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A First Person Account Of How Bernanke's Export Of Inflation Is Fueling Asia's Last Bubble, And The Bonfire Of The Fiaties
Much has been said about how the PPI and the CPI are stuck in deflation mode (despite what everyone is seeing when buying groceries or filling up empty gas tanks). Much less has been discussed about how Bernanke's blunt policy tool of unlimited liquidity is leading to an inflation-driven bubble in Asia (and all Emerging Markets). Luckily, Macro Man Simon Black provides a first person perspective of how this bubble is developing, and how it will soon pop. In some ways this is empirical evidence of what Knight Research said previously: namely that the days of an EM push-pull mechanism are coming to an end. Here is why Knight's conclusion is spot on, paraphrased half way around the world: "when central banks start ratcheting up interest rates (like the Fed did in 2004 and what China is doing now...), buyers and developers no longer have access to cheap credit. Demand drops, and prices fall. When this finally happens, I think the subsequent fallout will serve as another strong argument to abandon the dollar and reset the financial system, especially in the developing world. All they need is a reasonable alternative. China is already allowing its currency to be used for cross-border settlement and limited reserve status, and as this function grows for the renminbi, you can bet that Asian nations will stop importing American monetary inflation and start exporting those dollars back home." A must read note for all those who base their investment decisions based on theoretical musings and thought experiment speculation.
From: Sovereign Man: Notes from the Field
Date: November 17, 2010
Reporting From: Labuan, off the coast of Borneo
Because I travel so much, I have the luxury of being able to compare real estate prices among all the places I've been recently. How does a flat in London compare with an apartment in Bangkok? How does an estate in Cape Town compare with a single family home in Singapore?
I have to say, residential real estate prices in many developing economies are astoundingly high on a value-adjusted basis... and it's because supply and demand fundamentals are being distorted by central bankers and politicians.
Housing demand, for example, should primarily be driven by demographic factors and real wages; rising populations and net migration increase the number of new households, and higher incomes reduce the average size of existing households (kids move out of mom and dad's house and find their own place).
Demand is often twisted by government policy, though. In certain countries like the US and the Netherlands, the tax code incentivizes home ownership by allowing the deduction of mortgage interest. Carrying costs like home repairs and property taxes may also be deducted in many countries.
Perhaps the ultimate demand distortion, though, is easy monetary policy. Interest rates don't generally matter for smaller purchases-- nobody checks the 3-month LIBOR before heading out to the local convenience store for a cup of coffee and a candy bar.
When money is cheap and easy to borrow, though, people have a strong incentive to purchase a home and bid higher prices because they can afford more house for the same (or lower) monthly payment.
On an institutional level, banks have a strong incentive to make loans for property in an environment of loose monetary policy; capital is plentiful, burning a hole in the bankers' pockets, and they're accountable to shareholders to turn that capital into profit.
We all know how this story worked out in the United States and the UK over the last few years; simply put-- not well. I'm seeing similar bubble indicators in several Asian countries right now... and it's a direct result of the so-called currency wars.
Ben Bernanke's successful efforts to reduce the value of the dollar have caused commensurate money printing around the world; foreign central banks are fighting to keep their currencies restrained against the dollar because nobody wants to be the country with the 'expensive' currency-- that would reduce their cheap exports.
A common tactic of foreign central bankers has been to artificially depress interest rates, making a great deal of capital available to local banks. Add to this many hundreds of billions of newly printed dollars that have fled the US seeking higher returns overseas, and it's easy to understand why asset prices are rising so quickly: there's too much new money in the system.
Thailand is a good example. The Thai baht has strengthened over 10% this year against the US dollar because institutions and large investors have abandoned their greenback holdings in favor of greater potential returns in Thailand. Coupled with the low interest rates set by Thailand's central bank, the country is awash with new money.
A substantial portion of this capital is flooding the housing market. Developers can get cheap loans to build their projects, buyers can get cheap mortgages to purchase the end-units, and contractors are able to get cheap credit facilities.
The final result in Thailand has been a significant runup in housing prices, as well as the number of units available. There is a massive bubble forming in the country, and the indicators are everywhere. One of the strongest that I saw was a series advertisements offering teaser mortgage rates at 90% loan-to-value... to foreigners!
(Now, if you've ever bought property overseas, you know how difficult it can be for a foreigner to qualify for a mortgage... yet it's getting to the point where if you have a pulse, you can get a loan. When banks and developers are giving money away, this is a major sign of a liquidity bubble.)
Thailand is just one example; there has been much discussion about mainland China's housing bubble as well.... the People's printing press has been running around the clock to keep up with Bernanke's, and the trillions of renminbi created has given rise to triple-digit housing returns.
Chinese money is also finding its way into regional property markets. Hong Kong is a massive recipient-- interest rates on the island are already near zero, and the combination of cheap money and Chinese capital has spun housing prices out of control.
For property investors, rental income hasn't kept pace with the funny money that's fueling the asset price gains; in fact, many investment properties are cash-flow negative (rents are too low relative to mortgage and other carrying costs). When you can't turn a profit in an environment of historically low interest rates, it's time for the bubble to pop.
We've already seen what happens next-- when central banks start ratcheting up interest rates (like the Fed did in 2004 and what China is doing now...), buyers and developers no longer have access to cheap credit. Demand drops, and prices fall.
When this finally happens, I think the subsequent fallout will serve as another strong argument to abandon the dollar and reset the financial system, especially in the developing world. All they need is a reasonable alternative.
China is already allowing its currency to be used for cross-border settlement and limited reserve status, and as this function grows for the renminbi, you can bet that Asian nations will stop importing American monetary inflation and start exporting those dollars back home.
In the meantime, if you're mulling over a life change and thinking about a move to one of Asia's vibrant, growing economies.... consider renting first.
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It will all end in War, always has always will....
who will be the evil empire? wait for it..... wait for it....
That depends on who wins <and subsequently writes the history books>
agreed
LOL. Tyler fell for another GOP talking point again.
So when Greenspan lowered the rate from 4% to 3.75% to help a cooling economy, did you call it "export of inflation", or did you perhaps call it what everyone called it, a regular rate drop?
Because what the Fed has done with QE2 was to effectively reduce the federal funds rate. It implemented monetary policy - which is its duty to implement.
Or is your opinion that the US economy has "overheated", that a rate hike is needed?
Inquiring minds want to know.
You are forgetting -like most arrogant Americans- that the USD is the world currency. Yes there are other countires on the other side of that ocean. To a greater extent they do not have the fical and private debt burden to the point of saturation in the real world economy that your masters have saddled you with.
Sure, they are attempting to destroy their own currencies by money printing and lower interest rates just like you have. Only they are not at a point where the (US) money printing only goes between Goldman Sachs, the FED and the Treasury becuase there is no other economy left. What else had Greenspan/Rubin et al unwittingly exported ?
-jobs
- skilled labor
- pollution
- war
- oh yes, and inflation.
Please Google - Triffins Dilema to start your (re) education.
Excellent observations David. I have only one comment addressing this sentence.... "What else had Greenspan/Rubin et al unwittingly exported ?"
There is nothing 'unwitting' about the actions of the US Fed/treasury. In past episodes when excessive dollar printing in the US caused inflation/bubbles abroad and foreign soverigns complained, the US has stated.... 'It's our dollar but your problem'.
