[threadbear]

Look what I found! Could I get some semi-informed or informed opinions on this article? This writer may just be broadcasting his bias, or he may be ill informed. Does anyone have a better idea about this than I do. Surely someone with some economic saavy out there would know if the basics of this article are correct. Mr. Bill???

If it IS correct, many of us here are wrong that govt action can necessarily stave off deflation. This article states quite clearly that Friedman was dead wrong in his analysis of the steps that led up to the Depression, and that the present attempts to reliquify the financial sector were mirrored pre-30's Depression.

If this is true, all the more reason to diversify safe havens into currency, gold, and anything else that makes sense. Gold alone, may not be the best way to protect capital--though as people try to sort through all the possibilities, gold should benefit from confusion.

Pumping Action, Attempt to Stave off Great Depression, MIRRORS present day. Friedman WAS WRONG:

"However, a close examination of the historical data shows that contrary to Friedman the Fed was extremely loose and pumped reserves into the system in its attempt to revive the economy (on this see Murray Rothbard's America's Great Depression). The extent of monetary injections is depicted by changes in the Fed's holdings of U.S. government securities. Thus on January 1930 these holdings stood at $485 million. By December 1933 they had jumped to $2,432 million—an increase of 401% (see chart). Moreover, the average yearly rate of monetary injections by the Fed during this period stood at 98%."

http://www.gold-eagle.com/gold_digest_0 ... 41903.html

[americandream]

Japan's a good example of what awaits us.

Basically we're going to see a massive fall in the price of Western assets as the small man loses confidence. The big fella, in the meantime will do what he's done in Japan these past 10 years or so. Move to greener pastures for opportunity....China and India. I'm very bullish on India actually what with the outsourcing of services such as western debt collection, legal services and such like.

The hidden profits the bailout taxes will replace as they are vacated East will be applied to new ponzi schemes out there so get ready for carry trade ala Asia boom. In the meantime, Western public spending will drop to zilch, taxes will rise, two or three jobs will become the norm, more dulling of the overtaxed masses with the lives of the stars and mind numbing game shows plus crappy music to sooth our weary brows whilst we toil to pay for the shafting we've taken.

Oh yeah, and we will pick up the blame for this. Give it a few years and the poor old Western taxpayer will find that he has more taxes to pay to bail him out of the mess he created.

I'm considering moving to Africa or Asia.

[smallpoxgirl]

Fantastic article Threadbear. Thanks.

[mattduke]

It is very helpful to the printers of money that there is a prevailing opinion that money will be scarce. Having read all three books mentioned in the article myself, the inflation conclusion remains unchanged.

[smallpoxgirl]

It is very helpful to the printers of money that there is a prevailing opinion that money will be scarce.

You might want to read the article before you criticize it. What he says in the article is that money scarcity isn't the cause of depressions. What causes it is preceding periods of lax lending. Lax lending fosters non-productive business activities and causes people to deplete their real wealth. When the non-productive activities inevitability decline in profitability, lending contracts and followed by a contraction of the whole economy. The only thing that can pull the economy out of the depression is when real savings reaccumulate.

Basically the idea is that it doesn't really matter how much money is floating around. If people don't have real savings, they'll stop lending. If business aren't producing real economic benefit they will lose profitability. If business aren't profitable or people aren't credit worthy, they will eventually not be able to get loans. The fed can prevent depressions by avoiding lax monetary policy, but once it starts, it just has to runs it's course.

That fits really well with what we're seeing. Central Banks are spewing money in every direction. Still lending is really tight and the economy continues to contract.

[mattduke]

That is basically the Austrian theory of the business cycle, on which I have been raving about on this site for years. If you read further, you understand that if the government attempts to postpone the recession with more inflation, it will ultimately end in hyperinflation. The inflation bet is a bet on the nature of politicians. If you read Bernanke's PHD thesis, he maintains that the government can ALWAYS generate inflation, and he lists the endless mechanisms by which he can achieve it, including the famous helicopter drops.

[DantesPeak]

I read two of the books mentioned, and my opinion is also unchanged.

