559 replies to this topic
Posted 06 July 2003 - 10:45 PM
I also don't know if any one posted the free dead bull intro.
NONE of what I type, should be taken as financial advice.
And when you loose control, you'll reap the harvest that you've sown
And as the fear grows, the bad blood slows and turns to stone
And it's too late to loose the weight you used to need to throw around
So have a good drown, as you go down, alone
Dragged down by the stone.
Posted 06 July 2003 - 10:47 PM
Like so, Hypertiger?:
"Another question must be asked, however: Is the Fed prepared to monetize at a high enough level to create the "mega-purchasing power" needed to avert a deflationary credit contraction? The Fed can monetize the purchase of massive amounts of bonds, and it can monetize $100 billion plus annual deficits on the part of Congress, which would inject large amounts of money (without debt) into the economy through its open market operations, and through welfare handouts, farm subsidies, pork barrel bills, wartime spending, etc., which would create substantial purchasing power for consumers and businesses. But would it be enough to counteract the massive credit contraction that a Kondratieff winter brings on?
The problem is that trillions of dollars in credit and its corresponding debt have been created by the Fed over the years at a 10-1 ratio through the pyramiding process (or "multiplier effect") of fractional reserve banking. Now with businesses and consumers slowing their borrowing to a snails pace, the Fed can no longer effectively use the "multiplier effect" to create purchasing power for the economy. It can only resort to simple injections of fiat money that do not work their way into the pyramiding process. In other words, its monetization policies create purchasing power for the economy at a far lower ratio than 10-1 pyramiding does, probably at a 2-1 or 3-1 ratio only. This means that the Fed will find it difficult to create purchasing power at a fast enough rate to counteract the credit contraction taking place amidst all the liabilities that were created at a 10-1 ratio, and which will liquidate at a more rapid pace once deflation sets in. So the big question becomes, can the Fed monetize massively enough through simple fiat money injections devoid of the "multiplier effect" to counteract the power of a Kondratieff winter?
Jay Taylor, editor of Taylor's Gold & Technology Stocks, thinks it is doubtful. As he explains, because the dollar is the world's reserve currency, if the Fed were to print up massive amounts of fiat money, "the U.S. dollar would immediately be trashed as huge foreign investors in the U.S. would [abandon] the currency. At that point, not only inflation, but hyper-inflation would be the likely outcome. Argentina can do that. The U.S. cannot." (GOLD-EAGLE.com, November 5, 2002)
Thus, in Taylor's opinion, unless the dollar somehow ceases to be regarded as the world's reserve currency, the Fed will have to fight deflation primarily through credit and debt creation. Massive amounts of fiat money injections are not really an option. This would make deflation an inevitable outcome."
Posted 06 July 2003 - 10:52 PM
Slothrop... "Most tedious, boring topic ever introduced on M2M: California politics. Sheesh. Can't wait 'til Doc gets back and cleans out the shitload of whining on this subject"
Sorry you see it as just "politics" and not as seeking insight into how to minimize or maximise ones' exposure to the single largest investment most ever make. ... As to "whining" on the subject, I submit you are flat wrong with nothing to contribute by criticism. The financial impact of what we were discussing will directly impact realestate and its valuations in what may be financially THE most important state in the Union.
Posted 06 July 2003 - 11:01 PM
There are some who have no interest in anything that isn't hot casino action. Real estate doesn't fit the bill. If you want to see interest, talk about what expiring option to buy tomorrow to triple your money by Tuesday.
Posted 06 July 2003 - 11:31 PM
good discussion on operations and structure of fannie & freedie in first hour of roger arnold's sunday show. www.businesstalkradio.net - check the weekend host archives.
i deleted a post about Prop 13. apologies to those offended.
Iat least we're all safe for now. thank God we're in a bowling alley.
Posted 06 July 2003 - 11:34 PM
I agree with the above, and I am starting to wonder if this opinion is optimistic -as large increases in total net credit seem to have only minimal effect on growth.
The only thing standing in the way of a dollar colapse right now are a few central banks - who are intervening on a more massive scale than maybe we have ever seen. It is almost amazing how under-reported this subject is, but then bad news is greatly trivialized lately.
I don't know exactly when the dollar will be allowed to fall, but it will - either slowly or fast, or after some type of short term bounce.
