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Guest Post: Is The World Abandoning The U.S. Economy?
Submitted by Brandon Smith of Alt-Market blog,
Go to any university, any center of equities trade, any meeting place for financial academia, any fiscal think tank, and they will tell you without the slightest hint of doubt in their eyes that the U.S. economy is essential to the survival of the world. To even broach the possibility that the U.S. could be dropped or replaced as the central pillar of trade on the planet is greeted with sneers and even anger. But let’s set aside what we think (or what we assume) we know about the American financial juggernaut and consider the sordid history of the money powerhouse myth.
Germany, especially in the decade leading up to WWI, was an industrial giant, rivaling Britain in the production of raw commodities like steel, as well as the banking envy of the world. I’m sure very few economists of the era would have given any credence to the idea that the German foundation would in the near future collapse into hyperinflationary ruin. However, that is exactly what it did. In the span of 10 to 15 years, Germany was completely supplanted as the shining beacon of economic prosperity, never to return to a similar glory.
The British Empire from WWII up until the late 1950’s was the primary force in the global trade of oil, and the pound-sterling was dominant in the export and import of raw petroleum between nations. Extreme debt obligations and draining interventions in the Middle East set Britain on the path to currency devaluation, and the loss of its coveted reserve status.
The point is, there is no such thing as an invincible economy, especially if it is predicated on overt debt creation, fiat printing, and reckless foreign policy. When it comes down to the raw data, the American system is just as fragile as any corrupt third world shanty-town nation.
The possibility of a U.S. without financial hegemony is very real. To understand that this possibility exists is one thing; to understand that the process of destabilization has already begun is another. Many analysts with their heads stuck in the mainstream clouds attempt to argue against the “theory” of foreign markets decoupling from the U.S., not realizing that their entire debate platform is pointless because the decoupling is happening right under their noses…
The recent press covering the ongoing plan by BRIC nations (or “BRICS” if you count the latest bilateral agreements with South Africa) to establish their own supranational banking hub merely highlights the fact that developing countries are not simply “talking” about decoupling from the United States, they are taking actions to make it happen:
The response from mainstream financial analysts is, of course, that the project for a BRIC bank will fail. Their argument, however, usually revolves around the assumption that this new central bank is designed to “compete” with the IMF, and is a merely an overreaction to the IMF and World Bank’s failure to give developing nations more inclusion in decision making processes. I see no evidence that the BRICS are trying to create a counter-system which would conflict with IMF control. Instead, it would seem that the BRICS are much more interested in forcing the issue of greater inclusion, and garnering greater favor within the already existing IMF structure:
http://www.reuters.com/article/2012/04/19/imf-idUSL2E8FJ90K20120419
Last year the G20 discussed heightened participation by China and the BRICS in the IMF’s global basket currency, the SDR. French Finance Minister and later “elected” IMF chief Christine Lagarde agreed with the idea while stating that certain conditions, including appreciation of the Yuan’s value, would have to take place:
http://www.bbc.co.uk/news/business-12905205
Contrary to the belief that the BRICS are building opposition to the IMF, China has on several occasions called for the EXPANSION of the IMF’s power, as well as widespread circulation of the SDR:
How have the MSM talking heads missed this trend? Simply put: Bias, controlled and pre-written talking points from their editors, as well as many half-baked presumptions. The popular belief amongst financial academia is that the IMF is a product of American economic might, and that the organization will do whatever is in the best interests of the U.S. at all times. The reality is that the IMF is fast becoming the central authority of economic operations around the globe, and America just happens to be paying the largest “tithe” to the respective coffers of the banking syndicate. Do you get more control in the operations of the IRS when you pay more taxes?
The IMF’s goal is world centralization of economic control. For them, any sovereign nation is expendable in pursuit of the end game, including the United States. The IMF would not be pushing the issuance of a new world reserve currency to unseat the dollar if they did not intend to follow through, and they certainly would not hobble the greenback if they cared in the slightest about American economic concerns.
Rather than running counter to the IMF, BRIC partners and the newly realized ASEAN bloc are making themselves indispensible to the globalists, ensuring wider partnership in the near future. A BRIC central bank is, I believe, a bargaining chip to be used to open the door to more leadership in the IMF while reducing American influence. To summarize, the BRICS are not in conflict with the IMF, rather, they are in conflict with the U.S., and this conflict is coming to a climax…
Trade amongst BRIC nations continues to climb while exports to the U.S. have diminished. Between 2001 and 2009, exports and imports between BRICS skyrocketed, even amidst the derivatives collapse:
http://www.bbc.co.uk/news/business-13046521
Last year, ASEAN overtook Japan as China’s third largest trading partner. With the announcement of increased participation by Japan in the ASEAN bloc this year, the economic body looks poised to eclipse the U.S. and perhaps even the EU as China’s primary source of export and import business:
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1197997/1/.html
Meanwhile, overall exports around the world have dropped for five consecutive months in 2012 on slowing demand in the West. The expectation of a massive resurgence in consumer demand from the U.S. has been proven unfounded, while the recession in the EU is exacerbating the downturn. U.S. exporters, who not long ago held dreams of foreign buyers clamoring for goods in the midst of Federal Reserve inflation and dollar devaluation, have discovered that they are instead floundering:
http://www.nytimes.com/2012/10/23/business/global/chinas-slowing-economy-puts-pressure-on-american-exporters.html?pagewanted=all&_r=1&
The mainstream claim is that this is due to a breakdown in general Chinese demand, but with exponential bilateral trade deals (many of which cut out the U.S. dollar completely as a reserve currency) being made between China and major producing and consuming countries, it is clear that this is not just a demand issue in China; it is an ongoing process of removal of the U.S. from the trading picture. That is to say, China is deliberately reducing purchases of U.S. goods and turning towards BRIC and ASEAN partner countries to fill the void. This may be the reason why China recently surpassed the U.S. as the top sanctuary for foreign investment:
http://online.wsj.com/article/SB10001424052970203406404578074683825139320.html?mod=asia_home
A Treasury report on China’s status as a “currency manipulator” already due but now delayed until after the elections may become the catalyst for the final phase of the global shunning of American markets. With China being presented as a primary issue during the presidential debates, it would seem that regardless of who “wins” the election there will be strain applied to Chinese trade relations.
