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The problem is the methodology used to create that number has changed dramatically over the past 30+ years and is now greatly understating the inflation rate here in the USA.
The main reason why these numbers are under reported is because so many of the government's debt obligations are determined by the CPI. By under reporting inflation, the are able to reduce their liability.
The real concern here is currency induced cost push inflation. That is the collapse scenario people on here have been discussing and that isn't really the result of money printing in the traditional sense.
-------------------
As for gold... It's transferable wealth. There are times to own it and times to not own it. Based on the simple idea of not following the herd, you should own it right now. Less than 3% of the general public's assets are in gold. During the bubble mania phases of the past, we've seen gold make up 40% of the public's net worth. Right now, real estate and stocks are both over 40% of the public's net worth at the same time. That is always a bad sign.
Right now, banks are on 20-1 leverage and the stock market is MORE frothy than it was at the last bubble peak. the Current forward S&P 500 P/E: 15.6x.. The Forward S&P 500 P/E on October 9, 2007 was15.2x.. When it gets this high, it has always resulted in a crash. This party wont last much longer and there will be no natural buyers when the entire system is on this much leverage. So we will likely have another crash pretty soon here. Real estate will likely get hit too because so much of bank assets are actually still in these mortgages.
--------------
The most asinine thing I've read in this thread though was the comment that your money is safer in the bank than in your own home. Governments and financial institutions have been notorious for seizing assets inside of banks for generations. If you live in Georgia (USA) and have a bank account inactive for 1 year, it's immediately forfeited to the government. Other states are starting to pass similar laws because they are desperate for cash. Then when you start hearing about how the fed is going to institute exit fees on bond funds and NEGATIVE interest rates on deposits, how on earth can you think that wont be passed on to you? You have to be incredibly naive to think banks and the government would hesitate for one minute before giving you the D during a crisis.
This message was edited 1 time. Last update was at 2014/07/03 14:03:55
dereksatkinson wrote: The problem is the methodology used to create that number has changed dramatically over the past 30+ years and is now greatly understating the inflation rate here in the USA.
Heh, I was just yesterday reading a really nice takedown on the shadowstats nonsense.
Thing is, shadowstats doesn't actually calculate inflation. All they do is state than in their opinion the change in govt calculation of CPI resulted in CPI being about 3% less than it would otherwise have been, and so they just add that number to the government figure at any point in time. Resulting in this nonsense;
Anyhow, some nerds at MIT set about tracking their own CPI measure, independantly gathering a billion prices and calculating price movements. They ended up with prices that are pretty much bang on government figures;
The main reason why these numbers are under reported is because so many of the government's debt obligations are determined by the CPI.
Actually, no. T-bills are sold on the open market, and the effective interest is based on financial market's expectation of future inflation (as well as future risk free real rate of return), not the printed government inflation figures.
Less than 3% of the general public's assets are in gold. During the bubble mania phases of the past, we've seen gold make up 40% of the public's net worth. Right now, real estate and stocks are both over 40% of the public's net worth at the same time. That is always a bad sign.
Umm, that's a result of changing economic realities, not a bubble. As society accumulates more productive assets, a greater proportion of the capital stock will be in productive assets.
Right now, banks are on 20-1 leverage and the stock market is MORE frothy than it was at the last bubble peak. the Current forward S&P 500 P/E: 15.6x.. The Forward S&P 500 P/E on October 9, 2007 was15.2x.. When it gets this high, it has always resulted in a crash. This party wont last much longer and there will be no natural buyers when the entire system is on this much leverage. So we will likely have another crash pretty soon here. Real estate will likely get hit too because so much of bank assets are actually still in these mortgages.
"The chicken bones spread in the pattern of the devil. Dark times are upon us! Repent children, repent!"
The most asinine thing I've read in this thread though was the comment that your money is safer in the bank than in your own home.
My comment?
Anyhow, money in the bank is non-productive. Even interest bearing it's just matching inflation at best. Keep transaction money in the bank, and make the rest actually productive.
This message was edited 2 times. Last update was at 2014/07/04 05:19:58
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
Actually, no. T-bills are sold on the open market, and the effective interest is based on financial market's expectation of future inflation (as well as future risk free real rate of return), not the printed government inflation figures.
