8% of dollars outside of US? LOL there is at least 600 TRILLION dollars outside of US right now. All commodities and most exterrnal debts of all countries are USD denominated.
@pat52010 We should know soon enough if it's going to be a double dip. I've been hoping we might get a little traction, but it's not looking that way. I think we need to shed a bunch more debt before a true recovery can begin.
Now is the time to imagine new ways to store and represent value. We need an alternative to "money". Here's a start. Value exchange documents created by each state, or city even trusted company or individual. These documents could be administered by individuals elected or appointed by citizens from their location. All information should be public, instant, and fully transparent. What is needed is more choice not less. Who wants FRNs or gold? Sheep. Time to think big.
@lblmer Well it's certainly an intriguing idea. How about doing a video reply and fleshing it out some. I'll also link to it in my next video. Thanks for posting! Regards, John
Time will only tell and you make a good point. We have to remember also that the only thing backing our currency is CONfidence. Once confidence in our currency deteriorates, inflation can rear its ugly head in a big way regardless of people being neck-deep in debt. As long as people put their faith in the greenback though your conclusion could be correct. We are in uncharted waters my friend.
@nomoreserfs You get the point regarding CONfidence. I think most don't. We are truly in uncharted waters. And like generations of mariners, we find ourselves asking "what lurks beneath". Best to temper our imaginations I think, save we develop a nervous condition!
I think we have set ourselves up for a decade of no or little growth. The powers that be will do everything to prevent high rates on the trillions they have to roll over. We know what will happen if rate rise. But they also know the public is nearly tapped out from a credit standpoint. I guess I will just have to sit back and watch it play out, while keeping my own house in order.
@TajiTJ I concur with your observations. Rising rates will not only increase the cost of servicing existing (short term) debts, but most likely will discourage new borrowing (at least in the private sector) as well. The pressing question is: can we prevent the current systemic debt load from collapsing (mass defaults/ forced liquidations)? There seems to be broad agreement that deflation, once underway, is a vicious beast to fight.
The FED is printing money like crazy. Most of the national debt is monetized by the FED buying the bonds from "private" investors shortly after they acquire them.
M3 is decreasing because people are running away from the US dollar, taking their money out of the bank and buying real assets instead. This would only lead to deflation if banks were allowed to fail when they face a bank run. But they're not. The FED will crank up the printing presses even more to save most banks from failure.
@zuiprax During The Great Depression most banks went bankrupt because the FED couldn't print massive amounts of money to save them.
As for your analysis of most US dollars being used abroad, you're completely right. And if the people inside the US are worried about the value of the dollar, how long do you think it will take for foreigners to pick up the pace? Remember, US citizens are forced by legal tender laws to use US dollars to conduct all transactions of exchange. Foreigners are not.
@zuiprax The more the FED prints, the more US dollars will go down, and the more they go down, the more individuals and companies in foreign countries will have an incentive to get rid of them.
For foreign governments and central banks, it may be different different. Being that US dollars are a world currency, and that the FED can print as much as they want, it wouldn't be a stretch to propose that the FED can buy most of the politicians world-wide.
@watcherjohnny "The FED can print all they like, but how does it find its way into the hands of the broad population?"
Oh it has many ways. But essentially once it's exited the FED it will eventually get spent one way or another. The FED can buy assets with printed money, more importantly it can buy treasury bonds from all countries in the world including the US.
It can also "loan" money to commercial banks at 0% interest rate, which is lower than the inflation rate and thus is free money.
@zuiprax I'm glad you're thinking about the concept of legal tender laws. It's an important concept in this discussion. I think you should do a video on the subject and post it as a reply.
@watcherjohnny I talked a little about legal tender laws in my "what is money?" video. I'm trying to keep the number of vids I make to a minimum since I made that one, I want to explain a lot of concepts that are hard to understand. But I have to understand them really well first so I can make the most concise and easy to understand explanation I can.
@watcherjohnny "Is M3 "decreasing because people are running away from the US dollar"? "
Right, because they take the money out of the bank and purchase something, so the bank has to recall the loans it's made with that money and so M3 contracts. But that's not necessarily a sign that we will see deflation.
It would be if we could believe that the FED won't print up massive amounts of money to bailout all the banks and prevent bank runs.
@watcherjohnny but from what we've seen in the past, especially recently, they will print and print and print to accomodate government spending and to bailout all banks (well, more like type and type, as nowadays most money is electronic).
@watcherjohnny I would also like to add that, for now, what has been happening to keep the dollar from losing too much value vs other currencies is that mostly all central banks have also been printing a lot, to stay close to the US dollar. Because of this we're seeing world-wide high inflation.
The question is whether this trend will continue or whether other countries will stop following the FED and tighten up their monetary policies. If that happens, it's bye-bye for the US dollar.
