Bitcoin Forum

URL: http://www.cnbc.com/id/39271495 (http://www.cnbc.com/id/39271495)

I stopped reading the article after this sentence  ::)

*brings out the wheelbarrows

More money means we all get rich, right?

 :D

A hyperinflation would be the perfect time to advertise Bitcoin as an alternative to USD. I hope they start printing a trillion every day.

I refused to follow the link after I read the URL. "Mulls printing more money" my ass! They don't print it any more. They just spend it.

I just read a factlet (but forgot the link) that the Federal Reserve has doubled the money supply during the past two years. What does this mean? It means 50% inflation coming down the pipe, guaranteed.

How monumentally stupid do you have to be to piss away half of America's productivity in just two years?

http://img413.imageshack.us/img413/2302/weekendatbernankes.png.ban

Alternative Link (http://bit.ly/aQFo0y).


I busted up when I saw this on zerohedge (http://www.zerohedge.com/) this morning.  It's only a matter of time now.  Bitcoin is the future!

If you think its bad now just wait till Hillary Clinton takes over.......the head job.


  :D

Please don't confuse "pumping more money into the financial system" with "printing more money" these are two entirely different things.  If you really want to know more I suggest you read about open market operations.

http://en.wikipedia.org/wiki/Open_market_operations

"And indeed the Wikipedia article to which you link makes it clear (in the second paragraph) that the central bank funds its open market operations by printing more money."

The wiki states: "To pay for this, bank reserves in the form of new base money (for example newly printed cash) is transferred to the sellers bank"

Granted that is one example, but the US fed is already flush with currency and doesn't require printing any more to meet demand, they simply transfer 'elastic currency' in and out of the money supply.  The treasury has the sole authority and responsibility of printing currency.  In the US, the Federal Reserve can not print currency to increase base money.

http://www.investopedia.com/articles/economics/08/treasury-fed-reserve.asp

Hyperinflation would be too late.  Anyway, I don't think that hyperinflation is in the cards for a while, yet.  I don't think that there will even be much or any overall inflation, for that matter, even though food & energy are set to hit the hockey stick.  We are presently in deflation, despite the 'monetary easing' that's been going on, because the contraction in M3 (base currency + credit) has been falling even though the base currency numbers have nearly doubled.  The falling value of real estate is enough to overwelm the rising prices of neccessities, even though it doesn't feel any better.  The US dollar is a defacto international reserve currency, and as such, much of the monetary base is not in circulation within the US economy itself.  Much of it is held by foreign nations or banks as an asset in reserve.  This could change quickly, and China has us in a bad spot should they, for whatever reason, decide to divest themselves of their cash and savings bonds.  They are not likely to ever do this due to economic reasons, because they would harm their own economy significantly in the process; but they may do it for political reasons, and that would cause a massive inflationary adjustment if that much base currency were to suddenly attempt to return to the US economy.  Hyperinflation is a different event.  That is the death of a currency, and is never the choice that banks or their political pets would make, because it would be the end of their con game forever.  And it is a choice, because hyperinflation is always and everywhere a political event.

Wouldn't a nationwide bank run result in hyperinflation?

  A bank run is an increase in demand for currency.  Which would create hyperdeflation, as the value of currency rose to meet the clearing price at the current supply.

I don't follow you.  If you will, please break it down.

All of those accounts are "insured" for up to $250,000.  Where will this money come from?  They will have to issue more money or default on their promises.

They will default on their promises.  That is why you either want to have your cash in your mattress, or in a very strong bank.

Or, most cynically, put your money in a very weak bank.  If the banks start going down, you want yours to go down first when they're still paying on the 'insurance'.

Cash is already a broken government promise and I suspect those broken IOUs won't hold value even as well as they have over the last few decades in this next one.

The Federal Reserve bank holds large quantities of currency.  The Fed also owns securities and makes loans from which it profits.  There is an awful lot of money available to fulfill demand without having to print more currency.
The Fed uses open market operations to do this.  If the demand for currency increases (bank run) then the Fed offers currency to banks in exchange for securities (treasury notes, bonds, etc.)