Who is talking about T-bills? I am talking about obligations. The government doesn't recognize a debt until they have borrowed the money already. It's actually quite alarming that you don't know the difference between debt and obligations.
sebster wrote: Thing is, shadowstats doesn't actually calculate inflation. All they do is state than in their opinion the change in govt calculation of CPI resulted in CPI being about 3% less than it would otherwise have been, and so they just add that number to the government figure at any point in time. Resulting in this nonsense;
Anyhow, some nerds at MIT set about tracking their own CPI measure, independantly gathering a billion prices and calculating price movements. They ended up with prices that are pretty much bang on government figures;
Shadowstats actually removes the hedonic adjustments from the CPI figures that weren't around back in the 1980s.
The MIT study actually still applied hedonic adjustments (productivity gains) so it should match the government data.
Actually, no. T-bills are sold on the open market, and the effective interest is based on financial market's expectation of future inflation (as well as future risk free real rate of return), not the printed government inflation figures.
Who is talking about T-bills? I am talking about obligations. The government doesn't recognize a debt until they have borrowed the money already. It's actually quite alarming that you don't know the difference between debt and obligations.
sebster wrote: Thing is, shadowstats doesn't actually calculate inflation. All they do is state than in their opinion the change in govt calculation of CPI resulted in CPI being about 3% less than it would otherwise have been, and so they just add that number to the government figure at any point in time. Resulting in this nonsense;
Anyhow, some nerds at MIT set about tracking their own CPI measure, independantly gathering a billion prices and calculating price movements. They ended up with prices that are pretty much bang on government figures;
Shadowstats actually removes the hedonic adjustments from the CPI figures that weren't around back in the 1980s.
The MIT study actually still applied hedonic adjustments (productivity gains) so it should match the government data.
This is what happens when you close American factories, and manufacture abroad. An aging population, and nobody working to pay into the system.
Its hard to be awesome, when your playing with little plastic men. Welcome to Fantasy 40k
If you think your important, in the great scheme of things. Do the water test.
Put your hands in a bucket of warm water,
then pull them out fast. The size of the hole shows how important you are.
I think we should roll some dice, to see if we should roll some dice, To decide if all this dice rolling is good for the game.
I don't really have much to add that's constructive at this point, but as an EVE Online player, I can state with authority this thread has some high quality graph porn.
Like watching other people play video games (badly) while blathering about nothing in particular? Check out my Youtube channel: joemamaUSA!
BrianDavion wrote: Between the two of us... I think GW is assuming we the players are not complete idiots.
Rapidly on path to becoming the world's youngest bitter old man.
loki old fart wrote: This is what happens when you close American factories, and manufacture abroad. An aging population, and nobody working to pay into the system.
Pensions or federal obligations? If you are talking about the federal obligations, I think they were empty promises that were unrealistic from the get-go. Budgets are never balanced and nothing is ever really paid for until the very last moment. If the government ran on the same kind of GAAP accounting businesses use, it would be easily recognized as a farce. This will likely become a topic again by next fall.
As for state pensions.. The math is a bit ridiculous. The expectations for institutions that are that large to outperform the market and always make money is unrealistic. That is why states like Georgia are getting so creative with ways to pull in money. If you want someone to blame for losing jobs, I would start with those states which have been so aggressively going after businesses as a source of revenue. If the cost of doing business is low, there will be more jobs. Pretty simple concept. If it costs a business 3 times an employee's salary to employ an individual, there is something wrong with that picture.
It's unrealistic for American companies to manufacture in asia. And to sell that product to unemployed Americans, long term that is unsustainable. As long as more people pay in, than draw out, a reasonable pension should be expected.
@dementedwombat. I used to play eve online, then I got better.
This message was edited 1 time. Last update was at 2014/07/04 17:53:12
Its hard to be awesome, when your playing with little plastic men. Welcome to Fantasy 40k
If you think your important, in the great scheme of things. Do the water test.
Put your hands in a bucket of warm water,
then pull them out fast. The size of the hole shows how important you are.
I think we should roll some dice, to see if we should roll some dice, To decide if all this dice rolling is good for the game.
Easy E wrote: What gives Gold an intrinsic value? Answer, nothing more than what gives paper "fiat" money intrinsic value. Just trust that it has value.
If a real catasrophic crisis came people would value canned goods, firearms, and ammo way more than gold. Therefore, we should back all our currency with canned goods.
