Financial topics

Investments, gold, currencies, surviving after a financial meltdown
Reality Check
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Joined: Mon Oct 10, 2011 6:07 pm

Re: Financial topics

Post by Reality Check »

Where did all that QE1, QE2 and QE3 Money End Up ?

Why has it not stimulated the economy more ?

Why has it not caused massive inflation yet ?

The following graphs appear to shed some light on the the answer to those questions.

St. Louis Federal Reserve wrote: Reserve balances with Federal Reserve Banks are the difference between "total factors supplying reserve funds" and "total factors, other than reserve balances, absorbing reserve funds." This item includes balances at the Federal Reserve of all depository institutions that are used to satisfy reserve requirements and balances held in excess of balance requirements. It excludes reserves held in the form of cash in bank vaults, and excludes service-related deposits.

Non-Borrowed Total Reserves
Image


Required Reserves
Please Note THIS graph has a much smaller Verticle ( Y ) Scale - Maxes out at 110 Billion
Image
Please Note ABOVE graph has a much smaller Verticle ( Y ) Scale - Maxes out at 110 Billion

St. Louis Federal Reserve wrote: Excess Reserves: Amount of funds held by a depository institution in its account at a Federal Reserve Bank in excess of its required reserve balance and its contractual clearing balance. Excess reserves equals total reserves less required reserves.
Excess Reserves
Image


It Appears the Commercial Banks have just been sitting on it.
aedens
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Joined: Tue Nov 04, 2008 4:13 pm

Re: Financial topics

Post by aedens »

Yes, ever since the tearups on the notional OTC derivative contracts we noted years ago. I will dig up our forumed topical discussion on these events and meanwhile back at the ranch every 10 or 12 years the NPD effects pops up again for the shrink factorys, so again it is just the tip of the cognitive dissonance iceberg we all see. http://www.zerohedge.com/news/2012-10-1 ... depression
Institutionalized criminal negligence, sadistic treatment of employees and increasingly strident demands for respect voiced by these irresponsible authority figures from their victims of cruel predatory corporate practices will fail because they are the very definition of a dysfunctional society.
Psalms has a pinpoint description on these kind and the consequences in scope of logic and compassion. Nothing new under the sun.
The best atypical description also forwarded here was the Gal from Russia who now lives in Canada on the cultural aspects of ethics spillover. We also noted Malachi Martins observations dismissed in mainstream media's capture and predicated path forward. The better Company's are already dealing with it every day.

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Frederic Bastiat, 1850

I got this from the marxist websites traversed.
Coal production is falling in the Appalachian region of the U.S., which includes West Virginia and parts of Kentucky and Virginia. Patriot Coal Corp. has laid off more than 1,200 miners as well as cut health benefits to 2,000 miners and some 20,000 retirees or surviving spouses, reported the
Journal. Alpha Natural Resources Inc. said it was cutting 1,200 jobs. Earlier this year it laid off 700 miners and cut production at more than 20 mines. ConsolEnergy Inc. in early September closed one of its largest mines in southwestern Virginia, which employed 620 miners.

We had a discussion on the coal ash issues and if you are from our area you remember the countless dead pines from metro areas earlier.
http://generationaldynamics.com/forum/v ... ash#p16098
The feds sent a clear message. Kill coal and let disagreement's on the character of politics divide since it is never conducted in hindsight.
If any thing needs to be lightly conveyed the bureaucratic centrist have sown the seeds for regional decline just as the failed
reality noted in the 1965 to 1969 social shifts. What I wish to convey is technological advancements such as we watched in the mid 1980's
would not be considered in VOC scrubbers as sectors disappeared since the not in my back yard politics blossumed into NAFTA as border cost subsidy and democratic policy shift to free trade rhetoric that actually was prevention of left leaning atrocities of realities.
http://ecowatch.org/2012/scrubbers-incr ... amination/
It appears plain that the actual Greens should of secured a base acount of pipelines as mentioned over decades for natural gas advancements and truly how many can afford a 40K mode of transportation now since again manufacturing base has been decimated from even rust belt dialogs. As we noted here also Democrats are defecting since the green mask radicals wish to impose measures that even have awaken liberals to the imposed threat which in fact are real. Those still functioning in the substitution reactionary technolgy's of scale are aware and not removed from the realities of your day either. You simply cannnot genearate waste streams without compliances and then decimate the base acounts to buy your solutions as you once again deplete your base acounts customers.
Acording to the logic of the day I should get a free car since I already paid for it http://www.michigancapitolconfidential.com/16192
Last edited by aedens on Tue Nov 06, 2012 11:50 pm, edited 3 times in total.
Higgenbotham
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Re: Financial topics

