Lets put your theory to the test shall we? What was the cost of a personal computer as a portion of average wages in say 1990? the average PC cost $2,000 and the average wage was 31,000. today the average PC costs $600 and the average wage is 48,000. Guess your comparison theory doesn't hold up to scrutiny.
American Banks Dumping Dollars for the Yen
- Thread starter Smuggler
- Start date
Patrick Bateman
Active Member
As long as the United States economy remains the largest in the world its dollars will remain the reserve currency.
hanimmal
Well-Known Member
Why not?
What I am saying when you look at the numbers you just used computer went from costing 6.5% of our income in 1990 down to 1.3% of our wages today.
That shows reality, the costs of production decreased significantly due to increase efficiencies of scale, meaning it should cost us far less.
What the previous bread example lacks is a wage of the timeframe to figure out how much the bread actually cost in relation to how much people earned at the time. And therefore it does not have enough info to figure out if the cost of bread increased or decreased.
What I am saying when you look at the numbers you just used computer went from costing 6.5% of our income in 1990 down to 1.3% of our wages today.
That shows reality, the costs of production decreased significantly due to increase efficiencies of scale, meaning it should cost us far less.
What the previous bread example lacks is a wage of the timeframe to figure out how much the bread actually cost in relation to how much people earned at the time. And therefore it does not have enough info to figure out if the cost of bread increased or decreased.
Fine then, Last year a loaf of bread cost me $1.19, today it costs $1.28. Is the price increase because bread has gotten harder to make, less wheat in the world, bakery unions increasing worker wages, Perhaps the cost to run the ovens has skyrocketed? Maybe they shut down the bread machines and everyone is doing it by hand now? Or maybe its because the dollar of last year can't buy as much now becasue it has devalued? Lets look at exchange rates for the last 10 years. Has the dollar overall gained or lost in the last decade?
Have you figured out how to remove all grocery items from store shelves over night yet?
hanimmal
Well-Known Member
2nd time server time out deleted my post...
How about the bread company you use had to switch suppliers of a key ingredient due to the company going out of business (because they may have had too low of margins to survive the recession) and their costs went up meaning you have to pay more for it. I don't think you're saying you should not pay more if a companies costs to make the product went up right?
But we can use this as an example, let's say before the recession you were making 60k a year and dropped down to 40k so with the increase in prices your went from paying .001982% of your wages to .0032% of your wages.
That is a real measurement, you can clearly see how much extra the bread is costing you. Because values of everything fluctuate tying cost of goods to yearly income is the best way to understand the actual costs to a person of different times (cost being our labor and the money it demands).
How about the bread company you use had to switch suppliers of a key ingredient due to the company going out of business (because they may have had too low of margins to survive the recession) and their costs went up meaning you have to pay more for it. I don't think you're saying you should not pay more if a companies costs to make the product went up right?
But we can use this as an example, let's say before the recession you were making 60k a year and dropped down to 40k so with the increase in prices your went from paying .001982% of your wages to .0032% of your wages.
That is a real measurement, you can clearly see how much extra the bread is costing you. Because values of everything fluctuate tying cost of goods to yearly income is the best way to understand the actual costs to a person of different times (cost being our labor and the money it demands).
Yeah I have more problems with this site than any other, it really sucks when you spend 20 minutes coming up with a brilliant rebuttal and it gets wiped out.
If the bakery had to start charging more for their bread because of increased overhead and another bakery down the street did not, then one of them goes out of business, the price of bread remains the same.
There are many factors that could lead to a price increase, but overall as we get newer and better technology the price to produce items will always fall until they are at the lowest possible and most efficient level as long as a free market is allowed to work. I'm quite sure you would agree that with today's technologies we can make anything they made in 1750 better, quicker and cheaper. The OP is about the currency exchange rate and how the banks take advantage of the carry trade to make a profit by selling dollars. My point is that the reason they are doing that is because the dollar is devaluing. The dollar devalues due to inflation, we are no longer the rock by which all other currencies are valued, we float just like they do, you can thank Nixon for that. As long as there is inflation the dollar will devalue against the Yen. But why the yen? Why not say the Mexican Peso? The reason the Yen is because Japan has experienced low DEFLATION for the last 20 years and their currency has gained in purchasing power. Banks don't have to charge exhorbitant interest rates when the currency they are being paid back in keeps gaining in purchasing power.
