum wage? I'd first contact my local state representative and the Department of Labo (http://www.dol.gov/index.htm)r and raise hell. If you're working part time, never mind.

To answer your question, you'll be paying more for everything, because everything you buy comes to you or to your store on a truck, which runs on fuel. You may also lose your job if Déjavu's direst predictions materialize. If the government collapses, you may end up fighting over the contents of garbage cans.

My advice (assuming you can't afford to emigrate to Gibraltar with Déjavu): hoard the common bean (http://en.wikipedia.org/wiki/Common_bean#Pinto_or_mottled_beans). Cheap, delicious, and nutritious, they can be stored indefinitely.

[Dejavu]

The only useful definition of hyper inflation is in a situation like Zimbabwe/Weimar republic where inflation is above 50% a month, where the rapid devaluation of money is actually causing major problems.

The only problems that are going to be caused by US inflation are the ones that are already current, a small but significant devaluation of the value of the currency. HYPER INFLATION IMMINENT is clearly an attempt to appeal to this kind of panic.

Your comments on compound interest don't seem to make much sense. Pretty much every country in the world has inflation of +1% every year. The means its compounded on the previous years inflation. Is hyper inflation imminent for them too?

The government manipulation of the bank system is a much much graver concern than the inflation that is happening.

US isn't even in the top 100 for most inflation by country (http://www.indexmundi.com/g/r.aspx?t=100&v=71). The rate of inflation is much lower than it was.


Dude, you are not understanding the difference between the amount of inflation / each additional unit of time and the rate of inflation. I think I was pretty damn clear in illustrating the rate of inflation is not going to give you a clear picture of what is potentially going to happen.

Anyway, that's fine man. We'll just wait and see what happens. I think your bullishness about this is naive but I'm not making claims of certainty. I only claim hyperinflationary depression is an extremely likely scenario if we stay our course. We can still get away (maybe) from this likely scenario if we develop sound money policies and stop debauching our currency but time is short.

[GatesofLenin]

The stock market is run by greedy pigs, time for the world to see how corrupt the capitalist system is. These are good times for us comrades, people will listen.

[scarletghoul]

I was thinking of getting some gold a while ago, but never got round to it. Ah well.

[Havet]

Dude, you are not understanding the difference between the amount of inflation / each additional unit of time and the rate of inflation. I think I was pretty damn clear in illustrating the rate of inflation is not going to give you a clear picture of what is potentially going to happen.

Anyway, that's fine man. We'll just wait and see what happens. I think your bullishness about this is naive but I'm not making claims of certainty. I only claim hyperinflationary depression is an extremely likely scenario if we stay our course. We can still get away (maybe) from this likely scenario if we develop sound money policies and stop debauching our currency but time is short.

If what you're saying is true, all the 100+ countries that have inflation higher than America are going to get there first.

I think you may be overlooking compounding, in the sense that compounding happens over a vast period of time, and is nothing like if you have 50% inflation a month compounding for 12 months.

"I think I was pretty damn clear in illustrating the rate of inflation is not going to give you a clear picture of what is potentially going to happen."

Look, you showed a graph showing devaluation of the dollar, and rise of consumer prices as proof of inflation, then you doubled back and sayd non of that stuff will give me a clear idea?

I think you also overlooked the effect economic growth has on balancing inflation.

If you have trillions of dollars of wealth (http://www.google.co.uk/search?client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&channel=s&hl=en&source=hp&q=US+GDP&meta=&btnG=Google+Search)generated every year, that does a hell of alot to balance out the devaluation of currency.

this is one of the reason the "compound" issue isn't an important factor. While inflation compounds, so does economic growth, so its really not as if 5% inflation every year is actually turning into 50% inflation a month due to.

U.S.A inflation is bad enough for what we can prove it is, not some imaginary hyper inflation scenario that can't be empirically proved.

The currency is devalueing, but calling it hyper inflation (50% per month) is, IMO, stretching it.

If the US currency gets really devalued, the government will raise interest rates and quit printing money, like other governments have done in the past.

Or if things get really drastic they might even switch currency.

Either way the damage caused by the Feds money games is infinitely smaller than the damage done by massive taxation and regulation.