The effects of rampant monetary inflation by the world's central banks does not show up immeadiately. I never said it would, and I haven't seen any informed person say that.

Today the ECB added at least 100 billion additional euros into circulation plus they added $117 billion dollars under a new program. The stated policy was that they would provide an unlimited amount of lending, but this was all that was requested today.

Alltogether, probably about $2 trillion in new money was created worldwide over the last month. While that money may not prevent the market from falling more, eventually that $2 trillion of additional new money will seek a higher rate of return than 0.01% on one month US treasury bills.

BTW - There's a reason the article only goes to the start of 1933, otherwise the author would have to talk about the devaluation of the dollar which raised commodity prices 75%. We don't have a devaluation now you say? Well true, but this is much worse than a devaluation - this is an almost total debasement of the dollar.

[americandream]

That is basically the Austrian theory of the business cycle, on which I have been raving about on this site for years. If you read further, you understand that if the government attempts to postpone the recession with more inflation, it will ultimately end in hyperinflation. The inflation bet is a bet on the nature of politicians. And so far, I see NOTHING but inflation.

Austrian theory, schmostrian theory. Why don't you keep it simple.

The buggers have bled us dry in the West, they're working on their next set of prey, the Indian and Chinese worker with the help of the edlites over there and in the meantime, the CB's are trying to keep the lid on the scam with our frickin tax money!

I bet we will see a massive migration of CEO/analyst talent to the East in the next few years whilst we are relegated to working our butts off to pay the taxes we're going to be hit with.

[smallpoxgirl]

Care to hazard a guess as to when we might start to see inflation?

What you're saying makes a lot of sense Dantes. I'm also convinced that for now the dollar index is running exactly opposite to what it normally would. It shoots up every time the dow drops. I think it reflects people around the world fleeing their own currency and running to dollars as the most stable store of wealth. It's turned the metals markets on their heads. Normally people run to PMs in times of uncertainty, but with the dollar rising, the gold bugs keep getting bashed right along with the dow. I agree that at some point that trend is going to reverse, but I'm at a loss as to when that might be.

[americandream]

Care to hazard a guess as to when we might start to see inflation?

What you're saying makes a lot of sense Dantes. I'm also convinced that for now the dollar index is running exactly opposite to what it normally would. It shoots up every time the dow drops. I think it reflects people around the world fleeing their own currency and running to dollars as the most stable store of wealth. It's turned the metals markets on their heads. Normally people run to PMs in times of uncertainty, but with the dollar rising, the gold bugs keep getting bashed right along with the dow. I agree that at some point that trend is going to reverse, but I'm at a loss as to when that might be.

In times of a global crisis, who would you as a major wealth owner bank your profits with. There you are, making a mint running a sweatshop in China, world is going to the crapper with who knows what sort of debt and risk is a no no, you're invested in an economy thats run by an unreliable dickey bow, compliant as he is. I'ld sure as hell leave my money with a society with the biggest guns and not a chance in hell of going socialist, no matter how far down the gurgler it is.

I mean...the problem is right there for you yanks to see....good old self interest, theft and greed, and yet you'll still find some complicated free market answer to explain it away. You can be counted on to defend capitalism no matter how far up your ass they are.

Edited: I've heard all the free market excuses to last me a lifetime...now what are they:

1 It's those dumb proles and their borrowing;
2 Its' those dumb blacks and their borrowing;
3 It's those dumb Arabs and their oil pricing;
4 It's those fiendish OPEC fellas;
5 It's those Russkies;
6 It's those heathen greedy types;
7 It's not me;
8 Not enough free market;
9 It's the commies risen from the dead!
10 Now this has to be the best one. It's the fault of that black fella wot run Fannies....lol...choice!

Now given the we live in a zero sum world, where I ask myself has all those bailed out billions/trillions gone? Is there an alternate universe where money (wealth) that has leaked out of "failed" transaction collects? Buggered if I know.

[nobodypanic]

Care to hazard a guess as to when we might start to see inflation?