Just look at the money supply
black is m1, m2 is grey, m3 is blue "Shadow Government Statistics" IE Pre Clinton. The Fed no longer publishes M3 money supply.
The government has used up the Stimulus and now you are going to see the inflation as the money begins its acceleration through the public's pockets. Inflation is the causal effect of Currency devaluation.
In simple terms; Things don't cost more, your dollar just buys less.
Inflation makes Government debts simply disappear by having the public pay for it by the hidden inflation tax. Inflation is great if you are a large long term debtor, but If you are on a fixed income or pay as you go type of person inflation screws you. Inflation is only good for farmers and politicians.
If the bakery had to start charging more for their bread because of increased overhead and another bakery down the street did not, then one of them goes out of business, the price of bread remains the same.
There are many factors that could lead to a price increase, but overall as we get newer and better technology the price to produce items will always fall until they are at the lowest possible and most efficient level as long as a free market is allowed to work. I'm quite sure you would agree that with today's technologies we can make anything they made in 1750 better, quicker and cheaper. The OP is about the currency exchange rate and how the banks take advantage of the carry trade to make a profit by selling dollars. My point is that the reason they are doing that is because the dollar is devaluing. The dollar devalues due to inflation, we are no longer the rock by which all other currencies are valued, we float just like they do, you can thank Nixon for that. As long as there is inflation the dollar will devalue against the Yen. But why the yen? Why not say the Mexican Peso? The reason the Yen is because Japan has experienced low DEFLATION for the last 20 years and their currency has gained in purchasing power. Banks don't have to charge exhorbitant interest rates when the currency they are being paid back in keeps gaining in purchasing power.
Just look at the money supply
black is m1, m2 is grey, m3 is blue "Shadow Government Statistics" IE Pre Clinton. The Fed no longer publishes M3 money supply.The government has used up the Stimulus and now you are going to see the inflation as the money begins its acceleration through the public's pockets. Inflation is the causal effect of Currency devaluation.
In simple terms; Things don't cost more, your dollar just buys less.
Inflation makes Government debts simply disappear by having the public pay for it by the hidden inflation tax. Inflation is great if you are a large long term debtor, but If you are on a fixed income or pay as you go type of person inflation screws you. Inflation is only good for farmers and politicians.
Mr.KushMan
Well-Known Member
These facts are true assuming we have unlimited resources forever. Which is not the case!
My whole point was that we are running the world like an all you can eat restaurant or a bottomless salad, and as long as the ones in charge(whoever they may be at the time) feel they want more, they will take it no matter the costs to the general public.
At some point our fake economy is going to catch up with our ambitious strip mining of our planet. We won't have things to trade and all of a sudden money is highly over valued.
I suggest you do some reading on the "tinkerbell effect", its really eye opening if you really believe in economics, politics, or people in general.
Peace
hanimmal
Well-Known Member
........ Third time.
So kush I did a search and read an abstract of the paper with the name tinker bell and some law, hopefully it was the wrong one because this seemed more like rick white ranting against liberals and not much about economic models.
But I agree with you about hitting the wall with this slash and burn economy we are in. I am looking forward to the restructuring we are in where people start to understand the value of education and not depending on dirty manufacturing to produce what it is we need and want. And we begin to actually figure out how to live on our planet long term and not just infest it until it's on big dirt pile.
NoD I had some good stuff but going to resort to some bullet pointing because I'm frustrated about losing the last post and have some stuff to do.
- m3 stopped being published because m1 and m2 are far easier to track and represent about 95% of all transactions and all have a nominal value attached to them, things like homes or art don't so are far harder to show.
