Greece and the Eurozone in meltdown (deduction, mortgage, purchase, sell)
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http://boombustblog.com/BoomBustBlog...apse-Days.html They are talking about a 50~60% hair cut on Greek debt. For those that say that you always get all your money back on sovereign debt instruments they are talking about getting 1/2 or less back. If you bought those bonds with borrowed money then you are going to not be able to pay back 1/2 of the money you borrowed.
Shakespeare said, nether a borrower nor a lender be. Way back in the day the King of what was the father of our country England made his own money out of wood. We live on an exponential debt curve. We have been for a very long time. Jewish law has years of jubilee where debts are forgiven those were written in antiquity. Back then they only had coins. No paper money. The ancient Greeks taxed their colonies in grain not in gold. They knew that you can't take money out of circulation without bad consequences.
Agree with all of it
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http://www.bearishnews.com/wp-conten...l-debt-gdp.jpg Do you see when the last time we had this much total debt in the US was? The short answer was never. We are as broke as any country on the planet ever was. If we don't restructure our debt or our economy very interesting things will happen and most of them aren't good. We are flirting with hyper inflation with the world's reserve currency. Not good.
This is where most people go wrong. The national debt is precisely what the FED monetizes. Banks can't borrow from the Fed without collateral which is in the form of US treasuries. If I had a verifiable IOU from someone you trust, I could buy something with it from you. That is all a dollar is, a piece of paper backed by government debt which is in turn backed by taxing power. A very simple demonstration of what the national debt really is could be achieved by creating treasury notes and simply paying off the debt. This essentially swaps interest bearing paper in the form of treasuries into non interest bearing legal tender. In other words, we could pay off the national day by tomorrow. Inflation would of course increase, but then again da guberment could just tax it in.
The real scam is the money created by commercial banks at interest. As we can see, they have no useful speculative powers. All they do is create an expensive form of money, mis-allocate it, and then it seeks bailouts. Is that worth interest on 40 trillion?
Almost to a man everyone has been fooled by the financial masters to destroy interest free money in the form of da guberment debt and instead to favor bank issued money at usurious rates.
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The privet money in the US is the world's reserve currency.
Mint coins lots an lots of them and pay off our national debt with them and then have the banks hold them in the fed at no interest. If you mint $14 trillion worth of coins and then have the banks hold them and not let them circulate then they will not cause inflation. It is about time we tax the banks.
That essentially would remove the interest benefit to the banks now hold treasuries as collateral. Though you do demonstrate how easy it would be to pay off the national debt. Though there would still be the fractional reserve system which is what I find most objectionable.
Greece is only a problem because we worry about how the Money Lenders will collect their silver coins. They could always have a Communist revolution nationalize their banks, print a new currency and withdraw from the euro.
What a nonsensical answer. The problem with Greece is that their government is way too big as it is, what with retirement at age 55 and government expenditures comprising more than half of the country's GDP. It's a country where those who consume outnumber those who produce. As a result, it's a basketcase country that got itself into this crisis through its own profligacy, and blaming the bankers is like blaming the guy at the liquor store who sells vodka to a guy who has a secret drinking problem.
What a nonsensical answer. The problem with Greece is that their government is way too big as it is, what with retirement at age 55 and government expenditures comprising more than half of the country's GDP. It's a country where those who consume outnumber those who produce. As a result, it's a basketcase country that got itself into this crisis through its own profligacy, and blaming the bankers is like blaming the guy at the liquor store who sells vodka to a guy who has a secret drinking problem.
Hi cpg35223,
From the Greek point of view its a nonsensical answer. Yet from the view of the rest of the world, its a very good answer. Ask yourself why the credit monetary system is dependent on a basket case? Why should Greece threaten everything? When a bridge collapses, people suspect the engineering may not be sound. Yet this banking system that depends on drunks is sound?
Thats like the guy at the liquor store blaming me for not letting the drunk leech off me to buy more liquor. He loves the drunk, and he loves a drunk pick pocket the most because the liquor store still gets my money when I don't buy a drop.
Let put it this way. It takes two to make a loan, and one of them is not me.
This is where most people go wrong. The national debt is precisely what the FED monetizes.
The national debt exists in two parts. One is in t-bills, the other is in cash. Federal reserve note are part of the national debt. I have read the law on this but…
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Originally Posted by gwynedd1
Banks can't borrow from the Fed without collateral which is in the form of US treasuries. If I had a verifiable IOU from someone you trust, I could buy something with it from you. That is all a dollar is, a piece of paper backed by government debt which is in turn backed by taxing power.
