http://say-no-to-recourse-loans.blogspot.com/2013/02/the-biggest-currency-printers-will-be.html All is not lost if countries print currency. That is where I disagree with Schiff. He has a right to be worried, however, his libertarian views prevent him from strongly opposing speculation.
The Biggest Currency Printers Will Be The Biggest Losers - Business Insider
By bgamall4 Follow Sun, 3 Feb 2013, 7:44am 1,082 views 51 comments
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bgamall4 says
Nixon did it in '72 as one of his gimmicks to get re-elected. I remember how relieved we were that gasoline would remain at 29 cents awhile longer. However, they caused all kinds of distortions because costs couldn't be passed through on some products. I remember the instance of the drowned chicks because either the increased cost of feed couldn't be passed along or vice versa. The scheme was working so poorly that they even went to a Phase II sometime in 1973 before throwing up their hands and abandoning the whole business. The result was that all the pent-up pressures, in addition to the Arab oil embargo at the end of '73 resulted in double digit inflation every month of 1974, I think 13% for the whole year, and pretty well set the tone for the remainder of the 70's as the decade of uncontrollable inflation.
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Bill gates cannot sit on "it". He will have to sell that water to buy other necessary stuff. Unless he has connections with the government, he will have pay market price for everything he would buy.
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gsr says
Who said?? This guy bought 2.2 million acres:
http://management.fortune.cnn.com/2012/09/27/john-malone-billionaire-landowner/
He's a speculator who will squat on this land and wait for it to increase in value. What makes you think that a billionaire "needs" to do anything with wealth producing assets?
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How does a rich person, take a billion dollars out of circulation? Is there any means to this other than literally storing dollars in their basement vault, aside from throwing the currency into the fire?
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No one has taken more money out of circulation than the banks who have excess reserves sitting on their balance sheets from the Fed.
My point above about Zero Hedge is that they have written against austerity and they have written against excess printing. That is why all these folks, and maybe they have, need to all come out against the speculation, which, since 2000, has become unprecedented.
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Speculation is good!
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errc says
It used to be good, before the markets in oil and foodstuffs were cornered. One guy was able to corner the cocoa market. Can you imagine what the investment banks, working together can do to screw the pocketbooks of Americans? They actually create scarcity not of the underlying commodity, but of the contracts for the commodity.
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Speculation on any item is a way to predict a future crisis, which brings more immediate investment to that. Banning speculation on food will only make sudden food crisis appear from nowhere. Of course, some get free money from the fed to speculate.
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gsr says
That was the intent of speculation. But now the markets are cornered and the speculators drive up the prices prior to delivery of the item. That is also what happened in the Great Depression, causing Will Rogers to say:
"We never will have any prosperity that is free from speculation till we pass a law that every time a broker or person sells something, he has got to have it sitting there in a bucket, or a bag, or a jug, or a cage, or a rat trap, or something, depending on what it is he is selling. We are continually buying something that we never get from a man that never had it." DT #1301, Sept. 24, 1930
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iwog says
So he put his 2.2 million dollar IN circulation. Didn't he? He taking a risk with his money. Would you rather have his money stuffed under his mattress?
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"We are continually buying (a paper promise to) something that we never get from a man that never had it."
And the solution is, to print more paper. It would be funny if it wasn't so gotdamned stoopid. The American solution should have been to let the whole thing fali. If it can't "succeed" without the government stepping in and putting a gun to a couple trillion dollars worth of future labor not yet toiled, demanding to make the gamblers whole, than it deserves to fail. Cui bono from that type of "solution"
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errc says
While I agree with your sentiment, mass failure may have been really bad. It would have been better to have taken the TBTF banks down one at a time. But instead the Fed printed a gazillion dollars which sits on their books in case they go down again. But will it be enough?
So, I agree with your sentiment Errc, but toxic derivatives are sitting first in line at the FDIC in front of your bank deposit.
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bgamall4 says
Mass failure may have been really bad? For who? Relative to what? This which we've been gifted instead? You cannot let fear of the unknown dictate your life, you will never progress into anything better!
Societies outgrow institutions, like children outgrow clothing.
How bad off would I have been if the 1% of folk that own everything? Worse than I am now? Being forced to work more for their devalued dollars, buying their ever expensive neccessities, and being forced to pay more and more taxes? And you tell me, this is good for me?! You can't think outside the box, because you are the box!
