marxists see the last days LOL

[JohnDB]

If you are interested, the Bank of International Settlements did a study on deflation.



IOW, mild deflation of goods and services brought on by technological improvement is good for ordinary people, and the economy.

The problem with deflation is that usually it's a precursor to hyperinflation and immenant collapse of a Fiat money system.

 

[jasonc]

That can be an effect of a weaker dollar from watering down the currency. Sometimes it's necessary to prevent deflation. It allows a nation's goods affordable on the world market.

We wouldn't go to war if China decided to stop funding us? Does money grow on trees? Apparently the feds and you agree it does.the only reason Greece faltered is that don't print their money. Cant borrow, print money forever because taxation cant fund all that .

 

[JohnDB]

We wouldn't go to war if China decided to stop funding us? Does money grow on trees? Apparently the feds and you agree it does.the only reason Greece faltered is that don't print their money. Cant borrow, print money forever because taxation cant fund all that .

Of course not...and they have stopped buying bonds. Other Governments have started purchasing them again to dispose of their stores of excess cash.

Greece faltered because they borrowed money and had absolutely no regard for paying it back. There were no limits placed on their borrowing in the EU and they owned no honor in borrowing all they did.

The net result will eventually be the end of the Euro. Especially due to GB leaving the Union. (Germany and Austria are wishing to do the same) soon it will have to find something to back up their money...I think that soon they will begin buying American bonds and use those to bolster confidence in the Euro once again.

 

[jasonc]

Of course not...and they have stopped buying bonds. Other Governments have started purchasing them again to dispose of their stores of excess cash.

Greece faltered because they borrowed money and had absolutely no regard for paying it back. There were no limits placed on their borrowing in the EU and they owned no honor in borrowing all they did.

The net result will eventually be the end of the Euro. Especially due to GB leaving the Union. (Germany and Austria are wishing to do the same) soon it will have to find something to back up their money...I think that soon they will begin buying American bonds and use those to bolster confidence in the Euro once again.

socialists, political beauracry never has with central banks shown restraint.not even under conservatives in America has the deficit been reduced. Our dollar will fail and take the world down along with it.remember before the depression it was the u.k. who had the bank system of envy .we have no gold backing .

Cant fund social security, I don't expect to get any .my guard retirement will eat most of that, when it cant pay 70 percent of it obligation,wiz,ss.i will not get any .

No politician has restraint on spending save a few.those aren't enough.

 

[JohnDB]

socialists, political beauracry never has with central banks shown restraint.not even under conservatives in America has the deficit been reduced. Our dollar will fail and take the world down along with it.remember before the depression it was the u.k. who had the bank system of envy .we have no gold backing .

Cant fund social security, I don't expect to get any .my guard retirement will eat most of that, when it cant pay 70 percent of it obligation,wiz,ss.i will not get any .

No politician has restraint on spending save a few.those aren't enough.

You are speaking of recent history.
Before WWII our government went back and forth with excess funds and deficits.
During WWII our government issued war bonds...lots of hype and people bought them with payroll deduction and at various banks.
It wasn't until afterwards that it got worse...and by that I mean Post Nixon.

Kinda odd when you think of it.
Nixon was the last president that showed financial restraint even though the Congress wasn't so restrained. But both got along well enough to keep it under control.

Social security would have been broke long before this point. A rapidly growing population is needed to keep the thing funded at current levels of payments (and politicians kept loosening the qualifications and increasing the amounts a person could draw)

It is a Ponzi scheme. In the 60's they put social security proceeds and disbursements from the general fund because it was almost broke as it was. (Nevermind the hype and politician's mudslinging)

Which brings up the point that elected politicians are going to try to buy votes from those who have nothing better to do than take government handouts.

It was unique (in recent history) that under a traditional fiscal liberal president we had a couple of years of actual balanced budgets due to a fiscally conservative Congress.

 

[Michael74]

The problem with deflation is that usually it's a precursor to hyperinflation and immenant collapse of a Fiat money system.

Research suggests otherwise. A gold standard for example led to centuries of stable currencies in many nations around the world. Cowrie shells were the most utilized currency in history, and tended to be stable for long periods of time also.

Hyper inflation in such places as Weimar, Zimbabwe, and Venezuela were not preceded by deflation, but by inflation. A gold standard would have protected the people there from hyper inflation, just as it did elsewhere.

By contrast, debasing the currency to create inflation has led to the Y2K tech mania, 2008 housing mania, and the current multi asset class mania. When manias deleverage, it creates an emergency situation in the financial sector. Bankers would be better off just letting mild CPI deflation exist, avoiding serial mania, and subsequent deleveraging.

Joe average benefits greatly from mild deflation, since he can buy additional goods at the store. By contrast, inflation moves Joe average slowly backward.

 

[JohnDB]

Research suggests otherwise. A gold standard for example led to centuries of stable currencies in many nations around the world. Cowrie shells were the most utilized currency in history, and tended to be stable for long periods of time also.