- deflation sucks, if your currency is decreasing in value it is good so you can buy more foreign goods, so on the surface it looks good, but as your currency is increasing in value and other countries are decreasing in value your demand is going to fall all over the world. And demand in your own country falls too because people know it will cost less tomorrow than today so why buy it. Sounds good in a consumption whore economy we are in here, but if you own a store, or produce cars, or are thinking of opening a business it sucks. Leaving the economy slumping just like japan has dealt with over the last couple decades.
- the chart is a growth of money supply showing indeed the big increase due to the gobt spending, that was and still is needed to keep the economy rolling. But what you are missing is that we are in a deflationary time, I know you'll only look at gas and food prices, but the rest is just as important because that is the stuff we buy, which is where most of our jobs in this country are.
And that is why it is so confusing and dangerous to have the government stopping spending, there is a reason why you see the spending slump before you get the break in unemployment benefits and then the next month a lot of economic indicators look bad and we teeter on a double dip. We need to get back on track before we worry about if we are going to turn left or right.
If there is less money going to those industries that is less money going to their employees, and less money going to suppliers ect ect. With more money in the system we have a far better shot at getting back to a stable level.
And at that point you will see the FED doing open market operations to pull out some of the money in the system through selling their tbills to banks and pulling the cash out of the vaults. As well as increasing their target rates. This will slow inflation, but just like how it can take years for employment to rebound due to the slow nature of us feeling safe after recessions, inflation needs that employment to get revved back up before people can get that money in their pockets to start using it, biddy up prices.
But we are still a ways out from there because of people not understanding economics and thinking that somehow it is better to have no one spending money than to get the government (who at this point is the only ones that are willing to spend rig now) to do more stimulus. I mean what was the unemployment stoppage all about. These are people that don't have much of a chance to get work until businesses start highering, which with productivity up so high and the relative low level of education of the unemployed people (4% for people with four year degrees or more vs 9.5 for people without) meaning there is a far larger pool of people to chose from with similar qualifications especiAlly when your tAlking about 3 dollars a year (which with inflation is very little right) per person over the next 30 years.
Even two trillion dollars spread over the population is 6060 dollars in today's money, meaning about $200. a year for thirty years today for us to not go into a full on depression, money I see as well spent. We would have lost far more if not. And with obamas tax schedule the burden of this recession would be placed on top and not on the middle and lower classes.
So kush I did a search and read an abstract of the paper with the name tinker bell and some law, hopefully it was the wrong one because this seemed more like rick white ranting against liberals and not much about economic models.
But I agree with you about hitting the wall with this slash and burn economy we are in. I am looking forward to the restructuring we are in where people start to understand the value of education and not depending on dirty manufacturing to produce what it is we need and want. And we begin to actually figure out how to live on our planet long term and not just infest it until it's on big dirt pile.
NoD I had some good stuff but going to resort to some bullet pointing because I'm frustrated about losing the last post and have some stuff to do.
- m3 stopped being published because m1 and m2 are far easier to track and represent about 95% of all transactions and all have a nominal value attached to them, things like homes or art don't so are far harder to show.
- deflation sucks, if your currency is decreasing in value it is good so you can buy more foreign goods, so on the surface it looks good, but as your currency is increasing in value and other countries are decreasing in value your demand is going to fall all over the world. And demand in your own country falls too because people know it will cost less tomorrow than today so why buy it. Sounds good in a consumption whore economy we are in here, but if you own a store, or produce cars, or are thinking of opening a business it sucks. Leaving the economy slumping just like japan has dealt with over the last couple decades.
- the chart is a growth of money supply showing indeed the big increase due to the gobt spending, that was and still is needed to keep the economy rolling. But what you are missing is that we are in a deflationary time, I know you'll only look at gas and food prices, but the rest is just as important because that is the stuff we buy, which is where most of our jobs in this country are.