China’s incredible gold buying extravaganzas over the past few years (including an estimated 500 tons in 2011 and another 500 tons so far in 2012) indicate that they are indeed hedging against what they obviously expect will be devaluation in the dollar or multiple currencies around the world including the dollar. India continues its long tradition of gold buying, while Russia is now increasing its reserves by half-a-billion dollars a month. These are the actions of countries getting ready for a break in the financial system, not a recovery, and certainly not a return to the old days of American consumer bliss.
The argument over whether or not the BRICS and the rest of the world can drop the U.S. economy and move onward has, ultimately, been rendered obsolete. Many will claim that a decoupling is impossible, but the fact remains that a decoupling is taking place. The consequences of this fiscal divorce remain to be seen, and the mainstream could very easily predict disaster for the BRICS. The real question they should be asking themselves, though, is which countries are better placed to survive such an event? Is the U.S. economy really built to withstand a loss of the dollar as the world reserve currency? Is the U.S. prepared for plummeting foreign investment and a reduction in its already dismal production capacity (production taking place by Americans on American soil, that is)? Is the U.S. really ready for extreme inflation in imported goods (most of the goods we consume)? Who really needs who more? It is time for the pundits and average Americans alike to set aside their commercialized and subsidized fake patriotism and question how strong our economy truly is. To ignore vast weakness today, is to feel vast pain tomorrow…
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lifeboats Bitchez
If the USD ever loses its reserve status we are roadkill and the rest of the world will pass us by.
When will ZHers shut up about inflation?? Haven't you morons ever heard of inflation linked savings accounts? Am I dealing with a bunch of idiots here??? All you have to do is put your hard-earned savings in an inflation linked account and your interest rate will be set according to the OFFICIAL CPI (inflation) figure. There is literally nothing to complain about. When are doomer libertarians going to admit that inflation is not an issue?? I'm tired of arguing with pea-brained libertarians who don't know anything about economics or current affairs. Just WAKE UP.
Nice trolling there.
The only way to have your savings keep up with inflation would be to get the printing press away from Bernanke and start printing your own
@MDB: Is that denominated in $USD? You settle in $USD?
Of course I denominate in USD. I'm not a silverbug hillbily with stacks of eagles burried in my back yard. Real Americans trust in the US dollar, and believe in the full faith and credit of our elected officials.
Birth, Growth, Maturation, Decline & Death!
@MBD: If you're long a vehicle that undermines the value of the dollar then why the hell do you settle/denominate in a currency that you think will lose value?! Its like being a half-assed moron. Just be a full-blown moron. You should settle the price in a couple of Von Mises seminars.
Real American's should trust the dollar if the American People themselves controlled it. But they don't. Cocksuckers like the Rothschilds and the central banks do. Bernanke is just the figure head. He's a fucking cocksucker too though.
You subscribe to the thought that centralized decisions decides best. That is such an ancient way of thinking. Decisions should be at a People level. Then you would trust it because YOU would have a direct impact. Ultimately the American economy is the People, and The People are out of work, under worked and under paid and really fucking pissed.
Hey, easy on the Rothschilds there buddy!
They made some damn good caramels.
Throw a dog a bone, I see.
First post, meh. This post, caviar.
Keep up the good work.
MDB:
"hillbilly" has four l's
"buried" has one r
and that should be "Real 'mericans"
just saying...
It's all here:
http://www.youtube.com/watch?NR=1&v=zZmMwP5bELE&feature=endscreen
well, at least you're not MaxFischer. I can tolerate the MDB douchery but MF is so far over the line I refuse to even look anymore. 0 entertainment value. If I'm gonna throw up a little in my mouth I better be laughing too.
Hey MDB -About your "interest rate will be set according to the OFFICIAL CPI (inflation) figure."
What if they print the OFFICIAL CPI Figure as Negative? ...Ugh, never mind.
I've got stacks of eagles’ for you right here:
http://bleacherreport.com/articles/595424-juan-castillo-proves-philadelphia-eagles-are-smarter-than-you
"I feel like I'm taking crazy pills!! I invented the piano key necktie. I INVENTED IT! What have you done, Derek??? Nothing!! NOTHING!!!!"
http://www.youtube.com/watch?v=tOrI6uqS-vk&feature=endscreen
"set...to CPI" - MDB
Holy shit, that's some great fucking satire. thanks for the laugh MDB.
But he forgot the </sarc> tag. People are taking him seriously.
Sorry, but his act is wearing thin these days. Not only that, there are plenty of people reading that and believing he is accurate.
You know, like the "there is no inflation" numbskulls that post here all the time.
Call me a numbskull but there cannot be systemic inflation without a concurrent rise in wages. Sorry, it doesn't work that way. They are terrified of deflation and it seems they are losing that battle big time.
:D
I see you are smiling/laughing at yourself now. Are you a ZH sock puppet as well?
Right. Well, when you're standing there with your heavy bags, in a cold drizzle, waiting in that long line at the dealers that wraps around the block, I hope you remember this moment. The guy comes out, the only one who can hold an umbrella, and says, "The price is dropping too rapidly to make a market bid, so I tell you whatamIgonna do..."
Just don't catch cold! Drown your sorrows in your chicken soup!
:D
So, you believe the CPI data then? LOL. That speaks volumes.
You wouldnt know inflation is if it hit you in the fucking face by the looks of it.
And dont worry about me, my gold coins will buy more than chicken soup assclown.
My, what a vulgar little man you are.
Nevertheless, show me the inflation. Food inflation? Commodity futures are being ramped by free money. Doesn't fit the definition of inflation. Priced a house lately? No? Well, no one else has either, but in my neighbourhood, the Realtors are scraping 20% more off the top every fifty days. Sound like inflation to you?