What you're saying makes a lot of sense Dantes. I'm also convinced that for now the dollar index is running exactly opposite to what it normally would. It shoots up every time the dow drops. I think it reflects people around the world fleeing their own currency and running to dollars as the most stable store of wealth. It's turned the metals markets on their heads. Normally people run to PMs in times of uncertainty, but with the dollar rising, the gold bugs keep getting bashed right along with the dow. I agree that at some point that trend is going to reverse, but I'm at a loss as to when that might be.

In times of a global crisis, who would you as a major wealth owner bank your profits with. There you are, making a mint running a sweatshop in China, world is going to the crapper with who knows what sort of debt and risk is a no no, you're invested in an economy thats run by an unreliable dickey bow, compliant as he is. I'ld sure as hell leave my money with a society with the biggest guns and not a chance in hell of going socialist, no matter how far down the gurgler it is.

I mean...the problem is right there for you yanks to see....good old self interest, theft and greed, and yet you'll still find some complicated free market answer to explain it away. You can be counted on to defend capitalism no matter how far up your ass they are.

you're generalizing. not all of us are of the faith.

[smallpoxgirl]

Yeah. I think we're probably done as the bastion of capitalism. In case you hadn't heard, Hank Paulson is running around buying up billions of dollars in bank stocks. When the government starts buying up private enterprise, that's called socialism

[americandream]

Yeah. I think we're probably done as the bastion of capitalism. In case you hadn't heard, Hank Paulson is running around buying up billions of dollars in bank stocks. When the government starts buying up private enterprise, that's called socialism

When your husband spends money on you out of natural, love and affection, thats called "love". When your husband spends money on you to cover up his hankey pankey with the secretary, that's called a "rip-off".

[nobodypanic]

Yeah. I think we're probably done as the bastion of capitalism. In case you hadn't heard, Hank Paulson is running around buying up billions of dollars in bank stocks. When the government starts buying up private enterprise, that's called socialism

When your husband spends money on you out of natural, love and affection, thats called "love". When your husband spends money on you to cover up his hankey pankey with the secretary, that's called a "rip-off".

here's the possible silver lining from your point of view: the psychological barrier to the government nationalizing huge swaths of the economy is now breached. if at some point the people own the means of finance, then it's but a small step towards owning the means of production, and while i understand that none of this is for the benefit of the majority, it seems that given the proper set of circumstances, it is now easier by some untrivial degree to make the move towards a marxist state; to put it simplistically, all that's left is for the machinery to be redirected (not reorganized, which is the more difficult task).

[americandream]

Yeah. I think we're probably done as the bastion of capitalism. In case you hadn't heard, Hank Paulson is running around buying up billions of dollars in bank stocks. When the government starts buying up private enterprise, that's called socialism

When your husband spends money on you out of natural, love and affection, thats called "love". When your husband spends money on you to cover up his hankey pankey with the secretary, that's called a "rip-off".

here's the possible silver lining from your point of view: the psychological barrier to the government nationalizing huge swaths of the economy is now breached. if at some point the people own the means of finance, then it's but a small step towards owning the means of production, and while i understand that none of this is for the benefit of the majority, it seems that given the proper set of circumstances, it is now easier by some untrivial degree to make the move towards a marxist state; to put it simplistically, all that's left is for the machinery to be redirected (not reorganized, which is the more difficult task).

So you reckon the cheating husband's expenditure has some redeeming features?

[nobodypanic]

Yeah. I think we're probably done as the bastion of capitalism. In case you hadn't heard, Hank Paulson is running around buying up billions of dollars in bank stocks. When the government starts buying up private enterprise, that's called socialism

When your husband spends money on you out of natural, love and affection, thats called "love". When your husband spends money on you to cover up his hankey pankey with the secretary, that's called a "rip-off".

here's the possible silver lining from your point of view: the psychological barrier to the government nationalizing huge swaths of the economy is now breached. if at some point the people own the means of finance, then it's but a small step towards owning the means of production, and while i understand that none of this is for the benefit of the majority, it seems that given the proper set of circumstances, it is now easier by some untrivial degree to make the move towards a marxist state; to put it simplistically, all that's left is for the machinery to be redirected (not reorganized, which is the more difficult task).