And that is why it is so confusing and dangerous to have the government stopping spending, there is a reason why you see the spending slump before you get the break in unemployment benefits and then the next month a lot of economic indicators look bad and we teeter on a double dip. We need to get back on track before we worry about if we are going to turn left or right.
If there is less money going to those industries that is less money going to their employees, and less money going to suppliers ect ect. With more money in the system we have a far better shot at getting back to a stable level.
And at that point you will see the FED doing open market operations to pull out some of the money in the system through selling their tbills to banks and pulling the cash out of the vaults. As well as increasing their target rates. This will slow inflation, but just like how it can take years for employment to rebound due to the slow nature of us feeling safe after recessions, inflation needs that employment to get revved back up before people can get that money in their pockets to start using it, biddy up prices.
But we are still a ways out from there because of people not understanding economics and thinking that somehow it is better to have no one spending money than to get the government (who at this point is the only ones that are willing to spend rig now) to do more stimulus. I mean what was the unemployment stoppage all about. These are people that don't have much of a chance to get work until businesses start highering, which with productivity up so high and the relative low level of education of the unemployed people (4% for people with four year degrees or more vs 9.5 for people without) meaning there is a far larger pool of people to chose from with similar qualifications especiAlly when your tAlking about 3 dollars a year (which with inflation is very little right) per person over the next 30 years.
Even two trillion dollars spread over the population is 6060 dollars in today's money, meaning about $200. a year for thirty years today for us to not go into a full on depression, money I see as well spent. We would have lost far more if not. And with obamas tax schedule the burden of this recession would be placed on top and not on the middle and lower classes.
Mr.KushMan
Well-Known Member
Ok I am not going to respond to your discussion because I am not that invested in my opinion, however I do want to go back to when you said,
Peace
So what you are trying to say is that because it doesn't effect every single person we shouldn't replace the system. Sounds like ad hominem to me. Or are you meaning that because it works in the short term there is no reason to think it will end in a spiral. Its a feeble approach to world architecture in my opinion. Just because we can replace it doesn't mean we should, intentionally or not, contribute to a system which marginalizes and hold hundreds of millions and billions of people in a life of suffering and servitude because, mathematically it will end in ruins!!!
Peace
hanimmal
Well-Known Member
I posted that guys article because it was on your search of mathematical proof that all fiat currencies fail. I am very much of the opinion that as long as it has the requirements of currency it doesn't matter what you use. And the argument that is made whenever I see someone type fiat before a currency is usually just regurgitating an opinion and really does not hold up to scrutiny.
The precious metal for currency people somehow don't realize that they will experience inflation and deflation just like fiat currency so there really is no reason to go to it. Especially if you understand that other countries would have a far greater impact on your currency than they do now.
But I still havnt seen how it is holding people into a life of servitude? They will still have to work for their wages, that is how you are figuring servitude right. And with banks pretty much always keeping their savings rates at inflation, and the large amount of other investment opportunities we have it is very easy to beat inflation.
Inflation means that you want your money working and growing so it does not devalue. Even the wealthiest people are forced to keep their money churning in the economy or else they will lose money which means we continue to be able to utilize their invested money for businesses to increase the means to earn an income, school loans to get a higher education for the same reasons, all things that help out our society.
There was a good study that shows if you keep currencies at a fixed level you will inevitably end up in a deflationary situation as people eventually want to save up a hoard of money it means that there is less for others to be able to get in wages or save.
The math part of your argument may be technically valid as far as all currencies have stopped being used, but it says nothing about how and why it matters. And can you quantify eventually? And if somehow we got taken over by another country they would replace our currency with theirs anyway so again wouldnt matter if we were on the gold standard because most likely they would confinscate the gold and we would be left with worthless paper or cards again anyway. If America was at the verge of total collapse and the dollar was worthless it wouldn't even matter then if we were on the gold standard would it? Even those that saw it coming and switched to get their gold would be in a complete mess of a country until it got better. And if that eventually is three hundred years from now does that mean we should change the system now to a equally flawed monetary system, just because there is a group of people that dismiss mathematical proofs for common sense models?