Post by Higgenbotham »

aedens wrote:...and meanwhile back at the ranch every 10 or 12 years the NTD effects pops up again for the shrink factorys, so again it is just the tip of the cognitive dissonance iceberg we all see. http://www.zerohedge.com/news/2012-10-1 ... depression
Funny, reminds me of our Whitehall discussion.
http://generationaldynamics.com/forum/v ... ity#p10168
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
aedens
Posts: 5211
Joined: Tue Nov 04, 2008 4:13 pm

Re: Financial topics

Post by aedens »

Yes it dovetails rather nicely as spillover events every decade or so. The study posited correcty the hormone damages from
sociopaths on normalcy bias to stress management we have been babtised in the early days. Phases and dialogs so they
wonder why we have limited regard and measure the attention span of acedemia's ideologues. The crucible of keynasian
debauchery's.
Political calculation is what it will distill to maintain a position of those above him and opinion of those below.
aedens
Posts: 5211
Joined: Tue Nov 04, 2008 4:13 pm

Re: Financial topics

Post by aedens »

http://www.zerohedge.com/news/2012-10-1 ... d-business

Black feathers and time will let us know.
Higgenbotham
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Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

aedens wrote:http://www.zerohedge.com/news/2012-10-1 ... d-business

Black feathers and time will let us know.
Being a former landlord, it's inevitable in my opinion. The reason I got out (a long time ago) was I could see the declining manufacturing job base and retirement income base that was coming. My renters had hourly jobs at GM and pensions from Illinois Bell, as examples. In many areas of the country today where there are large volumes of foreclosures there would be literally nobody to rent to. That's why the foreclosures are there to begin with. But beyond that, a hedge fund doesn't have a chance. The contractors and renters will screw them blind. Class warfare. I never lived in a house or drove a car my tenants couldn't afford. I fixed my own furnaces, etc. If they move up to more expensive properties, the overheads will eat up too much of their profit. No way it can work in this environment.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
Reality Check
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Joined: Mon Oct 10, 2011 6:07 pm

Re: Financial topics

Post by Reality Check »

Higgenbotham wrote:
vincecate wrote:I thought the Treasury and Fed together had like $400 billion in gold and there were like $3 trillion dollars out.
None of the electronic dollars are backed by gold. If they are in a regular bank, they would be backed with whatever assets are on the other side of the ledger.

The paper Federal Reserve Notes are like banking with the Fed except you have a piece of paper instead of electronic digits on a bank statement. Those dollars are also backed by whatever assets are on the other side of the ledger. Reading the Fed's balance sheet, they have the gold listed on there valued at $35 per ounce. Taking the market price of gold, it calculates out to about 40% gold backed on the notes they have in circulation.
When we are talking about "Federal Reserve Notes" we are just talking about U.S. paper money, correct?

The U.S. dollar bills we carry around in our wallets are Federal Reserve Notes, correct ?

My understanding is that Federal Reserve Notes have no guarantee of any type, except they can be used as legal tender to pay off any U.S. dollar denominated debt.