A pound of bacon is cheaper than it was last winter and the price of a loaf of bread has actually declined just a tad. My favourite measure is iceberg lettuce. $1.69 a year ago, now $1.19.
So do you actually shop or do you just like talking smack? So, if you have no proof of inflation in the economy, why don't you reassess your beliefs and stop calling people names? This isn't the playground, you know.
:D
Haha....keep up the good work. Maybe ZH will let you be the next MDB?
Plenty of facts to refute your entire argument (fiat and loss of purchasing power) Not my job to educate you.
And this is Fight Club pussie. Go.Fuck.Yourself
Right again. So no proof, just like talking smack.
Ciao, little man. Have a great day!
:D
Okay Rag Doll. I look forward to beating you like a pinata around here.
Bay of Shit...
Below is cut and pasted a MDB post from yesterday.
I'd say one of his finest in true gallows humour.
And beyond the FUCKING SHITE your pea brain is capable of posting.
"The heated debate in the comments sections is thrilling. This is true democracy in action. Every commenter here has a clear idea of who should get what from politicians and is making a passionate and well thought out case. This is what the democratic spirit is all about. People don’t want to discuss how to create value in the world and trade it for goods and services. Instead every commenter is engaged in passionate debate about who should receive what from the politicians. This is how adults solve social problems in the 21st century.
(Bold by me)
Huh? And what does this have to do with Orly's bullshit?
I never said MDB didnt have some clever and funny posts. I said his "no inflation libertarian goon" schtick was getting old.
Try to stay on point Dukie.
I shop. From my receipt last week:
Wonder Bread, small loaf $2.49
Iceberg Lettuce $1.49
Bacon (store brand) $5.99
Now I don't know where you live, but where I live, prices have gone up substantially in the past year.
I could add 1000 items to that list. She/He is so full of shit. Almost trollish, much like MDB.
Please provide the source of your data, and please be more specific.
Yes, housing prices are going down. Food and energy prices, are however, going up for the American middle class. Oh also, wages are going down too. Thus, Americans feel the squeeze. Less and less income, food, fuel and energy get more and more expensive, no one has any sizeable savings and the value of your home is always less than you think it is.
Bi-flation is probably the more accurate word to use here. Things which middle class people typically hold as assets or as savings have all been devalued or made highly risky investments, while things that middle class people have to consume daily are becoming more expensive. This is actually worse than large scale massive inflation, because at least in that scenario you can take out a bunch of debt and pay it back when your wages go up. Well guess what? This is bi-flation. Your wages don't go up in biflation. They go down, in real terms.
Your statement earlier that there cannot be "there cannot be systemic inflation without a concurrent rise in wages" is simply factually incorrect. You clearly don't understand the history of modern economics. Look up the word 'stagflation'. Stagflation is completely impossible in your model. Yet it happened. This is because your model is wrong.
+1, BOOM!
Man down.
And thus endeth the lesson Orly...maybe go back and check your own "belief sytem"?
In the arguement of whether there is inflation or not - and the CPI is well if you believe the CPI to be correct then I have a bridge to sell you; if housing is going down and food and energy are going up - is that not a case for hyperinflation? Credit based purchases are falling and things people need everyday are rising.... sounds like Germany in the 20's
I am no expert, if I am wrong, tell me why.......
I would be more than happy to do that, Storm. But there is a distinction that must be made and that is between simple inflation and hyperinflation, which are two totally different things.
First, there is inflation and that is not to say that one necessarily begets the other. Inflation is caused by there being too much money chasing to few (or fewer...) goods and services. Inflation depends on the fact that there is still some disposable income to chase the items to purchase, which is why I say that there can be no inflation unless there is wage inflation.
Suppose that the price of wheat goes up for whatever reason, be it a drought or foreign competition or whatever. That means that the price of bread would rise. As long as people could pay it, the price of bread would rise until it reached an equilibrium. There are savings that are being drained, for instance, to pay for it, or you may go to your boss and ask for a raise. As long as there was an abundance of cash to pay for it, the price would rise until people couldn't afford it any more. That is inflation.
What happens is a vicious cycle. You go to your boss and say, hey, I need a raise and there are fourteen people behind you asking the same thing. Your boss has to raise the price of his products in order to compensate for his compensation. It is insipid and overall bad for the economy.
There is no inflation in this country because I have had to take pay cuts in order to keep my job as employers lay off workers. Or, I simply refuse to pay the premium and instead of wheat bread, I eat corn tortillas, which are half the cost. Or, instead of keeping up with the Joneses, I can smell a storm coming, so I start paying down debt from my savings instead of paying the increased cost of goods and services and those payments contribute absolutely zero to upward pressure on goods. Companies and providers then must lower their prices in order to counteract the fact that no one is buying. (My bet is that you have had this same experience lately...) That is a deflationary scenario and is what we are experiencing today in our economy.
Some would argue, inappropriately, that the Fed is printing money and that the money they are giving to the banks will someday be labelled as "too much money chasing too few goods," thus leading to the scenario that I have described. Again, this is not true because the banks aren't putting money to work into the economy; they are putting the money to work in the markets via speculation. That is why oil per barrel is rising. Common sense tells you that when banks buy AAPL at $700/share and are forced to sell at $350/share, there has been no money put to work at all. Instead, all of that credit (which is actual money...not cash...) simply evaporates and does nothing to the price of wheat or having your teeth cleaned. If the credit simply evaporates, there is no upward pressure on prices, no one is getting paid more and all of that money just goes up in smoke. Such is the scenario we find ourselves in today. Now, what happens when banks lose all that money speculating; the money they had hoped to pawn off on mom and pop- again- as losers in the big wheel? Remains to be seen.
Hyperinflation is an entirely different ballgame and is extremely rare in the annals of civlisation. Ask an economic historian to name four times in the history of the world where "hyperinflation" has occurred and she will be stumped to tell you. There are numerical measures of hyperinflation but none that really hit the mark of reality. Hyperinflation is a scenario in which all faith has been lost in the currency and that faith is not coming back.