Not to steal your catchphrase but peace to you too. Were all in the same boat and it takes discussions like these to get people on the same page!
The precious metal for currency people somehow don't realize that they will experience inflation and deflation just like fiat currency so there really is no reason to go to it. Especially if you understand that other countries would have a far greater impact on your currency than they do now.
But I still havnt seen how it is holding people into a life of servitude? They will still have to work for their wages, that is how you are figuring servitude right. And with banks pretty much always keeping their savings rates at inflation, and the large amount of other investment opportunities we have it is very easy to beat inflation.
Inflation means that you want your money working and growing so it does not devalue. Even the wealthiest people are forced to keep their money churning in the economy or else they will lose money which means we continue to be able to utilize their invested money for businesses to increase the means to earn an income, school loans to get a higher education for the same reasons, all things that help out our society.
There was a good study that shows if you keep currencies at a fixed level you will inevitably end up in a deflationary situation as people eventually want to save up a hoard of money it means that there is less for others to be able to get in wages or save.
The math part of your argument may be technically valid as far as all currencies have stopped being used, but it says nothing about how and why it matters. And can you quantify eventually? And if somehow we got taken over by another country they would replace our currency with theirs anyway so again wouldnt matter if we were on the gold standard because most likely they would confinscate the gold and we would be left with worthless paper or cards again anyway. If America was at the verge of total collapse and the dollar was worthless it wouldn't even matter then if we were on the gold standard would it? Even those that saw it coming and switched to get their gold would be in a complete mess of a country until it got better. And if that eventually is three hundred years from now does that mean we should change the system now to a equally flawed monetary system, just because there is a group of people that dismiss mathematical proofs for common sense models?
Not to steal your catchphrase but peace to you too. Were all in the same boat and it takes discussions like these to get people on the same page!
Mr.KushMan
Well-Known Member
Perfecto senor!
That was my point the entire time, all monetarism is flawed, as well politics working in a trade based system. The tinkerbell effect was describing the things that have meaning only because people believe in them, just like tinkerbell comes back to life in peterpan because the audience believes in her. Economy, politics, nationality, authority, justice, dieties, education, language ect.. all rely on the ethereal plane that is the mental realm.
I have always stood by a completely free world. I guess you would describe it as syndical anarchism but I like to veer from titles. Everything being controlled by groups, who are the people working to create a livable existence for all others(who are also working toward this goal). No money would need to circulate because we all just move forward in an effort to better everyone for everyone. I have said this before and keeping in suite with my recent diatribes I want to quote myself, "Why must the thing, which is completely influenced only by what we share, be subject to personal propriety!"
We are reflections of eachother and the world, all one and neverending, just like the story goes. Whatever the stuff is that we identify as atoms are made up of the same 'stuff', and when you slow it, or cool it, to such a degree that it stops moving it becomes a mass of stuff that has no solo identity, all the atoms are indistinguishable from eachother in a bose-einstein condensate and are in fact all one thing that can be in multiple places at once!!!
Peace
That was my point the entire time, all monetarism is flawed, as well politics working in a trade based system. The tinkerbell effect was describing the things that have meaning only because people believe in them, just like tinkerbell comes back to life in peterpan because the audience believes in her. Economy, politics, nationality, authority, justice, dieties, education, language ect.. all rely on the ethereal plane that is the mental realm.
I have always stood by a completely free world. I guess you would describe it as syndical anarchism but I like to veer from titles. Everything being controlled by groups, who are the people working to create a livable existence for all others(who are also working toward this goal). No money would need to circulate because we all just move forward in an effort to better everyone for everyone. I have said this before and keeping in suite with my recent diatribes I want to quote myself, "Why must the thing, which is completely influenced only by what we share, be subject to personal propriety!"