Hyper inflation in such places as Weimar, Zimbabwe, and Venezuela were not preceded by deflation, but by inflation. A gold standard would have protected the people there from hyper inflation, just as it did elsewhere.

By contrast, debasing the currency to create inflation has led to the Y2K tech mania, 2008 housing mania, and the current multi asset class mania. When manias deleverage, it creates an emergency situation in the financial sector. Bankers would be better off just letting mild CPI deflation exist, avoiding serial mania, and subsequent deleveraging.

Joe average benefits greatly from mild deflation, since he can buy additional goods at the store. By contrast, inflation moves Joe average slowly backward.

Do you remember why we removed ourselves from the Gold standard to begin with?

Corruption and other countries influencing the price of gold.

Not exactly a good idea to go back

 

[Michael74]

Nixon was the last president that showed financial restraint...

Vestiges of the gold standard still existed early in his Presidency, which required restraint. Once the gold window was closed, everything changed.

 

[JohnDB]

Vestiges of the gold standard still existed early in his Presidency, which required restraint. Once the gold window was closed, everything changed.

I'd have to see some documentation on that.

 

[Michael74]

Do you remember why we removed ourselves from the Gold standard to begin with?

Reelection. I remember double digit inflation that followed leaving the gold standard. Not worth it.

 

[Michael74]

I'd have to see some documentation on that.

https://en.wikipedia.org/wiki/Nixon_shock

 

[Michael74]

45 years ago today, on August 15, 1971, President Richard Nixon officially closed the gold window. While US citizens had been forbidden from owning gold or from redeeming their gold certificates for gold coins since the early 1930s, foreign governments still had the privilege of redeeming their dollars for gold. Due to the Federal Reserve’s inflationary monetary policy during the 1960s, foreign governments began to redeem more and more dollars for gold.

Nations could ask for gold before 1971.

 

[Michael74]

Eliminating CPI deflation via excessive credit creation has led to serial mania of financial assets. Followed by serial mania deleveraging of same. Derivatives in particular are sensitive to mania deleveraging.

During the 08 crisis, derivative counter parties such as AIG didn't have the resources to honor their contracts. In response, central counter parties have been tasked with clearing derivative contracts. However, research indicates that the new central counter parties may not have the resources to do their job during mania deleveraging.

In September 2018, a single trader's default wiped out roughly two thirds of the commodities default fund at Nasdaq Clearing AB, a Swedish CCP

The recent BIS quarterly report delineates how feedback loops between central counter parties and bank derivative divisions have not been properly accounted for. Mania deleveraging's effects on derivative contracts has not been tamed by central counter parties. Therefore, manias should not be promoted via credit creation. Allowing mild CPI deflation is far preferable to causing serial mania. The financial system is safer, and Joe average benefits from being able to buy additional goods at the store.

 

[Michael74]

The analysis indicates that conventional stress testing approaches may underestimate the potential vulnerability of the main CCP for this market.

The BIS conclusion is echoed by OFR. Using credit default swap data, OFR studied the direct and indirect effects of nonpayment by members and/or their clients through the full network of exposures. Former studies only considered the effects of non performance by 2 counter parties on the system. Considering both feedback loops (BIS) and full network analysis (OFR) suggests that manias should not be started in the first place. There is no easy way to deleverage them. Mild CPI deflation should be allowed for the good of the system, as well as the good of Joe average shopper.

 

[JohnDB]

Michael74

This is some really good stuff to read about.
I know that it's really boring to many but... interesting to me.
I hadn't heard of some of this before. I'm seeing many factors playing out with greed playing a central role. (Political views set aside)
I'm seeing several mistakes on various parts.
Europe's unwillingness to have morals and keep committments. (Still playing out with the Euro today)
America's continued commitment to a plan that requires participation from everyone but no one is participating in.
The emptying out of Fort Knox by other countries should have been a clue.

Other Governments buying dollars and then Gold also should have been a clue.

Rapidly decreasing domestic production/exports and increasing (cheap) imported goods.

Nixon leaving the Gold standard wasn't such a bad thing. Dollars being on the gold standard was overvaluing dollars (a reason for decreased exports) and actually was causing deflation with cheap imported goods.
The shock from removing was gonna happen. I don't know what else Nixon could have done because the American Economy was most definitely heading for a collapse.

But the resulting aftershocks had left such a bad taste in everyone's mouth returning to a gold standard plan isn't in the cards.

Russian indifference to the original plan certainly hasn't helped them. Nor has Chinese isolation been helpful to them either. Taiwan was included...they did alright.

But I'm sure with today's amount of debt owed by the different westernized countries there's no chance of returning to a Gold standard of exchange. The metal is too volatile in price. (We we're practically giving away money when we were on it before)

 

[Michael74]

I find it interesting too.

 

[Michael74]

...and actually was causing deflation with cheap imported goods.

Deflation is good. Shoppers can buy additional goods at the store.