Hmmm... I like the idea of paying for groceries with bullets. I've got a lot of shotgun shells just not being used.
Bottle caps. We should use bottle caps for money.
Also, the intrinsic value of gold is that it is rare and shiny.
First of all, there are always people being born. This results in steady, controlled inflation that no one government can manipulate. Secondly, it means everyone, no matter how poor, starts out with something: baby teeth. Its like welfare, except without the government. It regulates itself. Furthermore, we've been training children for it their whole lives. The idea of the Tooth Fairy was just introduced to get them ready to being paid in teeth.
On a final note, we is gonna stomp da universe flat and kill anyfink that fights back. we're da Orks, and was made ta fight and win.
First of all, there are always people being born. This results in steady, controlled inflation that no one government can manipulate. Secondly, it means everyone, no matter how poor, starts out with something: baby teeth. Its like welfare, except without the government. It regulates itself. Furthermore, we've been training children for it their whole lives. The idea of the Tooth Fairy was just introduced to get them ready to being paid in teeth.
dereksatkinson wrote: This time isn't any different... 23+ quarter rallies end and when they do, they end with a bang. It's not my fault you can't see how absurd this is.
So your claim is that sooner or later there'll be a downturn in the market, in which case your claim basically amounts to 'markets fluctuate', which can be met with a healthy 'duh'.
Alternatively, you might be claiming that you can say with some level of precision exactly what the peak of the market will be and when, in which case holy gak, you can make yourself a billionaire overnight. Just dump your savings in to shorts and put options the night before your prophecy, and the next day Warren Buffet will be coming to you for advice.
Who is talking about T-bills? I am talking about obligations.
Oh, so you're just getting at SS? In which case your belief that CPI is fudged to avoid future SS is total junk. SS is set by wage indexing, not the price of consumer goods.
And now we're on to that tired old hobby horse. To move past that nonsense quickly, just understand that merely listing all your future payments with no discounting for NPV, and no calculation of future revenue is fething stupid. It'd be like claiming Apple is bankrupt because they only have $150 billion sitting in the bank, and they'll have to pay their employees more than that in the next ten years.
sebster wrote:Shadowstats actually removes the hedonic adjustments from the CPI figures that weren't around back in the 1980s.
No, shadowstats doesn't do that. It just figured out what the adjustment was in 1980, and applied that exact same figure to every published figure since. If you're curious as to what the shadowstats figure of inflation is, just take the published CPI figure and add ~3%
Seriously, actually look at the graph, do you see the pattern?
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
Oh, so you're just getting at SS? In which case your belief that CPI is fudged to avoid future SS is total junk. SS is set by wage indexing, not the price of consumer goods.
As a means of adjusting dollar values: The CPI is often used to adjust consumers' income payments, (for example, Social Security); to adjust income eligibility levels for government assistance; and to automatically provide cost-of-living wage adjustments to millions of American workers. The CPI affects the income of about 80 million persons as a result of statutory action: 48.4 million Social Security beneficiaries, about 19.8 million food stamp recipients, and about 4.2 million military and federal Civil Service retirees and survivors. Changes in the CPI also affect the cost of lunches for 26.5 million children who eat lunch at school, while collective bargaining agreements that tie wages to the CPI cover over 2 million workers. Another example of how dollar values may be adjusted is the use of the CPI to adjust the federal income tax structure. These adjustments prevent inflation-induced increases in tax rates, an effect called "bracket creep".
Still want to argue? This is why I don't respond to every single comment you make. You aren't even reading.
Automatically Appended Next Post:
sebster wrote: No, shadowstats doesn't do that. It just figured out what the adjustment was in 1980, and applied that exact same figure to every published figure since. If you're curious as to what the shadowstats figure of inflation is, just take the published CPI figure and add ~3%
It has to do with reporting standards. The basically have taken out all the adjustments and made it an apples to apples comparison instead of apples to oranges.
The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.
This message was edited 2 times. Last update was at 2014/07/07 14:21:28
Yeah, this is the kind of thing you're going to get wrong when you rely on exciting financial journalism like zerohedge, instead of you know, actual fething substance.
You were talking about the "unfunded" future payments - ie payments owing to future retirees who are still working. The future payments to these people are based on wages growth measured by the AWI.
