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| User Info | The Incongruity Of What Government Does .vs. Says in forum [Ticker] | |||
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Genesis Posts: 71430 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/1079-T....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-06-02 08:45:00
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Mo Posts: 5501 Incept: 2007-06-26 
Florida Online
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How could Government Motors sell the 'green' idea if oil prices are at $40? They can't. They WANT high oil prices, even if they have to create them. They've created an entire new system of looting - Cap and Trade - to relieve Americans of their utilities money. It's as much of a heist as the TARP was, but the new heist will be ongoing. The government needs more money. And it will have more money. But the money from the heists won't be enough. ---------- "The World has been cancelled. It doesn't even look like the world. There is one island that is maintained and is said to be owned by the Sheikh and the rest looks like a pile of muck."
2009-06-02 08:59:25
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Lonestarhog Posts: 64 Incept: 2009-03-06 The Republic of Texas!
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Quote:Prior to the proliferation and explosive growth of interest rate swaps, values at the long end of the interest rate curve were determined by a breed of investor / trader known as the “bond vigilantes” who regularly enforced corrective and sometimes bitter discipline on the bond markets when naturally spend-thrift governments incurred too much debt. The IRS edifice that was created was so overwhelming – and created so much artificial demand for government bonds - it “steamrollered” the bond vigilantes into extinction. Missive> http://www.financialsense.com/Market/wra.... This is an interesting piece of forensic work by Rob Kirby. Hog
2009-06-02 09:02:37
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2banana Posts: 168 Incept: 2008-02-25 Online
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It is also axiomatic that interest rates are calibrated by three factors: If the capital being borrowed is itself borrowed by the lender, the cost of the funds (that is, nobody will intentionally lend at a loss) The risk you will not pay back the loan The risk that inflation will make the money you pay with worth less --------------------- For the American Government with a socialist President and a congress that will rubber stamp every and all socialist plans - I would need at least a 10% rate to buy anything over a 6 month term.
2009-06-02 09:03:18
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Koaj Posts: 953 Incept: 2009-02-03
NJ Online
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agreed Mo with $50-60 oil, americans want SUVs, not the 50mpg **** box smart cars. imagine someone over 5'6" driving that thing HR 1207 has 180 co sponsors on the floor. This FED madness can only be stopped by the people who surrendered their powers to them in the first place, Congress. Although an audit of the Federal Reserve is not the be all end all fix for this, it is a start...once audited the Fed will cease to exist. When normal americans realize that the Fed has printing money from thin air to buy treasury debt and assets and shifting that risk to them, they will get their pitchforks ....i hope. but ive been hoping for a while that americans wake up. the only thing that will do it is $4.00 gas
2009-06-02 09:04:23
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Ssg263 Posts: 100 Incept: 2009-01-07 
NY
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This nation is so asleep right now it's downright sickening. Don't count on Americans holding Congress/the Fed accountable until they literally can't put dinner on the table and pay the rent. It has to get much worse, and it will before the pitchforks and ammo come out. Last modified:
2009-06-02 09:10:56 by ssg263
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Wearedoomed Posts: 904 Incept: 2009-01-14
Petra Online
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Re: the (un)lawfulness of the Fed's monetization "strategy": Does this article dug up by Aztrader have any truth? http://www.tickerforum.org/cgi-ticker/ak.... the article wrote..On the day before Thanksgiving in 1991, the U.S. Senate voted to vastly expand the emergency powers of the Federal Reserve. ---------- The shrewdest of the great generals in China's history once said that perfection in war lay in so sapping the opponent's will that he surrenders without fighting.
2009-06-02 09:11:10
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Genesis Posts: 71430 Incept: 2007-06-26
KD^2
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Yes. But its not relavent. The issue of LENDING to people is not the problem. It is the asset PURCHASES that are the problem, and that's NOT legal. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-06-02 09:12:35
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Lonestarhog Posts: 64 Incept: 2009-03-06 The Republic of Texas!