We are now stuck "living" in a system, built on fear, political privilege, and privatized gains with socialized losses. But we ought be happy with it, because the alternative may have been worse. Please, by all means, explain to me how it could be any worse for those of us at the wrong end of the political privilege barrel?
I'm plenty smart/strong/adaptable enough to survive and thrive in any environment. However, I reject the premise of all you leftist hypocrits that whine about how everything is republicans faults, and hey, if you can't beat um join um. Nobody gave me the friggin rule book, and I wouldn't bother reading it anyways. RULES ARE MADE TO BE BROKEN by those that make them, for everyone else, theyr made to corrall the pigs and fatten them up prior to slaughter.
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Sorry for the rant, nothing urks me more than this horseshit
" mass failure may have been really bad."
Well we know that mass bailouts are really bad!
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errc says
Again, we should have clawed back money, made the banks pay more, made the banks loan to the real economy. That all could have been done and it wasn't. And bailouts are really bad. Yet, capital flight from America is really bad too.
Again, your sentiment is commendable, but capital flight is a disaster. And the derivatives are a disaster that should be wound down now. But in this lull between crises, they are doing nothing. That is stupid and I hope you would agree.
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No, we should have let the banks FAIL - that is what capitalism is built upon and it won't work otherwise, failure is encouraged, but NOT REWARDED. Insurances are here for a reason, small and middle class people would have been protected up to 100K/250K per account. If you have more, you can distribute your accounts. It would have been much better to let this crap fail and prosecute the fraud and let small, sustainable banks/credit unions emerge who can actually hedge their risk and don't run criminal ponzi schemes and mortgage fraud. Stop the looting and being the eternal apologist and start the prosecuting.
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Btw. that preemptive "reasoning" is no better than the neocons justifying every fucking war at every corner in the world. If we don't bomb Iraq they will eventually have/use WMDs, same for Iran, Syria, blah blah blah. If we don't print money, shit will happen. If we don't bail out the banks, shit will happen. But we know how to make everyone prosper! All we need is special interests, Paul Krugman and a printing press!
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mell says
Perhaps if we had had state banks willing to lend to the local banks that would have been ok. But only North Dakota has a state bank that works. And it is not exactly a flaming liberal state. Ellen Brown has the right idea.
You don't know what would have happened, Mell, had all the capital left the country. You don't know. So until you know why do you keep saying no bailouts? It should have been done very differently, but you don't know what the derivatives consequences could have been.
When you know, let me know will you?
You may be right, but unless you can prove it, no one really knows what could have happened if all the banks would have melted down all at once.
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mell says
Again, there are rules of war, and the consequences of war are well known. The consequences of a mass meltdown of 65 trillion dollars of derivatives held by Bank of America ALONE is not known.
But I am open to someone trying to explain that outcome!
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gsr says
As is frequently pointed out, dollars are NOT WEALTH. They are simply a marker for wealth. If everyone sold every asset to hoarders at inflated prices, then everyone would be rich and there would be nothing to buy and we'd be Zimbabwe.
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iwog says
You quickly change topic. I never claimed a paper dollar is wealth.
It's you who said circulation of money is necessary to create wealth. He just did that. Whether dollar is a wealth or not is a separate topic. It is valued as much as anyone is willing to accept it.
There are two more comments.
First, I have no objection if he earned those dollars honestly. He can do whatever he wants with it. You do the same with your real estate. It seems you dislike anyone who is a bigger fish in the market than you are.
Second, using that dollar, he can accumulate as much natural resources he wants as long as he pays fair market price. It does not always guarantee a future wealth or prosperity. China is doing the same across the world using the paper dollars.
To me, human brain is the best resource. Neither you, nor this guy can hoard human brain as a resource.
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gsr says
Yup.
gsr says
All he did was lock up 2.2 million acres so no one could use it to create wealth. What if I wanted to mine that land? Ranch that land? Grow crops on that land?
He's speculating and will only release the hostage if he's paid a significant sum of money over his cost. This is precisely what is wrong with having high wealth disparity. You're getting too wrapped up in semantics instead of examining what is going on.
gsr says
First of all it doesn't seem like I dislike anyone. I passed no judgement on this man, in fact if I was a billionaire I might do exactly the same thing. The problem is with unrestrained capitalism and the fiction that a free market will correct imbalances.