CPI only comes in to it when you're talking about people already receiving payments. ie a lower CPI will reduce the payments to current earners in future months.
And now, if you'll care to actually think about your theory for a second, realise that what you're suggesting is a conspiracy to cook economic numbers that goes across multiple departments of government, most of whom having nothing to gain, and this whole vast conspiracy is run just to reduce SS and other government payments... but fething why? Government, if it chooses, can simply vote to link payment increases to a lower measure of CPI, or even to CPI less some arbitrary amount, something that has actually been proposed in congress in the last couple of years.
It's just a silly, silly proposal.
This is why I don't respond to every single comment you make. You aren't even reading.
No, you don't respond because you simply don't have answers to two of the points I made;
1) That you think your chartist nonsense gives you some unique insight in to the future market peaks and troughs.
2) That you got conned in to that old scare tactic of adding up all the expected future payments government will make, without taking in to account all the future revenue it will earn.
It has to do with reporting standards. The basically have taken out all the adjustments and made it an apples to apples comparison instead of apples to oranges.
No, shadowstats is doing nothing of the sort. No matter what they type on their website, their actual published data very easy to deconstruct. All they did was look at the difference in CPI when the adjustment was made, and then just add that exact number to every published CPI figure.
Here is the shadowstats huckster himself;
"I’m not going back and recalculating the CPI. All I’m doing is going back to the government’s estimates of what the effect would be and using that as an ad factor to the reported statistics."
http://econbrowser.com/archives/2008/10/shadowstats_res
Now go and look at the graph. Do you see how the graph exactly matches the actual reported inflation, plus a fixed variable. That's because that's all shadowstats is.
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
Yeah, this is the kind of thing you're going to get wrong when you rely on exciting financial journalism like zerohedge, instead of you know, actual fething substance.
bls.gov isn't zerohedge. You are arguing for the sake of arguing. The government website uses SS as an example for god's sake.
Again.. Straight from the government website..
As a means of adjusting dollar values: The CPI is often used to adjust consumers' income payments, (for example, Social Security); to adjust income eligibility levels for government assistance; and to automatically provide cost-of-living wage adjustments to millions of American workers. The CPI affects the income of about 80 million persons as a result of statutory action: 48.4 million Social Security beneficiaries, about 19.8 million food stamp recipients, and about 4.2 million military and federal Civil Service retirees and survivors. Changes in the CPI also affect the cost of lunches for 26.5 million children who eat lunch at school, while collective bargaining agreements that tie wages to the CPI cover over 2 million workers. Another example of how dollar values may be adjusted is the use of the CPI to adjust the federal income tax structure. These adjustments prevent inflation-induced increases in tax rates, an effect called "bracket creep".
If you honestly don't think current wages do not impact the calculations used for future payments, I don't know where to begin. The best way to lower the NPV of a cash flow is to low the initial payment as much as possible. That's the basic concept of time value of money. A dollar today is worth more than a dollar tomorrow.
Calling my opinion "silly" doesn't make it less valid. Understating the CPI does lower the NPV of government obligations. It's not even debatable.
If we can't get past something this basic, i'll just have to admit defeat because the angles you are trying to argue are not rational. I mean this is REALLY basic. No economist would argue what you are trying to say.
This message was edited 1 time. Last update was at 2014/07/08 12:56:48
dereksatkinson wrote: bls.gov isn't zerohedge. You are arguing for the sake of arguing. The government website uses SS as an example for god's sake.
Again.. Straight from the government website..
And now you're deliberately misreading me just so you don't have to admit you got something wrong. Yes, you linked to a BLS site, when you were trying to make your argument about CPI and SS. But my comment on zerohedge is on all the commentary and editorial you bring to here, which is almost entirely nonsense.
And just repeating that snippet of information you didn't properly understand the first time is just wasting your time and mine. I'll repeat how it works again - when you make payments in to SS, they are grown based wage indexing - ie as wages grow so does the final value of your benefit. Then once you start receiving payments those payments increase by CPI. The future liability you were talking about is almost entirely people still working in the system - ie the government liability will grow almost entirely through wage increases.
If you honestly don't think current wages do not impact the calculations used for future payments, I don't know where to begin.