So you reckon the cheating husband's expenditure has some redeeming features?

i think the anaolgy breaks down at this point, but i'll play along.

if mom now has a little more money to buy baby some new shoes... yeah.

[americandream]

Yeah. I think we're probably done as the bastion of capitalism. In case you hadn't heard, Hank Paulson is running around buying up billions of dollars in bank stocks. When the government starts buying up private enterprise, that's called socialism

When your husband spends money on you out of natural, love and affection, thats called "love". When your husband spends money on you to cover up his hankey pankey with the secretary, that's called a "rip-off".

here's the possible silver lining from your point of view: the psychological barrier to the government nationalizing huge swaths of the economy is now breached. if at some point the people own the means of finance, then it's but a small step towards owning the means of production, and while i understand that none of this is for the benefit of the majority, it seems that given the proper set of circumstances, it is now easier by some untrivial degree to make the move towards a marxist state; to put it simplistically, all that's left is for the machinery to be redirected (not reorganized, which is the more difficult task).

So you reckon the cheating husband's expenditure has some redeeming features?

i think the anaolgy breaks down at this point, but i'll play along.

if mom now has a little more money to buy baby some new shoes... yeah.

Let's not forget that the cheating husband who is a successful exec, is invested in an offshore joint venture in a Chinese brothel in Shanghai, unbeknownst to the wife.

The expenditure alas has come out of their joint account, which, incidentally the wife is poised to be a major contributor to due to circumstances at execs head office and his "reduced" circumstances (all very sad...sigh). Baby may well have to go without shoes (chokes back tears...echoes of hockeyed mothering and better days).

[nobodypanic]

Yeah. I think we're probably done as the bastion of capitalism. In case you hadn't heard, Hank Paulson is running around buying up billions of dollars in bank stocks. When the government starts buying up private enterprise, that's called socialism

When your husband spends money on you out of natural, love and affection, thats called "love". When your husband spends money on you to cover up his hankey pankey with the secretary, that's called a "rip-off".

here's the possible silver lining from your point of view: the psychological barrier to the government nationalizing huge swaths of the economy is now breached. if at some point the people own the means of finance, then it's but a small step towards owning the means of production, and while i understand that none of this is for the benefit of the majority, it seems that given the proper set of circumstances, it is now easier by some untrivial degree to make the move towards a marxist state; to put it simplistically, all that's left is for the machinery to be redirected (not reorganized, which is the more difficult task).

So you reckon the cheating husband's expenditure has some redeeming features?

i think the anaolgy breaks down at this point, but i'll play along.

if mom now has a little more money to buy baby some new shoes... yeah.

Let's not forget that the cheating husband who is a successful exec, is invested in an offshore joint venture in a Chinese brothel in Shanghai, unbeknownst to the wife.

The expenditure alas has come out of their joint account, which, incidentally the wife is poised to be a major contributor to due to circumstances at execs head office and his "reduced" circumstances (all very sad...sigh). Baby may well have to go without shoes (chokes back tears...echoes of hockeyed mothering and better days).

oh yeah! well... something something about the capitalist selling you the very rope w/which to hang him with.


sorry that's all i got at this point.

[cube]

Yeah. I think we're probably done as the bastion of capitalism. In case you hadn't heard, Hank Paulson is running around buying up billions of dollars in bank stocks. When the government starts buying up private enterprise, that's called socialism

"Free-market capitalism" is unfortunately sometimes used interchangeablly however the 2 components are totally different.

Capitalism - simply means capital is owned by individuals. There is both the rich and poor. That will never change.

Free-market - that died off a long time ago just like the Dodo bird.

The USA originally had a free-market based economy --> then it shifted to a mixed economy during the great depression --> and now it's becoming what I call "authoritarian capitalism."
Basically the gooberment controls capital and decides where it should go. Russia, China, East Asia are good examples.

my 2 cents...

[smallpoxgirl]

Capitalism - simply means capital is owned by individuals. There is both the rich and poor. That will never change.

Exactly. And when the government starts buying up businesses, that's called socialism.