We are reflections of eachother and the world, all one and neverending, just like the story goes. Whatever the stuff is that we identify as atoms are made up of the same 'stuff', and when you slow it, or cool it, to such a degree that it stops moving it becomes a mass of stuff that has no solo identity, all the atoms are indistinguishable from eachother in a bose-einstein condensate and are in fact all one thing that can be in multiple places at once!!!
Peace
Mr.KushMan
Well-Known Member
Perfecto senor!
That was my point the entire time, all monetarism is flawed, as well politics working in a trade based system. The tinkerbell effect was describing the things that have meaning only because people believe in them, just like tinkerbell comes back to life in peterpan because the audience believes in her. Economy, politics, nationality, authority, justice, dieties, education, language ect.. all rely on the ethereal plane that is the mental realm.
I have always stood by a completely free world. I guess you would describe it as syndical anarchism but I like to veer from titles. Everything being controlled by groups, who are the people working to create a livable existence for all others(who are also working toward this goal). No money would need to circulate because we all just move forward in an effort to better everyone for everyone. I have said this before and keeping in suite with my recent diatribes I want to quote myself, "Why must the thing, which is completely influenced only by what we share, be subject to personal propriety!"
We are reflections of eachother and the world, all one and neverending, just like the story goes. Whatever the stuff is that we identify as atoms are made up of the same 'stuff', and when you slow it, or cool it, to such a degree that it stops moving it becomes a mass of stuff that has no solo identity, all the atoms are indistinguishable from eachother in a bose-einstein condensate and are in fact all one thing that can be in multiple places at once!!!
Peace
That was my point the entire time, all monetarism is flawed, as well politics working in a trade based system. The tinkerbell effect was describing the things that have meaning only because people believe in them, just like tinkerbell comes back to life in peterpan because the audience believes in her. Economy, politics, nationality, authority, justice, dieties, education, language ect.. all rely on the ethereal plane that is the mental realm.
I have always stood by a completely free world. I guess you would describe it as syndical anarchism but I like to veer from titles. Everything being controlled by groups, who are the people working to create a livable existence for all others(who are also working toward this goal). No money would need to circulate because we all just move forward in an effort to better everyone for everyone. I have said this before and keeping in suite with my recent diatribes I want to quote myself, "Why must the thing, which is completely influenced only by what we share, be subject to personal propriety!"
We are reflections of eachother and the world, all one and neverending, just like the story goes. Whatever the stuff is that we identify as atoms are made up of the same 'stuff', and when you slow it, or cool it, to such a degree that it stops moving it becomes a mass of stuff that has no solo identity, all the atoms are indistinguishable from eachother in a bose-einstein condensate and are in fact all one thing that can be in multiple places at once!!!
Peace
When they confiscate gold they don't literally go door to door.
It is unbelievable to me that most mainstream economists believe that deflation is the biggest threat facing the U.S. economy. In order to believe that U.S. deflation is possible, you need to believe that the U.S. government will default on its national debt and Social Security obligations and that the U.S. dollar will rally in the process. In my opinion, there is zero chance of the U.S. government formally defaulting on its debts and Social Security obligations when it has a printing press. But for conversation's sake let's say the U.S. outright defaults and refuses to pay its debt. Why on earth would the U.S. dollar rally in the process? Why do deflationists believe the world will flock to the safety of paper? Look outside, unless you live in a desert, you will see plenty of trees.
During the Great Depression, the U.S. experienced deflation because the U.S. dollar was backed by gold. As the rest of the world defaulted on their debts, they flocked to the dollar as a safe haven because the dollar was gold, not paper.
It is unbelievable to me that most mainstream economists believe that deflation is the biggest threat facing the U.S. economy. In order to believe that U.S. deflation is possible, you need to believe that the U.S. government will default on its national debt and Social Security obligations and that the U.S. dollar will rally in the process. In my opinion, there is zero chance of the U.S. government formally defaulting on its debts and Social Security obligations when it has a printing press. But for conversation's sake let's say the U.S. outright defaults and refuses to pay its debt. Why on earth would the U.S. dollar rally in the process? Why do deflationists believe the world will flock to the safety of paper? Look outside, unless you live in a desert, you will see plenty of trees.