@watcherjohnny I was wondering the same thing. The money isn't being lent out. It is sitting "sterile" to make the banksters balance sheets look good. Once that money gets lent out with the fractional reserve banking system, look out!
@nomoreserfs It seems the current problem is that qualified borrowers are not interested in taking on debt, and everyone else is already neck-deep in debt and CAN'T afford to take-on any more. I'm thinking price inflation will not be a problem for some time to come.
@nomoreserfs I've heard they're sitting on that money for the next wave of foreclosures, when the real mortage crisis hits. I.E. Option arms and Alt-A mortgages. The nice intro rates those people are getting under those terms are supposed to be good but when the real rates kick in lookout. It's supposed to be worse than sub-prime. They have so many schemes these days to cook the books. I heard the NY Fed was going to start counting people underwater as renters. Schemes undreamed of.
@curiouschem One would think it would have a simulative effect on the economy. The question is: would a wholesale repatriation of dollars be enough to create price inflation in the US?
@watcherjohnny no, a repatriation of dollars would have to be thrown out of helicopters hovering over major cities in order to have an "inflation" affect. Dollars in that amount are transferred electronically and become digital dollars, but could have the same inflation affect if transferred to, say, 100 million entitlement recipients as a cost of living adjustment or as a "economic collapse" bonus.
@TheModernMystic It's almost strange enough to qualify as one of those urban legend stories, isn't it? - (..."stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet"...).
And then there is irony - ("But don't bother trying to steal them [the bonds]; they're nonnegotiable, which means they are worthless on the open market").
there has been a lot of talk about removing the USD as the international reserve, that would bring all that 80% back to the USA real quick....
renowolfgang 1 year ago
8% of dollars outside of US? LOL there is at least 600 TRILLION dollars outside of US right now. All commodities and most exterrnal debts of all countries are USD denominated.
quadcatfly 1 year ago
@quadcatfly You misunderstood (sorry, but sometimes I don't speak as clearly as I should). I said 80%.
watcherjohnny 1 year ago
Maybe we should call it what it really is; A double-dip Depression!! And the derivatives scam continues on!!
pat52010 1 year ago
@pat52010 We should know soon enough if it's going to be a double dip. I've been hoping we might get a little traction, but it's not looking that way. I think we need to shed a bunch more debt before a true recovery can begin.
watcherjohnny 1 year ago
Now is the time to imagine new ways to store and represent value. We need an alternative to "money". Here's a start. Value exchange documents created by each state, or city even trusted company or individual. These documents could be administered by individuals elected or appointed by citizens from their location. All information should be public, instant, and fully transparent. What is needed is more choice not less. Who wants FRNs or gold? Sheep. Time to think big.
lblmer 1 year ago
@lblmer Well it's certainly an intriguing idea. How about doing a video reply and fleshing it out some. I'll also link to it in my next video. Thanks for posting! Regards, John
watcherjohnny 1 year ago
Time will only tell and you make a good point. We have to remember also that the only thing backing our currency is CONfidence. Once confidence in our currency deteriorates, inflation can rear its ugly head in a big way regardless of people being neck-deep in debt. As long as people put their faith in the greenback though your conclusion could be correct. We are in uncharted waters my friend.
nomoreserfs 1 year ago
@nomoreserfs You get the point regarding CONfidence. I think most don't. We are truly in uncharted waters. And like generations of mariners, we find ourselves asking "what lurks beneath". Best to temper our imaginations I think, save we develop a nervous condition!
watcherjohnny 1 year ago
Johnny,
You may be interested in this article that just came out a few hours ago by austrian economist Frank Shostak on deflation in the US.
mises (DOT) org/daily/4480
zuiprax 1 year ago
I think we have set ourselves up for a decade of no or little growth. The powers that be will do everything to prevent high rates on the trillions they have to roll over. We know what will happen if rate rise. But they also know the public is nearly tapped out from a credit standpoint. I guess I will just have to sit back and watch it play out, while keeping my own house in order.
TajiTJ 1 year ago
@TajiTJ I concur with your observations. Rising rates will not only increase the cost of servicing existing (short term) debts, but most likely will discourage new borrowing (at least in the private sector) as well. The pressing question is: can we prevent the current systemic debt load from collapsing (mass defaults/ forced liquidations)? There seems to be broad agreement that deflation, once underway, is a vicious beast to fight.
watcherjohnny 1 year ago
The FED is printing money like crazy. Most of the national debt is monetized by the FED buying the bonds from "private" investors shortly after they acquire them.
M3 is decreasing because people are running away from the US dollar, taking their money out of the bank and buying real assets instead. This would only lead to deflation if banks were allowed to fail when they face a bank run. But they're not. The FED will crank up the printing presses even more to save most banks from failure.
zuiprax 1 year ago
@zuiprax During The Great Depression most banks went bankrupt because the FED couldn't print massive amounts of money to save them.
