patrick.net

jvolstad says

The Fed will never stop buying.

Print until they can print no more

What do you fellers think of this possibility?

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indigenous says

What do you fellers think of this possibility?

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I think you about hope for the best and prepare for the worst

Rickards says
The mistakes have already been made. The instability is already in the system. We’re just waiting for that catalyst that I call the snowflake that starts the avalanche. You don’t worry about the snowflakes; you worry about the snow and that it’s unstable and it’s just waiting to collapse.

Bubbabear says

it’s just waiting to collapse.

The guys I listen to say cash is king. This guy is saying that cash is going to be replaced by SDRs (world money put out by the IMF) He says the new reserve currency.

He indicates that Buffet is investing in hard assets like the Burlington RR and dumping cash. I thought I heard a while back that Buffet was heavy with cash?

Unless the FED is in cahoots with the IMF it would seem they would fight this. OTOH if no one has confidence in any currency the IMF may be able to step in?

indigenous says

Unless the FED is in cahoots with the IMF it would seem they would fight this. OTOH if no one has confidence in any currency the IMF may be able to step in?

IMF won't because the fed will protect it's interests just as Japan will. The one screwed is the EU central bank. When the EU breaks, each country's central bank comes back and the fed will protect its world reserve status.

Bubbabear says

The fed will protect its world reserve status.

What happens when the melt down starts?

indigenous says

Unless the FED is in cahoots with the IMF it would seem they would fight this. OTOH if no one has confidence in any currency the IMF may be able to step in?

The only way SDRs makes sense is the Fed gets too over extended (possible) and the IMF has SDRs with a clean balance sheet to bail out the dollar.
Cash would make no sense if the Fed and treasuries crumble-stocks and tangible assets would be the way to go then

Bubbabear says

Rickards says

The mistakes have already been made. The instability is already in the system. We’re just waiting for that catalyst that I call the snowflake that starts the avalanche. You don’t worry about the snowflakes; you worry about the snow and that it’s unstable and it’s just waiting to collapse.

You cant just print $4 trillion, buy trillions worth of useless mortgage back securities from otherwise bankrupt banks, fund 90% of the US government deficit spending and expect everything to be fine.

Call it Crazy says

That's the part that makes me wonder.... When does the curtain get pulled back and people see this "recovery" for what it really is??? All this artificial propping up has to blow up at some point, doesn't it??

To this day people think that FDR was a great president who saved the US. It amazes me how people can be brainwashed. Especially when they deify the president. At least half of Mt Rushmore is literally laughable.

smaulgld says

The only way SDRs makes sense is the Fed gets too over extended (possible) and the IMF has SDRs with a clean balance sheet to bail out the dollar.

Rickards was saying that the IMF is leveraged 3 to 1 where as the FED is leveraged 80 to 1.

Kind of absurd, I wonder how they arrive at that conclusion, what is a derivative worth. He also said derivatives for the most part should be banned. Seems to me that Darwins law would fix that if no bailouts. Certainly with GS or MS

A different reason to own gold?

indigenous says

Kind of absurd, I wonder how they arrive at that conclusion, what is a derivative worth. He also said derivatives for the most part should be banned. Seems to me that Darwins law would fix that if no bailouts. Certainly with GS or MS

A different reason to own gold?

The advantage of gold or any asset that you own outright is that it is not someone else's liability.

indigenous says

To this day people think that FDR was a great president who saved the US. It amazes me how people can be brainwashed. Especially when they deify the president. At least half of Mt Rushmore is literally laughable.

I am writing a book on the Presidents from the point of view that "great" presidents were the ones that abused their powers the most

Call it Crazy says

That's the part that makes me wonder.... When does the curtain get pulled back and people see this "recovery" for what it really is??? All this artificial propping up has to blow up at some point, doesn't it??