They will point to the hyperinflation of German currency between the wars and say that is happening here. That is utter hogwash. During the time of the Weimar Republic, for example, all faith had been lost in the currency. The government debts were outrageous and the populace knew that there was no way to pay it back. I mean like 400X the GDP kind of in debt.
What happened was retailers wouldn't take the money for their services or goods because they knew it was absolutely worthless to pay anyone back with. Change was imminent, so why would they accept old currency when there was a new on around the corner? Okay, a wheelbarrow full of it, they would take because it had to be worth something. The price of a loaf of bread was weighed in currency and not taken out of one's pocket. That is absolutely not happening here, nor will it ever.
I hope this clears it up for you.
Thanks for your reply.... I see your point, which only leads to more questions: 1) If the money is stuck on bank balance sheets it slows the velocity of money down to a crawl, which doesnt allow for the dollars to generate taxes in the real world which the government needs desperately and not just here but in EU as well 2) What would happen if China announced tomorrow that they have enough gold to back their currency - even by 50%; would people move away from the dollar and wouldnt that be an attack on the dollars reserve currency status? Without it we would get crushed, agreed? 3) When it cost much more to build than it does to buy and existing structure, whether that is residential or commerical - it deflates a sector of the economy that needs growth to help support the rest - can the government afford to inflate more bubble's without creating a problem for themselves (interest payments on even higher amounts of debt)?
Sorry for the random thoughts. I feel that you are technically and historically correct - but this game has evolved to the point that I am not sure that anyone fully understands the causes and effects of actions in the global economy.
The money (actually, credit...) that is stuck on the balance sheets of the giant banks has done nothing for the velocity of money, thus the money multiplier effect on the economy has stalled. According to Austrian economic theory, there comes a limit at which the velocity of money can increase and ours has hit a brick wall.
The banks, having large deposits of junk on their balance sheets, such as derivatives of derivatives of mortage-backed securities and various insurance policies, such as credit default swaps, have traded that junk for full value (even though it is clear that those instruments are worth nowhere near what is stated...) to the Federal Reserve, which has created credits to trade with the banks- out of "thin air," as the saying goes.
In order to keep the velocity of money moving forward and expanding the economy, the money mulitiplier effect must also be expanding. The money multiplier is simply the ratio of its reserves that banks can lend the money to. For instance, if there were a 10:1 ratio for bank reserve requirements, then then banks can loan out ten times the money that they have in storage. Because of policies of assessing a bank's worth, called mark-to-market, the banks have to assess their holdings regularly and can only loan out this much money times ten, for an axample.
So with MBS and other holdings on bank balance sheets going into the tank and with reserve requirements being held steady, it can be seen that the money multiplier would dwindle rapidly, as it did in 2008. Enter the Fed, which removes the bad investments from the banks, at par value, thus giving the banks the full value of their investments, which makes the multiplier not expand but stay static.
This why there is no inflation and, in fact, why the Federal Reserve is terrified of deflation. It won't be the banks that lose a ton of money, it will be the privately held banks of the Federal Reserve Board that gets their clock cleaned. If the assets that the Fed now holds continue to depreciate, they would lose big-time.
The world does not recognise any gold standard to back fiat currecny, so the fact that the Chinese backed their currency in gold would fall on deaf ears and may actually get a snicker or a sniggle from Dr. Bernanke because he realises that the price of gold will return to its long-term mean, say $180/ounce and the Chinese would be stuck holding a giant bag of nothing. They would then have to "cut" their currency by adding a few zeroes to the reserves, which would lead to massive, massive inflation in the Chinese economy. That is just never going to happen. It is just my conspiracy theory that all of this mess was orchestrated by Alan Greenspan and the Fed beginning in 1993 in order to bring down the Chinese economy. That will happen sooner than later and will happen more swiftly than most people can imagine. Keep your eyes peeled on the Chinese. It's going to get very interesting.
It seems to me that the Fed is not at all interested in blowing more bubbles but trying to keep the one they've got from popping in everyone's faces. Dr. Bernanke simply wants to deflate the bubble without causing harm to the global economy and he's hoping that with a little luck and the resilience of the American economy, we can grow our way out of this mess, as the MBS and other instruments expire. I think he'll be right about that in the end.
Best of luck to you! I hope I've helped clarify things a bit!
:D
I am pretty new to all of this and by no means an expert but I thought of four examples of hyperinflation off the top of my head. So not sure what econonimists you were refeering to, Krugman or the Bernak maybe. Wikipedia, the all knowing (and sometimes wrong) lists 56
https://en.wikipedia.org/wiki/Hyperinflation
But I did enjoy the rest of your post. Thanks
This is nice, plus a hat tip to Tyler, see link below.
US Hyperinflation Is A Myth
SATURDAY, OCTOBER 20, 2012 11:29 PM It's time we do away with the notion behind the incessant flow of stories and warnings about upcoming hyperinflation in the US. It can't and therefore won't happen, at least not for years into the future. It would be a lot more constructive - and necessary - to focus on the reality we see before us than on such a purely mythological tale. Because that's all it is. Bubbles, and yes, that includes credit bubbles, have their own internal dynamics: they MUST pop when they reach critical mass.Trying to prevent the pop, or even increase that mass, is futile. And even though that may be more about physics than about finance, why it is so hard to understand is beyond me. The deleveraging, a.k.a. debt deflation, has hardly begun, and it for now remains largely hidden behind a veil of QEs. That doesn't negate the fact that ultimately QE is powerless to stop it, even as it sure manages to fool a lot of people into thinking it can.
But don't take my word for it. You could start with - even - the IMF saying European banks will need to sell $4.5 trillion in assets through 2013. And then try to explain how that could possibly link to hyperinflation. For now: never mind.
http://theautomaticearth.com/Finance/us-hyperinflation-is-a-myth.html
However, hyperstagflation is not a myth.
Anyone who uses charts to disprove hyperinflation does not understand what it is.