At some point organizations like the SCO, BIS, OPEC, soverign wealth funds, etc, will deem that the US has gone too far with it's exhorbitant privilage of printing, to excess, the primary world reserve currency, the dollar, and move away from dollars. It has not happened yet because there is no good dollar alternative. But, since no fiat currency has lasted more than a few generations I see no credible arguement that would preclude a replacement/replacements of the dollar.
You repeat the same mistake as in the OP: countries do not choose by their own volition to import USD. No USD, no possibility to import resources.
Asian countries starting to export back USD will not happen tomorrow. Because the USD is backed by the world's resources minus US resources. Asian countries will get nothing by sending back greens.
Erm, there's crippling unemployment building up in the US, and Japan-style deflation is nearing. The Fed has every moral and economic incentive and right to do something about it.
Again, I repeat the very simple argument: where were you guys complaining about Greenspan when he cut interest rates? Where were you complaining when the ECB cut interest rates? (the EUR is certainly the reserve currency of a huge economic area, and not just the EU itself.)
The Fed is trying to lower rates with QE2, to revive the economy and to avoid a crippling deflationary period. It has every sovereign and moral right to do it.
If China has any trouble with the Fed trying to avoid a catastrophy then it should stop its predatory mercantilism ... China has full employment and does not face deflation at all and it is stealing jobs and growth from all over the world not via innovation or productivity, but via a predatory currency policy.
+1000 Friend, you obviously don't have a PHD (Propagandafilled HeaD)
you mean wikipedia (located on an old military base in SF)
1100,
Well, even OUR Gv't is not stupid enough to take on the Reds.
Thats a NO win, bad bad bad scenario.
Starting pissing contests with nuke capable nations, and with the laest technology, so lovingly given to them by the Clinton Regime.
I get the warm fuzzies all over.
It would have to be Iran.
It may end up differently: Let's think outside the box for a minute.
What if, the US is signaling and actually doing some QE until other countries retaliate and start printing themselves to oblivion?
Thus, creating deflation and collapse and then the US announces that they are now stopped printing. The strong dollar will buy all their valuable assets for a song.
Simply speaking.
i have often thought that the 'goal' was for all gubmints to agreeably inflate their debts away in a semi-coordinated fashion (each pointing a finger at the other whilst another is inflating in the background of the distraction e.g. greece/ireland, etc.) - but your theory that we're (US) trying to compel them to hit their own brick walls first is most interesting.
that, however implies that ben and tim are smart, and that the rest of the world is not.
even as an arrogant american bastard (apparently, there aren't any other sort), i'm not so willing to underestimate my competitors.
but i'm gonna watch things through those glasses for a while and see how it sits...
+++
Two proven facts for all to ponder:
Thieves sport very high IQ's amongst al groupings, by race, by education, by profession etc.
The difference between a genious and a madman is: Drumroll.........2 IQ points. (162-164)
Act accordingly.
Cheers mates
heh
i've similarly asserted that the two sorts of kids in the local 'special-ed' classes are either super-bright and bored to tears/trouble, or, they're actually learning disabled.
thrown in the same box, it makes for an interesting dynamic.
your point stands.
There you go. That's it.
All the rhetoric appears linear, not just comments on ZH but also from many "sophisticated" posters. The Money Masters are smart but not omnipotent. They screw-up and have demonstrated that trait often. So we must asknowledge that our information is limited and our conclusions are based upon those limitations. We do not know the true agenda or the real motivation of the humans in power. Too often the premise is that they are attempting to save the Republic leading to a belief that their methods are unsound. Challenge that perspective and the mosaic comes into focus.
Further to my comment above and the IQ facts:
Here is one more theory I have that people can ponder:
What if, N. Korea is an American supported regime to ensure that the Japanese keiretsu which were one of the reasons of WWII involvement of the US, are not expanding their worldwide trade domination. Why do you think such a small country is the number 2 economy?
Disarm and use threats.
==========================
Another one:
Greece and Ireland have the option of defaulting rolling in the Drachma and the Punt and let the lender banks go under. But, they are not doing it because the threats of retaliation have already been made.
Their respective threats to them are Turkey and N. Ireland. France and the UK can supply the motive and the arms.
According to Aristotelian Politics, wars start from trivial disputes. Even the Trojan war was started by an infidel queen.
Sorry to cut in. Have you guys seen this ??
ABSOLUTELY HILARIOUS...AND TRUE ABOUT
THE FED.
http://dealbreaker.com/2010/11/quantitative-easing-explained-by-furry-animals/
The Ben Bernank!
"You are shitting me....nope". I still laugh.
LOOOOOOOOOOOOOOOOOOOOL
Yea, it just might. Especially after China launched that missile of the coast of California.
The real fireworks start when the mercantilist Asian nations try to out-mercantile each other.
BINGO!.............back to eating dogs and tigers
LV.......dog makes a fine meal
#36 Szechuan Beef
get long USD.........
....Madison Ave say........Chinese dont believe us/no tickie...no market/wages for their own goods
6.5% VAT is just an import duty on foreign goods......because thats all we buy in the USA
The K Winter norther is blowing in...........globally
LV.........got food? got a fishing rod and worms?
A fan of Sovereign Man.
Wish I could say the same thing - but after he, or more accurately an exclusive 'source' of his tried to claim that last year (or 2008, can't remember when he put out the article) was the first time ever Chinese were allowed to buy gold...I wrote him off as a sensationalist who doesn't let the facts get in the way of a so-so yarn.
He no doubt travels a lot, but when you spread yourself on the ground too thinly without spending adequate time in a country, you don't always pick up the whole truth as it were.
Other than this little gripe, he does offer plenty of other insight which would no doubt be accurate...just...stopped reading him after a short period.
It looks like finishing Greenspan's work. He made a bubbles around a world, but not all popped until now. So now they are 'maturing'.
Debt money is finished.
Perhaps one could make a bundle trading credit derivatives that have nothing to do with carbon pricing. I'm sure Al Gore is/will.
People also made a bundle in the Zimbabwe stock markets while hyperinflation was raging there....a worthless bundle.
China will blow up because of her housing bubble. The battle against inflation will force China to raise rates over the next 6 months then boom' ....
Then you move in and cherry pick stocks.
http://chinesepolitics.blogspot.com/2010/02/looming-problem-of-local-deb...
"Then you move in and cherry pick stocks."
That's if you don't get captured by a group of high school students in Red Guard uniforms, and they stick a dunce cap on your head and put a sign on your chest that says ??? "Capitalist Roader".
Perhaps a bit sanguine on the timing?
When China does roll, it will be rolling into a period of either higher RMB, lower growth, and more than likely both.
So you have the luxury of thinking about what this will mean from an investment perspective over a longer time horizon.
I agree with your assessment spaulding. I thought you were a crackpot with your deflation theories but lately you have been on.
The "natural order" would have already been USD deflation but we have major government interference altering things. Could it be that the central bankers all know of these issues and really are working in concert to save their respective economies or, at the least, control & cushion the fall? Could it be that they all know the entire ponzi is coming to an end, globalism has chained all nations together such that they will all drown together?
Bernanke pulled his ass out of his hat today! $600 billion to create 700,000 jobs. way to rub those stocks, er..I mean sticks together Bernanke!