[Dejavu]

If what you're saying is true, all the 100+ countries that have inflation higher than America are going to get there first.

I think you may be overlooking compounding, in the sense that compounding happens over a vast period of time, and is nothing like if you have 50% inflation a month compounding for 12 months.

"I think I was pretty damn clear in illustrating the rate of inflation is not going to give you a clear picture of what is potentially going to happen."

Look, you showed a graph showing devaluation of the dollar, and rise of consumer prices as proof of inflation, then you doubled back and sayd non of that stuff will give me a clear idea?

I think you also overlooked the effect economic growth has on balancing inflation.

If you have trillions of dollars of wealth (http://www.google.co.uk/search?client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&channel=s&hl=en&source=hp&q=US+GDP&meta=&btnG=Google+Search)generated every year, that does a hell of alot to balance out the devaluation of currency.

this is one of the reason the "compound" issue isn't an important factor. While inflation compounds, so does economic growth, so its really not as if 5% inflation every year is actually turning into 50% inflation a month due to.

U.S.A inflation is bad enough for what we can prove it is, not some imaginary hyper inflation scenario that can't be empirically proved.

The currency is devalueing, but calling it hyper inflation (50% per month) is, IMO, stretching it.

If the US currency gets really devalued, the government will raise interest rates and quit printing money, like other governments have done in the past.

Or if things get really drastic they might even switch currency.

Either way the damage caused by the Feds money games is infinitely smaller than the damage done by massive taxation and regulation.

Ugh. Most other countries do not have the accumulated amount of inflation we have accrued. I don't over look 'wealth' as you call it because a lot of that is phony wealth created by the financial sector sloshing around debt ( paper and credit). Employment, as we tend to measure =/= real GDP especially if they are not engaged in producing anything ( i.e. majority of the public sector and financial markets). I am already saying they should let the market increase the interest rate which will surely lead to a severe recession but it is desperately needed. But, they are not letting the market correct this problem and making it worse by doing the opposite. It would be immediately unpopular.

How can I 'empirically prove' a hyperinflation scenario that has not even happened yet? That's just dumb to argue on that premise. What I can demonstrate is that the only difference between hyperinflation and inflation is the amount of inflation increasing with each additional unit of time. This is an exponential function. Thus far I have shown that to be the case.

I seriously disagree with you on your last statement. I think this is where we differ the most. I think taxation and regulation ( while ethically equivalent to central banking) is minuscule compared to what the central banks actually do. If we only had to worry about direct taxation and some annoying regulations , I would be thrilled , we'd have a much better shot at getting rid of just that and obtaining more freedom.

But that's cool that we disagree. It shows those of us truly interested in freedom are not drones and think for ourselves. The goal is still the same.;)

[Il Medico]

You're making less than the minimum wage? I'd first contact my local state representative and the Department of Labo (http://www.dol.gov/index.htm)r and raise hell. If you're working part time, never mind.
I work 7-days a week (for at max $200 dollars a week, but usually $160, but like last week I only made $75, not even enough to cover the money I spend driving 50 miles a night). No holidays, ever ( and on most holidays we get even bigger papers). No benefits either. And you can't just quit, if you want to leave, you got to work 30 more days, or they charge you $1,000. Never get a job as a newspaper carrier (aka guy who delivers the newspaper).


To answer your question, you'll be paying more for everything, because everything you buy comes to you or to your store on a truck, which runs on fuel.

You may also lose your job if Déjavu's direst predictions materialize. If the government collapses, you may end up fighting over the contents of garbage cans.

My advice (assuming you can't afford to emigrate to Gibraltar with Déjavu): hoard the common bean (http://en.wikipedia.org/wiki/Common_bean#Pinto_or_mottled_beans). Cheap, delicious, and nutritious, they can be stored indefinitely.
Oh, joy. Now for my second question, what will be the effect on the bourgeoisie, will they be be homeless and eating ramen noddles and beans as well? My spidey sense doubts it.

[Bud Struggle]

Oh, joy. Now for my second question, what will be the effect on the bourgeoisie, will they be be homeless and eating ramen noddles and beans as well? My spidey sense doubts it.