What? Discounting for NPV was first brought in to this thread when I mentioned it to you, because you posted that nonsense that totaled future expected payments with no discounting. Be honest, did you run off and look up NPV after I mentioned it, and are now pretending you knew about it all along?
If we can't get past something this basic, i'll just have to admit defeat because the angles you are trying to argue are not rational. I mean this is REALLY basic. No economist would argue what you are trying to say.
Find me an economist on Earth that is trying to claim that government deliberately understates inflation so that it can reduce the real dollar cost of future payments. Just one will do.
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
6 days ago we were at all time highs... Today.. the Russell 2000 just went negative on the year. That's approximately a 6% drop and most of it was over the past 3 sessions.
What caused the sell off? The 2nd largest Portuguese bank, Espirito Santo, missed a bond payment 2 days ago and then halted trading today. The Dow 30 equivalent for Portugal is now down 22% off it's highs. There is already plenty of talk about the potential for contagion. I'm not willing to bet on it but it does show exactly how leveraged, unstable and interconnected these markets are if a single bank missing a bond payment can cause this much havoc even if it is temporary.
IMHO.. this isn't a "herd turning" moment but if we get a couple follow on events from this, it could be that the Holy Ghost (Espirito Santo) just made the market give up the ghost.
dereksatkinson wrote: 6 days ago we were at all time highs... Today.. the Russell 2000 just went negative on the year. That's approximately a 6% drop and most of it was over the past 3 sessions.
Oh feth me, now you're posting a move in a small cap index as if it were news. It happens - the market fluctuates, especially small cap stocks.
What caused the sell off? The 2nd largest Portuguese bank, Espirito Santo, missed a bond payment 2 days ago and then halted trading today.
Yeah, the drop in small cap stocks in NY is clearly due to a wobbly bank in Portugal. That isn't speculative nonsense at all!
Please go and read actually good financial advice. Go read Ritholz or Housel. They'll actually be honest with you, and won't spend time trying to tell you exciting stories that end with you thinking you know more than you really do. One big lesson they will both tell you is that sometimes the market drops - there's no clear reason, it'll just happen. Around once a year you'll get a reasonable drop, and around once a decade you'll get a big drop, and anyone who tells you they know why is telling you a story for their own benefit.
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
dereksatkinson wrote: 6 days ago we were at all time highs... Today.. the Russell 2000 just went negative on the year. That's approximately a 6% drop and most of it was over the past 3 sessions.
Oh feth me, now you're posting a move in a small cap index as if it were news. It happens - the market fluctuates, especially small cap stocks.
What caused the sell off? The 2nd largest Portuguese bank, Espirito Santo, missed a bond payment 2 days ago and then halted trading today.
Yeah, the drop in small cap stocks in NY is clearly due to a wobbly bank in Portugal. That isn't speculative nonsense at all!
Please go and read actually good financial advice. Go read Ritholz or Housel. They'll actually be honest with you, and won't spend time trying to tell you exciting stories that end with you thinking you know more than you really do. One big lesson they will both tell you is that sometimes the market drops - there's no clear reason, it'll just happen. Around once a year you'll get a reasonable drop, and around once a decade you'll get a big drop, and anyone who tells you they know why is telling you a story for their own benefit.
Global stock markets hit by Portuguese bank concerns
Shares in Banco Espirito Santo were suspended after falling 17% following concerns about accounting irregularities at its parent group.
As a result, the Lisbon stock exchange fell more than 4%, Madrid's IBEX was down 2.7%, while the Paris Cac 40 and Frankfurt's Dax were both 1.8% lower.
Wall Street also opened sharply lower, with the Dow Jones falling 150 points.
This took the index well below 17,000, the level breached for the first time earlier this month.
Media reports highlighting concerns about certain financial practices at the Espirito Santo group surfaced at the end of last year.
Portugal's central bank then ordered an audit into the group's accounts, which uncovered "serious" accounting irregularities.
This message was edited 1 time. Last update was at 2014/07/11 08:01:49
Its hard to be awesome, when your playing with little plastic men. Welcome to Fantasy 40k
If you think your important, in the great scheme of things. Do the water test.
Put your hands in a bucket of warm water,
then pull them out fast. The size of the hole shows how important you are.
I think we should roll some dice, to see if we should roll some dice, To decide if all this dice rolling is good for the game.
