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Author Topic: Currency War Imminent  (Read 3086 times)
stochastic
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February 07, 2013, 08:37:35 PM
 #1

Great quote from this article:

Quote
“Devaluing a currency is like peeing in bed,” a Federal Reserve official told The Journal. “It feels good at first, but pretty soon it becomes a real mess.”

Introducing constraints to the economy only serves to limit what can be economical.
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February 07, 2013, 11:19:01 PM
 #2

Great quote from this article:

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“Devaluing a currency is like peeing in bed,” a Federal Reserve official told The Journal. “It feels good at first, but pretty soon it becomes a real mess.”

Too bad people are oblivious to what's about to happen.

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February 07, 2013, 11:34:25 PM
 #3

I don't really understand how inflation is going to happen if people already have too many loans?

Central banks printing money is one thing, but for that money to go into circulation it's quite another,
since there are not that many people able to take new loans and hence, help the newly printed money
go into circulation and ultimately cause inflation. I'd say that for the time being, it is only banks
that are being helped to remain afloat.

But then, I'm no expert and I am always willing to learn from more knowledgeable people.
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February 07, 2013, 11:55:34 PM
 #4

I think the idea is to reflate the bubble so people can borrow again against their equity.

Bernanke even said that this is his goal, to reinflate the housing bubble so people can borrow out their new equity and spend it and he is trying to achieve this by purchasing 40bil/month of mortgage securities.

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CurbsideProphet
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February 08, 2013, 02:56:07 AM
 #5

I don't really understand how inflation is going to happen if people already have too many loans?

Central banks printing money is one thing, but for that money to go into circulation it's quite another,
since there are not that many people able to take new loans and hence, help the newly printed money
go into circulation and ultimately cause inflation. I'd say that for the time being, it is only banks
that are being helped to remain afloat.

But then, I'm no expert and I am always willing to learn from more knowledgeable people.

You're on the right track.  To properly calculate or predict inflation, you need to factor not just the money supply but also the velocity of money.  If you Google "velocity of money" it should give you more than enough information.

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stochastic
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February 08, 2013, 03:18:21 AM
 #6

I don't really understand how inflation is going to happen if people already have too many loans?

Central banks printing money is one thing, but for that money to go into circulation it's quite another,
since there are not that many people able to take new loans and hence, help the newly printed money
go into circulation and ultimately cause inflation. I'd say that for the time being, it is only banks
that are being helped to remain afloat.

But then, I'm no expert and I am always willing to learn from more knowledgeable people.

It is not just inflation that is the worrying thing, it inflation along with a stagnant economy, stagflation.  Stagflation is the phenomenon of high unemployment, low economic growth, and increasing prices of goods and services, these are things that should not  happen according to Keynesian economics.  In that economic model high unemployment should mean less people have money which would lower prices, and when the economy is booming it should make more people employed and thus increase inflation.

What most people fail to realize is that there are 2 economies of the world.  There is the traditional lending business that banks do and the other business of speculating in financial markets, such as FOREX.  If you compare the FOREX market with the traditional lending market you will see it is several times larger than the traditional economy.


source

What is happening is that the central banks of the world are lending money to banks at low rates and instead of banks lending the money out for traditional loans, the banks are using it on speculative investing.  This flow of capital into commodity and other markets increase the price of commodities and stocks, which causes inflation.

Introducing constraints to the economy only serves to limit what can be economical.
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February 09, 2013, 01:08:38 PM
 #7

That is the most fantastic quote about inflation I've ever read Cheesy
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February 09, 2013, 01:11:29 PM
 #8

That is the most fantastic quote about inflation I've ever read Cheesy

I agree. The best statements are true and funny at the same time. This one qualifies.

Here's another one from the wall thread:

Bears are fighting with limited ammunition, bulls have factorys making more and more ammunition everyday Grin

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thefiniteidea
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February 09, 2013, 05:37:06 PM
 #9

+1 for that post stochastic!

That chart is a great example of why inflation is USELESS for the majority of people (poor and 'working class') when all it does is deplete the value of their savings (in cash), while maintaining the wealth of the rich, who just hoard the new inflationary money into speculative investments for 'further' gains.