During the Great Depression, the U.S. experienced deflation because the U.S. dollar was backed by gold. As the rest of the world defaulted on their debts, they flocked to the dollar as a safe haven because the dollar was gold, not paper.
Correct , We have the reserve currency, Bretton woods, oil is priced in dollars for the most part although China, Brazil and Russia trade amongst themselves without using the dollar.Of course the dollar's true value is zero, they took a valuable commodity (Paper) and ruined it by adding all that green ink.
A New red Ferrari is not as important as food on the table. A new 60" LCD TV is not as important as heating my home in the winter, the latest fashion is not as important as being able to drive to work in the morning. All those things you said were just as important have no importance at all when it comes to survival. When food prices increase 5 fold and that new Speed boat is reduced 50% I have the choice not to buy the boat, but I have NO CHOICE when it comes to food, I MUST buy it or I will die. I can live without the speed boat believe me. Now you tell me again how those things are just as important as energy and food. An increase in food and energy is a direct decrease in your standard of living, you cannot escape it.
Bernanke and his supporters have said that their stimulus will be withdrawn as soon as the recovery takes hold in earnest. This misses the point that any "growth" created by stimulus is totally dependent on stimulus to continue. The "recovery" will end as soon as the stimulus prop is removed.
And think about this,Any moves by the Fed to shrink its balance sheet, thereby withdrawing liquidity from the real estate market, would add significant downward pressure to home prices. Lower house prices would bring on an additional wave of foreclosures, which would then force many previously bailed-out financial institutions back into bankruptcy. (With foreclosure data growing more ominous despite the current stability in house prices, it looks like these institutions are headed back toward bankruptcy even with Fed support.)
They closed 8 more banks last Friday, which seems to be about the average number closed every Friday this year. I wonder how long it can go on.
hanimmal
Well-Known Member
no all you need for deflation is for less money to be out in the system thanther was previously. As people save more of their money that leaves less dollars in use which means everyone is using less money to make their purchases and there are less transactions which leads to people having less spending money because less commissions less manager pay, less producer/supply purchases so they make less.
This leads to those people less willing to pay for goods and services and even less dollars in the system and deflation grows. It has little to do with somehow a destruction of the capital, it is how people are spending it that leads to the inflation/deflation trends.
That tv or Ferrari sale may not be important to you but to the guy that is desperate for the sale so that he can feed his family with the commission he receives as payment it is the most important thing.
And when his commission drops in half because they sold the car so cheap he is left hurting far more that you realized. Not to mention all the owners of smaller retail stores pain when all their products have reduced to a fraction of what they were, now those bills are far tighter and him and the employees that rely on the job to feed their families are hurt by deflation.
Where do you get this from? Because that's not the case most stimulus was about tax cuts, so we already benefitted from that to give us a bit more money during the recession which helped. Then you have the works programs, and those people got use of the money for doing their job and used it to get through. Then with the 80 billion in small business loans those loans are out and used right, that money is already out in the system and they are now paying it back. All those things cannot be undone right?
And when the economy is back on track and we get employment back up there will be more money flowing around the economy and prices will start to push upward. So that is when the fed is going to syphon off some of those excess funds from the stimulus package through increases in rates and removing some excess reserves from banks so that cash is tied up.
I'm trying to see where you are getting a drain in the liquidity of the housing market and the fed doing open market operations of selling (because a fed sale to banks means that the banks get the tbill and the fed takes the cash), but am not seeing it. Do you mean that if there is less money and higher interest rates that there will not be any more home loans and that will lead to foreclosure? I can maybe see ARM adjustments with higher rates forcing people to walk away. But if we are at the point where the economy is better we should be able to handle that. And most likely those people are in too much home anyway right.
But I will not be surprised if we see most people who are in those situations getting some kind of easing where the bank and the fed take a bit of a hit but the peoples loan amount are reduced and restructured to where they can afford it.