We agree in most part here we don’t trade in dollars we trade in IOU(s) for dollars. Back in the day the civil war to be precise Abe Lincoln went to get loans to run the civil war. No one would pony up so he solved the problem by printing IOU(s) for money, the old green back. This really pissed off the international bankers.
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Originally Posted by gwynedd1
A very simple demonstration of what the national debt really is could be achieved by creating treasury notes and simply paying off the debt. This essentially swaps interest bearing paper in the form of treasuries into non interest bearing legal tender. .
And that is what I’ve been talking about. Unless we restructure the national debt that is precisely what will happen. We have unfunded obligations and not the tax base to cover them. When everyone realizes this and stops buying treasuries then we will just print the cash and that will be hyperinflation with the world’s reserve currency.
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Originally Posted by gwynedd1
In other words, we could pay off the national day by tomorrow. Inflation would of course increase, but then again da guberment could just tax it in.
Not fast enough. We are spending 45% more each day than we take in, in taxes.
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Originally Posted by gwynedd1
The real scam is the money created by commercial banks at interest. As we can see, they have no useful speculative powers. All they do is create an expensive form of money, mis-allocate it, and then it seeks bailouts. Is that worth interest on 40 trillion?
Almost to a man everyone has been fooled by the financial masters to destroy interest free money in the form of da guberment debt and instead to favor bank issued money at usurious rates.
That essentially would remove the interest benefit to the banks now hold treasuries as collateral. Though you do demonstrate how easy it would be to pay off the national debt. Though there would still be the fractional reserve system which is what I find most objectionable.
I want to tax the principle on debt. Now that would be interesting to see.
The national debt exists in two parts. One is in t-bills, the other is in cash. Federal reserve note are part of the national debt. I have read the law on this but… We agree in most part here we don’t trade in dollars we trade in IOU(s) for dollars. Back in the day the civil war to be precise Abe Lincoln went to get loans to run the civil war. No one would pony up so he solved the problem by printing IOU(s) for money, the old green back. This really pissed off the international bankers. And that is what I’ve been talking about. Unless we restructure the national debt that is precisely what will happen. We have unfunded obligations and not the tax base to cover them. When everyone realizes this and stops buying treasuries then we will just print the cash and that will be hyperinflation with the world’s reserve currency. Not fast enough. We are spending 45% more each day than we take in, in taxes. I want to tax the principle on debt. Now that would be interesting to see.
Hi newonecoming2,
The solution to hyperinflation is ending the fanatical cartel. They have expanded the money supply far more than FED. We do have a political problem, but its still nothing compared to the one in finance. They are essentially collecting the bulk of the inflation tax. If they actually produced anything, it might mean something. Do they really know what should be monetized better? With the housing bust, it does not seem like it to me. Secure loans don't even drive innovation. The capital markets do and always have. Its fractional reserve banking that is the issue, not the national debt IMHO.
The national debt can easily function as a money supply, and there is little difference in calling it a treasury note or a bond. Call it a bond that draws interest, and its 13 trillion in "debt". Call it money, and its 13 trillion in money.
So how could they have stopped deflation in 2008? You create more money to stop deflation. If its in the form of bonds, then you must increase the national debt. We are doing the opposite we ought to be doing in this system. We need more national debt, not less. Before anyone panics about inflation in the wrong places, raise the interest rates. It is somewhat confused because the Fed buffers it, but its essentially true. The Fed prints money from US treasuries. When sub-prime went bust, we essentially demonetized sub prime private debt somewhere in the area of 2 trillion. That is why I fliiped my history book back to 1870 when silver and green backs were demonetized.
The simple solution in 2008:
1. tax holiday on social security withholding, both worker and business.
2. Run 2 trillion dollar deficit to "pay" for it.
3. Raise interest rates to prevent inflation.
Under this system the national debt is interest free money. Sure anyone who hold it draws interest, but then they can just create more of it.
I'd rather not create money as a debt, and just use straight treasury notes calling it money, but this is the system we have. We need more national debt.
All a growing national debt will do is cause inflation which will also reduce nominal obligations. Its not a big issue. We can inflate out of it.
The problem with being the reserve currency is Triffin's dilemma. This is especially a problem when the US economy becomes a fraction of the world economy. We have serious inflation potential here. The scary thing is its inevitable. The low interest rates and carry trade is accelerating this process, quite on purpose if you ask me. Though it happens to explain perfectly why debt is essential in this system.
, the United States had to incur large trade deficits in order to provide the rest of the world with the liquidity required for functioning of the global trading system.
To provide the rest of the world money, the US must go into debt aka run trade deficits.Catch that? More debt is needed. What makes the local US economy different? Nothing. We have made a money system where the national debt must always increase. Its just a different scale, but the same nonintuitive reality as the public can never get it right.