As for your analysis of most US dollars being used abroad, you're completely right. And if the people inside the US are worried about the value of the dollar, how long do you think it will take for foreigners to pick up the pace? Remember, US citizens are forced by legal tender laws to use US dollars to conduct all transactions of exchange. Foreigners are not.
zuiprax 1 year ago
@zuiprax The more the FED prints, the more US dollars will go down, and the more they go down, the more individuals and companies in foreign countries will have an incentive to get rid of them.
For foreign governments and central banks, it may be different different. Being that US dollars are a world currency, and that the FED can print as much as they want, it wouldn't be a stretch to propose that the FED can buy most of the politicians world-wide.
zuiprax 1 year ago
@zuiprax The FED can print all they like, but how does it find its way into the hands of the broad population?
watcherjohnny 1 year ago
@watcherjohnny "The FED can print all they like, but how does it find its way into the hands of the broad population?"
Oh it has many ways. But essentially once it's exited the FED it will eventually get spent one way or another. The FED can buy assets with printed money, more importantly it can buy treasury bonds from all countries in the world including the US.
It can also "loan" money to commercial banks at 0% interest rate, which is lower than the inflation rate and thus is free money.
zuiprax 1 year ago
@zuiprax I'm glad you're thinking about the concept of legal tender laws. It's an important concept in this discussion. I think you should do a video on the subject and post it as a reply.
watcherjohnny 1 year ago
@watcherjohnny I talked a little about legal tender laws in my "what is money?" video. I'm trying to keep the number of vids I make to a minimum since I made that one, I want to explain a lot of concepts that are hard to understand. But I have to understand them really well first so I can make the most concise and easy to understand explanation I can.
zuiprax 1 year ago
@zuiprax Is M3 "decreasing because people are running away from the US dollar"?
watcherjohnny 1 year ago
@watcherjohnny "Is M3 "decreasing because people are running away from the US dollar"? "
Right, because they take the money out of the bank and purchase something, so the bank has to recall the loans it's made with that money and so M3 contracts. But that's not necessarily a sign that we will see deflation.
It would be if we could believe that the FED won't print up massive amounts of money to bailout all the banks and prevent bank runs.
zuiprax 1 year ago
@watcherjohnny but from what we've seen in the past, especially recently, they will print and print and print to accomodate government spending and to bailout all banks (well, more like type and type, as nowadays most money is electronic).
zuiprax 1 year ago
@watcherjohnny I would also like to add that, for now, what has been happening to keep the dollar from losing too much value vs other currencies is that mostly all central banks have also been printing a lot, to stay close to the US dollar. Because of this we're seeing world-wide high inflation.
The question is whether this trend will continue or whether other countries will stop following the FED and tighten up their monetary policies. If that happens, it's bye-bye for the US dollar.
zuiprax 1 year ago
@watcherjohnny I was wondering the same thing. The money isn't being lent out. It is sitting "sterile" to make the banksters balance sheets look good. Once that money gets lent out with the fractional reserve banking system, look out!
nomoreserfs 1 year ago
@nomoreserfs It seems the current problem is that qualified borrowers are not interested in taking on debt, and everyone else is already neck-deep in debt and CAN'T afford to take-on any more. I'm thinking price inflation will not be a problem for some time to come.
watcherjohnny 1 year ago
@nomoreserfs I've heard they're sitting on that money for the next wave of foreclosures, when the real mortage crisis hits. I.E. Option arms and Alt-A mortgages. The nice intro rates those people are getting under those terms are supposed to be good but when the real rates kick in lookout. It's supposed to be worse than sub-prime. They have so many schemes these days to cook the books. I heard the NY Fed was going to start counting people underwater as renters. Schemes undreamed of.
doc7474 1 year ago
spending those dollars in the U.S. would boost the economy. it would be an exchange of value
curiouschem 1 year ago
@curiouschem One would think it would have a simulative effect on the economy. The question is: would a wholesale repatriation of dollars be enough to create price inflation in the US?
watcherjohnny 1 year ago
@watcherjohnny no, a repatriation of dollars would have to be thrown out of helicopters hovering over major cities in order to have an "inflation" affect. Dollars in that amount are transferred electronically and become digital dollars, but could have the same inflation affect if transferred to, say, 100 million entitlement recipients as a cost of living adjustment or as a "economic collapse" bonus.
curiouschem 1 year ago
@TheModernMystic It's almost strange enough to qualify as one of those urban legend stories, isn't it? - (..."stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet"...).
And then there is irony - ("But don't bother trying to steal them [the bonds]; they're nonnegotiable, which means they are worthless on the open market").
watcherjohnny 1 year ago