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Quote:The American people will never knowingly adopt socialism. But under the name of ‘liberalism’ they will adopt every fragment of the socialist program until one day America will be a socialist nation without knowing how it happened...I no longer need to run as a Presidential candidate for the Socialist Party. The Democrat Party has adopted our platform. -- Norman Thomas, six-time U.S. presidential candidate for the Socialist Party, 1944. What more need be said? Hog
2009-06-02 09:14:27
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Margincalltime Posts: 830 Incept: 2008-04-01
NJ
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Well Put Ticker. Previous Fed generated bubbles increased perceived wealth, first through the tech stock bubble, then the housing bubble, which increased spending and led to higher capital investment. But the joke's on them as it did not equate to increased incomes (ie the sustained ability to take on more debt). The debts grew, but the incomes didn't. Now, the Fed's additional liquidity is pumping up commodities, which instead of increasing wealth, subtracts it as a tax. Higher commodity costs are only likely to lead to additional job losses, further lowering overall incomes, while the debts are still there. Ultimately, the commodities are also likely to get whacked based on cratering demand (if you don't have higher income, you have to cut back on costs and commodities are a cost). Overall, still highly deflationary.
2009-06-02 09:16:07
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Bob.builder10 Posts: 92 Incept: 2007-07-26
UK
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What is going on in the slosh now? It looks like we have got $131bn TAF maturing on thursday. Is this another drain?
2009-06-02 09:17:16
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Edc Posts: 6 Incept: 2008-11-20 arizona
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KD great post. right down to the point. Now if others would realize simple math.
2009-06-02 09:20:32
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Lonestarhog Posts: 64 Incept: 2009-03-06 The Republic of Texas!
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I think that many people miss the point of commodities, as an investment. I converted all of my financial assets into gold in 2000. I then converted 90% of my gold into silver in January 2003. I have added to these with every dip. The point being that I don't want paper, which includes promises to deliver. I want hard assets. It truly amazes me that commodities - one of the most volatile classes, mainly due to U.S. Government manipulation (read CRIMEX) - have been in a raging Bull Market for almost ten years and still people just don't get it. The Bull Market in commodities will last for years and will have a very negative effect on Americans - especially Americans! Hog
2009-06-02 09:25:08
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Genesis Posts: 71430 Incept: 2007-06-26
KD^2
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Bob, its nearly impossible to measure true liquidity provided by The Fed now, as the slosh is no longer the primary (or only) driver. Lonestar, "hard assets" don't include things that are not productive assets. A CNC machine or an acre of land is a hard asset. Gold is not. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-06-02 09:29:27
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Margincalltime Posts: 830 Incept: 2008-04-01
NJ
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Lone- what people still just don't get, is the last 10 yrs had seen the greatest expansion of credit (read: debt) in history, which filtered through to commodities. You may have speculative bursts higher in commodities, but the destruction of that previously generated credit (debt) is highly deflationary, and this includes commodities.
2009-06-02 09:33:28
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Lonestarhog Posts: 64 Incept: 2009-03-06 The Republic of Texas!
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Quote:Gold is not.  Gold is the ultimate "hard asset", that is the ultimate currency with 5000 years of history to boot. All fiat schemes (paper) have failed, while gold/silver is still here. Our Founding Fathers even included gold/silver in the Constitution. Hog
2009-06-02 09:39:22
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Koaj Posts: 953 Incept: 2009-02-03
NJ Online
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and all debt...is nothing more than a tax on future earnings the more debt we have as a people and a government means the more we have to use "disposable" income to pay down that debt. its a big fat negative spiral and will become a ticking time bomb once rates spike up.
2009-06-02 09:40:38
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Margincalltime Posts: 830 Incept: 2008-04-01
NJ
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Then if you believe the dollar will fail, why not buy the long dated out of the money calls on PRODUCTIVE assets. Not sure what you're going to produce with your gold, or if you are going to lug it around to make transactions and what not.
2009-06-02 09:41:39
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Genesis Posts: 71430 Incept: 2007-06-26
KD^2
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Goodbye Lonestar. I have repeatedly told people that The Ticker area is NOT for this sort of crap. You and others continue to insist on refusing to discuss PMs where they belong, and I will continue to place permanent post bans. Further, gold and silver in the US are not usable as money at the "market price." You CAN indeed pay your taxes with gold and silver - at $35/oz for gold. That is its official "monetary value". This sort of horse**** game has no place here on TF and is identical to the "reconquista" game certain illegal aliens try to run. I permit this sort of crap to be run over in Metals but nowhere else on this forum, and those who refuse to follow the rules voluntarily find themselves with a permanent restriction on their ability to violate the rules in the future. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me Last modified:
2009-06-02 09:45:20 by genesis
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Statusquojoe Posts: 2397 Incept: 2008-11-20
Land of the fees Home of the slaves.