From the Greek point of view its a nonsensical answer. Yet from the view of the rest of the world, its a very good answer. Ask yourself why the credit monetary system is dependent on a basket case? Why should Greece threaten everything? When a bridge collapses, people suspect the engineering may not be sound. Yet this banking system that depends on drunks is sound?
Thats like the guy at the liquor store blaming me for not letting the drunk leech off me to buy more liquor. He loves the drunk, and he loves a drunk pick pocket the most because the liquor store still gets my money when I don't buy a drop.
Let put it this way. It takes two to make a loan, and one of them is not me.
Yes indeed. And that's the inherent problem with the entire rotten edifice. Because we have an entire string of countries that can't possibly repay the money they're borrowing, at least as long as they cling to their governing philosophies. Yet the laws of sound finance have been pretty much in suspension over the past twenty years. And now the chickens are coming home to roost.
What a nonsensical answer. The problem with Greece is that their government is way too big as it is, what with retirement at age 55 and government expenditures comprising more than half of the country's GDP. It's a country where those who consume outnumber those who produce. As a result, it's a basketcase country that got itself into this crisis through its own profligacy, and blaming the bankers is like blaming the guy at the liquor store who sells vodka to a guy who has a secret drinking problem.
i would have to agree with that assessment on greece.
the citizens cheat on their taxes, have an underground economy, retire too soon, demand free healthcare, and depend too much on government services ---and when the government cuts back the citizens get outraged.
they can riot but exactly what do they expect to win?
The solution to hyperinflation is ending the fanatical cartel. They have expanded the money supply far more than FED. We do have a political problem, but its still nothing compared to the one in finance. They are essentially collecting the bulk of the inflation tax. If they actually produced anything, it might mean something. Do they really know what should be monetized better? With the housing bust, it does not seem like it to me. Secure loans don't even drive innovation. The capital markets do and always have. Its fractional reserve banking that is the issue, not the national debt IMHO.
The national debt can easily function as a money supply, and there is little difference in calling it a treasury note or a bond. Call it a bond that draws interest, and its 13 trillion in "debt". Call it money, and its 13 trillion in money.
The coins in my pocket say US of A. They are the money that is used to repay the national debt with. The bills in my pocket say Federal Reserve Note. They are what is repaid with the coins.
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Originally Posted by gwynedd1
So how could they have stopped deflation in 2008?
You increase the wages to support the debt load that was the housing bubble. Wage price inflation.
Quote:
Originally Posted by gwynedd1
You create more money to stop deflation.
When you have more debt than the wage base will carry the debt collapses they only way to create more money when that is happening is to increase wages.
Quote:
Originally Posted by gwynedd1
If its in the form of bonds, then you must increase the national debt. We are doing the opposite we ought to be doing in this system. We need more national debt, not less. Before anyone panics about inflation in the wrong places, raise the interest rates.
We can't raise the interest rates as we are borrowing 45% of our budget currently and upping the rates would raise that fraction substaintially.
Quote:
Originally Posted by gwynedd1
It is somewhat confused because the Fed buffers it, but its essentially true. The Fed prints money from US treasuries. When sub-prime went bust, we essentially demonetized sub prime private debt somewhere in the area of 2 trillion. That is why I fliiped my history book back to 1870 when silver and green backs were demonetized.
The simple solution in 2008:
1. tax holiday on social security withholding, both worker and business.
2. Run 2 trillion dollar deficit to "pay" for it.
3. Raise interest rates to prevent inflation.
The simpler solution in 2008.
1.Up the minimum wage to $30hr and print $ 1 trillion and write everyone a check with it.
2.Let the inflation happen to the tune of a 200% inflation in GDP.
3.Tax the principle on debt. This expands the tax base and lets the government collect the inflation tax.
Quote:
Originally Posted by gwynedd1
Under this system the national debt is interest free money. Sure anyone who hold it draws interest, but then they can just create more of it.
I'd rather not create money as a debt, and just use straight treasury notes calling it money, but this is the system we have. We need more national debt.
We need more coins not more national debt. About $1 trillion of them and give them to everyone to spend.
Quote:
Originally Posted by gwynedd1
All a growing national debt will do is cause inflation which will also reduce nominal obligations. Its not a big issue. We can inflate out of it.
The problem with being the reserve currency is Triffin's dilemma. This is especially a problem when the US economy becomes a fraction of the world economy. We have serious inflation potential here. The scary thing is its inevitable. The low interest rates and carry trade is accelerating this process, quite on purpose if you ask me. Though it happens to explain perfectly why debt is essential in this system.