What I find most amusing about this thread is how Derek talks about impending doom in the economy and stock markets...yet over in the GW share price thread he's deriding everyone who discusses GW's decline and potential failure as doom mongering haters foaming at the mouth.
It's a complete role reversal.
This message was edited 1 time. Last update was at 2014/07/11 11:43:58
Shadow Captain Edithae wrote: What I find most amusing about this thread is how Derek talks about impending doom in the economy and stock markets...yet over in the GW share price thread he's deriding everyone who discusses GW's decline and potential failure as doom mongering haters foaming at the mouth.
It's a complete role reversal.
I'm bearish on GW's stock price. Just for a completely different reason that what's being trotted out there.
Automatically Appended Next Post: Also.. When I find these kinds of stories running, I can't help but see a bubble.
Global stock markets hit by Portuguese bank concerns
Indeed. It's like a $6 billion market cap company (which is actually fairly small in the grand scheme of things) that is causing ripples throughout economies because of leverage and interconnected markets. Portugal makes up something like 1.6% of the Eurozone banking assets so the chances of REAL contagion coming from this is minimal. However, it is big enough to where it can cause margin calls and a pretty good drumming for this market if it isn't handled properly.
This message was edited 2 times. Last update was at 2014/07/11 14:31:38
Only A New Gold Standard Will Save The U.S. Dollar - Steve Forbes
A weak U.S. dollar is a threat to the global economy and the only way to stop the greenback’s decline is to reintroduce a gold standard, said media tycoon, Steve Forbes.
Forbes, the editor and chief of Forbes Media, was one of the keynote speakers at the annual Freedomfest conference in Las Vegas, an annual convention that looks to gather free minds for open discussions on politics and the economy.
In an interview with Kitco News’ Daniela Cambone, Forbes talked about gold’s role it the U.S. economy, which is also highlighted in his latest book MONEY: How The Destruction Of The Dollar Threatens The Global Economy And What We Can Do About It. He said to stop the decline in the U.S. dollar it only makes sense to link it to gold.
Forbes said different currency valuation methods have been tried for “more than 4,000 year,” and experience shows that having a gold standard is the way to go. He added a gold standard “done right” provides stability and value when it comes to money supply.
Its hard to be awesome, when your playing with little plastic men. Welcome to Fantasy 40k
If you think your important, in the great scheme of things. Do the water test.
Put your hands in a bucket of warm water,
then pull them out fast. The size of the hole shows how important you are.
I think we should roll some dice, to see if we should roll some dice, To decide if all this dice rolling is good for the game.
Well.. the gold standard basically handcuffs central planners so politicians wont go for it. I don't believe we will see a gold standard but I do suspect gold is moving towards the monetary system as a whole. China and Russia are definitely taking action on that front as a way to get away from the US dollar for example. So maybe we see something on an international front but I doubt it domestically.
Instead.. I think that we likely see a "clean slate" type of moment that involves a war of some kind. Winner gets to keep printing and the loser defaults on their debts. Historically, that's how it always ends up. Normally, the debts aren't this global and this large pre-war though.
At the heart of the gold conspiracy theories is the idea that, "Gold is prettier than paper, so it'll survive the collapse of society that Charles Manson warned me about".
And if you're talking about the industrial uses of gold, realize that the price of gold would plummet if people were only using it for industrial uses. Your investment would still flop in the apocalypse (that's the funny thing about apocalypses).
Why don't crazy people just invest in ammo, cigarettes, and toilet paper instead? And by invest I mean become hoarders. It seems like a lot less effort for a guaranteed profit once Obamalluminati plunges the world into a war over whether the reptilians or the jews own the chemtrails.
LoneLictor wrote: At the heart of the gold conspiracy theories is the idea that, "Gold is prettier than paper, so it'll survive the collapse of society that Charles Manson warned me about".
And if you're talking about the industrial uses of gold, realize that the price of gold would plummet if people were only using it for industrial uses. Your investment would still flop in the apocalypse (that's the funny thing about apocalypses).
Why don't crazy people just invest in ammo, cigarettes, and toilet paper instead? And by invest I mean become hoarders. It seems like a lot less effort for a guaranteed profit once Obamalluminati plunges the world into a war over whether the reptilians or the jews own the chemtrails.
wow.. I've never heard that argument before. Maybe you should start a newsletter.