There simply is no metric to measure human faith in the purchasing power of any currency. Why? Well, for one reason, any metric is based on sentiments concerning the underlying system, which itself is subject to the very same changes in sentiment that drive the loss of faith in a currency.
In other words, the metrics will all fail in exactly the same manner as they no longer tell a realistic tale, but rather, merely project the system of the past onto the future.
Any fiat currency can collapse at any time. All it takes is the right amount of activation energy to surpass a critical threshold from which there is no return.
Hyperinflation couldn't happen in Germany either, yet it did, thanks to externalities that couldn't be out into models.
Shadowstats predicts hyperinfaltion by end of 2014:
http://www.silverdoctors.com/shadow-stats-john-williams-feds-qe-to-trigg...
With consumer debt looking like it does, a debt jubilee would be the same as a rise in wages, me thinks...
Now, that would trigger inflation.
:D
I'm wondering if you are Raul Meijer himself or one of his lackey's?
Go spew your trash somewhere else.
How about tied to the inflation in food, Gas, Oh and throw in healthcare inflation, the qouted cost to the insurance company pre "negotiation". Then were talking...Doesn't really matter all arguements like this or moot, that dollar inflation is real for piss poor countries that import commodities using dollar assets or dollars as payment or collateral. Something the Tunnel vision CFR or Mainstream analyst crowd misses.
You've lost your Mojo MDB.
You might have a point, MDB, if the official CPI actually represented the true rate of inflation. Unfortunately, it does not. The true rate has been fluctuating between 6 and 8% while the gov't figures have been stating 1-2%. So, feel free to stick your money in an account that pays 1.5% and while you are receiving that amount in interest you can watch the purchasing power of your dollars lose at least 4%. It is called financial repression. Enjoy.
"inflation is not an issue"
-----------------------------------------
Well, yes, if you don't have to EAT, or use ENERGY in any way.
Bah ha ha ha ha ha!!! Classic trolling today MDB. Nicely done.
Good luck with that. Keep trusting the clowns in Washington. OFFICIAL, my ass!
Two things: 1) the rate of inflation that those accounts are linked to is likely under-reported. And 2) Price inflation is not the same thing as inflation and can be caused by other factors, such as wild speculation in the commodities markets. Your inflation-adjusted savings account will not keep up with #2.
Well, I'm glad I'm not preaching to the choir...
Your troll-fu has improved, MDB.
missed you MDB
all I have seen for days is the cruel satiric persona MD BOGUS...afraid you'd quit the field.
The above article will be moot if the dollar hyperinflates. I do not believe inflation linked accounts will help much when inflation is increasing hourly. They will likely readjust annually.
'If the dollar hyprinflates'
You think there is some doubt then do you?
wow, I can get an CPI-adjusted account? That's MADNESS! sign me up!!!!
Now I can be SURE I only lose 4% to 9% compared to food prices & property taxes, I'll be broke in NO TIME FLAT.
Thanks MDB, you're a real pal.
I'd Buy That For a Dollar
Already in the globalist plans.
Assuming tptb plan is still global, then they'd have this abandoning in sight, no? De-shelling.
And who can say they do not have other tricks up their sleeves? "Nothing is as it seems..." Who said that?
Much of the world has equal or greater debt and currency problems. All headed for the Big Default. We have the people and resources to rebuild. I hope we can root out the corruption an crony capitalism that created this mess. Tea Party on.
Actually, the Dollar losing it reserve status (and ending the petrodollar) would be the best thing that could happen to us.
The dollar, which gave us strengh and power, is now killing us. Lets see how we can compete with the ROW, without the priviledge of King Dollar.
Can't compete. Fat, under-educated, self-entitled slobs make for very poor producers. The credit cards are finished motherfuckers! One advantage is that riding bikes to the factory will burn some of that lard off their asses.
What factories? Between central banks, environmentalists and unions, they're all long gone.
Home based businesses are going to be responsible for most local production, IMO.
Perhaps they'll ride their bikes to the farmer's market?
If the USD ever loses its reserve status...
When, not if.
Never put Gold and Silver in a boat, life or otherwise. It will always end up sinking it.
Same for a private airplane. Never fly with your gold over a lake.
Sucks that I lost it all.. I should have bet on Italian bonds.
Man, yachts are the worst. There I was on Lake Titicaca, minding my own business on a perfectly calm day, when whoosh! All my "ballast" sinks to the bottom of the lake.
I tried my hand at juggling with silver and gold today next to the river. Sadly it all fell in. I don't have diving equipment nor a diving license so I can't retreive it. I'll just buy some Zynga stocks with the money I have left, I heard it is a really good deal and I love playing Mafia Wars: The Wall Street Edition. :D
With quantative easing, are central bankers going to buy all the virgins in the world?
Now you know it has become an http://www.udderworld.com where we are all milking each other for printed money, globally
They should try their hands at "martyrdom operations" instead of currency debasement. Allah promises 72 virgins which is more than they can get at New York strip clubs.
In other news, we are completely fucked.
LOL..."economy".
See: Fed.
Could it be another cog in the wheel to bring about the demise of the Chinese without firing a shot? Allow them to buy metals at super-inflated prices, then dump the whole kit-and-kaboodle right in their laps?
Already doing it with US Treasuries, so the idea is probably not far off the mark.
:D
With all due respect, who says metals are super-inflated? CNBC? The Fed?
China knows that gold is riggedhttp://www.marketwatch.com/story/china-knows-that-gold-is-rigged-2012-10...
Pay no attention to the deflationist anti goldtards here. They must have come over form Mish's board by mistake.
Today's gold price ($1,700) in 1980 dollars is $605 an ounce, roughly 30% off 1980's high of $850--how is an item that's 30% off its all-time high "super-inflated"? It's even better with silver: Today's silver price ($32) equates to about $11 in 1980 dollars, which is 78% below the $50/oz. all-time high set that year! Super-inflated metal prices??? LOLOLOLOLOLOL...