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February 13, 2013, 06:10:40 PM
 #10

Isnt one of the reasons the soviet union went bankrupt that they just kept printing rubles? Isnt that what we are doing now with the dollar just printing more money with nothing to back it ? If this is the case wouldnt it be expected that we too will have a large scale economic downfall?
I'm really new at this economic stuff so, take it easy on me if i sound retarded. I do appreciate any helpful feed back though, the simpler the better. I just learned what fiat meant if that gives you any idea where im at

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molecular
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February 13, 2013, 07:12:59 PM
 #11

Isnt one of the reasons the soviet union went bankrupt that they just kept printing rubles? Isnt that what we are doing now with the dollar just printing more money with nothing to back it ? If this is the case wouldnt it be expected that we too will have a large scale economic downfall?
I'm really new at this economic stuff so, take it easy on me if i sound retarded. I do appreciate any helpful feed back though, the simpler the better. I just learned what fiat meant if that gives you any idea where im at

simple feedback: what you say is correct.

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arepo
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this statement is false


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February 13, 2013, 09:46:09 PM
 #12

Isnt one of the reasons the soviet union went bankrupt that they just kept printing rubles? Isnt that what we are doing now with the dollar just printing more money with nothing to back it ? If this is the case wouldnt it be expected that we too will have a large scale economic downfall?
I'm really new at this economic stuff so, take it easy on me if i sound retarded. I do appreciate any helpful feed back though, the simpler the better. I just learned what fiat meant if that gives you any idea where im at

simple but nuanced feedback: what you say is correct, but there are far more factors contributing. the analogy suffers from oversimplification. just keep delving into economic theory and you'll get a better grasp of the scope of the situation.

this sentence has fifteen words, seventy-four letters, four commas, one hyphen, and a period.
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realityfalacy
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February 14, 2013, 10:27:19 AM
 #13

I appreciate it thank you

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February 14, 2013, 12:05:14 PM
 #14

Another simple answer:

The central banks are creating more debt, and they hope that this will stimulate the economy within each country, and not reduce the value of the respective money units.

However, when the market (me, you and all the other persons) start to mistrust the debt, the value of the debt (the bonds) will go down, and may have to be replaced by outright base money printing.

The value of the money unit is of course directly connected to the number of units issued, but some mainstream economists deny even that.
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June 07, 2013, 08:30:28 AM
 #15

Great quote from this article:

Quote
“Devaluing a currency is like peeing in bed,” a Federal Reserve official told The Journal. “It feels good at first, but pretty soon it becomes a real mess.”

Too bad people are oblivious to what's about to happen.

Those of us that have already accepted this fate will soon be the next leaders guiding everyone out of this complete and total shit-show economy, because we already planned on it. At least I am.


It is a mathematical certainty that fiat will fail, and soon. The next ripple in the world marketplace will start a contagion that will bring it all down. Bets are out on whether it will be the EU, China, Japan, or basically every country as they are all a large economic bubble. The debt will eventually be effectively infinity as there is literally not enough money on Earth to pay back the debt. Just the downfall of a single major bank holding a stack of risky derivatives will sound the death knell of the global economy. Unless Bernake plans to print up about $1.5 Quadrillion to pay off the debt (which wouldn't work), there is nothing anyone can do.

Except move on to a new and better system. We have one now. 

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June 07, 2013, 09:12:03 AM
 #16

Great quote from this article:

Quote
“Devaluing a currency is like peeing in bed,” a Federal Reserve official told The Journal. “It feels good at first, but pretty soon it becomes a real mess.”

Too bad people are oblivious to what's about to happen.

Those of us that have already accepted this fate will soon be the next leaders guiding everyone out of this complete and total shit-show economy, because we already planned on it. At least I am.


It is a mathematical certainty that fiat will fail, and soon. The next ripple in the world marketplace will start a contagion that will bring it all down. Bets are out on whether it will be the EU, China, Japan, or basically every country as they are all a large economic bubble. The debt will eventually be effectively infinity as there is literally not enough money on Earth to pay back the debt. Just the downfall of a single major bank holding a stack of risky derivatives will sound the death knell of the global economy. Unless Bernake plans to print up about $1.5 Quadrillion to pay off the debt (which wouldn't work), there is nothing anyone can do.