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The Keynesians are indeed running the asylum. After being proven incorrect in their theories countless times the proponents of an ineffective policy still dominate economic thought. Why? It allows the government the ability to grow unrestrained until it no longer can. They will kick the can until they can't. To this point in history socialism has always had a capital host to drain, when all government are socialist there remains no host to drain since capital will have fled to "secure" havens not to return till saner times (Antal Fekete). It is my understanding the Fed secretly wants hyper-inflation to take hold to offset the deflation, thus the QE. And yet their mechanism to contract inflation when necessary is to sell the assets they purchased through the market. Now if they have purchased "toxic assets" at dubious value to protect the banks, how on earth are they going to sell those assets or where will they find gullible buyers at the necessary time? Those assets will remain on their balance sheets, they will never be able to get rid of them, and thus the tax payer is stuck with them and the dollar suffers as a result. At least that is my limited understanding. ---------- "In short, you are the definition of moral hazard." Senator Bunning to Bernanke
2009-06-02 09:46:12
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Eternalblue Posts: 4230 Incept: 2007-08-09
sokali Online
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damn seriously you think this rally will last as long as 6 months to a year?
---------- my miniblog; http://economicpsychosis.blogspot.com/
2009-06-02 09:48:23
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Treebeard056 Posts: 198 Incept: 2009-01-31
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Quote:It is for this reason of risk, by the way, that The Fed is barred by law from buying any instrument that is not backed by "full faith and credit" of The Federal Government. We the people (and Congress), of course, are ignoring this law. Karl (and anybody else) - has ANYONE pursued legal action in any form to challenge this? Any quick reference available to see the law that applies to your statement?
2009-06-02 09:49:39
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Genesis Posts: 71430 Incept: 2007-06-26
KD^2
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Tree, nope. Any quick reference? How many times do I have to post the cite over to The Fed's own web site and The Federal Reserve act?! Read Section 13 and 14. I'm tired of repeating myself. Jesus Christ. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-06-02 09:55:01
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Kuhio Posts: 206 Incept: 2008-12-31
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KD, there are two other issues at play, of which I and many others would enjoy reading your perspective: 1. Have we really even had a "rally", bear or otherwise? That is, if a market index doubles (500 -> 1000), yet the denomination halves ($1 -> $.50 cents), has there even been a real change? I have yet to see anyone tackle this by comparing the real/nominal values of the S&P to the $USD. 2. More significantly, there's a much larger world out there than just the US economy. As anyone who has ever experienced a rebound relationship knows, you don't want to be the bridge. When real estate and then commodities crashed, global funds came flowing in Treasuries looking for 'safety', to the benefit of .gov & interest rates. The downside of course was the fear that Ts would crowd out other lending; if only that were the case. The big problem is that as the world-wide situation has stabilized to some degree (to the extent that BRIC countries are looking around and discovering that they can practically sustain their economies by trading amongst themselves), it's not Ts crowding out other lending. No, it's other more profitable & less risky opportunities that are going to crowd out Ts. This is the hammer very few people are considering. I know a few have been predicting the de-coupling effect, but what does it mean in terms of the central gov's borrowing ability? I think it will end up killing our chances to get outside financing, which will cause the Fed to print money in the misguided attempt at tamping down (short-term) rates. Yet, as I noted yesterday, the real impacts from a devalued $USD and increasing rates aren't commodity prices. No, it's asset prices that are highly leveraged: real estate. It's the next couple of legs down in r/e prices that will finally send us over the ledge by completely destroying the 19 TARP banks and the Fed. Our greatest danger all along has been maintaining the illusion that the USA was essential. Once the world figures out they don't need us, all those funds parked here looking for safety will take off out the back & side doors. That's when we will reap our very bitter harvest. My take is that we are very close to a breaking point. Last modified:
2009-06-02 10:06:29 by kuhio
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Genesis Posts: 71430 Incept: 2007-06-26
KD^2
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Quote:This is the hammer very few people are considering. I know a few have been predicting the de-coupling effect, but what does it mean in terms of the central gov's borrowing ability? I think it will kill our chances to get out side financing and the Fed is going to have to print. Fed printing does NOT allow the government to sustain itself; that's a circle jerk. That's where the hyperinflationists lose their minds - they say "oh they'll just print it up" (and destroy purchasing power of ordinary Americans) but somehow believe that the prices paid by The Government will somehow be immune to the same destruction of purchasing power. That's beyond illogical - its stupid. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-06-02 10:09:02
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