Of course not. We are buying gold thanks to the good financial advice we get on RevLeft and we'll make out quite nicely. ;) :)

[brigadista]

Gibraltar is horrible...

[Robert]

I work 7-days a week (for at max $200 dollars a week, but usually $160, but like last week I only made $75, not even enough to cover the money I spend driving 50 miles a night). No holidays, ever ( and on most holidays we get even bigger papers). No benefits either. And you can't just quit, if you want to leave, you got to work 30 more days, or they charge you $1,000. Never get a job as a newspaper carrier (aka guy who delivers the newspaper).

You sound like an independent contractor, not a wage slave, so you can't sue, but I'm not getting the $1,000 reverse severance pay deal. Did you sign a contract saying that? I doubt they would sue you for $1,000 if you quit. Of course, you didn't say you even wanted to quit, and I still don't know how many hours you are working for the $160. That's about 20 hours at minimum wage. 7 nights per week at ... what, 3 hours/night?

I also don't get the $75 for 50 miles. If you get just 20 mpg, it shouldn't cost you more than $7.00 for gasoline.

Anyway, I hope you are looking for another line of work, as newspapers are going the way of the buggy whip anyway. Good luck.

[Havet]

I seriously disagree with you on your last statement. I think this is
where we differ the most. I think taxation and regulation ( while
ethically equivalent to central banking) is minuscule compared to what
the central banks actually do. If we only had to worry about direct
taxation and some annoying regulations , I would be thrilled , we'd
have a much better shot at getting rid of just that and obtaining more
freedom

The dollar devalues a few percent each year, even this can be mostly avoided if you're not saving your money in dollars and only using it as liquid assetts.

In some states people can pay over 50% in tax for all direct taxes.

Whats going to happen now you'll probably say, but that devaluation is exponential, so its worse. Which I honestly think is wrong. you don't experience the exponential devaluation unless you are keeping that wealth in dollar form over that period of time.

Using your own data: http://www.stubbycandles.com/images/1950dollar.gif

in the 45 year span of the graph, the dollar has only devalued on average 2% a year, thats in absolute value, so compound interest is already included (please understand this and don't use compound interest as a reason inflation is a bigger problem than all direct taxes combined).

2% a year is no where near the equivalent of pretty much every tax. And its alot easier to avoid the 'inflation tax' by not keeping large sums of wealth in the form of dollars. so all in all someone might pay 2% in 'inflation tax' on 10% of their wealth.

Also, if you count it over the last 15 years, where the rate of devaluation has been vastly reduced, its much less than that.

You should rethink your opinion that THAT'S where everyone's freedom is being wiped out.


What I can demonstrate is that the only difference between hyperinflation and
inflation is the amount of inflation increasing with each additional
unit of time. This is an exponential function. Thus far I have shown
that to be the case.

I disagree. Any country that has a inflation in the +% is exponential. I.e. if a country has 1% this year, and 1% next year, the increase of 1% is exponentially bigger the second year.

You seem to have changed (consciously or not) the meaning of hyperinflation to one that means nothing of any significance.

The hyper inflation definition of 50% a month, is one of compound interest. It is not, when 1% has compounded to be the same as 50% 50 years ago.

If that where the case the vast majority of all countries would be classed as having "hyper inflation" .

[Dejavu]

You refuse to grasp what I'm saying which is fine. I bore of this. Lets just wait and see if I'm right, O.K?

Cheers.

[Havet]

You refuse to grasp what I'm saying which is fine. I bore of this. Lets just wait and see if I'm right, O.K?

Cheers.

