World economy talk

[Ms Homer]

whewww kakadugo ng ilong dito. pasang awa lang kasi ako noon sa Econ 101 eh.

very informative/educational though.

[tidus1203]

let me explain the way the US Fed works, then. the only way the Fed can create new money (increase the money supply) is TO ISSUE NEW DEBT - in the form of new T-Bills to be sold to banks. so, how can you "pay down debt" by creating new debt? :hihihi:

the Fed cannot simply print money and throw it out of a helicopter, as those talking heads and bloggers allege.

Yes and thats how they pay back the old debt by issuing new debt so the debt spiral continues. Its like refinancing, except this one is unending... Lets say I hold a 2 year Tbill. After 2 years the principal is paid back by the government by printing new money (by printing new money they issue new debt) and it goes on and on. The problem is everytime they borrow there is interest that has to be paid and it compounds. So they have to print even more to pay the principal + interest of the old debt and print even more when this new debt expires since the interests coumpounds. So the money supply will just grow endlessly and it compounds cause if they stop printing the whole thing collapses. That is why the politicians fear Gold, because Gold is honest.

And now more than ever they are lowering interest rates meaning banks can borrow even more and new money again is being created at the request of the banks. These new money might likely create a new bubble (after the NASDAQ and housing bubble) since there is now even more money chasing the same or even fewer goods. Add to that fractional reserve banking and this whole thing is just a pile of debt that they will never ever escape.

And you have to be smarter that that to believe that the inflation the government publishes is accurate. They always use core inflation but its a load of BS cause they remove food and energy. Who the hell in this world can live without food and energy. I can live without computers and TV but I sure can't live without food. And you don't have to go to the government to get the inflation data you only need to shop yourself and realize that inflation is much more than what the government claims. The government is misleading us with many bad economic numbers, now they don't even print M3 anymore (which is the statistic showing total money supply) cause if we knew the real M3; inflation expectations will go up the roof.

[empy]

o, so i'm not smart enough to understand inflation now...hehe.

so give me a better measure of inflation than CPI. then tell me what the numbers are. if you don't trust the government, then cite your own source. commodity price trends are available to anyone with an internet connection, so i'm sure any number of private sources can independently calculate CPI, PPI or whatever number you choose. let's see if it still shows the type of hyperinflation that you are implying.

remember - the core part of your argument is that the US government is paying down its debt by printing money, and that increasing of the money supply will devalue the currency. the US national debt is $9 trillion - if the Fed is covering that with new money, then you should see a huge amount of inflation, not to mention a phenomenal increase in the number of T-bills outstanding. so tell me - WHERE IS THAT INFLATION? you didn't like my numbers, so give me another credible source.

btw, i live in the US. i shop for myself every week. what commodities, exactly, am i supposed to see much more price inflation on? yes, i pay a lot more for gas now. but food? housing? clothes? medical care? entertainment? education? none of those are high enough that i notice the difference.

sorry, but it's still not making sense.

[empy]

whewww kakadugo ng ilong dito. pasang awa lang kasi ako noon sa Econ 101 eh.

very informative/educational though.

ma'am, medyo tagilid din ako nun eh

who knew that i would actually have to use it in grad school and my current job :bwahaha: inis na inis pa ako nun that i had to take it :hihihi:

[tidus1203]

I am not calling anyone not smart, but we have to be more sophisticated than just believing what the government throws at us. Afterall this is the same government that is creating this ridiculous stimulus package that will put them even more in debt and obviously its just more of a political statement rather than an economic one cause its not going to work.

You don't feel the increase in education and health cost where exactly in the US do you live?

Just in case you didn't notice the US Dollar is falling as we speak. The 2007 US Dollar is worth 13 cents when they removed the gold standard in the Nixon era. Yes 13 cents of the 1970's Dollar so all those years the dollar has depreciated that much. Before if you say you're a millionaire in the 1950's it meant something these days there are so many millionaires not because they were ultra successful, there is just that much more money now. Another example is John Rockefeller vs Bill Gates. Rockefeller was the richest guy of his time while Gates of our time. Rockefeller has estimated net worth of $200 million while Gates has over $52 billion but Rockefeller is still considered the richest man who ever lived. Says so much about inflation.... How about my personal experience, when I was like 10 years old movie tickets where just P40. Now I am 23 movie tickets cost P150. I know its in the Philippines but I am sure its also true there.

Bahala ka basta ako out nako sa US Dollar. As they say we foreigners who never have to use the currency (I don't live in the US thank God) are more objective in choosing our money. I am not forced to hold US Dollar unlike people who live in the US thats why I can think more rational than people who need to use them in everyday life. I hold the Euro, the Australian Dollar, the Japanese Yen and yes the Chinese Yuan all more sound currencies than the US Dollar. I also plan to get into the Swiss Franc momentarily....

[tidus1203]

Here if you still can't agree with me than maybe an investing great could convince you. I totally agree with everything this guy is saying...

[ame="http://www.youtube.com/watch?v=umeXaGb6Xco"]YouTube - 11/2/2007-Part 1 Jim Rogers Interview On Bloomberg[/ame] (PART1)
[ame="http://www.youtube.com/watch?v=-ClwicFzAcM&feature=related"]YouTube - 11/2/2007-Part 2 Jim Rogers Interview On Bloomberg[/ame] (PART2)

[uls]

And most americans wont even take Ron Paul seriously

He's the only candidate who GETS IT.

[empy]

teka lang tidus...inaantok na ako. bukas na lang ako sasagot ha

i have to make this point again really quickly - i am not a big believer in the US dollar either, at least for 2008. that's why i've moved 25% (and probably more later once my options mature and i can get out of them) of my portfolio out of US-market securities and into international. i just think that the reasons to be pessimistic are not the ones you stated. there are more real issues with the US economy than money supply - like the trade imbalance, the subprime crisis, and general lack of investor confidence. those are the reasons to be afraid - not Big Ben.

g'nite man :sleep2:

[tidus1203]

And most americans wont even take Ron Paul seriously

He's the only candidate who GETS IT.

Ron Paul might seem very extreme but to be honest he is the only candidate who even talks about money and inflation. All the other candidates will just run the country's finances status quo and since Ron Paul won't win then we have to continue getting out of US dollars. The US has abused its reserve currency status just like the Brits did in the 19th century when their currency was the world's reserve currency.

[tidus1203]

[ame="http://www.youtube.com/watch?v=gldETRlhiXk&feature=related"]YouTube - Ron Paul Schools Ben Bernanke Yet Again 2-27-08[/ame]

The only politician who talks about the economic reality of the US Dollar. The others don't even want to talk about the inconvenient truth....