If gold is so worthless, why do central banks still hold it? Gold has been used as a currency for 5000+ years because of it's rarity and lack of industrial uses. It's not a "it's pretty" argument. It's a hedge against central banks being corrupt and foolish. Fiat currencies really don't last very long historically so there is no real reason to expect them to suddenly do the right thing now.
Espírito Santo Unit Rioforte to File for Creditor Protection
So i guess that capital they raised wasn't enough to cover their margin call. Now we do have to worry about contagion. They were supposed have a EUR 847 million payment to Portugal Telecom tomorrow (or today) and it looks like they wont be making that payment because now PT is down about 10% on the uncertainty. If it does indeed default, it would likely cause payments that PT is supposed to make to be defaulted on if they don't have enough cash on hand (remember these companies are all leveraged) and it would spread on and on to other companies.
Oh.. and it's impacting the US credit markets this morning and US stocks are getting hit because Yellen is basically telling everyone that the general public is reaching for yield. Such sure footing this financial system is on...
BIS chief warns debt mountain puts global economy into worse state than before 2008 crash
The global economy is more vulnerable than it was just before Lehman Brothers collapsed says the Bank of International Settlements (BIS), the international finance watchdog, citing even higher debt ratios and emerging market involvement.
Jaime Caruana, head of the BIS, warned that nobody invested in stocks seems prepared for the idea that at some point central banks will begin raising interest rates again, in an interview with the DailyTelegraph.
As most major central banks including the UK, US and Japan are holding rates at around zero percent, banks get accustomed to ‘easy money’ and ignore the risk of monetary tightening. That is boosting stocks, because there is no point in investors keeping their money in savings accounts at such low returns.
“Markets seem to be considering only a very narrow spectrum of potential outcomes. They have become convinced that monetary conditions will remain easy for a very long time, and may be taking more assurance than central banks wish to give,” Caruana said.
As most major central banks including the Bank of England and the US Federal Reserve are holding rates at around zero percent investors leave savings accounts due to insignificant returns. That boosts a looming "irrational" stock bubble Caruana said, without specifying when the bubble will burst.
Since 2008 the emerging markets have gained around $2 trillion in foreign currency debt, becoming a way bigger player than they were during the East Asia crisis of the late 1990s.
“The ramifications would be particularly serious if China, home to an outsize financial boom, were to falter," the BIS said.
IMF: Eurozone weak, risks falling into deflation
The single currency bloc can fall into deflation, as the recovery across the region is weak and inflation remains too low, the IMF warned on Monday. It said the member states should be ready for quantitative easing, if rising prices remain subdued. "The recovery is weak and uneven. Inflation has been too low for too long, financial markets are still fragmented, and structural gaps persist: these hinder rebalancing and substantial reductions in debt and unemployment," said the report.
BIS chief fears fresh Lehman from worldwide debt surge
Jaime Caruana says investors are ignoring prospect of higher interest rates in the hunt for returns
Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally,” it said.
Mr Caruana declined to be drawn on when the bubble will burst. "As Keynes said, markets can stay irrational longer than you can stay solvent,” he said.
The BIS says prolonged monetary stimulus in the US, Europe, and Japan has led to a leakage of liquidity, contaminating the rest of the world. The rising powers of Asia are no longer able to act as a firebreak – as they did after the Lehman crash –and may themselves now be a source of risk.
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Its hard to be awesome, when your playing with little plastic men. Welcome to Fantasy 40k
If you think your important, in the great scheme of things. Do the water test.
Put your hands in a bucket of warm water,
then pull them out fast. The size of the hole shows how important you are.
I think we should roll some dice, to see if we should roll some dice, To decide if all this dice rolling is good for the game.
Microsoft just announced 18k layoffs. Since the economy is booming and all..
Housing starts and permits came out REALLY soft.. Starts missed expectations the most since Jan 07. Housing permits have biggest 2 month plunge since lehman brothers blew up.
So tech and housing certainly wont be keeping us from going into a recession...
Kilkrazy wrote: As far as the UK goes the financial sector is as big as it ever was, despite four years of the government supposedly wanting to rebalance the economy away from finance.
Of course the reason why the UK still has such a large financial sector is that out of the four major banking groups, three effectively went bust but were bailed out by the UK government (in Barclays case by middle eastern sovereign wealth funds.)