Eventually that is the concept of kicking the can down the road for as long as you can then turning over the tables when you can kick no longer

smaulgld says

"great" presidents were the ones that abused their powers the most

I was listening to something yesterday about Teddy Roosevelt, suffice to say Mark Twain said he was insane. He wanted to get the congressional medal of honor to make amends for his father who bought his service in the Civil War. I guess back then you could pay for a proxy. Anyway Clinton gave him the Congressional Medal of Honor posthumously. That asshole is such a hick he could shit on anything, said TR was his favorite president.

I will take a Clinton with zero integrity over an ideologue any day.

This guy has his PHD in history, is an Austrian, might be interesting to you regarding some of these "deities", you should hear what he has to say about Lincoln.

http://www.schiffradio.com/pg/jsp/verticals/archive.jsp

smaulgld says

You cant just print $4 trillion, buy trillions worth of useless mortgage back securities from otherwise bankrupt banks, fund 90% of the US government deficit spending and expect everything to be fine.

Obligatory:

The Zimbabwe people must be pretty good at math?

indigenous says

This guy has his PHD in history, is an Austrian, might be interesting to you regarding some of these "deities", you should hear what he has to say about Lincoln.

http://www.schiffradio.com/pg/jsp/verticals/archive.jsp

Thanks I finally got to listen to this

indigenous says

What happens when the melt down starts?

What will trigger a meltdown?

smaulgld says

Eventually that is the concept of kicking the can down the road for as long as you can then turning over the tables when you can kick no longer

You assume that no problem can get solved over time in a better way than they would be in one shot.

Heraclitusstudent says

indigenous says

What happens when the melt down starts?

What will trigger a meltdown?

That is a good question.
probably an event that drives home the realization that dollar/US Treasury scheme can't be sustained

Call it Crazy says

When does the curtain get pulled back and people see this "recovery" for what it really is??? All this artificial propping up has to blow up at some point, doesn't it??

Or when does the artificial propping up become the real thing?

There is a dynamic at work: One good result lead to more good results. Every problem fixed, even temporarily, makes it easier to fix other problems. At what point the chain reaction starts on the right side.

Heraclitusstudent says

Or when does the artificial propping up become the real thing?

There is a dynamic at work: One good result lead to more good results. Every problem fixed, even temporarily, makes it easier to fix other problems. At what point the chain reaction starts on the right side.

Yep maybe you can step in the same river twice and find it as good and the same as ever, but I doubt it

smaulgld says

the realization that dollar/US Treasury scheme can't be sustained

Yesterday we discussed the fact that the US debt held by the fed might as well be forgotten.

What US treasury scheme can't be sustained?

smaulgld says

Yep maybe you can step in the same river twice and find it as good and the same as ever, but I doubt it

That's the point, is it not?: the river is not the same.

I'm a housing bear in the long term. But there are many ways housing can go down.

It can go down, in a relative way, in a booming economy.

Heraclitusstudent says

Yesterday we discussed the fact that the US debt held by the fed might as well be forgotten.

What US treasury scheme can't be sustained?

International acceptance of the printing of dollars to satisfy previously issued and ever growing U.S debt obligations

Heraclitusstudent says

What will trigger a meltdown?

Money is a symbol that people have confidence in, when that confidence is broken the herd stampedes. The trigger could be anything. In 2007 it was a change in overnight lending rates that caused Jeff Imelt to cry wolf to Paulson. One day someone said to the tulip bulb buyers your tulip bulbs are not worth that much and boom tulip bubble is over.

The thing that is obvious is the bubble. WE HAVE A BIG ASS BUBBLE.

smaulgld says

International acceptance of the printing of dollars to satisfy previously issued and ever growing U.S debt obligations

You think the dollar status is at risk? Look at the Yen, the Yuan, the Euro, the GBP, the Swiss Franc. The dollar is by far the best kid in town.

What is at risk - and should be at risk - is the low value of currencies of countries like China.

indigenous says

The trigger could be anything. In 2007 it was a change in overnight lending rates that caused Jeff Imelt to cry wolf to Paulson. One day someone said to the tulip bulb buyers your tulip bulbs are not worth that much and boom tulip bubble is over.