Neither foreign governments, nor any other person, can turn Federal Reserve Notes in for anything ( not gold, not silver, nothing except exchange them for other Federal Reserve Notes ). One can deposit them in a bank and receive an IOU in return from the bank promising to pay you back with "Federal Reserve Notes" under some contractual terms associated with the account, but that is the only thing you are contractually guaranteed to get back, more paper money.
Last edited by Reality Check on Thu Oct 18, 2012 1:30 am, edited 1 time in total.
Reality Check
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Joined: Mon Oct 10, 2011 6:07 pm

Re: Financial topics

Post by Reality Check »

Higgenbotham wrote: None of the electronic dollars are backed by gold.
Neither "Federal Reserve Notes" printed by the FED, nor electronic dollars created by the FED and deposited in a Commercial Bank's Reserve account in Federal Reserve Bank are backed by gold or anything else. They are exactly the same, correct ?
Last edited by Reality Check on Thu Oct 18, 2012 1:31 am, edited 1 time in total.
Higgenbotham
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Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Reality Check wrote:When we are talking about "Federal Reserve Notes" we are just talking about U.S. paper money, correct?

The U.S. dollar bills we carry around in our wallets are Federal Reserve Notes, correct ?

My understanding is that Federal Reserve Notes have no guarantee of any type, except they can be used as legal tender to pay off any U.S. dollar denominated debt.

Neither foreign governments, nor any other person, can turn Federal Reserve Notes in for anything ( not gold, not silver, nothing except exchange them for other Federal Reserve Notes ). One can deposit them in a bank and receive an IOU in return from the bank promising to pay you back with "Federal Reserve Notes" under some contractual terms associated with the account.
All correct.

A Federal Reserve Note is a liability of the Federal Reserve Bank, and holding that note would give the holder legal rights. Whereas it appears the Federal Reserve Notes are substantially "backed" by gold they are no longer "redeemable" in gold. The Federal Reserve Notes are (partially) collateralized with the gold, whereas the electronic dollars are not collateralized. The specific requirement to collateralize the Federal Reserve Notes is found in the Federal Reserve Act.

There's not much discussion of this difference and what it might mean. Antal Fekete speculated on this in 2007 and I found a more recent article referencing Fekete.

http://www.safehaven.com/article/8507/c ... -same-time

http://www.acting-man.com/?p=17058

I see it as a combination of 3 possible unknowns: how the market would interpret what this means and will mean, how a bankruptcy court would interpret it, and what any politician(s) might do in an emergency situation. My understanding of the difference would be: The holder of a Federal Reserve Note has a legal right to their fraction of the collateralized assets on the Fed's balance sheet in the event the Federal Reserve is dissolved or taken through bankruptcy. As a practical matter, that might mean that the holder receives a new paper currency note whereas the electronic money is partially redeemed with a new note or not at all. Granted, the new note may be redeeemable in the gold, depending.
Last edited by Higgenbotham on Thu Oct 18, 2012 1:46 am, edited 1 time in total.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
OLD1953
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Joined: Tue Aug 11, 2009 11:16 pm

Re: Financial topics

Post by OLD1953 »

With respect to gold or any commodity there is more than one mechanism to drive up price. Primary drivers are normally inflation of money and supply/demand for the product.

I have no problem with saying either of those can drive up prices, nor do I have a problem with saying both can occur at once. Where my problem lies is in adding both together and acting as if demand has increased to drive up prices to that extent. To discuss price as demand driven requires removing price increase from other sources, particularily inflation. If inflation drives up all prices 400% and gold goes up 350%, then the price for gold in real terms dropped. And I'll confess I don't know what an ounce of gold is selling for in Tehran today, and given that most seem to be having problems securing food and medical supplies, I doubt many Iranians are worrying about it.

Gold is in a peculiar position when it comes to statistics because many want to use the price of gold as the yardstick of monetary inflation. This causes difficulty, because the price of gold can vary as supply and demand ebbs and flows, and that makes the economic numbers fly all over the place. Without a gold based currency and a fixed gold price, gold is a very elastic rubber ruler against anything but gold.

The lesson the big guys who keep trying to find the "next big thing" are refusing to learn is simply this, leverage quit working. If you want to do rentals, buy the units outright and own them. Don't try a power play based on difference in interest rates and assuming 82% of occupied units or whatever, just buy it and rent it with a superintendent/manager on the ground. The same applies to everything, and the next leg down will make a believer out of all of them. Appropriate yearly returns are no more than 7% after inflation, so deal with it.
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