700,000 jobs in the Asia Pacific rim you mean ?
During the RE "boom" in the States, the Wall St. banks were able to sell off most of the CDO "inventory" to the fools (aka "investors".) So, who is buying the pools of those 90% LTV "risky" mortgages advertised to the foreigners? Like the Pavlov dogs conditioned the "house prices never fall" Chinese speculators?
Remember the 25 of November, the day Mark Pittman passed.
Did anyone take up the torch?
China stops inflation in China by allowing their currency to float in my opinion. Unfortunatley, they like us are also at the currency devaluation game.
All fiat currencies will eventually lose value as long as there conciouss devaluation and as long as debt remain completely not repayable and increasingly so.
China can't stop shit ...
China has stepped up its fight against food inflation by announcing plans for price controls, the selling of government supplies, and subsidies to needy families, reported China's official press agency Xinhua News.
Some specifics include:
1) putting government reserves of grains, edible oils, and sugar up for sale
2) reducing the prices of power, gas, and rail transport for chemical fertilizer producers
3) offering temporary food price subsidies for the needy
4) increasing allowances for student canteens
5) making sure welfare benefits keep up with rising food price levels
The prices of food and overall consumer products have surged in China this year. October consumer prices surged 4.4 year-on-year and food prices an astounding 10.1 percent. Year-on-year inflation of food prices was 8.0 percent in September, 7.5 percent in August, and 6.8 percent in July.
Xinhua also said in the first 10 days of November, the average wholesale prices for 18 types of vegatable in 36 cities spiked 62.4 percent year-on-year, according to government data.
Food accounts for about one third of consumer purchases in the Chinese government's CPI calculation.Chinese officials blame the surging inflation on economic growth and excessive liquidity, including the inflows of "hot money" from foreign countries.
http://www.ibtimes.com/articles/83107/20101117/china-food-inflation-pric...
The irony of it all. Richard Nixon, the man who tried price controls that failed, opened China. We know how well price controls will work out in the end ...
Yup.
Who keeps junking Mr. Smailes?
Someone from the Vatican ?
That's just plain creepy Spalding ...
I think price controls of food was tried in Zimbabwae. There was no food as a result.
To add to the discussion: I think many people forget that food commodity price increases impact the world lower class much more than, say, in the U. S.
We buy already prepared foods which have high preparation, packaging, shipping, advertising costs, etc. When wheat goes up our bread cost rises very little. But in developing countries, where they buy wheat directly, the "input" cost for food is greatly increased. A little rise in food commodity prices hits the poorer class much harder.
"We've already seen what happens next-- when central banks start ratcheting up interest rates (like the Fed did in 2004 and what China is doing now...), buyers and developers no longer have access to cheap credit. Demand drops, and prices fall."
Hang on, central banks everywhere were raising their 'target' rates from 2004, some before then. Did that stop the 'bubble' from inflating? Hell no. The 'risk free' rate means nothing in & of itself.
It was the compressing of corporate yield spreads over 'benchmark' government bonds that fed the boom. Since the 2008 debacle, governments have monetised all sorts of garbage & issued copious amounts of their own debt. Going 'long' governments will get you nowhere, there is no longer a bubble in corporates, not in $ terms anyhow.
And anyway, this Simon Black is a name dropping bullshit artist.
Mmm. Bank of England currently has the lowest interest rates in 315 years
I can second this, as in the nicest part of Manila, Philippines, 1-bedroom condos of about 700 square feet with 1 parking space included, are selling for a starting price of $150K USD and up. This is in the Rockwell area, in e.g. the Joya, Rockwell One, Manansala, and Rizal complexes.
it's like the wave in a stadium - the residential real estate excesses move from Japan to US to EU to China to Australia and Canada. the same denial, the same herd in a different pasture. you'd think we, as humans, would learn from the last pasture being eaten barren.
Fascinating really. We learn that you get a full belly by eating it to the nub. What comes next, well ...
And to assure maximum global economic destruction, our "financial experts" gladly exported, for a small fee, the expertise to package the soon to be devaluing Asian real-estate into MBSs. There are no prisoners in economic warfare, just casualties.
you can bet that Asian nations will stop importing American monetary inflation and start exporting those dollars back home.
except when those dollars buy American assets at increasingly steep relative discounts, right?
Havn't you forgotten "Free" Trade Agreements where GS/ JPM etc can sue your Sovereign Nation for attempting to restrict 'hot' money flows ? Brazil didn't want one. Obama failed to 'negotiate' one with Sth Korea. Not happy B.
Hot Money Creating Havoc in Global Economy
http://tinyurl.com/2bzb856
I think things will turn out like other developing countries
Local items are in deflated terms, imported goods are really expensive
Bad news: we import > 50% oil, and many other things
Good news: we produce a lot of food
but much of fertiizer is petro-based?
That's the point about oil.
Oil is imported and affects everything. Let's be thorough -- fertilizers, farming, pesticides, transportation, storage, refrigeration, and even cooking the food, too. Too little space. You fill in the blank.
People who import oil still can't live without food though. It's one thing we are still really good at.
.
Your reasoning seems circular to me.
"Good news: we produce a lot of food"
Without oil food production goes down dramatically.
Without chemical herbicides and fertilizers, most made from oil and natural gas, food production goes down dramatically.
So any nation that has a decline or loss of imported oil/nat gas is going to take a big hit in their internal food production....and the US is still a nation, importing ~ 50% of it's crude oil, regardless of contrary rumors.
I believe we're seeing the end game of a long, secular process that began when Bretton Woods ended and governments had to figure out how to contain inflation while still printing money at will. And here we are at the end result for developed economies: a nearly 0% interest-rate deflationary economic environment with high-debt and anemic GDP. None of this would have worked without the willingness of the developing world to go along with the program. And there's little doubt that they have benefited. However they've now reached the stage that the developed world reached 40 years ago: an inflationary economic environment with low debt and robust GDP.
Can it be reasonably expected that the US and EU will play the role that China and other developing nations did 40 years ago? The notion seems absurd. And it's all the more absurd when one considers the domestic political backdrop: in the US there's a growing protectionist mood and a leaning toward austerity combined with a stubborn refusal to face facts that the US is anything but a mature post-capitalist economy. Likewise China will be no more willing to face the fact that it's a mature, post-communist economy and agree to undergo experimental changes with uncertain outcomes. So there will be friction and unease because the solutions to these problems require big adjustments and changes. It's a bumpy road ahead.
The seatbelt sign is definitely ON.
Now we shall see how fast these systems can adapt and evolve. It's only in retrospect that we will know how aligned or symbiotic the relationship between east and west has become.
The general concensus seems to be that either war or general malaise will be the outcome. I'm not so sure ...
Hong Kong is a bubble, thailand is a bubblette. You have to look at the difference between rental income and resale price to get a picture of whether there is a bubble or not. The gap between rent and price is big but not getting bigger. Loans for foreigners? That's very new and very hard to qualify for, and its only for condos. Most foreigners here have to pay in cash and so they can hold if they have to without forced sales. We also have car loans here with 5% down and 7 years but no one says there is a bubble in cars. But, yes, prices here are "high" but that is because of strong demand not speculation.