Lol ok

no hard feelings? :)

[Il Medico]

You sound like an independent contractor,
That's what they call us. Back in the early 90's when they need to save some money they switched the lowest level of employment in the companies (the carrier) to independent contractors, because that way they could save on benefits.

not a wage slave, so you can't sue, but I'm not getting the $1,000 reverse severance pay deal. Did you sign a contract saying that? I doubt they would sue you for $1,000 if you quit. They don't sue you, they just bill you. (You can't just quit, or their baseline employees district Managers have to go out and do the route. And they don't get any money for doing this either, so I don't see what the company loses if people just walk off). And yes it is in our contract. And the way the pay system works, you would lose your down payment as well (you get that back the last week you work, if you just leave, they keep that as well, so more like $1,300)


Of course, you didn't say you even wanted to quit, and I still don't know how many hours you are working for the $160. That's about 20 hours at minimum wage. 7 nights per week at ... what, 3 hours/night?Glory of being an independent contractor, the company screws you and all the bad shit you catch. (some asshole decides to steal papers from your box, the truck shows up late to give you your papers and thus you lose sales, etc etc). One paper route is considered to be a part-time job, but I have two. On the week days the time it take to do the routes is about 3 hours delivery time and 1 1/2 -2 hours insertion (putting the papers together, filling out paper work). But on Sunday, Monday, Tuesday, you can be out for 10 hours. (Sunday is usually 12:00 am to bout 7:00 am, Monday the same, but Tuesday we have to go down and key key in returns for every location[so they will give us a credit the next bloody week {hence why we lose $300 the first week because we have no credit to pay the paper bill}]you can go in about 2:00 am and not get home till like 3:00 pm)


I also don't get the $75 for 50 miles. If you get just 20 mpg, it shouldn't cost you more than $7.00 for gasoline.$75 is what I made total last week. I have an old Buick, so only about 15 miles to the gallon. It cost about $10 dollars to deliver the route one day. So bout $70 bucks a week. (I drive 50 miles per night)


Anyway, I hope you are looking for another line of work, as newspapers are going the way of the buggy whip anyway. Good luck.I've been trying to since I got this bloody job. But no one is hiring and if they do, the job is gone within two day (a friend of mine manages a 7-11 and told me about a job opening she had on night shift, I go in to apply two days later and it is gone). Basically, my job is all the pains of being a worker and of being a bourgeois with none of the benefits for either. But hey, I am luck to have a job. (and for the record, I hope all of these cheap ass newspaper companies go out of business, they screw their "employees" like Bernie Madoff.)

[Robert]

I've been trying to since I got this bloody job.Is there any chance of your taking classes and seeking certification in some category of health service? There will be zillions of jobs for nurses and LVN's and therapists and dieticians and, hell, cooks as far as that goes.

On edit, sorry if me and the Doc are derailing the thread, but if Hayenmill and Dejavu can't agree on whether I should buy gold, or should have bought gold, I'm going shopping for a new guitar. To hell with it, you know? I think both of them at least agree that prices for guitars are headed up.

How high and how fast is the only point of contention as far as I can make out.

[Havet]

Is there any chance of your taking classes and seeking certification in some category of health service? There will be zillions of jobs for nurses and LVN's and therapists and dieticians and, hell, cooks as far as that goes.

On edit, sorry if me and the Doc are derailing the thread, but if Hayenmill and Dejavu can't agree on whether I should buy gold, or should have bought gold, I'm going shopping for a new guitar. To hell with it, you know? I think both of them at least agree that prices for guitars are headed up.

How high and how fast is the only point of contention as far as I can make out.

A guitar sounds okay

You can even use it to beg for money in the event of an economic collapse :cool:

[Red Label]

i already knew this, but if i did not i would of thanked you for a great post:)

[Il Medico]

Is there any chance of your taking classes and seeking certification in some category of health service? There will be zillions of jobs for nurses and LVN's and therapists and dieticians and, hell, cooks as far as that goes.
Haha, no. My only experiences with health care is getting screwed by them ($11,000 for a little over an hour in the hospital with food poisoning) because I don't have insurance. I am currently studying English, so I can grow up and be a straving writer. :lol:


You can even use it to beg for money in the event of an economic collapse :cool:
What? Another one?

[IcarusAngel]

Haha, no. My only experiences with health care is getting screwed by them ($11,000 for a little over an hour in the hospital with food poisoning) because I don't have insurance.

Aww.. That SUCKS man. I hope you're doing all right.


I am currently studying English, so I can grow up and be a straving writer. :lol:

Which is actually a good field to be studying that has a wide variety of applications, such as editor, reviewer, etc.