Except move on to a new and better system. We have one now. 

While I agree all fiat will fail, the reason is certainly not a mathematical one. Keep hearing this and it's just wrong. Math has an unlimited amount of zeroes for us. The exponential function might be hard to grasp for man, but math has no problem with it.


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Operatr
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June 07, 2013, 09:49:04 AM
 #17

Great quote from this article:

Quote
“Devaluing a currency is like peeing in bed,” a Federal Reserve official told The Journal. “It feels good at first, but pretty soon it becomes a real mess.”

Too bad people are oblivious to what's about to happen.

Those of us that have already accepted this fate will soon be the next leaders guiding everyone out of this complete and total shit-show economy, because we already planned on it. At least I am.


It is a mathematical certainty that fiat will fail, and soon. The next ripple in the world marketplace will start a contagion that will bring it all down. Bets are out on whether it will be the EU, China, Japan, or basically every country as they are all a large economic bubble. The debt will eventually be effectively infinity as there is literally not enough money on Earth to pay back the debt. Just the downfall of a single major bank holding a stack of risky derivatives will sound the death knell of the global economy. Unless Bernake plans to print up about $1.5 Quadrillion to pay off the debt (which wouldn't work), there is nothing anyone can do.

Except move on to a new and better system. We have one now.  

While I agree all fiat will fail, the reason is certainly not a mathematical one. Keep hearing this and it's just wrong. Math has an unlimited amount of zeroes for us. The exponential function might be hard to grasp for man, but math has no problem with it.



The fractional reserve system only goes deeper and deeper into debt as the debt plus interest on that debt is always larger than the return. Soon we will not be able to even afford the interest on the FEDs loans to the US Government because the Government is several Trillion dollars in debt. Eventually the debt will skyrocket into what might as well be infinity and no amount of money will be able to satisfy the debt. All fiat currency will break down and become completely worthless at that point as inflation will completely devalue it. Exponential debt is built right into the financial model. Those zeros are being added to the debt that is growing out of control at this point, making every dollar in your pocket more worthless by the minute.

The reason is absolutely a mathematical one. The system was unsustainable from the start.

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June 07, 2013, 10:40:35 AM
 #18

I don't really understand how inflation is going to happen if people already have too many loans?

Central banks printing money is one thing, but for that money to go into circulation it's quite another,
since there are not that many people able to take new loans and hence, help the newly printed money
go into circulation and ultimately cause inflation. I'd say that for the time being, it is only banks
that are being helped to remain afloat.

But then, I'm no expert and I am always willing to learn from more knowledgeable people.

It is not just inflation that is the worrying thing, it inflation along with a stagnant economy, stagflation.  Stagflation is the phenomenon of high unemployment, low economic growth, and increasing prices of goods and services, these are things that should not  happen according to Keynesian economics.  In that economic model high unemployment should mean less people have money which would lower prices, and when the economy is booming it should make more people employed and thus increase inflation.

What most people fail to realize is that there are 2 economies of the world.  There is the traditional lending business that banks do and the other business of speculating in financial markets, such as FOREX.  If you compare the FOREX market with the traditional lending market you will see it is several times larger than the traditional economy.


source

What is happening is that the central banks of the world are lending money to banks at low rates and instead of banks lending the money out for traditional loans, the banks are using it on speculative investing.  This flow of capital into commodity and other markets increase the price of commodities and stocks, which causes inflation.


+1 , well said

@alexeft
Also note, that SHOULD the vast amounts of money created at the moment, at some time in the future get into the real economy as well, then brace yourself. We're running the risk of hyperinflation by then.




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June 07, 2013, 09:23:49 PM
 #19

mmmmm hello guys..... the thing is...... currency wars have been around for a few years now...... deflations and hyperinflations is just one aspect of it.... just wanted to let you know...

One example is the intentional inflation caused in Japan to undervalue Japanese government bonds bought by the Chinese so they can buy them back or resell them higher.

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June 08, 2013, 02:17:37 AM
 #20

That is the most fantastic quote about inflation I've ever read Cheesy

 Grin
Really, it is like the FED and the politicians peeing in OUR BEDS.
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