Second of all, my real estate is wealth being exploited to the fullest extent possible. People are living on my land and in my houses. There is a massive difference between productive real estate and hoarded real estate with a keep out sign.
gsr says
Right, and if I was rich enough I could corner the world market on silver, buy every available ounce, and close all the silver mines. Then entire industries from plasma TVs to computers to medical devices would be utterly destroyed and the world would plunge into a massive depression that might last decades.
"He can do what he wants" is fucking stupid and will wreck any society. He can't do what he wants just as Teddy Roosevelt said when he broke up Monopolies and sent the Robber Barons packing.
Unrestrained capitalism is a dismal failure and will ALWAYS end in misery and war. When I talk about hording wealth in the modern economy, I am talking about specific small examples that by themselves have few implications.
However these actions DO have tragic consequences. It is perfectly legal to fill a supertanker with oil and park it offshore waiting for the price to rise. It is also perfectly legal to buy so many supertankers and hoard so much oil that it drives the price up to $200 a barrel.
It will fuck every working American, it will make their standard of living worse, it will replace other expenses like medical care and might even kill a few people. But hey........he can do what he wants right?
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errc says
I don't know. John Denver didn't let fear control his life and he died in a littl reckless plane. Depressions are bad, unless they are a non credit crisis recession.
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gsr says
You should. Paper money has never been more stable. Other wealth could be manipulated, and yes paper money can too. But it is liquid. That is a big advantage. But I would be interested in listening to Iwog's argument further. I say cash is king.
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bgamall4 says
What the heck are you talking about? All the factories would have been moved overseas? (the ones not already) All the farms and soil scraped up and shipped over seas? All the stores packed up and shipped overseas? What exactly are you calling capital? Do you honestly believe the world would end tomorrow if the US Dollar paper money disappeared? The South seemed to have carried on just fine even as the Confederate money was made illegal overnight!
Money is not capital. Productive asset is capital (until it is replaced by another asset that is even more productive, just like old mode computer replaced by new model). Money is only an accounting unit. If the current monetary system dies, a new monetary system will replace it. If all the existing banks die, new banks will rise up to replace them without the existing debt burden.
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iwog says
How is that even possible? What would hoarders do with productive assets like land and factories? Mothball them? That would only make their neighbor's land and factories all the more valuable . . . and make the hoarders poor for lack of productive return while having to maintain the property, plus paying property taxes.
Zimbabwe was a case of government destroying the economy by hyperinflation. The economy got back to footing by trading on gold grams for a while and then re-based the currency. Life became a lot better after the old monetary system was swept away.
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bgamall4 says
In that case, you will be happy to have 2.2 million instead of the natural resource. Iwog prefers something else. That supports my argument. That's why we need more business, and capitalism. Each of us value things differently.
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iwog says
There is nothing called unrestrained capitalism, unless by capitalism you mean corporate oligarchy. First, you always _have_to_ produce first before you can consume.
Unless you are a well-connected individual, you have to have to produce stuff with your hard work, before you can consume. And even if you so called "hoard" resources, you need to pay for other things you need by using those resources. There is nothing magical about one specific resource.
For example, this is exactly why housing speculation with unrealistic expectation fails, and will fail.
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bgamall4 says
Derivatives are zero-sum transactions: for every loser there is a winner, for the exact same amount! Take for example, if you and I establish a derivative contract on the next coin flip, heads you owe me $1T, and tail I owe you $1T. Of course, neither of us has $1B under our names. There is no snowball's chance in hell either one of us can pay the other the $1T . . . unless we can get the government to deem one of us TBTF, then make that person lose the bet. The result is that one of us will get the $1T, from the government . . . or more precisely, we'd lend that $1T back to the government and collect 3% interest, netting us $30billion a year for the rest of our lives . . . even though neither one of us had even $1B to begin with.
That is essentially how the whole scam worked, and why the tax (including inflation tax) to service the $30B interest payment on non-existent money is destroying the economy and destroying jobs.
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iwog says
Then offer him a price that is attractive enough for him to sell the land to you or lease the land to you, unless the land is under conservation convenant.
Unless he is a conservationist who wants the land to go ferral, I don't see why he wouldn't lease the land to you for productive use while collecting the lease to offset his property tax and maintenance cost . . . even assuming he is a speculator and can not do anything with the land himself.
Or he will lose his shirt someday selling the land for a lot less than what he paid for it. Speculation goes both ways.
