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Old 06-28-2020, 03:32 AM
 
80,379 posts, read 78,701,183 times
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whenever i think i know whats next i am reminded of these quotes


"Mr. Speaker, gold prices continue to soar -- or rather, the dollar continues to decline in value... we are witnessing the remonetization of gold, in disregard of the official U.S. Government position concerning the precious metal. The surge in gold prices is the world's vote of no confidence in paper currencies and the governments that promote fiat monetary policies."


He's obviously talking about gold right now, correct? Not quite. That's actually a quote from ron paul in 1979, according to his book "Pillars of Prosperity".

The scary part is, of course, it's 1980 and it's leading up to the 1980 gold price crash,



"I believe such a [gold] standard to be not only desirable and feasible, but absolutely necessary if we aim to avoid the very real possibility of hyperinflation in the near future, and economic collapse."

The problem? The quote was from Ron Paul in 1981. When you predict a crisis around the corner that could be hyperinflationary for almost 40 years, eventually you're going to run into problems and be "vindicated". The only problem is that we're seeing inflation, but nothing close to hyperinflation - not even close. It's been almost 4 decades.
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Last edited by mathjak107; 06-28-2020 at 03:40 AM..
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Old 06-28-2020, 06:36 AM
 
Location: Guadalajara, MX
7,544 posts, read 3,673,179 times
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Quote:
Originally Posted by NJ Brazen_3133 View Post
Those multinationals also killed off all the mom and pop when they came about.
Do you really believe this or did you get caught up in spouting hyperbole?

I've seen stats showing something like 98% of retail stores are small businesses with less than 50 employees. Do you have alternate source that pegs this number at 0%?
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Old 06-28-2020, 07:19 AM
 
2,640 posts, read 1,009,363 times
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Quote:
Originally Posted by artillery77 View Post
The dollar doesn't remain constant, but a weakening dollar allows all other countries to do the same. If everyone does it at the same pace, you won't see large currency issues. Plus, inflation in everyday consumable goods and electronics is constantly needing increases in productivity to remain at a fixed price point. For things that can't be mass produced, like land, education and hospitalization...we're seeing some pretty high rates of inflation.
The MMT economists will argue that the money supply can expand without limits so long as we have significant under/unemployment, and there will be no price inflation from this flood of money because it’s supposedly used to pay for productive activities. I’m old enough to remember the inflationary economy of the 1970s and people today don’t understand that inflation is as much a psychological phenomena as anything else. Price increases are baked into the cake because no business wants to be caught flat footed. Now the Rational Expectations economists out there will nod knowingly and wag their fingers, “we told you so”, but the MMT guys will point to their charts.

In six months or so we will find out which economic theory is applicable.
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Old 06-28-2020, 11:14 AM
 
Location: Myrtle Creek, Oregon
14,379 posts, read 13,936,104 times
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Quote:
Originally Posted by Hoonose View Post
Of course the Fed needs no ink nor printer.
Low grade ongoing inflation is almost inevitable all over the world.
Hyperinflation of the USD very unlikely unless we lose our national productivity.
America has already lost a major part of its productivity, which is reflected in our balance of trade. Any drop in the exchange rate would be reflected in domestic prices. The Fed would be forced to defend the dollar by raising interest rates and shrinking the money supply.
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Old 06-28-2020, 11:34 AM
 
Location: Myrtle Creek, Oregon
14,379 posts, read 13,936,104 times
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Originally Posted by Hoonose View Post
This is a generalization. I felt a lot like Taggerung 15-20 years ago.

And the keys that changed me have to do with my study of debt and money and foreign exchange.

Sovereign debt is very different from personal or business debt.

Fiat money is very different than PM or PM based currency.

The whole world uses and needs the USD and USD denominated debt paper. And there is no other currency around to supplant it.

Gold as a global currency makes much less sense. It has to be physically secured and stored. Transfer is not easy or efficient. There is limited supply, and that supply is too easily controlled.
It has been over 40 years since the last USD currency crisis. The only reason the system works at all is that it is to everyone's advantage for it to work. Unfortunately, that is a metastable system. A disturbance large enough could drive it into chaos. People make unfortunate choices in a panic.

It is hard to imagine how the federal government could function in a fiscal environment where bonds require a 10% annual return, but that may be necessary. Thanks to expanding world productivity, the US no longer has complete control of its fiat currency. Without the productivity to back the dollar, we may be forced to other means.
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Old 06-28-2020, 01:48 PM
 
Location: Heart of flyover America
661 posts, read 265,154 times
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Quote:
Originally Posted by mathlete View Post
Now that we’ve successfully invented the free lunch and discovered an endless supply of cheap oil the next item on the agenda is a perpetual motion machine.
One thing that no one seems to understand: you can never get something for nothing.