, the United States had to incur large trade deficits in order to provide the rest of the world with the liquidity required for functioning of the global trading system.
To provide the rest of the world money, the US must go into debt aka run trade deficits.Catch that? More debt is needed. What makes the local US economy different? Nothing. We have made a money system where the national debt must always increase. Its just a different scale, but the same nonintuitive reality as the public can never get it right.
There is an alternative to running trade deficits. And that is simply give everyone in the world money to spend. I've noticed something that I haven't had quite the correct word to put it in. The higher the concentration of people that use a currency the lower its value. That average wage in NYC is far higher than the average wage in rural Va. The farther you get away from NYC the more valuable the dollar becomes. Until you hit Tokyo, then the dollar is again less valuable but that is because Tokyo has a higher concentration of people than NYC does.
The coins in my pocket say US of A. They are the money that is used to repay the national debt with. The bills in my pocket say Federal Reserve Note. They are what is repaid with the coins.
LOL, now I see what you are getting at. Coins are produced by the US treasury? So they can mint some million dollar coins then.
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You increase the wages to support the debt load that was the housing bubble. Wage price inflation.
That was the general idea. With a tax holiday, labor would have more money.
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When you have more debt than the wage base will carry the debt collapses they only way to create more money when that is happening is to increase wages.We can't raise the interest rates as we are borrowing 45% of our budget currently and upping the rates would raise that fraction substaintially.The simpler solution in 2008.
1.Up the minimum wage to $30hr and print $ 1 trillion and write everyone a check with it.
That would have been another way though its a bit less conventional. Not collecting the SS withholding is basically the same thing more conventionally. Though you are right, wage inflation by any means would have done something to reverse the financial swindle.
Though I disagree about raising interest rates. The idea is to shut off carry trade and loose loans. Large deficits would create the new money for liquidity instead. Our government only pretends to borrow when they are really just printing money.
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2.Let the inflation happen to the tune of a 200% inflation in GDP.
Not really sure what the right number is but again I agree, wage inflation is needed.
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3.Tax the principle on debt. This expands the tax base and lets the government collect the inflation tax.We need more coins not more national debt. About $1 trillion of them and give them to everyone to spend.There is an alternative to running trade deficits.
If there is the legal frame work to mint coins right out of the treasury, I agree. It would be rather amusing too.
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And that is simply give everyone in the world money to spend. I've noticed something that I haven't had quite the correct word to put it in. The higher the concentration of people that use a currency the lower its value. That average wage in NYC is far higher than the average wage in rural Va. The farther you get away from NYC the more valuable the dollar becomes. Until you hit Tokyo, then the dollar is again less valuable but that is because Tokyo has a higher concentration of people than NYC does.
That is because of the cost of land rents are driven up by demand and limited supply. That means housing and factory space costs are driven up. If labor needs to pay $ a month with another $ a month on office or factory space, while a 100 miles away both are half that price, then the price of goods and services will be reflected in the difference. Must be a term for it somewhere under land rents.
I don't think Greece's debt is large enough to bankrupt the world.
The big problem, I believe, is the fact that for many years Greece was able to borrow money at low interest rates because investors thought Greece was not likely to default because of their Eurozone membership. If Greece defaults and/or leaves the Eurozone, that confidence goes down the drain. So other countries who can also borrow money at low interest rates (for the same reasons Greece could) such such as Italy and Spain, will no longer be able to do so, since investors know being in the Eurozone gurantees nothing. Because they can't borrow money (which is vital for countries to raise funds), they will eventually also default. And when they default, since their debts are significantly larger than Greece, that's when the bank runs will start.
The big problem is not Greece itself, but the domino effect (and confidence crisis) it could trigger.
The main problem is derivatives.
There are about $180 trillion dollars worth of these toxic instruments worldwide and most of them are leveraged.
That means there are really not enough assets to cover them. They are in fact a worldwide pyramid scheme.
If Greece defaults on its debts, then those debts have to be accounted for and covered by someone, which means writing off something classified as assets, which have been used as collateral on more debt somewhere else.
What you have is exactly the same kind of panic we had in 2008, coming from the necessity to sell debt instruments that have questionable value.
In fact, in 2008, no one would touch debt instruments requiring the government to step in and be the "buyer of last resort". The bailouts are temporary measures that do nothing to address the fundamental problem of more debt than assets.
The ever-increasing worldwide debt creates ever increasing debt service, which means an ever increasing amount of every national budget that runs a deficit, goes to interest. It is a feedback loop that only has one final solution. Worldwide economic collapse.
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