It is not enough for a newer capital to displace an existing dominant capital simply by growing faster. It must win that place at the top against the old capital. Britain and Germany were displaced by a global holocaust, not American efficiency.
Charley, you're an astute judge of situations, both real and pretentious. I appreciate that.
:D
The US economy is essential to the greedy rat faced middle-men that are selling their country out through a series and ongoing treasonous acts and they would like you to think that the US economy is essential to the rest of the world. We have it all here in the US and if a closed economic loop within the borders can be re-established and the globalists kicked out of the country and the banksters imprisoned we would have a bitchen place to live in. Arrest the import/export dudes. Redistribute Wallmart's and Staple's stolen wealth.
I gave you a down arrow but I'll tell you why. I too believe our country has been sold out but it was sold out by our politicians. They did this with unfair trade agreements, i.e., clinton (btw hitlary was on Walmarts board) w/Nafta, obama w/KORUS and the NAFTA of the Pacific. You sound like Hitler (or obama for that matter re the redistribution) with the Arrest all the people statement. Why should they be arrested? They played within the rules that were set up by our politicians. Vote them out or try to change the system so that Free Trade is actually Fair Trade but calling for the imprisonment and redistribution is a slippery slope to Fascism.
Wal-Mart heir funding Obama big time
http://washingtonexaminer.com/wal-mart-boss-sam-walton-funding-obama-big-time/article/2511391
Obama Trade Document Leaked, Revealing New Corporate Powers And Broken Campaign Promises
http://www.huffingtonpost.com/2012/06/13/obama-trade-document-leak_n_1592593.html
German Fascism
http://www.spartacus.schoolnet.co.uk/GERfascist.htm
I will gladly pay you last Tuesday.
Only thing that stops the Fed and US government from destroying everything is for the US to loose it's reserve currency status.
The way to take down the US is not militarily, it's economically.
--------------------------------------------------------------------------
1.) Get the US deeply in debt - done and getting much further in debt.
The further the US gets unto debt the more they must cut the military (Will occur after the election).
2.) Take away strategic industries - almost completlely outsourced. Germany never allowed this to occur.
3.) Socialize the US, more towards Europe (FRance). (46 million on food stamps, free cell phones, Section 8, etc...)
4.) Give the US youth no perpose (Banksters load the youth with school debt and let them all compete for meager wages). - Occuring
5.) Dumb-down the citizens via the media. - Done.
6.) Light the fuse.
7.) Police State
Agree with most; disagree with some, but definitely not your junker. As to cutting the military, we may see some lip service and token cuts, but as things deteriorate, we're going to need scapegoats in order to justify resource grabs. That requires a military to enforce. In addition, there's a whole lot of lobbying by MIC companies, and they expect their pet politicians to deliver. Other things will be cut first.
It's not just external either. EVERYONE I know is stocking up on food, weapons, survival stuff....
I'm sure there are large numbers of people who are clueless, but the numbers of people getting ready climbs a little every day.
I'm getting the fat Gain lady (ad) with a flower in her hair who looks like she is running to get me instead of the cameltoe chick. Time to clear my cookies.
Please evacuate the sofa bears with expediency.
I lost the cameltoe chick too. Probably how I noticed there's a comment section.
http://www.marketwatch.com/story/us-gdp-view-cut-to-17-after-durables-data-2012-10-25?link=MW_home_latest_news
MARKET SHOCK IS COMING: 90% Of Corporate Forecasts See Results Below Wall Street Consensus And A Massive Estimates Cut Across the Board Imminent!! http://investmentwatchblog.com/market-shock-is-coming-90-of-corporate-forecasts-see-results-below-wall-street-consensus-a-massive-estimates-cut-across-the-board-imminent/Empires always fall, usually for the same reason - power is spread too thin and maintaining it costs too much...
...or primitive space teady bears blow up your shield generator - that can happen too.
Can it happen? Yes. When I was in Europe in 1973 no-one would accept dollars in payment. You had to exchange your bills in a bank and pay in local currencies. It wasn't a catastrophe but it was really humbling to have your money rejected by cab drivers, waitresses, and tour guides. It will happen again.
Do you accept payment in Euros when you are back here in the U.S., dumbshit?
He mentioned 1973. I was ten years old and the Euro was but a dream in the globalists' agenda. I would imagine that the Italians would take dollars and American cigarettes over lira back then but there must have been some penalty for it, so the practiced was stopped.
That would be a guess, of course.
Orly, do you have any facts supporting this meme about the EUR being "a dream in the globalist agenda"?
As far as I can see it's the SDR that is being pushed as as a global "replacement" for the Dollar by the BRICS.
As far as I can see the EUR has a regional scope. Nevertheless it's defensive and reactive in it's design and current course.
Of course I'm still unused to this new US-English word "globalist", pls explain how you do define it.
Well, there is really no "mainstream" proof of record as to the globalists' creation of the Euro, as their main agenda is always performed behind the scenes and in secret. That makes me a kook, you see.
A globalist is a person who works toward the idea that all global power should emanate from a central government to dictate what happens to the resources of the planet. These ideas are well-known and can be Binged for much further clarification that I can give here.
For instance, find the ties between Prescott Bush, George Bush (W and HW...), Henry Kissinger, Richard Nixon and Zbigniew Bzrzenski. Claude vanRumpuy and Tony Blair, Bill Clinton and Al Gore, Condy Rice and Larry Silverstein and the list goes on and on. Once you begin to piece these things together, they become much less of some kooky conspiracy theory and seem to make much more sense vis-a-vis the things we see happening today.
Pipelineistan, the Taliban, Al-Qaeda, Mohammad binLaden, Alan Greenspan, Ben Bernanke... Just look it up and try to piece it together in your head. You'll fairly quickly come to see what I mean. Don Rumsfeld, Dick Cheney, Paul Wolfowitz...
:D
so you are finding ties between a lot of Americans, a few Britons and a very few "others" (mainly Belgium). No Chinese, no Russians, no Brazilians, no Indians? No "rest of the europeans"? No "all the others"?
