'The iraq war was about oil, not weapons of mass destruction' The above is the line from JM's long answer, but there was ANOTHER secret reason to attack Iraq that common person does not know. The similar reasoning now applies to the fact that just for one soldier's life, Israel has moved troops and tanks into Gaza and its planes have started to buzz the Syrian airspace including the one above Syrian leader's summer retreat. Why this high profile and risky response? Something major is cooking behind the scenes or has been for the LAST 10+ YEARS. Any guesses?????? What is going to be unfolding in coming days will result in markets correcting further for the rest of the year and Gold rising higher again. The question is will the US bungle up this time also??
2cents, I don't think you quite grasped the argument you are refuting. The beginning of hyperinflation, as envisioned by the article, is excessive dollar-denominated government debt and unfinanced financial commitments from the past, combined with present and future, uncontrolled, dollar-denominated government borrowing, which rapidly increases the debt. This creates a powerful pressure on politicians to print dollars in order to pay the government's growing debt. The question is whether or not such pressure will result in hyperinflation and dollar collapse. I don't think you've addressed, or even recognized, this central question.
Soon2BTrader, I hope you won't let a comment like this embarass you or discourage you from contributing to this thread. I hope we can all stick to the subject matter instead of insulting each other in this manner.
whats wrong with you jimmy... how was that an insult??? what makes u think the guy needs any help?... anyway...
why bring up helicopter bernanke then?? just to add confusion so the thesis becomes more complex, worrying, therefore more credible to gullible people? as far as inflation, the CB has objectives that are naturally at odds with those of Government / Treasury... anyway... 1. been discussed at large, do your research... however there are many ways to measure it relative to GDP etc, and on a historical basis we've seen much worse and things went well nonetheless... the growth pace of it is the worry, and up to what point it may be sustainable... except other than crying wolf, nobody has a clue, and it is all the more likely that the problem will gradually grow away now that everybody is so fixated on it... 2. 'courageous' political decisions: a stroke of a pen and pooooff! thats a domestic pb to the US... doesn't bother me, but i sympathize if it bothers u mate )) 3. where, when, according to who???????????? have i missed anything? 4. politicians can't print $, sorry, all they can do is issue debt (via the Treas)... all u can do is elect them, or not... don't blame everything on the Fed, actually, they are the good guys, but hey, don't say i said it, popular belief has it that they are the ones who WANT inflation ))))))) 5. with a cooperating US population continuing to elect deficit-hungry presidents, anything's possible, even an attack by the arcturians if u ask me, but even then, a depreciation would only happen slowly, because 1) by necessity there would be enough twist & turns orchestrated by the various protagonists on whether a policy U-turn is near or not, 2) there are feedback-type adjustment mechanisms in the markets that will simply take advantage of any quick fall in the $ and prop it back up again, therefore slowing the slide.... how about this bill? ya gonna pay me or what?
I guess I would have to do some research to verify your belief that our government's fiscal position is not worse than at other times in our history, which did not result in hyperinflation. What is a "domestic pb"? You seemed to have missed that we have seen the beginnings of hyperinflation, in the form of the government's aggressively out of control borrowing. You instead that we haven't seen any such beginnings. The real question is how much further this process of borrowing dollars, and printing dollars to pay those debts, will continue. I think, in order to address that question, you need to recognize that we are moving in a dangerous direction. I think you misunderstood my use of the term "politicians", with respect to the pressure upon them to print money. I do not exclude Fed governors from the category of politicians. I think Greenspan was a politician. I think you underestimate the political pressures upon the Fed. I don't think you have any basis to assume that depreciation of the dollar will be slow. It might be slow, but it might not be slow. Do you know what is meant by the term "panic"? Are you acquainted with the history of financial panics, which occurred in spite of the various stabilizing mechanisms which always exist, in one form or another, in any economy? If so, then why are you so confident that we will not see a dollar panic? Do you think we have some special form of financial alchemy, unavailable to previous generations or to those guys in the recent Argentina meltdown, which will make the dollar panic-proof? Let us discuss the question of payment. Would you be willing to accept Reichsmarks?