If we could create all these dollars with no consequence, then why not just print the entire gdp? That way, no one would have to work. Hell, why not not print ten times the gdp, then we'd really be rich!
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Old 06-28-2020, 02:23 PM
 
Location: Silicon Valley
4,913 posts, read 2,202,293 times
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Quote:
Originally Posted by TimAZ View Post
The MMT economists will argue that the money supply can expand without limits so long as we have significant under/unemployment, and there will be no price inflation from this flood of money because it’s supposedly used to pay for productive activities. I’m old enough to remember the inflationary economy of the 1970s and people today don’t understand that inflation is as much a psychological phenomena as anything else. Price increases are baked into the cake because no business wants to be caught flat footed. Now the Rational Expectations economists out there will nod knowingly and wag their fingers, “we told you so”, but the MMT guys will point to their charts.

In six months or so we will find out which economic theory is applicable.
I don't expect massive inflation anytime soon. The amount of cash in my wallet today is much higher than a month ago, but it's because I took some out of the bank, not because I'm making more money. What's a store in a mall worth today from 6 months ago. What's an office building worth? How much are bonds worth when based solely on one's ability to repay? They may not have the transactions yet, and the Fed may be holding up the entire world valuation....and for now let's pretend it works. We extend and pretend long enough for the world to get back together and continue on....at that point, with no ability to bring the money back in is when we'd see inflation.

The problem is that throwing money at valuations doesn't help an economy correct. While nobody likes recessions, it's when underperforming organizations have to give up assets and those assets are picked up by people with new ideas for new companies. The government was hoping this would be a fast freeze of the economy and we could microwave it back when the virus was gone. However the virus is going to be here for longer than anticipated and with 45M unemployed and more on furlough, that's no longer the case. A bank panic would make things worse, so it makes sense to keep solvency there, but the rest of the money needs to be poured into infrastructure to pick up demand and in turn create new opportunities. Could we build a high speed rail system across the country and develop areas around the train stations? Could we upgrade internet capacity or electrical grid infrastructure meaningfully? A train to nowhere might work if it's part of an entire system. Suddenly an underdeveloped area has ready access to traveling people and product distribution. The American economy can take it from there.
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Old 06-28-2020, 09:28 PM
 
10,594 posts, read 4,606,825 times
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Quote:
Originally Posted by Larry Caldwell View Post
America has already lost a major part of its productivity, which is reflected in our balance of trade. Any drop in the exchange rate would be reflected in domestic prices. The Fed would be forced to defend the dollar by raising interest rates and shrinking the money supply.
Balance of trade is part of it. GDP another. Exporting the USD another. When I say loss of productivity I mean loss of a world war, Weimar or an asteroid hit.
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Old 06-28-2020, 09:34 PM
 
10,594 posts, read 4,606,825 times
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Quote:
Originally Posted by Larry Caldwell View Post
It has been over 40 years since the last USD currency crisis. The only reason the system works at all is that it is to everyone's advantage for it to work. Unfortunately, that is a metastable system. A disturbance large enough could drive it into chaos. People make unfortunate choices in a panic.

It is hard to imagine how the federal government could function in a fiscal environment where bonds require a 10% annual return, but that may be necessary. Thanks to expanding world productivity, the US no longer has complete control of its fiat currency. Without the productivity to back the dollar, we may be forced to other means.
Right. Productivity is key, plus rule of law, safety and stability. And then there is military might.

We have enough control over the USD to suit ours and most of the world's needs. The Fed/Treasury has control over the shorter term interest rates at least. And push comes to shove they can always limit themselves to shorter term debt paper. No one sees enough inflation on the horizon to begin worrying about 10% rates. As we are so much less dependent on foreign oil, and as a country we can go back to much more self sufficiency, I'm not sure what we'd encounter to give us onerous inflation longer term.
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Old 06-28-2020, 09:40 PM
 
10,594 posts, read 4,606,825 times
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Originally Posted by artillery77 View Post
With all due respect, the FDIC had nowhere near the funds it needed to make depositors whole. If even just one of the TBTF banks failed the FDIC would be in the red by a significant margin....that's why they were TBTF. Even if the FDIC rallied the funds to bail out one, then the rest of the FDIC coverage was worthless for everyone else, and we'd be back to the bank panic days of 100+ years ago. Basically it was a giant extend and pretend exercise...and it worked.
The Fed could cover it, as the total amount of USD's/money they can create has no set limit. Bank deposits today are about $15.5T. After the 2008 crash the Fed created a total of $29T. Much of that new money was repetitive overnight loans, but even then $7-9T, all temporary money paid back or cancelled. And very few people on Earth even knew about it.
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