Did any of them really ever talk about changing the current system? As far as I know they are doing fine with the current World Order.
Euros are not now and never have been the reserve currency. It does make a difference.
Most of the American economy revolves around shuffling paper around of some sorts and making a living skimming a little portion off af every dollar in circulation. The rest revolves around servicing those people who produce nothing. Whether it be in food service, hotels..or any other service job. Our productive capabilities have all been shipped overseas , so we have nothing to offer the world but we consume most everything. That is fine for a while,until the nations that produce what we used to accumulate some wealth and start to desire those items that they are making for us. It doesn't take long before they start asking themselves "what the hell do we need America for agaïn"?
Does it matter? Is there another currency on earth backed by something fucking real?
So fucking what, all economies are local, always have been. Let the decentralizing resume (something central banks all over the world are fighting, yes, even in China - you know, that centrally-planned, state-run society). To all these fuckers, deflation and decentralization, independence, and liberty are bad.
The whole fucking world is tired of paper promises. Period, full stop, don't think beyond that simple conclusion.
Stupid bloody sheep.
#this
Why try to rob a gambling addict when you can just ante him off?
REVIEW on Lew Rockwell today: Economist John Williams says the latest round of “open-ended” QE has set the table for a global “dollar sell-off” and “hyperinflation” no later than 2014. Williams says, “There’s no way the consumer can fuel the economic recovery, and there is no way we’re going to see one in the near future.” Williams predicts, “The Treasury is going to have funding problems, and that means the deficit gets a lot worse.”
Now, there is talk the Fed might increase the money printing. Williams charges, “The Fed’s primary concern is to keep the banking system afloat, and they’re not doing so well with that.” Williams contends there is 12 trillion in liquid dollar assets held outside the U.S. Williams says it is only a matter of time before all the Fed money printing will “trigger a sell-off . . . and that will provide the early start of the hyperinflation.” You think the U.S. is better off today than it was in the last meltdown? Not according to Williams, he thinks, “. . . things have gotten a lot worse.” Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.
http://lewrockwell.com/orig13/hunter-greg3.1.1.html
You took the link right out of my mouth JR. It's incredible that the post makes absolutely no mention of the fact that on September 6, China offered the yuan/renminbi as international settlement for trade and most signifcantly for oil. Russia followed suit a few days later offering China unlimited access to its oil again in renminbi. Apparently China is making the same arrangements with Iran offering settlement in gold and with several other Middle East nations along with African banks for exports in Chinese paper. With several trillion dollars already in the pipeleine flooding back to the US and hyperinflation inevitable in six to eight months I guess that superpatriot BS is more than a little bit behind the curve here.
Where's that dang Rickards video from yesterday?
Edit: http://www.youtube.com/watch?v=kdPkaCTdxBU hat tip to user vast-dom
There's a couple of omissions in the article-
Germany went down the crapper after World War I because of World War I's extremely high human and financial cost, and related reparations payments extracted by France. By 1925, under the "Dawes Plan", the U.S. was basically giving Germany the money, through soft loans, to pay these, so the worst of the hyperinflation from the 1921-1923 period ended, but the damage (destruction of the accumulated wealth of the German middle class) had been done.
Britain's preeminent economic position was essentially ended by World War I as well. There was an interim period (1919-1939) where the leading role of the U.S. and the end of U.K. dominance were still in flux, but by 1941, the U.K. was relying on U.S. loans to maintain its war effort, and it was clear who was the junior economic partner. The U.K. after WWII was rationing food in a desperate effort to keep its imports from the U.S. down, to avoid falling futher into a current account deficit with the U.S.
China is a real contender, but the idea that India or Brazil will go toe-to-toe with the U.S. geopolitically is laughable. India and Brazil want to do the Japan-Korea trip-- free-ride on the U.S. security umbrella and fiat currency franchise as long as possible. I wouldn't be too unhappy if Call Center Babu stopped taking U.S. $, that would be progess.
Follow the oil. That is where the US $ has its power, and where its power would be challenged.
...The IMF’s goal is world centralization of economic control. For them, any sovereign nation is expendable in pursuit of the end game, including the United States. The IMF would not be pushing the issuance of a new world reserve currency to unseat the dollar if they did not intend to follow through, and they certainly would not hobble the greenback if they cared in the slightest about American economic concerns....
What this does not say is that the US oligarchy construct has, on the private sector side, taken over the world resources and already built their own global model. Its now in place!
This was the aim of Reagan and Thatcher doctrine : get out from under the nation-state welfare construct gun and free the US/UK oligarchy entrepreneurs to take over the world, its resources, its money line and control it with the 2 core countrys' MIC. Mission accomplished seemingly when USSR collapsed and Saddam demolished.
Now to get out from under the gun of US nation-state democracy, they have to move the surrogate political structure from DC to offshore new-DC; some place which is in the cloud world of new political Olympus, run by bureaucrats like the IMF who know what is best.
And they had achieved it very well, until the greed spilt over... Oh, the shame of it...Now its battleship Titianic! But never say die, these Oligarchs plod on inspite of the debt cloud and the internal rumblings beneath. They have no other choice!
The transition can now begin from Washington DC to some new shangrila that reflects the Caymanista reality of the off shored money line. That way, Bloefeld of NWO, whoever he be, whatever his origin, will have no attaches to the nation-state world, which can burn for all he cares. He will have done what neither Nero nor Constantine achieved : he will have transferred the political power of the world elite to some new SAFE shangrila. GAme over, or so they had dreamed of. In their networked world of Davos, successor to Trilateral and Bilderburg on a more international basis.
Our money, our power, our outsourced industry and our soon to be droned MIC and star warred electronic repression and surveillance network, all subcontracted out to US today, and maybe Blackwater tomorrow, will allow us to build our own thousand year Reich that bows to no country.
To be part of us you just have to be totally elitist by instinct, married to power and riches, and then you are one of us.
Hoist up the Jolly Roger! Under all flags, we own the sheeple world. Nice elitist dream but will it work?