Someone has to decide what to do with each piece of land. That power can be expressed in money terms or in raw political power terms. If the former, the market place tend to chip away at concentration of power in a free market. In places where land use decisions are made by political process, the result tends to be concentration of power.
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iwog says
Where is this "if you are richer than me you must be stupid or unethical" idea coming from? Why should a billionare automatically hoard land and not care about the carry cost?
I doubt your idea of best use for all the land in the US is carving all of it up into 4000sqft lots and placing a house on each one! Someone has to maintain open space, so you and your tenants can enjoy low density, have fresh air and fresh water. If you ever think from a developer's perspective, it would also make sense to have reserve land for building houses in the years to come so your equipment and your workers don't idle just because land price has been bid up.
Think beyond your own narrow perspective for a change.
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iwog says
Inside every wannabe central planner is a control-freak who is ignorant of basic economics. Why would you ever aspire to such an endeavor as buying every available ounce of silver? Not even the Hunt brothers were trying to do that (they just wanted to drive up price then cash out). Have you ever heard of price elasticity? If you ever try to buy every last ounce of silver in the world, the price for the last few million ounces will shoot through the roof! You'd have to be infinitely rich to acquire them. In fact, the only way you can really corner all the silver in the world would be if you are the head of the world government, and you send your world police to gather it for you. That must be why your ilk is so keen on central planning . . . you really do want to control it all!
iwog says
Then Teddy packed up himself to massacre lions in Africa and build American Empire all over the world. Controlling all Americans alone was just not enough for Teddy the control freak. Ironically, it was Teddy's actions that prompted the Morgans and Rockerfellers to get together and found the Federal Reserve. Funny you are a fan of both power-hungry teams.
iwog says
Where did you find unrestrained capitalism, so much so that you can use "ALWAYS"? Seems to me wars are distinctively actions of the government, which is by definition not unrestrained capitalism but the very thing that restrains trade and capitalism . . . as in the old saying: where goods don't cross borders troops do.
iwog says
Seems to be rather similar to governments with strategic oil reserves. LOL. Attempting to hoard and corner commodity market like that usually ends up losing money, unless one is backed by the FED's monetary inflation policy on top of gauranteed bailouts of course.
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bgamall4 says
Paper money is liquid only because of fiat money law and that the public have not rejected it yet. The trillion-dollar Zim paper money was not at all liquid despite the central banker's signature on it. Nobody would even give you a loaf of bread for it.
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Reality says
What are you talking about? Iwog is discussing how the concentration of capital has the potential for monopolistic behavior. (More probably oligopoly)
What is the "free market" solution for monopolistic behavior?
As far as I know the only cure for this government intervention.
When has the free market limited monopolistic power on its own? Especially after it has been established. Some will claim that monopolies cannot exist without government intervention in the first place - that is, barriers to entry created by regulation create monopolies, not the free market. But then there are examples like De Beers that contradict...
Then there is the example of the board game monopoly - what happens at the end? No barriers to entry there - only limited resources for wealth creation and finite capital (read: hard money).
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Reality says
You made my case. BAC alone has 65 trillion dollars of derivatives. If these banks fail en masse, the government tab could be trillions upon trillions of additional dollars.
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Reality says
No, it is also backed by the enormous might of the United States. The danger is that the neocons have and will use that might for evil. But as a backing for fiat money, and the power of the US gives the world a certain stability.
And if the Fed wears itself out with QE and slows it down, the dollar could turn over less and could then be stronger. But that would require somewhat stable production in basic goods. If that slows we could have inflation
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Speculators LOVE famines and shortages, it's why they love their jobs. Sometimes, they do everything they can to create or exacerbate crisis.
Here is an Enron trader telling an engineer to take a plant offline in order to gin up the rate.
http://www.nytimes.com/2005/02/04/national/04energy.html?_r=0
The tapes are online if you google for them.
Funny, this shit didn't happen when utilities were strongly regulated, only when the regulations were removed.
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bgamall4 says
There is no government tab, just orderly default and jail-time for the bankstas. Perfect scenario. Maybe public hangings would make it evn better. Ironic how the whole world despises Bernie Madoff who should be free as long as the bankstas are free. Don't fear bank bankruptcies, they will make the economy better not worse.
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That reminds me, where is AF?
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mell says
I am all for that. There were prosecutions in the S & L crisis. And the S & L's were wound down in an orderly fashion. These banks are much bigger. It is like a python swallowing an elephant.