I don't believe that Chinese inflation is a function of how many usa clownbux they have but rather a desire by them to stimulate internal demand for houses, durables, etc., due to waning/unsustainable export markets. They need to cool it or they will have a peasant revolt tho...
it takes 60% of income in dual-earner family to pay ARM mortgage rates in Warsaw at this time. When interest rates explode things will get interesting.
There's no option to walk away and there's no consumer bankrupcy.
The place will implode in 2-3 years.
Polish Hammer -
Are those ARMs in Euros?
Prolly denominated in Swiss Francs.
At least Poland is not on the Euro, you guys still have some power.
Yes, but 2/3 of ARMS are CHF and EUR
Otherwise it would be double-yes instead of yes-but
The Chinese have fared better with a command economy than the Soviet Union because they have a very large, obedient, hard working and inexpensive labor pool. And, most importantly, they focused all these resources on exporting inexpensive goods. Rather than churning out sub-par Volgas and forcing Eastern Europeans to buy them and expending huge resources on a massive doomsday nuclear arsenal, the Chinese export cheaply made goods and have racked up a massive account surplus. We beat the Soviet Union in the nuclear arms race. But I'm afraid the USA has lost the economic war to China. They now own us and could step in and call in the loan if they so desired. The only thing stopping them is that we are their market and they aren't done yet--their domestic infrastructure and standard of living is still well below that of the US. And, they need to build up their gold reserves. So, they do need to avoid any messy inflationary bubble bursts in order to keep things growing in a sustained fashion. Look for them to ease up on the gas pedal, which could cause a bit of a temporary asset bubble burst.
You are understating things a bit, don't you think? In China, their streets are their garbage dumps. Toxic poisoning from heavy metal waste is common there. Central planning, command and control, DOES NOT WORK BUDDY!
And now...price controls. After decades of manipulating their currency to inflate their troubles away...this is what they come up with.
Good grief. Buy canned goods, folks. They are about to get much more expensive.
+ 7.009234 Suppressed Renminbi
lead, arsenic, mercury, etc., permeate everything from open dirty coal burning and the water is disgusting. I don't know how that many people can survive the environmental conditions there.
Centrally planned population control?
prolly just a serendipitous side effect of centrally planned greed. sounds a lot like the america of not-so-long-ago.
From an economic standpoint, humans are just another input into the manufacturing and capital formation process. There are so many humans in China that they are expendable. Their destruction from pollution is a not a problem since there are so many humans to use.
Forced abortions, slave labor, inhuman working conditions--the people in control don't care about these issues. They are using their bountiful, obedient and hard working labor force at will to create a rich China.
Great point.
Beware of a male only society. I believe the current male:female ratio is north of 60:40. A disgruntaled male population changes things. Fight Club.
Good point. Males are typically less obedient than females. They are warriors, strong and can rise up. If the male dominated work force starts to rebel from the horrendous working conditions, then China has a problem on their hands.
But the leaders rule with an iron fist and will ruthlessly kill them. They use capital punishment extensively in China for lessor crimes to keep them in place. I doubt they will rise up in a significant fashion in our lifetime.
I dont know if it was cause uprisings or not. But one must loose sight that a male only society has different needs than a traditional one. How China adapts will be interesting to watch. Money making opportunity: start mail order bride service to China.
This had occurred to me: isn't it pretty likely that a significant proportion of those "extra" males are going to end up marrying girls from elsewhere? It could be quite something if the Chinese communists turn out to have unintentionally caused the biggest shake-up of the glorious etc. Han racial profile in quite a while.
or start sellin them cheap plastic, blonde blowup dolls
All that is made in China already, so...
Dr. No, If your figures are correct the problems coming to China will be a Tsamui in raw numbers. With a spread of 20%+ between male and female that is 260,000,000 more males than female!! (almost the pop. of the USA) I would seriously question those spreads. China would be or would have come apart a long time ago. Even 5% would come out to 65,000,000 differential. MIlestones
My figures were not accurate. I did some checking and the CIA fact book states 1134/1000. Far less than my 60% number. I apologize for my posting of unverified speculatioin. The ratio is higher than other nations however.
Here is a graph of the Chinese population pyramid:
http://www.nationmaster.com/country/ch/Age_distribution\
It's all good.
:D
.
I depends on what age cohort you look at. The one child policy is a few decades old, so something like half the population, the older half, ought to have a more balanced ratio of males to females.
Why don't you spend a minute to check your facts instead of posting random figures?
It took me about 2 minutes to find that the ratio (in 2009) is 54.5:45.5. We'll know more after the latest census.
And it's been that way for a while. As in other Asian countries, they already "import" brides from overseas. Fight Club my ass.
It is the poorer (and declining) countries that should worry, although getting a woman is hardly a priority when one is hungry.
Robot bitchez, bitchez!
(Got a 503 error, comment still went thru - duplicate deleted)
(Got a 503 error, comment still went thru - duplicate deleted)
That's been happening a lot lately...
The Chinese don't have the monotheist background that modern western societies have. Thus, in Chinese history, there have been examples of 'non-traditional' family structures, such as polyandry (one woman, multiple husbands) in certain provinces. This was done to keep land in certain families hand, and it was allowed among slaves (yes, there was slavery in certain provinces). In Tibet province today, polyandry is the norm - even though it's technically against the CCP Family Law).
The Chinese will come up with solutions that work for the Chinese people.
Sounds like the US. Are you projecting ?
The Chinese are now faring better than the Soviet Union, since they switched from Soviet-only-worse communism to (basically) the Prussian model of export-oriented state capitalism. The Soviet Union might have done similarly well under the Prussian model, though maybe the Soviet state could never have managed the changeover. China's problem now, apart from the fact that it's not really as dominant yet as you say it is, is that the Prussian model is politically unsustainable: it relies on continuous economic growth and militarism to keep the political tensions under control. Eventually there's likely to be a change of regime, or a big whoops: see what happened to Prussian successor state Imperial Germany, or leading Prussia-imitator Imperial Japan.
"racked up a massive account surplus"
Denominated in what, depreciating USD? The longer the Chinese play the game of musical chairs the harder they will get screwed. Which makes them stupider than the US in my book.
Yes, you are right and much of their "account surplus" is in US Treasuries and the USD. But don't forget, owning so many treasuries gives them a level of control over the US. We are paying them billions in interest. It's another way for the Chinese to bleed us dry.
They are converting much of this hoard to hard assets now. They are filling a strategic oil reserve and building up gold reserves.
PBoC does not have that much of an upper hand on the USA. The inflation we are sending her way is destroying the PBoC.
Take the most obvious example, the PBoC itself. The central bank officially has about $2.5 trillion in reserves. This by the way almost certainly understates its true position but let’s ignore that for a moment. The PBoC has funded this position with an equivalent amount of RMB liabilities, which makes it very vulnerable to changes in the value of the currency.
Rate addiction
In fact there were strong rumors last year that the PBoC was technically insolvent as a consequence of the 20% increase in the value of the RMB against the dollar during the 2005-08 period of currency appreciation. Weirdly enough, although the numbers are huge, it has proven difficult to convince anyone that the PBoC is not the richest institution in the world, and that it is actually very vulnerable to big losses (although I notice that Sovereign Trends’ Terrence Keeley, in an OpEd in the Financial Times Tuesday, seems also to have done the numbers).