The assumption that the Federal Reserve is also the Treasury is the common error.  They are two distinct entities which have different ways to correct the money supply.

No, at least not directly.  As has been alluded to by others, a bank run is a sign of rapid deflation.  A bank run is caused by the sudden loss of faith in the soundness of an institution.  A national bank run would indicate the loss of faith in the soundness of the Federal Reserve System & the FDIC.  The result of large numbers of people trying to get their money in cash is a sudden and drastic increase in the demand for currency.  The law of supply and demand, of course, leads us to the conclusion that the value of cash would rise to close the supply gap; which would be large because the FDIC has the option of taking up to 60 days to follow through on the insurance claims without needing outside approval of a longer time period.  There are good reasons why this grace period exists, but the result is that there would be roughly a 60 day period wherein the supply of currency in the economy is significantly short of the demand; and that is assuming that the public actually trusts that the FDIC can follow through, which is mathmaticly unlikely in any national event at the present time.  Currently, the FDIC is insolvent due to so many banks going under the last two years.  The net result of bank failures in the longer term is also deflation, as the failure of a bank is usually related to too many of it's own loans going sour and never getting repaid.  Debts forgiven in bankruptcy court are equivialent to currency, previously willed into existance by the power of fractional reserve banking at the inception of the loan as credit, ceasing to exist.  On a large, national scale, the net result of such events is the contraction of the currency base as it's perceived by the economy at large; (the business owner views credit as being functionally equivialent to currency) and the denial or loss of credit availability results in the academic definition of deflation, i.e. the reduction of currency in circulation relative to the mean economic activity that it represents.  Changes in consumer prices are affected by too many other variables to point at any group of prices at any particular time and determine if inflation or deflation has occured.   A sharp reduction in 'velocity' can have similar effects to reductions in gross volume, and that is usually what we call a "recession".

Of course, a national bank run could easily result in a political 'intervention', resulting in the political forces triggering a hyperinflation; but a national bank run is mathmaticly deflationary.

That's assuming institutions will buy treasury notes and bonds or will even have the time to do so.  I imagine a modern day bank run (at a national level) could happen in a matter of hours, possibly in a matter of minutes.  If people can't withdraw their funds on the spot, their confidence in the USD will go from 100% to 0% before the teller is able to finish her apology.

I don't think that value of USD will ever go to zero, because there will always be demand for USD as long as The US exists and demands payment for taxes in USD.

What do you believe the motive for a bank run is then?  Aren't people demanding US dollars?  If it gets harder to acquire something in high demand, wouldn't the value go up?  I think you are confusing confidence in the government with confidence in the currency.  Certainly there is a dependency under fiat currency for a strong trusted government, but people should have already priced that into their trust of currency and banking.  Otherwise they would only work for commodities they could take immediate possession of.

Default will never ever happen. The USA government will never default on its citizens. It will print away all it needs, which is equivalent to defaulting, but it will never directly default. There is a reason why there has never been a deflationary collapse and the empire collapse are always hyper-inflationary.

The USA would only default on some foreign nation. The event would obviously trigger war, probably IIIWW.

Just so we're clear.  The Fed "bailed out" wall street by loaning them funds or buying up equity.  It didn't just give free money to the troubled companies.  We're all still in the same boat floating on the confidence in the US dollar.  Wall street still has to make good on their bail out debt to work our way out of this- and at the rate that its happening it very well could turn a profit for the Fed.  The Fed recently decided to reinvest that profit in the economy, but when the economy gets on its own legs, those profits will go to the treasury and pay off the government debt.  Certainly this will be a painful slow process, but we're no where near a doomsday scenario of internal default.  The only real risk I see is the one hugolp brings up- that other nations may default (PIIGS), which would strain the markets and increase the credit crunch here in the US. 

When I was your age, I believed in unicorns also.
Do not think for one minute that any money the fed may get from payments on the bail outs will pay off any debt.

The worlds only superpower would just hold everyone ransomn. They might have to nuke a few other countries to get the point across though.

The US government is a mafia organisation,its no surprise Obama is from Chicago.....this is how the mafia rolls. >:(