When thieves fall out...human nature is the ONE cog that no empire can provide for.
United in victory, dire enemies in troubled times. The horse shoe which lost the battle and the war!
Looks like the heart of the construct, the Jerusalem of the financial jewel of USD hegemony is now in doubt. Oh, the shame of it all, will it give out?
Sounds like Fiji is the place to be:
http://www.imf.org/external/region/pis/rr/index.htm
:D
Cutting out the US can only be bad for the world in some way or another.
Yeah, and we're PART OF THE WORLD, remember?
Since you want to be snarky:
The part of the world outside of the United States would suffer.
And so would the U.S.! That's my point....
Where does our monetary danger originate: IMF or FED?
It’s the FED. Eliminate the IMF and you still have the problem; the IMF is an arm of the FED; they are one.
The central source of this world crisis is the private owners of the Federal Reserve now running things after Congress illegally transferred its right to coin money to the Fed. IOW, the problem is not who, it’s what.
Fed historian G. Edward Griffin defined the problem: “The Federal Reserve is the starting point of the pessimistic scenario. The chain of events begins with fiat money created by a central bank, which leads to government debt, which causes inflation, which destroys the economy, which impoverishes the people, which provides an excuse for increasing government power, which is an on-going process culminating in totalitarianism.
“Eliminate the Federal Reserve from this equation, and the pessimistic scenario ceases to exist. That is the…reason to abolish the Fed: It is an instrument of totalitarianism.”
Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain gave this warning in the 1927: “
“Bankers own the earth. Take it away from them but leave them the power to create money, and with a flick a pen, they will create enough money to buy it back again… But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.”
When Americans lost their prerogative to control their own medium of exchange and to set the value thereof to a super-national cabal of globalist central bankers who could print free money for themselves for which the rest of mankind must toil or trade assets they forged the chains that now bind them.
America lost her freedom to the bankers; elminate the FED, downsize, and rebuild from the ashes of American liberty is America's, is freeman's, only hope.
"Extreme debt obligations and draining interventions in the Middle East set Britain on the path to currency devaluation, and the loss of its coveted reserve status."
Sound familiar?
pUT YOUR FINGER IN A GLASS OF WATER AND THE SPACE IT FILLS IS THE U S ECONOMY. NOW REMOVE YOUR FINGER FROM THE GLASS OF WATER AND YOU CANT TELL WHAT HAPPENED TO THE SPACE IT OCCUPIED
THIS IS HOW QUICKLY THE WORLD WILL ADJUST TO A U S COLLAPSE. ITS JUST ANOPPORTUNITY FOR DEVELOPING NATIONS TO EXPAND THEIR ECONOMY
Not only is the U.S. not essential to the world's economy, but much of the world would actually do better without it (after bouts of starvation caused by the end of subsidized agricultural exports).
All powers throughout history say the exact same thing: either we stay in power forever, and everybody is our slave forever, or the world comes to an end.
They have all been proven wrong.
With the USA producing few goods, Monsanto poisoning the land, constant idiotic wars of aggression, CIA running around causing trouble, 2 imbeciles running for president, flooding the world with its BD money, and the USA using up 25% of the world's energy while piling up the greatest debt obligation the world has ever seen, does anyone believe the world doesn't wish the USA would go away????
If U reversed the situation between the Chinese and America, what Americans wouldn't want to see China collapse?
Not exactly... they're abandoning the Federal Reserve Note (the BRICs already have the network in place to trade directly without FED and BIS tyrrany). Also, much of the outside world wants it's decades and centuries of stolen gold back and had placed multi-trillion dollar liens of the FED, BIS, and other major central banks...
http://www.scribd.com/fullscreen/93544415/LIEN-Affidavit-Against-Bank-of-International-Settlements-BIS-05-14-12
http://www.scribd.com/fullscreen/93551732/LIEN-Affidavit-Against-Japan-Central-Bank
http://www.scribd.com/fullscreen/93549901/LIEN-Affidavit-Against-Federal-Reserve-The-Fed
http://www.scribd.com/fullscreen/93545192/LIEN-Affidavit-Against-European-Central-Bank-ECB
Mainstream economics follows normative bias. It assumes what seems to be new the norm will be the norm.
For example rising home prices for past time period of decades, which is long term, they expect home prices to rise forever. It goes back to methodology & put into mainstream by Keynes, then solidafied by Milton Friedman. They can only see things they are significantly visible infront of them, or things that catches their eye.
Since the world has not decoupled from the US completely, there will be no decouplement. Mainstream method is basically like a news reporter reporting what is already evident. It does not really try to explain causes with all things being accountable. This is why "mainstream economics" misses a lot of things, & really gives the field of economics a bad name. There is very little explanation in mainstream economics. They cannot coherently explain with logic why decoupling is impossible. I mean really, decouple from pieces of paper called US dollars, and digital money? Reason being? Most of their focus is exerted on the present, or near present versus the future. They disregard everything else that is not relevant, and assumes them to be fixed for the relevant period while they focus on the relevant data exclusively without considering also the future, or other data.
For example the Federal Reserve always has the focus of fighting deflation by creating inflation, without acknowledging that inflation today can cause deflation in the future. The Federal Reserve in the quest for stability asks linear questions like is little inflation good? How about a little deflation? No, the federal reerve only prescribes inflation most of the time, only when inflation becomes a political problem cough Jimmy Carter/Paul Volcker. See central planners can't plan the economy. Alan Greenspan thought he had a good thing going, everytime there was a crisis in the world, just lower interest rates to create inflation. Eventually we are now at 0% interest rates, even still, there is some economist ::cough:: alchemist who say interest rates are not low enough, so let's have - negative nominal interest rates with no consideration to savings despite having no coherent logical theory that explains the phenomenon of interest in a economy.
Nice analysis.
And as has been seen, once all profit has been pulled forward and debt becomes the new profit, only lower interest rates can bring new profits.
So what happens when interest rates are zero, or in fact negative?
I guess we're about to find out.
:D