The problem for the PBoC occurs not just because of the currency mismatch but also because it needs repressed funding costs to keep it profitable. How much do the PBoC foreign currency assets earn? I would guess probably between 3% and 4%, maybe less. The RMB funding cost, on the other hand, is roughly between 1.5% and 2.5%. This leaves the PBoC with a net positive carry of between 1% and 2%.
If the RMB appreciates by as little as 2% a year, in other words, the PBoC runs a negative carry on its assets. Every further 1% increase in interest rates, or additional 1% rise in the value of the RMB, then, erodes its capital by at least $25 billion (annually, if it happens through an increase in interest rates).
http://mpettis.com/2010/07/the-pboc-can%E2%80%99t-easily-raise-interest-...
"China is already allowing its currency to be used for cross-border settlement and limited reserve status, and as this function grows for the renminbi, you can bet that Asian nations will stop importing American monetary inflation and start exporting those dollars back home."
Please finish that thought... as an American, we can still borrow cheaply for houses. If you see a wave of dollars coming ashore, and you're sitting on dollars and you just happen to need a house, would you buy one or not?
China reserve status is a long ways away ....
China Financial Markets ~
I am pretty skeptical about the likelihood of this happening, at least with some of the more excited predictions. So, by the way, is the ADB, whose recent report (“The Future Global Reserve System — An Asian Perspective”), suggests that by 2035, the RMB may comprise about 3 to 12 per cent of international reserves. This is a pretty reasonable prediction, in my opinion, and far from the more feverish claims we see reported almost daily.
If the renminbi ever becomes a major trading or reserve currency, it is going to take a long time for this to happen and will require a radical transformation of the Chinese economy and the role of the government. This may seem like a surprising statement. After all nearly every week we see reports about a new breakthrough for the renminbi, and almost every day someone important somewhere speculates publicly about what the world will be like when (never if) the renminbi displaces the dollar.
But away from all “qualitative” arguments about why this is unlikely, and there are many, I think there is a problem with the arithmetic of reserve currency accumulation. If the rest of the world is going to use the renminbi as a reserve or trading currency, clearly it needs a mechanism by which to accumulate renminbi. This is something on which a surprisingly large share of people who talk about the future of reserve currencies don’t seem to focus.
Leave aside the fact that foreigners are prevented from having renminbi accounts and that it will probably be many years, if not decades, before the PBoC is willing to allow full convertibility, with limited government intervention and no control over the setting up and trading of its currency. The world still needs a way to accumulate renminbi in order for it to be a major trading or reserve currency.
How does the world accumulate sufficient renminbi to acquire reserve status? There are basically two ways. First, China can run a current account deficit. Second, foreign capital inflows into China can be matched by Chinese capital outflows. The second way does not result in a net foreign accumulation of Chinese assets, but it allows foreigners to hold renminbi bonds and other assets to the same extent that Chinese hold assets abroad (above the current account surplus, of course)
http://mpettis.com/2010/10/it-isn%E2%80%99t-easy-being-green/
Which is why I am long FXY. Think about it. The yen is a potential reserve currency. People laugh at the yen, but I do not see Japan default before the US.
Perhaps you should look closer.
Please give us some insight ... Whats the trade help him/us out.
This forex/trade stuff I have no clue.
Whats up kid. :-)
Personally, in the overnight, I like the USDJPY short to ~ 82.8. It is getting tricky though in 4X because the USD is trying to re-establish its dominance over the yen and get back to its status as a global "risk-off" currency.
With the risk back on, the USD is selling off- sometimes.
You have to be very careful now with that trade, as the USDJPY is acting schizoid. One minute it is a risk-off currency, the next minute it is a risk-on currency vis-a-vis the yen. Just fascinating to watch. This is a once in a lifetime occurrence.
I think that once the level between 81.9 and 81.5 has been reached and the pair heads definitively higher, this contruct will be fully imbedded and the USDJPY rockets for years ahead.
Frankly, though, I am still not sure why it is doing what it is doing.
Trade carefully.
Another one is to short AUDJPY if it breaches 82.05. That is a much safer trade but the pair may or may not reach that level. We'll see.
Best of luck trading!
... After the great " lost decade " Japans banks are some of the strongest.
Maybe all the powers come together at some point and tweak the system. I still think the USA overall is in a strong position due to dollar/debt global web.
It does not help anyone to play this game out as is I think a new system will be put in place before they/we crash.
The dollar underpins every other currency they all go down before the dollar, we make money off interest payments gleaned from the dollar denominated debt/credit.
My argument is a rather simple one in demographics. Not enough young people. No one to buy bonds. Japanese government bonds will have to compete in the global marketplace. Rates rise.
End of story.
Can they import some young people. Thats one reason the border has been opened along Mexico. We will take them in and help with the boomers going off line you will see this take place in the future, book it. We need the young also ...
And most forget boomers die off at some point and stop drawing off S.S.... This issue will go away also .... under harrys rug.
They have the same Nippo-centric attitude that many nations have. They don't want blue-eyed people mixing with the great Japanese race. But it will get interesting in the future when they have to choose whom to let in. They are partial to Koreans but detest the Chinese. Vietnamese are okay...
But no Irish! (Okay, okay. And the Irish.)
Heyyyy I'm Irish watch it .... blue eyed.
and french,german and american indian Lol' ...
It was a joke taken from Blazing Saddles.
:D
I lived in Japan 4 years. They are not fond of Koreans. In fact, they are not fond of any foreign nationals. Tolerant, yes, fond of, no.
except young blue-eyed blond female models... they can't get enough of 'em
not that i'd question the appeal
The yuan will never become a reserve currency in the next 75+ years for the reasons you outline. The dollar will retain it's reserve currency status just because there are so many dollars out there. It is ironic that running a large account deficit in the US helps to retain the status of a reserve currency for the USD--the liquidity allows any level of monetary velocity.
However... when the dollar loses it's value, then people don't like holding them any more. If the USD continues to fall, there will be a world wide grumble and efforts to go back to the gold standard.
But I predict that the dollar will start to rally in the short term and the Euro will enter a declining phase.
And the dollar over the last 5 years has dropped what ??? Not that much after trillions in bailouts/backstops ....
Shes not doing that bad. And all the new debt/credt/swaps/ going on daily. Everyone is humping her leg Lol'
Any 'foreigner' can walk in to a bank in China and open an account (with opening costs of less than $2), and one which has overseas transfer capability so you can transfer RMB (though there is a daily limit for individuals). But similarly, anyone can pretty much open an account in HK too without toooo many hurdles, buy RMB bonds via the acount, transfer globally etc...so the RMB is making headway.
I think the only practical limits per say (other than the daily limit available for RMB conversion by individuals) are the ones imposed by bankers in countries other than China, not the other way around.
...and you're sitting on dollars and you just happen to need a house, would you buy one or not?
This seems to be a taboo argument (due to the recent housing bubble I think) that I believe has merit. (ag land is often mentioned but seldom a house) A house purchased on credit at a decent rate could be used as a hedge against currency risk in an untouchable account. (ira, 401k, pending inheritance, etc.) It was once commonly accepted wisdom that everyone hedged interest rate and currency risk with some form of real estate but this board currently favors precious metals and other commodities.
