Financial topics

[Witchiepoo]

A simple question for all forum members: "where is all this money coming from?"

I have no idea, but I sure hope that Citi holds it together long enough for me to cash in my CD next April. Otherwise, it's back to work!

I was almost guessing that maybe the Fed thinks it won't actually have to shell out any of this money, because the simple promise of government backing makes the markets go up, and the companies more solvent?

If so, that's a big frickin gamble.

[JLak]

The $7.76 trillion should not be compared to GDP. It should be compared to exports. Remember that Weimar crashed not because they couldn't send the money, but because the other nations demanded trade goods. The total debt could easily reach 10 times the yearly export capacity of the entire country. It's impossible to pay back already. The question is whether the US will be able to service the debt when the demand for treasuries drops. At that point they can either default on the debt or just press a few buttons to create all the electronic money they want. Isn't technology wonderful?

What if the US government defaults? Every bank in the world would fail immediately. Now that's deflation! It's also clear that there will be no way to pay for the government itself. (i.e. Anarchy)
What if the US government creates the money? We've seen this one before; it's called hyperinflation and it makes private business impossible. (i.e. Totalitarianism)
What if the US government disciplines itself to run a surplus again? Yeah right!

As a people, we Americans are no longer certain which of these eventualities inspires the greater fear.

However, there is one thing that can and probably will save our ass once again just as it has before. If a much greater crisis erupts somewhere else, then the old corporate USA is once again the safe haven and guiding light of the world.

Of the three likely scenarios, the first two will destroy the value of or ability to redeem any asset whether it be hard cash or complex derivatives, so the only way you'll get out of this one with your wealth intact is the last one. While you should prepare yourself and your family for the worst, you really just have to invest what's left in a business that has real value in a sane economy and hope the portfolio rides it out.

-Lak

[John]

The $7.7 trillion isn't even the point.

If there were an ironclad guarantee that $7.7 trillion would do it,
then we'd survive.

The point is that $7.7 trillion is the figure du jour. It
will continue to go up every week, until even the stupidest
macroeconomist will get the message.

John

[malleni]

The $7.76 trillion should not be compared to GDP. It should be compared to exports. Remember that Weimar crashed not because they couldn't send the money, but because the other nations demanded trade goods. The total debt could easily reach 10 times the yearly export capacity of the entire country. It's impossible to pay back already. The question is whether the US will be able to service the debt when the demand for treasuries drops. At that point they can either default on the debt or just press a few buttons to create all the electronic money they want. Isn't technology wonderful?

What if the US government defaults? Every bank in the world would fail immediately. Now that's deflation! It's also clear that there will be no way to pay for the government itself. (i.e. Anarchy)
What if the US government creates the money? We've seen this one before; it's called hyperinflation and it makes private business impossible. (i.e. Totalitarianism)
What if the US government disciplines itself to run a surplus again? Yeah right!

As a people, we Americans are no longer certain which of these eventualities inspires the greater fear.

However, there is one thing that can and probably will save our ass once again just as it has before. If a much greater crisis erupts somewhere else, then the old corporate USA is once again the safe haven and guiding light of the world.

Of the three likely scenarios, the first two will destroy the value of or ability to redeem any asset whether it be hard cash or complex derivatives, so the only way you'll get out of this one with your wealth intact is the last one. While you should prepare yourself and your family for the worst, you really just have to invest what's left in a business that has real value in a sane economy and hope the portfolio rides it out.

-Lak

JLak,
good summary.
I agreed.


Unfortunately, for me it looks like your point 2 - i.e. Hyperinflation-Totalitarism - is the future we are rapidly heading.

Deflation - even with devastating short time implication - is on the end just correction of the market. Necessary contraction of ballooned ones. It destroyed bed loans, weak business, but (without state interventions) base the situation for the more stability in future. I would not say "anarchy" for deflation since the state force instruments probably remained strong enough to enforce "stability". On the other hand - since huge mass of people are without anything (plain poor) - there is nothing to steal...

On the other side in your second possibility (most real unfortunately) - The "Anarchy" is just the First Phase of the Totalitarism.
Even if I do not like to "predict" future - the logical sad progression is:
1. the financial and political establishment realise that there is enormous balloon.
2. they know that there are two possibility: a)do not intercede - balloon will deflate with all implications, b)intercede - try to inflate (with other words - rob the citizens)
3. since on the World today we have a "system error" based on the dollar monetary dominance - each action on the dollar will automatically transferred to the whole planet... i.e. worlds citizens.
4. Obviously US establishment has decided to try fighting "deflation" with inflation.
5. Other countries are very, very conscious about it. They will soon or later refused to be continually robbed by US establishment, since they can rob own citizens by themselves!
6. This will cause a forced interruption of the present monetary system - i.e. monetary system collapse!
7. As consequence it will lead to increase of social strain in each part of the Globe... With other words - the Anarchy.
8. As way to "rescue" citizens of the increased Anarchy - the different state establishments on the Globe will implement the "special rules" (martial law) - i.e. Totalitarism.


It sounds unbelievable, but all of this points are explained in Orwells 1984, even if he wrote more about time after "special rules" - i.e. Big Brother time.

Unfortunately, it looks that for future "understandings" more studies of Balkan wars will be of help.
Those events were - quite similar- but in very little scale.

[JLak]

Maybe this is more geopolitical, but, is there a single country on earth that has a financial system that is not tied to government and therefore must simply take its lumps without any sort of "robbery" (as in Atlas Shrugged)? I feel such a place might be a very attractive investment and/or living option for the long term.

[John]

> Maybe this is more geopolitical, but, is there a single country on
> earth that has a financial system that is not tied to government
> and therefore must simply take its lumps without any sort of
> "robbery" (as in Atlas Shrugged)? I feel such a place might be a
> very attractive investment and/or living option for the long
> term.

