General Economic Chat

Anderson

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Neither can anyone else.

In effect, nearly all assets are unpaid for, there is an IOU on everything. Everyone borrowing from everyone else and central banks also printing money out of thin air to add to an exceedingly complicated brew.

The fact that someone can go to a bank and borrow a million dollars to buy a house allows the builder to build it and pay the worker. The fact that the bank can more or less just wish the million into existance is too magic. Everybody wins. 5 years later the owner sells and makes 250000 dollars. He was in effect paid a 1000 dollars a week just to live there. He buys a 2 million dollars house.

So boom times and buildings aplenty. That is the magic of fractional reserve lending and money creation. Not to be confused with Money Printing by the Fed.

It works till it reverses and then there is a problem, the money now disappears just as easy as it appeared. That is where we are at now.

So the Fed will try to print new money to replace the disappearing fractional reserve created money.

No nobody is paying anybody so anything with debt tied to it is toxic.

The only thing with no debt tied to it is gold and silver coin or bars. An exciting time
Where do you see it all ending Dan?

I have always felt we were overdue a war, wars always seem to be the get out of jail card.
 

Youngdan

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Where do you see it all ending Dan?

I have always felt we were overdue a war, wars always seem to be the get out of jail card.
I don't see it, unless we are attacked. Leaving aside the possibility of a False Flag or Israel starting it.

The Empire seems to be about to cave in on itself.
 

Youngdan

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That would destroy all the creditors though. all companies owed money would be therefore destroyed.
 

Oliver Plunkett

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I predict this will be the foundation that seals the fate of Brexit. I said , right after the election result, that it would never implemented. Queue the talking points about how 'we (EU/Britain), are all in this together'.

Chancellor Rishi Sunak has admitted that "hard times are here" as the UK crashes into a deep recession.
 

Oliver Plunkett

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That would destroy all the creditors though. all companies owed money would be therefore destroyed.
I'm not seeing a downside . We need to enter a post-usury world. Dept is strangling the life out of civilization
 

Youngdan

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I'm not seeing a downside . We need to enter a post-usury world. Dept is strangling the life out of civilization
You would see a down side if your retirement fund was made up of these now worthless bonds
 

Youngdan

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Clanrickard

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Check this out.

What happens if and when interest rates rise.

I have not seen this months figures for rent non payment but all rents in Manhattan including commercial must be suspected to be unpaid.
How the **** can you be driving a massive pick up and not afford food?
 

Oliver Plunkett

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How the **** can you be driving a massive pick up and not afford food?
It is not much of a mystery. Most Americans work check to check. Financing on homes and cars gives the illusion of affordability, until the crap hits the fan and you find yourself without said paycheck for 3 or more months. Now, I personally would downsize my vehicle dramatically, unless it was a necessary part of my work as a contractor or tradesman. In which case I imagine people are simply in wait-and-see mode.
 
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Youngdan

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How the **** can you be driving a massive pick up and not afford food?
It is deceptive. A 20year old truck can still look new. It could be paid off. Fuel is still cheap, especially if you are not driving much.

And if you have payments, they might be 3 to 500 a month, but you can spend 300 on a good trip to Costco for food as well.


But few are buying new trucks, that is for sure
 

Olli Rehn

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It is deceptive. A 20year old truck can still look new. It could be paid off. Fuel is still cheap, especially if you are not driving much.

And if you have payments, they might be 3 to 500 a month, but you can spend 300 on a good trip to Costco for food as well.


But few are buying new trucks, that is for sure
In other words- it is complaining on a very very high level.
You should live in Haiti or Cambodia for while- you might find out about hunger and poverty then.
And if you really think, you live in a communist dictatorship, move to North Korea and join tha party! You'll soon find out about the real world.
Those guys will beat it into you!
 

Oliver Plunkett

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Ollie, why not just go the whole hog and ask people to live in a broken glass filled hole in the road? I saw a documentary once where some Asian family lived in a hole in the middle of a train track. They just hunkered down when the trains came over. As you say Ollie, it makes no sense to compare one's situation with the standards of the civilization you yourself inhabit. It makes much more sense to compare yourself to some 3rd world sink-hole you will never visit in 1 million years
 
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Youngdan

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In other words- it is complaining on a very very high level.
Yes, you are correct in this.

But we compare ourselves to a free society, something like 1955 in economic terms.
 

valamhic

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A bond can have any duration at all from a few days to a 100 years and believe it or not there is perpetual bonds that are never paid off, but the interest is paid every single year. The US does not issue perpetual bonds but they were common back in the 1700s. They have advantages for both sides.

Bills, Notes and Bonds are 3 terms used to differentiate the duration from short to long.
For example, a 6 month Bill, a 7 year Note, and the 30 year Bond, but they are function the same.

Up to recently private investors bought these bonds, they being conservative safe investments that would not fall like stocks can.

But with the increase in the supply nowadays there is not enough demand AT THESE INTEREST RATES, so the price of the bond would fall which would increase the interest rates. So they need more demand. That is where The Federal Reserve comes in, they buy and that increases the demand and brings down the interest rates.

Now they(the fed) just print the money out of thin air. The bonds they buy are added to their assets and is called their ASSET BASE.That expanding is a big problem. so they print money.

But the government still borrows that printed money and the debt is raised. The government does not get free money, they pay interest on it and repays it at the end of the duration.

The Fed do not buy directly, they buy the bonds from the PRIMARY DEALER BANKS, and the banks know this so can bid high, knowing they flog them immediately to the Fed and collect a bit of juice. This is what is meant by QE or Quantitative Easing.


Note also. The Federal Reserve is not part of the government at all, it is a bank, privately owned.

So it is not accurate to say that the government is lending to itself, or it is printing money. The government cant just print money.



Now, some people want the government(Treasury Department) to do just that, print the money itself.

These people are known as GREENBACKERS.

Doing that, would mean the government would not have to pay interest. But that is a different system altogether. That is what Lincoln did to finance the war
I thought Trump had taken the Fed under government control?
 

valamhic

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In other words- it is complaining on a very very high level.
You should live in Haiti or Cambodia for while- you might find out about hunger and poverty then.
And if you really think, you live in a communist dictatorship, move to North Korea and join tha party! You'll soon find out about the real world.
Those guys will beat it into you!
Blacks in control. same as Africa
 

valamhic

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There is a situation in Europe where the normal is negative interest raters, the effect of this is not known.Trump thinks it is great. In theory it should result in a flood of money away from the banks and cripple the banks.

It should cause a move away for depositing cash into assets, mostly property. This would drive up asset values and banks would show profits due to the increase in asset values on their loan books.
 
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Youngdan

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I thought Trump had taken the Fed under government control?
That is open to debate but I don't think so. He might be able to ask them to do what he wants but he can not force them. He can not replace or fire them, as far as I know
 

Youngdan

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There is a situation in Europe where the normal is negative interest raters, the effect of this is not known.Trump thinks it is great. In theory it should result in a flood of money away from the banks and cripple the banks.

It should cause a move away for depositing cash into assets, mostly property. This would drive up asset values and banks would show profits due to the increase in asset values on their loan books.
Over the past few short days, interest rates have risen substantially. I don't think we will see negative rates here. We could see drastically higher rates in fact, 10 or 15%

Before the dollar blew up
 
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