Bingo. The value of a house is less in potential capital gains than it is in the utility value/ rent. I have no doubt that home prices will decline further into an environment of rising rates. But the carrying cost of a house with a full mortgage may never be lower. The mortgage itself is a hedge against inflation, and housing is literally the only asset that I can convince myself is not in a bubble (anymore!). Even farmland is scary, I live in the midwest and quality farmland here goes for $10k an acre, yearly cash rents are maybe $400 / acre or 4% return. For comparison, a $130k house might rent closer to $12k / year, or 9% return. A long term leveraged investment in real estate at the best mortgage rates looks like one of the lower risks out there -- however crazy that sounds!
You're right. You have to wait for stasis in declines and the closing of the output gap (rising wages...) to get the best timing. Then people will pay their rent on time, more or less.
The last thing you want is twelve houses renting at a grand per month and everyone late, or worse...
Suddenly, that 4% doesn't sound too bad. You just don't need the hassle.
Er, why are Real Estate prices falling ? Beacuse the locals can't afford the repayments at any interest rate or monertary source? 20% unemployment, 40 million on food stamps and rising. Unemployment benefit extended 3(?) times.
Its not just RE in China that is getting expensive. I work with a Chinese American who goes back to visit family every year. She mentioned that food is getting very expensive. The working class uses a much higher percentage of their income to feed themselves. Wages will have to rise to keep up. The Chinese government is not as in control of the situation as many on this board would make you believe. They are very fearful of social unrest.
Greenshoots now have leaves and lots of polon. So what's the trade morons
So what's the trade[sic] morans[sic]??[sic]
depends who you ask.
wanger likes crAAPL
robo likes victorias secret
i like JNJ (moistly for the KY & FASoline)
moistly (sic)
Was that a Freudian slip buzzsaw?
Ha!
KY makes slipping easier... or didn't you know?
Abandon control of the bankers not the dollar!!! they will just make up a new currency which they will control and all will be the same period. Not gold, not silver not any type of anything that they control. What needs to end for all intents and purposes is them. And more importantly or belief that we need them or that there is no alternative. We are the alternative, the very thought that we need a master is what makes this be. We want someone to blame when things go bad instead of looking at ourselves, it is so easy to call bernanke dumb and buy a TV on credit in the next breath.
I find it strange that more people in the US are not tweaking to the fact that the US does not have a Budget passed for its CURRENT financial year. Almost no one seems to have realized this might be a little problem. All this information available, and yet such a basic operational politico-economic factor has just escaped collective attention?
No one in the media says anything?
No one posts on it?
http://en.wikipedia.org/wiki/2011_United_States_federal_budget
Given this is the mechanism that 'pays' for that tiny gap between falling revenues, rising debt, falling credibility, rising unemployment, and a REAL-GDP per capita that did not actually recover since the 2008 crap-out, you'd think more people would be more than a little bit interested in it.
Apparently they aren't.
Factor in the implications of 'Barry & Co' (Est. 2009) getting their budget-passing-arse handed to them just two weeks ago, with no chance their current budget passing, with less pain than a golf ball-sized kidney stone wedged up your urethra. Just try passing one of those.
Isn't anyone interested that a mere $1.5 trillion (actually ~$2.1 trillion) in poo-tickets for this year's annual spend-a-thon are not coming down the Federal umbilical cord?
That the operational lubricant of the US Govt goes away in only 16 days from now?
Do you think it's a good time for a potential 3 to 4 month budget negociation and standoff huff-'n-puff?
Or are we assuming this is mere formality? That what Barry asks for Barry will get, ya know, because votes don't matter?
I've anticipated this since about mid last year, and finally, here it is, and it's about what I foresaw.
And get this, next year's 2011-12 budget is going to be like pissing out a dodge-ball ... covered in razor blades. The days of budget passing, sans EXTREME ECONO-POLITICAL PAIN, are over. Now you'll get political trench-warfare.
This is the process of the political 'old-normal' dieing.
This is in fact that earlier promised, “Change we need”, you know, the one where; "I promise to halve the budget deficit before the end of my first-term".
What's that? You thought he was bullshiting? Fair enough, but people thought Ben was bullshiting about his helicopter too - he wasn't.
Got it priced-in?
You are quite correct.
I believe we can explain this in the same way we can explain many other "totally un-freaking-believable" aspects of reality today... like the fact nobody has been tried or convicted or gone-to-jail for the most gigantic criminal fraud operating in the history of mankind.
How can so many un-freaking-believables be true?
The answer is "the elephant in the room".
Everyone in DC, and everyone with even one eye slightly open, knows the USA has been 100% completely totally taken over by a criminal cabal. While they continue to "go through the motions" in the meantime, everyone is simply waiting to see when "all hell breaks loose".
Probably most folks are amazed that millions of americans are not running wild in the streets shooting anyone and anything that has anything whatsoever to do with banks, financial institutions and governments.
They all figure something must happen... eventually. After all, this is the "land of the free and home of the brave"... right?
NOT.
The fact is, the game is over... but nobody knows what comes next. In the meantime, the predators-that-be will simply continue their enslavement campaign while everyone wonders "who will fire the first shot".
Quite possibly, nobody ever will.
And that will be the end of all honesty, ethics, liberty, justice and individualism... forever.
That is, unless backbone is not totally extinct.
PS: Backbone is not practiced by keyboard.
Couldn't tell that to Thomas Payne, though. That guy!
I feel you, and quite agree.
I'm an Aussie, so I always feel like I'm speaking out of turn, like at a funeral or something, whenever I post on a predominently US econ-blog, but the fraud and lies just make me sick.
It is an outrage what has happened, and is happening, in the US today. I hope you won't need that gold-and-guns social approach, but the way your fascist police-state has become so afraid of its own shadow, I suspect you may.
All the best friend.
I suspect that we are going to be getting closer to the bottom of this around the next presidential election in 2012. More and more of this jaw-droppig stuff is going mainstream.
The break may actually be from the 911 Truth movement. That is a giant can of worms that opens Pandora's Box for the global banking elite. A full, real investigation would turn up some interesting names.
Hi Orly,
I haven't bought into the whole 911-punked-by-bankers-and-CIA plot.
But the one thing that still really bothers me about it all, it did at the time, and it still does now, and still stinks to high-heaven of insider knowledge, is the supposedly separate parallel issue of the US originated weapon-grade ANTRAX (that the US supposedly no longer weaponized, yet we now know this did come from a US lab, because the TPTB actually admitted it was US weapon-grade anthrax).
So how did this supposed rogue disgruntled mega-death scientist KNOW to send it through the mail, at exactly the ‘right’ time, in parallel with the supposedly unrelated 911 'terrorist' attacks.
This I find EXTREMELY suspicious, and it leads me to conclude that a degree of inside US plotting did in occur. In which case, the TPTB would have known the 911 attacks were coming.
Which then, unfortunately, lends considerable weight to the whole 911 US-plot thesis (which I still find very hard to swallow in total).
But given the incredible other things that have gone on for decades, which many people here know about, about what our respective governments have been getting up to, I can’t rule it out. Even almost 10 years later the 911 ‘attack’ looks suspicious.