There are indeed countries whose banks are doing well, because they
didn't allow themselves to be pulled into the massive credit bubble,
and so they're not now suffering from deleveraging.

They are: Lebanon, Afghanistan, Iraq, Iran.

** Stock markets in Iraq and Iran are surging.
** http://www.generationaldynamics.com/cgi ... 17#e081017

What do these countries have in common?

They're all in generational Recovery or Awakening eras, so the
survivors of the last financial disaster in their countries are still
alive and kicking.

Japan is also a country with a pretty solid currency and banking
system, because they already had a massive generational panic and
crash that began in 1990. It's only in the last 2-3 years that
Japan's deflationary spiral has ended, and now they have to deal with
a deflationary spiral in the rest of the world.

** Japan's real estate crash may finally end after 16 years
** http://www.generationaldynamics.com/cgi ... 20#e070220

Sincerely,

John

[malleni]

...
They are: Lebanon, Afghanistan, Iraq, Iran.
...

Interesting.
It looks for me that every one of those countries has a problem with "democracy made in" United States of America...?

Coincidence...?

On first look the places do not look as "options for long therm living"...?

[John]

...
They are: Lebanon, Afghanistan, Iraq, Iran.
...

Interesting.
It looks for me that every one of those countries has a problem with "democracy made in" United States of America...?

Don't confuse what's going on with politics.

Lebanon, Iran, Iraq and Afghanistan are in a generational Awakening
era because all four countries fought bloody, genocidal wars of
eradication and extermination in the 1970s-90s.

The political angle, as laid out by the Truman doctrine in 1947, is
that the US should encourage these people to have democracies, so
that they won't try to eradicate and exterminate one another.

** William G. McLoughlin / Awakenings / Truman Doctrine
** http://www.generationaldynamics.com/cgi ... ning060919


Generational Dynamics shows that this whole concept is misguided. We
might as well leave them alone, and just let the rivers of blood
flow. The same is true of Darfur, Congo and Sri Lanka today. Why
should the US get involved? Just let them exterminate each other if
they want. We've got our own problems to worry about. If other
people want to slaughter, torture and annihilate one another, what
business it of ours?

Sincerely,

John

[JLak]

There are indeed countries whose banks are doing well, because they
didn't allow themselves to be pulled into the massive credit bubble,
and so they're not now suffering from deleveraging.

They are: Lebanon, Afghanistan, Iraq, Iran.

** Stock markets in Iraq and Iran are surging.
** http://www.generationaldynamics.com/cgi ... 17#e081017

Funny, but this doesn't seem to work out so well for me.
After reading this site in 2007 and seeing progress in Iraq, I invested my entire Roth IRA in a Fidelity fund that is supposed to index the middle east. The fund lost 80% when it should have gained 40%. It's amazing how you can take the best advice and make all the right predictions and still get totally screwed. Lucky for the fund managers that this country does not give us the option of corporal justice. Really I shouldn't blame them, however. I knew they were both stupid and evil when I invested. I wouldn't have done so if the government had given me the option to manage my own IRA without a paperwork jungle to manage. This too is my fault. It's my fault for deciding to work a job and pay taxes in a country that would have rewarded me more handsomely had I chosen to avoid taxes altogether by joining the underground or indigent. I know this because my brother took the greymarket path as a night club staff worker. I served in the military and took huge debts to pay for the best engineering schools in the world, and yet he is 5 years younger with no more than a high school diploma and ends up taking home more pay than I. So is this really what we've come to? Fundamentalist Muslim nations are the only winners? Has the world as a whole left it's law abiding, moral, productive citizens with no options whatsoever? Is there no safety from bankrupt ideology anywhere on earth? Where is Galt's Gulch?

-JLak
(sorry for the rant)

[John]

Dear John,

> Funny, but this doesn't seem to work out so well for me.

> After reading this site in 2007 and seeing progress in Iraq, I
> invested my entire Roth IRA in a Fidelity fund that is supposed to
> index the middle east. The fund lost 80% when it should have
> gained 40%. It's amazing how you can take the best advice and make
> all the right predictions and still get totally screwed. Lucky for
> the fund managers that this country does not give us the option of
> corporal justice. Really I shouldn't blame them, however. I knew
> they were both stupid and evil when I invested. I wouldn't have
> done so if the government had given me the option to manage my own
> IRA without a paperwork jungle to manage. This too is my fault.
> It's my fault for deciding to work a job and pay taxes in a
> country that would have rewarded me more handsomely had I chosen
> to avoid taxes altogether by joining the underground or indigent.
> I know this because my brother took the greymarket path as a night
> club staff worker. I served in the military and took huge debts to
> pay for the best engineering schools in the world, and yet he is 5
> years younger with no more than a high school diploma and ends up
> taking home more pay than I. So is this really what we've come to?
> Fundamentalist Muslim nations are the only winners? Has the world
> as a whole left it's law abiding, moral, productive citizens with
> no options whatsoever? Is there no safety from bankrupt ideology
> anywhere on earth? Where is Galt's Gulch?

I actually wasn't joking at all.

But it has nothing to do with "Fundamentalist Muslim" nations. Most
other Muslim nations are in generational Crisis eras, and they're as
bad off as everyone else -- Pakistan, Saudi Arabia, Yemen, Kuwait,
etc.

This has nothing to do with politics, nothing to do with "bankrupt
ideologies," and nothing to do with religion. From the point of view
of Generational Dynamics, religion is just one of a collection of
demographic features that identity groups use to distinguish
themselves from each other. Others include language, geography, skin
color, and even clothing.

Sincerely,

John