The thing that is obvious is the bubble. WE HAVE A BIG ASS BUBBLE.

In 2007 it was the bust of a housing bubble based on massive fraud and unsustainable credit growth. Credit had been moving weaker hands for years. The money been thrown around at that time was unpayable debt.

Now this unpayable credit has been replaced by new base money. A huge black hole of debt has met the infinite source of green paper, and the hole has lost: it has been filled, mostly. There is the difference: base money will not be defaulted upon.

All that's missing for the economy to actually boom, is the money to actually circulate.

And it's a very brave assertion to say it won't happen.

It's a very brave assertion to think we HAVE TO fall back into a deflationary spiral with the extra base money that's sloshing around.

Heraclitusstudent says

You assume that no problem can get solved over time in a better way than they would be in one shot.

It's hard to solve a problem when each successive "solution" pushes you closer to the cliff

Heraclitusstudent says

That's the point, is it not?: the river is not the same.

I'm a housing bear in the long term. But there are many ways housing can go down.

It can go down, in a relative way, in a booming economy.

Housing should not drive the economy, but rather be reflective of the health of the economy-ie people have good jobs and can afford to buy houses.

Heraclitusstudent says

You think the dollar status is at risk? Look at the Yen, the Yuan, the Euro, the GBP, the Swiss Franc. The dollar is by far the best kid in town.

What is at risk - and should be at risk - is the low value of currencies of countries like China.

None of the currencies are backed by anything BUT the US has the largest outstanding obligations
other countries are making efforts to accumulate assets for reserves other than dollars

smaulgld says

None of the currencies are backed by anything BUT the US has the largest outstanding obligations

other countries are making efforts to accumulate assets for reserves other than dollars

Are you kidding?
Have you looked at Japan's debt?
Have you looked at the debts of European countries?

As for reserves: the whole point of accumulating them is not to store value, it's to devalue your currency against the dollar. This can't be achieved by buying gold.

You guys worry way too much about gov debt and consequently currency values. The problem of a country like Japan, is not to pay back its debt. The problem is to extract enough value from its working population to feed its retirees without sucking the financial blood out of young people.

You should think of the problem in these terms.

smaulgld says

It's hard to solve a problem when each successive "solution" pushes you closer to the cliff

Explain in what sense we are moving closer to a cliff.

smaulgld says

Housing should not drive the economy, but rather be reflective of the health of the economy-ie people have good jobs and can afford to buy houses.

Housing prices have reflected growing leverage in the 30yrs to 2007.
This trend may well have reversed already.
The river is not the same.

The weak economy today is not 'fake': it's a better reflection of economic realities than the strong economy of 2005 ever was.

Heraclitusstudent says

Now this unpayable credit has been replaced by new base money.

That is a very glib statement, that someday sooner than later will hand your ass to you.

Calling something base money does not mean shit. The fed is leverage 80 to one that is not a benchmark, it is an albatross around our neck.

indigenous says

Bubbabear says

The fed will protect its world reserve status.

What happens when the melt down starts?

Melt down? Fuses are lit every where!

indigenous says

Calling something base money does not mean shit. The fed is leverage 80 to one that is not a benchmark, it is an albatross around our neck.

Base money has a precise definition.

On the other hand saying the fed are leverage 80 to 1 doesn't mean shit when they have a printing press in their basement.

Heraclitusstudent says

On the other hand saying the fed are leverage 80 to 1 doesn't mean shit when they have a printing press in their basement.

You your self are saying the CDOs and other derivatives are now a part of base money. That is where the 80 to 1 leverage comes from.

indigenous says

You your self are saying the CDOs and other derivatives are now a part of base money. That is where the 80 to 1 leverage comes from.

Please explain further. Why do "leverage" come from the presence of CDO or treasury bonds?

Heraclitusstudent says

Please explain further. Why do "leverage" come from the presence of CDO or treasury bonds?

Because the FED has been buying the derivatives at the price GS and MS and others paid for them. By doing this they are saying that this is now the real value of these worthless derivatives which is maybe 40 times their actual value.