And when you combine it with the thoroughly unreasonable and unjustifiable ongoing Govt and military and security reactions, and the destruction of constitutional processes and Justice, and the now weekly propaganda fear-fests (there was another on Wednesday), what we have seen in the USA, and pushed down the throats of all Western States since, the whole evil-plot thesis all hangs together pretty well, in terms of being a plot to implement a generally unrecognized global fascist banker-cartel take-over.
I really can’t deny it, the circumstantial evidence alone, and especially the endless propaganda, is quite compelling evidence of global take-over by (so far) Fascism-Lite.
I do think the US is without question a rapidly-evolving genuine Police State right now though, and that is will do incredible damage to the US, and especially the rest of the world, and it already has.
I no longer buy the now standard Canberra political sound-bite line, that we are fed here, that the US is, "fundamentally a force for good in the World". That simply is not credible. It's kinda like saying Obama should get a pre-emptive major peace-prize, for pre-emptively bombarding the territory of a nuclear-armed state or something.
Who would do it!?
Even more important to notice is the fact that the PatriotAct existed before 911, and that the administration had plans to invade Iraq weeks after Bush was elected the first time.
Or even more obviously, the totally freaking lie that was given at the time of 911 --- that the terrorists hate our liberty, and win if we lose our liberty... after which the entire focus of the government of the USSA is to completely destroy every last vestige of liberty for americans. I mean really! It was not OsamaBinLaden who destroyed our liberty, it was BarackHusseinObama and GeorgeWankerBush and their predator thugs who destroyed our liberty.
This last inconvenient truth alone one proves without any doubt that the terrorists are the government of the USSA.
Though I'm almost certain the government staged 911, it really doesn't matter to assign blame, does it?
Yeap,looks that way from Adelaide. Meanwhile in the Irish quarter white collar banking crime thrives.
Seán FitzPatrick
http://en.wikipedia.org/wiki/Se%C3%A1n_FitzPatrick
Anglo Irish Bank
http://en.wikipedia.org/wiki/Anglo_Irish_Bank
...Some commentary
http://www.youtube.com/watch?v=nQFHgcFlrlw
You mean in Australia, or in Ireland? I'll presume you mean Australia, and I would agree with you 100%.
I would welcome a shooting war showdown. That is the only way to move past the current system. The predators-that-be will certainly not "stand down" or "back off"... what moron would even imagine such a solution given the evidence?
Since americans are so utterly spineless, I have made plans to leave and never return. I will have moved away from the USSA in 5 months. While I would never claim to know how humans from other countries would react to the same kind of predator class takeover that destroyed america, I am very much not optimistic that any country on earth will be a home for honesty, ethics, liberty, justice or individualism for much longer either. I see earth becoming a permanent slave planet, primarily because humans are so utterly clueless, and getting more so by the day.
End fiat.
End fake.
End fraud.
End fiction.
End fantasy.
End fed.
End banks.
End banksters.
End fractional reserve practices.
All humans need to live happy, productive lives:
- gold coins
- gold standard
- other real, physical goods
The "gold standard" is simply a standardized way to identify the [current] exchange rate for every real, physical good [and service]. To determine the exchange rate between the eggs you (and your pet chickens) produce and the lumber you want to trade for, you simple observe the exchange rate between eggs and gold, plus the exchange rate between lumber and gold. This aspect of the gold standard does not require gold, because this is only a computation.
The "gold coins" are the most easy and convenient way to exchange the eggs you produce for the lumber you want. You exchange your eggs for gold with someone who wants your eggs, then you exchange your gold for lumber with someone who has the lumber you want. Simple.
At no point was the "value chain" broken (by substituting any form of paper-receipt or paper-currency or paper-anything). This is absolutely crucial, because the instant any paper substitute for "value" exists, the predators will do what they have always done... create endless schemes to create endless paper at zero cost, and buy up or control the endless real goods in the world for themselves. That plus enslave everyone [by buying politicians].
If ALL fictions are not removed from the "system", the predator class will always and forever rule. They have known this for centuries (at least). This must stop. But it will only stop if we refuse to accept ANY fiat, ANY fake, ANY fraud, ANY fiction, ANY fantasy, ANY form of fractional reserve practices.
An "economy" should be nothing more than humans exchanging real physical goods for real physical goods... gold coins being one of those goods. EVERYTHING else is fiat, fake, fraud, fiction, fantasy... and overt slavery of producers by predators.
I like the practical sentiment, but...
My ISP sends me a bill, I propose to send them gold, they say "gimme plastic, or fuck right off". I say, "but that's just a digital abstraction, I'm offering you something real here!".
I don't think they're going to accept my gold, when their whole apparatus creates and consumes digits.
But I DO want their service. Thus I WILL pay them in digits, because at the end of the day, my eggs come from the supermarket supplier's battery hens, not from the guy just down the road.
So I'm naturally going to, therefore, support the continuance of a system that gets me what I want, in the simplest and fastest way, even if that requires one or more layers of digital abstraction, and 'fiction' to do so.
You have to admit, that's practical also.
Their system, their digital system, relies on gold; it is in their bank vaults. The system, it revolves around gold. FIAT may not be on its standard, but the fractional reserve system would be nothing without gold, the first loan of recourse.
If your (gold-based) bank doesn't practice fractional reserve banking, you still can use plastic or Internet to make that transfer from your account to your ISP's account.
Hey, in an honest gold standard system, nobody would stop you from storing your gold at a warehouse --- call it a "gold bank" if you wish --- and having the warehouse credit some of your gold to someone else.
To be sure, a modest percentage of what people do might be more convenient that way. The key point is... physical gold is exchanged for some real, physical product [or service]. Just because the physical gold didn't move, the ownership of that physical gold did move --- from you to your ISP.
A gold standard is honesty, ethics and liberty. You are free to make any deals with anyone, but NOBODY can run any fractional reserve rackets. Some totally foolproof method would need to be created to assure the warehouses have at least 100% of the physical gold that is credited to customer accounts.
I don’t think I disagree, I just want to point out the 'fiction' of digit trades is also a practical necessity, in a world of so many, who are at least once-removed from the 'primary-industry' level of the real-economy, which is what we used to call it when I was a kid.
We stopped calling it 'primary industries' at exactly the same time the term 'value-adding' showed up. I remember it well. And the value has been actually subtracting ever since (think Monsanto’s crop seeds, and the rest of it).
Lots of humans that are urbanized require more viable ways to transact than physical gold, and that requires abstraction, or ‘fiction’ as you put it. I have no problem with real stuff backing a currency, and I don't mean strictly precious metals, per sec.
I mean things like the USD FIAT being ultimately 'backed' by physical realities like the deepest and most productive soil on earth, and massive natural resource reserves (I’m a geo BTW).
I'm not so sure FIAT is as 'unbacked' as many people talking their book would have us think. Neither the USD nor AUD. They are in fact ‘backed’ by ‘physical’, we can in fact back them with stuff, they are in fact already implicitly backed by said ‘stuff’ others want to buy off us.
The real issue, as I see it, is Sovereign control of the territory, that actually contains that stuff, that others really want to buy or otherwise take, and which you can sustainably sell to them (enviro-wise), because then your currency, whether paper FIAT or even gold itself, is going to be in use and in some state of national and also international demand, due to the inevitable trading of that ‘primary-industries’ stuff.