Posted 06 July 2003 - 11:45 PM
Here's a thought exercise....money comes into creation via debt, as Hyper explains...most of that debt has some sort of collateral backing it up...in some cases it's a home or a building, a car, a business plan, etc. Credit cards are unsecured, of course, but that's usually just a fraction of the whole picture. The way the system is, every year more debt must be created than the previous year, forever...it's a mushroom cloud...OK...it's been working out just fine (more or less) since the end of WWII....BUTT...by this time the mushroom cloud is so broad, it takes one hell of a lot of additional debt to be created each year to keep the sucker growing...a REALLY BIG number...and that much debt requires lots of collateral to back it up. To say it differently, the system is starving for collateral right now, that's why the housing bubble is raging...housing (and housing inflation) is the "collateral of last resort" in our debt-backed system. Now, think about all the innovative new products that came to market in the decade of the 1990's: cell phones, PC's you could actually do something with, PDA's, Windows, Office Software, Internet/Broadband, yada yada, all of that business activity represented the collateral behind a ton of debt. Think also about how quickly all that technology was iterated on and perfected and cost-efficient-ized into really good, affordable products. Again, lots of collateral backing up lots of debt which backed up lots of business activity. So....where's all the frezied activity here in 2003? Yes, lots of houses are getting built, but I doubt that makes up the difference...I guess my point is, if the deal were working out properly, we should be in the midst of a wave of innovation in some field(s) that was even greater than the tech revolution of the 90's, because the mushroom cloud of debt (business activity) requires it....well, to my eye, it's not happening...housing is doing it's damndest to make up the difference, but it can't go it alone, some other new innovation needs to come to the rescue and fast, something that every household and every business just has to have, and will borrow lots of money to pay for...anyone have any candidates? Whatever it is it better get here soon. And even when it does, it will be competed and perfected and innovated down to near-commodity status in no time, just like in the 90's...remember the hordes of gen-x slackers coming out of the woodwork to code html for big bucks?...so, we'd quickly be back in our current fix once again, hoping and praying for the next miracle innovation to come along....
Posted 06 July 2003 - 11:48 PM
isnt credit expansion, say like via a drop in reserve requirements, essentially money creation and therefore money/currency expansion since it allows banks to loan more, whicle their reserve base is static?
edit: ill be glad when doc or CMGI fan start posting agian so i wont be the worst typist anymore.
Iat least we're all safe for now. thank God we're in a bowling alley.
Posted 07 July 2003 - 12:00 AM
All yoo stinky shrots are gonna be blasted tamarra! Fewtirs are up BIGG!
Posted 07 July 2003 - 12:02 AM
I guess it all depends on your definition of " Collapse" ? I didn't know Japan had collapsed yet. What exactly do you mean by collapse?
By the way, if those futures keep climbing (already up 1050)at this rate we will have a 40 point gap open on the Nasdaq. Jeeze, I love large Gap up opens close to the top of the trading range.
Posted 07 July 2003 - 12:03 AM
sure, I guess...but that isn't a problem in this environment...like Hyper said a while ago, banks aren't turning people away because they are up against their reserve req's and can't legally lend...they are turning away loans because they are afraid for the return of the principal - the definition of a deflationary environment is one in which there are few if any worthwhile investment opportunities left (comparatively), as they were all picked clean during the long disinflationary period. The banks aren't blind to what's going on...
Posted 07 July 2003 - 12:12 AM
They will create debt by selling gold and buying each others government bonds. Once the major governments central banks have each others bonds, why would they want to hurt each other? Then one world currency backed by a basket of government bonds, and one world government not far behind - just like the EU. Heav
en on earth. Gold becomes like silver - demonitized. Goal is gold to 200.
Well, that is their plan.
Posted 07 July 2003 - 12:20 AM
UPDATE - Canada sells one quarter of gold reserves in June
Friday July 4, 8:48 am ET
(Recasts throughout, all figures in U.S. dollars.)
OTTAWA, July 4 (Reuters) - Canada sold about one quarter of its official gold reserves in June but lost $2 million on the transaction because of slumping bullion prices at the end of last month, a government official said on Friday.
Gold sales in June totaled 114,064 ounces, leaving government holdings at about 300,000 ounces on June 30, when the metal closed at $346 an ounce from May 30 when it closed at $361.40 an ounce, Finance Department data showed.
"The gains or losses are based on what the selling price of the gold was relative to its previous valuation at the end of the previous month. So, it was $2 million lower than the previous month-end valuation," the official said.
Canada has a policy of gradually selling off its gold reserves and replacing them with interest-bearing instruments.
Overall Canadian foreign reserve holdings fell by $724 million to $36.7 billion in June, largely due to exchange rate effects which accounted for $395 million in declines.
Slightly more than half of Canada's foreign reserves are held in U.S. dollar-denominated assets so the Canadian dollar's appreciation of more than 15 percent so far this year has trimmed the relative value of government holdings.
Canada also paid out $213 million foreign-currency debt that came due as well as interest charges and cross-currency swap payments.
Posted 07 July 2003 - 12:35 AM
Shorts on a Bull Board? Come now...CMGI...YHOO and EBAY to the moon baby!!
Looks like Canada dumped some of their meager holdings. Hope they keep it up so I can boast I have more holdings than Canada.
AM...I'll disagree with you on the plans the EU has for $200 gold. I believe the EU would like to separate gold from US paper entanglements. This is the future from my viewpoint.
Off to chart those longs I'm buying at the bell,
Posted 07 July 2003 - 12:39 AM
kinda makes you wonder why should we want the stuff if the CB's don't even want it for their reserves. I don't buy the "interest-bearing" story. There's enough volatility in currencies to wipe out any interest earned in a heartbeat if the CB's pick the wrong time to buy their foreign bonds.Reuters
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