There is always a risk in any investment vehicle {currencies, futures, stocks, commodities} from a crash in price. The risk however is greater in some of this vehicles than others, gold for instance has historically been the safest commodity to turn to when things go sour... stocks are usually considered the riskier. A crash in the dollar is an unlikely scenario, or at least it seems that way. Due to the current position of power held by the US. However there are several situations that are threatening that position. I´ll mention a few that I can remember right now... The chinnesse economy, devaluation of the yuan {this guys buy a lot of US bonds, if they devaluate and therefore reduce the commercial deficit [surplus from their end] they´ll buy less bonds}, The rise of europe as a block {germany alone put the world in check twice on the 20th century...}, they´re profiling themselves as the 21st-22nd century superpower. Last time there was a block in europe it ruled the world for nearly 2 millenium... Russia reemerging {the bear is got capitalist teeth this time}, Peak oil {is not a question of wether it´ll happen or not, but rather of when}, Oil being traded in euros {though it may not bring doom to the dollar, it would be a hard blow on demand}, Asian central banks considering diversification of their dollar reserves, this will also be a blow to demand on the dollar. Central banks will tend to diversify to euro´s and yen´s if they see the US´s economic leadership threaten by another nation or block. Think about it from a investor point of view, you buy more of the security that has the best prospect for growth. Is very unlikely that a single one of this variables can cause the dollar to crash, but they might weaken demand for the dollar {vs other currencies or gold}, forcing the fed to contrat the supply of dollars. The fed´s constant hikes in interest rates over the last few years are aimed in that direction, higher rates increases demand for new bonds and the money collected from those bonds can be put out of circulation therefore reducing supply of the dollar. The direct consequences of this measures are making every dollar more expensive, reducing inflation and cooling down the economy {by means of reducing the agreegated demand, people percieve things as being more expensive and therefore buy less}. The best thing to do in this scenarios is to diversify one´s portfolio beyond the borders of any one of the world´s players... from german stock to japannesse bonds and US etf´s and some gold... be all over the place, minimizing your risk while optimizing your return.
1. international comparisons with OECD Japan & developed economies 2. domestic problem 3. hang on, nobody's disputing THAT! and that it has to stop... all i am saying is that contrary to popular beliefs, not all bubbles pop, but we only get to talk about and remember those who do because there is more of a story to tell... i have no reason to believe this debt bubble is going to pop, as opposed to gently deflate like your average bubble gum... and the author provides not a single argument as to why it should pop either... neither does r.duncan in his otherwise great awareness-raising book i've provided the links to earlier in the thread... 4. that doesn't make them politicians... these guys have integrity... anyway, no point in 'debating' that... but if only for clarity's sake, better if you referred to the Fed as the Fed... also as i said, politicians & Gvt have a preference for inflation, not the Fed... 5. yes, its called the Rest of the World... ;-) 6. why not some soon-to-be worthless T-Bills of yours instead??
Can you be more specific as to comparisons with other nations? Can you name just one other specific example which you believe gives reason for optimism that we will not hyperinflate? Can you be more specific as what in the Rest of the World will prevent a dollar panic? It really would be to your advantage to take my Reichsmarks instead of my T-bills. If you would take the Reichsmarks, I will be in a better financial position, and this will enable me to continue doing business with you in the future, so that I can pay you even more Reichsmarks in the future. I project that you would be able to build an enormous reserve of Reichsmarks from such a relationship. If you insist in T-bills, however, my finances would collapse like a house of cards. I know it sounds crazy, but some precedent for such a relationship can be found between the U.S. and Communist China.
1. canada (40%), australia (60%) notably in terms of debt/gdp ratio... week-end read for you: http://www.kc.frb.org/publicat/ECONREV/PDF/1q01holm.pdf and if you can't get enough http://www.sedlabanki.is/uploads/files/mb011_4.pdf discusses a couple interesting cases in details this you'll find interesting too: http://en.wikipedia.org/wiki/U.S._public_debt understand me well, i am not saying this is great, of course not, its definitely a BIG issue, but panic??? 2. will what? i am not the one who is making 'predictions' here... plus, do some homework ok ;-) ... the article's author IS making predictions, pretty cheap ones to make for that matter... can you give me ONE compelling reason why the current situation WILL inevitably result in a panic run on the $? 3. your well-being is my 1st and only priority mate! let's do this: you tell me how much you'd pay for a t-bill in reichsmark, and let me decide whether to sell or buy one from you... hows that?