So the real trick is maintaining USD or AUD ‘backing’ is to be found in maintaining Sovereignty over the tradable stuff’s physical territory – hence borders and all the rest of it.
For the US, that's become very easy (except the US's biggest mortal strategic threat is, paradoxically, now become itself, as JFK clearly established beyond any dispute back in 1962).
For Australia it's much harder, because for one thing, we agreed in 1972 to sign the NPT, under huge US pressure, so despite our fear of the falling-dominos in Asia, and the 'Yellow-Peril' of nuclearized China, and of Indonesia, we were forced by the US into a very dependent Allied relationship. So from 1972 we would now absolutely require a close relationship with at least one nuclear power, so we also kept up close relations with the pretty much useless mother-country (and tried to be nice to the French in the South Pacific, but they proved to be insufferable little pricks much too often).
But in 1999 the existence of 'SILEX', the world's most advanced and efficient laser uranium enrichment process, developed in Aust, and now licensed commercially to GE, was revealed. The US DOE tested it and fount it to be >20 times more efficent than any currently existing isotopic separation technique. It still is.
That largely redressed the Sovereignty issue, because the US now knew we clearly would take it further if Sovereignty were ever questioned (and/or the US was not still 'on-the-beat' in Asia).
Which makes the AUD and economy a 'safer' longer-term bet, in terms of material ‘backing’, in an overpopulated high demand Asian setting, with a rising China.
So I think the 'fiction' of Fiat money and digit trading is not so clear-cut, or a damnable as gold-backing advocates would assert (in my present view ... ‘through a glass-darkly’).
I suspect that notion that FIAT is not real, and not backed, has become over-sold, and over-bought.
First of all, we must not turn our head from blatant facts. One of those is the astronomically greater skills the predator class has today to create and implement scams. They are masters compared to the pikers of yesteryear.
Furthermore, there is exactly ZERO rule of law today. What happens today is whatever the predators-that-be choose. The proof of this is the absolute complete utter lack of any criminal prosecutions of anyone whatsoever in government or large corporations.
Any viable system must recognize these and other very unpleasant facts. Therefore, the ideal system is one in which everyone pays for everything with real, physical gold. Having said that, you correctly point out certain "inconveniences". However, many of these inconveniences are simply due to habituation and the nature of existing corrupt infrastructure.
Ultimately, to have any hope whatsoever to return to honesty, ethics, justice, liberty and individualism requires the "system" inherently have zero ways for the predator class to jigger the system. As we agree, liberty demands that we not prohibit people from developing and employing various kinds of indirect schemes that involve "third party clearing agents" in some form of other.
We introduced one in our conversation above, which acts much like checking accounts today. We seem to agree that some totally foolproof way would need to be developed to prevent the agents from finding ways to simulate fractional reserve practices or overt fraud (as in "keeping gold coated tungsten bars in their vault instead of pure gold").
I'd prefer to invert that scheme, actually. I'd prefer we all pay real, physical gold for all expenses --- yet retain the convenience of the checking account type system we already discussed. How could we do that? Well, assume that every "bill" for products or services "already rendered", or "to be rendered" by any supplier was a standardized bar-code that contains one section to identify the buyer, another section to identify the seller, other sections to identify the date, time, and the specific transaction. You simply take the strip of paper with the bar-code to [just about] any store, give them the appropriate number of gold coins to pay the bill, and they simply swipe it and hand you back the change if necessary.
In this scheme, no centralized location is collecting endless information on you. In fact, nobody even has a way to determine who it was that handed them the gold coins and paid the bill. This is privacy, which everyone should learn to value again. This also eliminates the need for "regular folks" to even have a checking account. Your employer pays you gold coins on payday, and you spend them where and how you wish - with all the convenience of checks and credit cards, but with a great many advantages (evade the predator class).
The problem, of course, is that only someone like a RonPaul on steroids would even consider such systems. But I believe it is still wise to imagine better systems in case we have a chance to replace the current criminal fiat absurdity.
Sorry for the delayed response, been away since Friday;
Yeah, I generally agree with what you say. I listened to an audio talk by G. Edward Griffin recently (The Creature from Jekyll Island) and it’s impossible to deny - we have been duped and ripped by all-time experts, who really know how to. And have been doing it for the best part of a century (at a minimum).
What you sugest reminds me of what Steve Keen said recently (from a Fiat perspective) in a lecture and discussion in the US, in which he emphatically took the position that regulatory arbitrage and political meddling must be engineered out of the system permanently. He put forward a proposal to do that, or else in his view there was no chance of avoiding yet another credit super-cycle and debt-money collapse fraud-wave.
AMI Conference:
http://www.debtdeflation.com/blogs/2010/10/04/jubilee-shares-and-the-american-monetary-act/
If I remember correctly it was within this MP3 Q&A discussion:
http://www.debtdeflation.com/blogs/wp-content/uploads/2010/10/AMI2010PanelDiscussion.mp3
I guess for 99.9% of people who are not seeing/studying the effects directly the idea of abandoning Fiat debt-money is incomprehensible (if they even knew what that was, and how it even worked).
I agree with you on privacy as well, knowledge is power, and the power-hungry use knowledge of us, specifically to sucker us. I haven’t filled out even a national census in 20 years. Last time I did it was all obviously fake info. I now always provide fake personal info, as a rule, as it’s the only way to remain unknown and anon (zh is spot on about anon participation).
If you want to target someone, or something, you need info. So it seems entirely valid in that case, within a predatory commercial world with corrupted Governments endlessly lying, to not provide them useful info, wherever possible.
conversation appreciated - tnx.
esp privacy. i recently heard it called fecebook. classic.
Yes, privacy is extremely important... vastly more important than 99.999% of people care to consider. I figured out the basics of the scam at an incredibly young age (4 years old) based upon my observation that different adults give different answers, so I must learn by first-hand observation and first-hand inference. In retrospect, it is amazing how much difference that one fork-in-the-road made in my life. Except, once we understand the fundamentals, it isn't amazing at all.
I have always avoided the census, and I have never voted. I understood that voting was sanctioning, and thereby aiding, the mafia (government) as long as they were in the business of theft and enslavement.
I listened to the Q&A, and SteveKeen does seem more rational than the others. But they are all elitist meddlers, they all accept "state powers", and it appears none of them are actually willing to totally eliminate all forms of fractional reserve practices. And the idea that humans should be taxed 10% (or any percent) every year to own real estate (after paying for it), is obscene in the extreme.
It was interesting to learn that the inflation of Weimar Germany was caused by a private central bank, just like the current FederalReserve. So much for the justification many people make for needing a private FederalReserve.
I had to laugh at the conversation about "critical thinking". The only people I know who are reasonably capable of "critical thinking" are those who have learned to think critically on their own, by facing reality. I could not hear the previous conversation about poor people in Chile, but it sounded like some economist lived with poor folks in the boonies and found they were far more capable of critical thinking than PhD educated folks. I agree. For all practical purposes 99.999999% of all modern education is deception and propaganda.
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we need to get Henry David Thoreau's 'Civil Disobedience' "translated" for today's audience.
an amazing piece that mirrors your great sentiment.
question the premise
disengage
bravo.
I think people are working on a second edition. ;)
Never heard of it, but definitely sounds like a book I would enjoy.