. Yeah Its going to keep happening too, I know during the eighties three were a few thousand banks closed up. And average a couple hundred closings a year since then. As far as how long we have about eight thousand independent banks and most countries have about five. So we have a long time before we really need to be worried.
They already have an Obama "Easing" program, unfortunately its only been able to help a handful of people, the rest ended up going bankrupt anyway. Besides Government and banks won't have a single thin dime come out of their pockets to pay for this, no no no, they always keep the money, its the TAXPAYER who will pay for their neighbors homes. Its almost laughable to hear someone say that the Banks and the Fed will take a hit. They never have and never will. That is one of the things I love about you Han, you really don't understand how it really works, your so naive sometimes, its kind of refreshing.
Actually 787 banks were closed over the S&L crisis. And that alone caused a Huge problem, but I don't expect you to remember stuff from when you were wearing diapers.
2008's tally of 25 banks shut down by regulators was more than in the previous five years combined and up from only three bank failures in 2007. Your data is extremely wrong.
hanimmal
Well-Known Member
Sorry forgot that you may not get that the bank doesn't actually have to disappear for it to be shut down. Look at the number of bankrupt banks it is a different story from bank closings right?
Try not to poo yourself with my way off data: http://www.fdic.gov/bank/individual/failed/banklist.html
And the easing your talking about is nothing close to what Could be on the horizon. I really think that could be a large reason why the fed has been acquiring so much of the toxic assets from the banks over this crisis, they are the bad mortgages. My guess is that they may try to ease people into paying what they can and chalking the rest up as a loss on their books. They very well may not, but I could see it happening.
I love how you continue to think I'm naive, but don't mistake the fact invent been fooled into believing the complete religious level bullshit that Austrian economics is and their star Ron Paul spews for naivety. It is just I know where their shit falls apart.
And any blog site claiming to be economics that says math is dead ranks right up there with intelligent design in my book.
Try not to poo yourself with my way off data: http://www.fdic.gov/bank/individual/failed/banklist.html
And the easing your talking about is nothing close to what Could be on the horizon. I really think that could be a large reason why the fed has been acquiring so much of the toxic assets from the banks over this crisis, they are the bad mortgages. My guess is that they may try to ease people into paying what they can and chalking the rest up as a loss on their books. They very well may not, but I could see it happening.
I love how you continue to think I'm naive, but don't mistake the fact invent been fooled into believing the complete religious level bullshit that Austrian economics is and their star Ron Paul spews for naivety. It is just I know where their shit falls apart.
And any blog site claiming to be economics that says math is dead ranks right up there with intelligent design in my book.
Sorry forgot that you may not get that the bank doesn't actually have to disappear for it to be shut down. Look at the number of bankrupt banks it is a different story from bank closings right?
Try not to poo yourself with my way off data: http://www.fdic.gov/bank/individual/failed/banklist.html
And the easing your talking about is nothing close to what Could be on the horizon. I really think that could be a large reason why the fed has been acquiring so much of the toxic assets from the banks over this crisis, they are the bad mortgages. My guess is that they may try to ease people into paying what they can and chalking the rest up as a loss on their books. They very well may not, but I could see it happening.
I love how you continue to think I'm naive, but don't mistake the fact invent been fooled into believing the complete religious level bullshit that Austrian economics is and their star Ron Paul spews for naivety. It is just I know where their shit falls apart.
And any blog site claiming to be economics that says math is dead ranks right up there with intelligent design in my book.
Your graph is not in any way representative of banks closures by the FDIC, your graph just shows how many banks have closed for any reason at all. Banks can be bought out by others, sold off piecemeal etc.
311 banks have been closed by the FDIC in the LAST DECADE, that is the OFFICIAL number http://www.fdic.gov/bank/individual/failed/banklist.csv
You need to get a new graph, or you need to understand what it is, your graph isn't showing FDIC bank closures.
Try to wipe up after you pee your pants.