If the government had adopted the strategy suggested by Joseph Stigler, which was to tell the banks to sort out their own problems, the finance section would have shrunk a lot.
In effect the risk taking of finance was transferred to the citizenry.
But we don't get any of the payoffs for this? Where are our interest payments for lending them this money?
This message was edited 2 times. Last update was at 2014/07/17 15:04:49
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dereksatkinson wrote: Microsoft just announced 18k layoffs. Since the economy is booming and all..
Or it could be they were a bloated company with too many layers of management that had displayed a lack of ability to respond to market forces for several years now finally shedding dead weight
It's not like layoffs are impossible even in good times. Intel cut tens of thousands of jobs in the mid 2000's before the 2008 crash, and it had nothing to do with the overall economic picture, they'd just mismanaged themselves and had over-promoted too many people than was necessary and had to retire product lines that were no longer relevant in the market.
This message was edited 1 time. Last update was at 2014/07/17 15:08:40
IRON WITHIN, IRON WITHOUT.
New Heavy Gear Log! Also...Grey Knights! The correct pronunciation is Imperial Guard and Stormtroopers, "Astra Militarum" and "Tempestus Scions" are something you'll find at Hogwarts.
Wall Street also opened sharply lower, with the Dow Jones falling 150 points.
You're just putting in colour the junk I already explained was junk. People see a piece of bad news in one place, and a piece of bad news somewhere else, and conclude that one caused the other. It's crap reporting, the kind of stupid nonsense that fills up loads of financial reporting.
Understand this, and realise prices will wobble constantly for little or no reason and that's okay because the long term trend is always up... and then you realise why long term investment in a broad range of assets is highly effective.
Alternatively you can read the breathless nonsense talking about every minor wobble as if it were a major new trend, and either hide away from the market or worse, think you can ride those wobbles and trade your way to success.
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loki old fart wrote: A weak U.S. dollar is a threat to the global economy and the only way to stop the greenback’s decline is to reintroduce a gold standard, said media tycoon, Steve Forbes.
The most incredible thing is that the reasons gold is a really poor means of controlling money aren't even that complex. An eight year old with reasonable concentration could understand it given an hour or so.
The power of reasonably intelligent people to apply their intellect to justifying stupid things is quite amazing.
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dereksatkinson wrote: Well.. the gold standard basically handcuffs central planners so politicians wont go for it.
Yeah. What you're missing is that it is bad to handcuff central banks, because monetary policy as a means to offset business cycles is a good thing.
China and Russia are definitely taking action on that front as a way to get away from the US dollar for example.
No, China and Russia are moving away from the dollar (sort of, it's a lot more complex than your summary above) because the US no longer dominates the world economy as it once did. People have written all sorts of stupid nonsense about that, but the basic reality is that there was no reason to think that a country with 4% of the world population would continue to have more than 30% of the world's economic activity.
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dereksatkinson wrote: If gold is so worthless, why do central banks still hold it? Gold has been used as a currency for 5000+ years because of it's rarity and lack of industrial uses. It's not a "it's pretty" argument. It's a hedge against central banks being corrupt and foolish.
And here it is. All of the crap and silliness, really all comes back to a belief that central banks are somehow destined to be corrupt and foolish.
It's a notion I suspect you won't ever be reasoned out of. Which is why trying to reason you out of the rest of this, my posting of graphs showing your great concern over inflation is completely baseless, my showing you that shadowstats is junk, and that independent inflation measures closely track with official figures... it's all pointless because you just... believe.
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loki old fart wrote: BIS chief warns debt mountain puts global economy into worse state than before 2008 crash
The global economy is more vulnerable than it was just before Lehman Brothers collapsed says the Bank of International Settlements (BIS), the international finance watchdog, citing even higher debt ratios and emerging market involvement
BIS rolled in to 2009 warning everyone that QE was terrible because there'll be inflation. What was needed was tighter money and higher yields. Then when that turned out to be stupid they didn't accept they were completely wrong, they just changed the reason they wanted higher yields to 'bubbles! bubbles I tell ya!'
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dereksatkinson wrote: Microsoft just announced 18k layoffs. Since the economy is booming and all..
fething what? A single tech company restructures, and you're using that to make claims about macro level economic activity? Now you're just being silly.
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“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
