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I disagree. All money is created thru balance sheets. For every "Asset" created, there is the creation of a "liability." Basic double entry book-keeping. That's the system we have. (Coins are different)

The $10 in interest comes from the creation of additional debt. It's a Ponzi System. And how do such systems end? Obviously they do not last forever.

My thought experiment: I borrow 100 dollars from the bank, and I pay the bank back with freshly issued government money that I earned from working for the government. The debt at payoff, due to interest, is 110 dollars. But what is money created by the government? It is debt. Just look...

Here's a China story from Southern Europe: I'm currently living on Kefalonia, a Greek island in the Ionian sea - between Greece and Italy. This island just recently became "globalized." Large chains from Germany, immigrant workers from Albania, etc... But one really interesting...

I look at it the other way around - my opinion is that fiat money required that we find markets with lower wages, i.e. China. Thus, we could expand fiat with much less inflationary effects due to global wage arbitrage. But ultimately, the inflation did show up - it showed up in the stock...

Excellent analysis, and I see your point, but here's another way of looking at it: In the past, what China and Germany are doing today made more sense. When international trade was conducted in commodities, or precious metals, everyone won, or at least your trade surplus was not vulnerable...

Thanks.... I see Novagold is doing quite well. Unfortunately, I sold it last Spring as it got close to 9 dollars. But I didn't miss out too much, I bought silver with the proceeds.

I wrote a post on this on my blog. Here's one of my conclusions aimed at China: We live in a fiat debt-backed paper world. If you want to export your economic output, without trying to allow world trade to be somewhat fair - you too will lose in the end. You are exporting your economic...

You're thinking of it backwards. The Fed owns loans on construction projects like an unfinished Red Roof Inn on it's books - at an imaginary (mark to market) value. When those pieces of paper and electronic digits representing nothing become worthless, the Fed by association, becomes...

There will be no orderly transition to a new global monetary system. It will be chaos first, which means gold by default. And then, either the US re-asserts its power, or another nation becomes the next power. And the winner will dictate the new global monetary system. After the messy...

I have worked for myself, and for Fortune 500 companies in the US. All the type of work I did was paper based - there was no tax evasion, not that I would do it anyway. Thus weekly, I saw my pay get slashed by various government entities... Federal, State, City wage, Social Security...

So what you're saying is that a precious metal standard of sorts can not be implemented because the world prefers to allow trade imbalances to grow much more precipitously and dangerously with a fiat standard? So what happens when the imbalances of trade under a fiat system of IOU paper grow...

I've read up on that - and there's no proof either way. As you said, no recent audits. But you know what else? Maybe the US is hiding something else. Maybe the US has even more reserves than stated? Maybe US policy planners knew all along that a fiat monetary system has a limited lifespan...

Yes, the US Gov't spends a disproportionate share on its military budget - for various reasons, but that currency is fiat -and a world reserve one at that. So it can be "printed" at little cost so long as the game continues. You can never run out of fiat money. Only its value gets...

The US does have one option at maintaining economic supremacy. But it won't be the same as the credit fueled post Bretton Woods I 1971 era we now know. It will require the US to keep a balanced budget and once again become a net global exporter. In theory, the US can tell all its foreign...

If we ran a 10% deficit, more or less, say, in 1997, would it be normal for the economy to grow merely 2-3%? And what of the resultant inflation? I agree with what you're saying, but I'm also taking into consideration the fact that we are experiencing extreme demand destruction without the...

Who "Wins" a Currency War? I want to elaborate on my post below: Currency War On! The first finance official to state the obvious: "a trade war and an exchange rate war". Inevitably, the question arises: Who wins a currency and trade war and how? That question in my opinion, is the wrong...

Thanks, I'll read it. I was called a "doomer" from early 2007. Since then, AIG, Citi, Lehman, Bear, General Motors, Chrysler, countless smaller banks, Fannie Mae and Freddie Mac, and counteless countries have needed extraordinary financial help. All monetary systems are debt-based...

The market will push the gold price for so long. Then Sovereigns will get involved and determine what the gold price is relative to their currencies and reserves. That's how these things play out. Always have. Thus, your numbers are irrelevant. And I won't rule out gold confiscation...

The Central Banks and Finance Ministries of the world are despairing - that's why for the first time in over 20 years, they are net buyers of gold. Gold is their insurance against monetary collapse. That's why they own the stuff. Think about it... why else do governments hold gold? I...