It's official : Bernanke has lost his mind

[Angrycat]

We execute a strategy which makes us agnostic to the direction the market moves. So, generally, I don't care where the market is going. However, lately, I've become alarmed when the market moves up powered by hopium.

The Fed has basically made it clear that it will repeat the mistakes of 2001 and stomp on the interest rate to artificially increase asset prices.

The last bailout binge in response to a burst bubble was massive enough to bankrupt the government. When the stock market bubble they're blowing up now bursts, the United States will implode like the Soviet Union (mostly because it's beginning to resemble the Soviet Union).

 

[Emini Maestro]

Quote from Angrycat:

The Fed has basically made it clear that it will repeat the mistakes of 2001 and stomp on the interest rate to artificially increase asset prices. The last bailout binge in response to a burst bubble was massive enough to bankrupt the government. When the stock market bubble they're blowing up now bursts, the United States will implode like the Soviet Union (mostly because it's beginning to resemble the Soviet Union).

The Fed since 1913 has functioned with resolve to enrich its members and owners. Recall that the Fed is a private corporation. You are correct regarding the bubble being inflated since DOW 6600; there may be yet another bailout up Obama's sleeve, but whenever the bubble does burst, it will be the end of the fool's rally we see today. And then, watch the unprepared and unprotected masses, without more than three days of food in the cupboard, empty the stores, run the banks and take to the streets. Glad I live nowhere near a city, have zero dependence on an ATM, and am prepared for what the people in money and power have in mind.

 

[Angrycat]

Quote from Emini Maestro:

The Fed since 1913 has functioned with resolve to enrich its members and owners. Recall that the Fed is a private corporation. You are correct regarding the bubble being inflated since DOW 6600; there may be yet another bailout up Obama's sleeve, but whenever the bubble does burst, it will be the end of the fool's rally we see today. And then, watch the unprepared and unprotected masses, without more than three days of food in the cupboard, empty the stores, run the banks and take to the streets. Glad I live nowhere near a city, have zero dependence on an ATM, and am prepared for what the people in money and power have in mind.

You're smart to be prepared. I hope your preparation includes assets held outside the borders of the United States.

The Fed hope to inflate away the national debt and it's foolish enough to believe that it can centrally plan inflation.

 

[makloda]

Quote from ByLoSellHi:Bernanke is destroying the dollar and middle class.

I thought the middle class is bankrupt and is heavily indebted. If the Dollar is being destroyed the middle class will therefore make out like bandits as they can repay their trillions in household debt with worthless paper money.

In a hyperinflation scenario the big losers would be banks/creditors, not debt debtors such as the poor/middle class.

 

[Emini Maestro]

Quote from makloda:

I thought the middle class is bankrupt and is heavily indebted. If the Dollar is being destroyed the middle class will therefore make out like bandits as they can repay their trillions in household debt with worthless paper money.

The big losers would be banks/creditors.

Read on Zimbabwe and Argentina. The bank owners never lose, by design.

 

[makloda]

Quote from Emini Maestro:

Read on Zimbabwe and Argentina. The bank owners never lose, by design.

So if I owe the bank $1,000,000 for a house on a 30 year fixed mortgage. Say starting in 2010, inflation is suddenly approaching 50,000% annualized overnight as Bernanke and the rest of his evil conspiring central bankers controlled by rich Europeans step up the velocity of the money printing presses.

I pay back the $1,000,000 with worthless paper and keep the house.

The bank doesn't lose? I got a house for free and the bank gets worthless paper. Let me know which side of the deal you prefer.

Creditors always lose in a hyperinflation scenario. Debtors make out like bandits.

 

[Emini Maestro]

Quote from makloda:

So if I owe the bank $1,000,000 for a house on a 30 year fixed mortgage. Say starting in 2010, inflation is suddenly approaching 50,000% annualized overnight as Bernanke and the rest of his evil conspiring central bankers controlled by rich Europeans step up the velocity of the money printing presses. I pay back the $1,000,000 with worthless paper and keep the house. The bank doesn't lose? I got a house for free and the bank gets worthless paper. Let me know which side of the deal you prefer. Creditors always lose in a hyperinflation scenario. Debtors make out like bandits.

People in money and power only want more of the same, and that greed knows no international boundaries. I cited Argentina because they used to have a middle class like America. I choose to judge national financial reality in objective numbers, instead of political opportunity and what-I-can-get-out-of-it. As if the DOW rising concurrently with gold was normal and nothing to alarm the taxpayer...

I prefer the side that fixes the problem, by letting the market right iself without the meddling of government and related agencies, who multiply by 10 the cost of whatever they touch. I reject the notion of stringing out the credit and debt, to hope someone will bail out the USA of it's own demise. I prefer short-term pain for long-term gain. I prefer work over welfare. I prefer to keep my dollars' worth as opposed to giving away 97% of its purchasing power since 1913. I prefer the hard way, because it is the only way to fix this service economy back into a manufacturing one, where wealth can be generated by more than just those already wealthy. No one and nothing can get out of debt by incurring more and more debt. Ask anyone with a credit card.

I also prefer to learn from history, instead of following idealism and my own greed determine what I pursue. America is on the same path as Argentina.

Your mortgage will be of secondary concern when everything in your local grocer is too expensive to stock in your kitchen. The consumer loses in hyperinflation, unless you become an inanimate object that consumes nothing.

 

[the1]

Dude, you gotta go study economics 101. How exactly do you plan to pay your house off when a basic need such as a loaf of bread will cost you $84?

Quote from makloda:

So if I owe the bank $1,000,000 for a house on a 30 year fixed mortgage. Say starting in 2010, inflation is suddenly approaching 50,000% annualized overnight as Bernanke and the rest of his evil conspiring central bankers controlled by rich Europeans step up the velocity of the money printing presses.

I pay back the $1,000,000 with worthless paper and keep the house.

The bank doesn't lose? I got a house for free and the bank gets worthless paper. Let me know which side of the deal you prefer.

Creditors always lose in a hyperinflation scenario. Debtors make out like bandits.

 

[makloda]

Quote from the1:

Dude, you gotta go study economics 101. How exactly do you plan to pay your house off when a basic need such as a loaf of bread will cost you $84?

The cost of bread has ZERO relevance to the question I asked: Who loses in hyperinflation. Those who owe money or those who are owed money?

A house is a real asset. With inflation running at 50,000% in 2010 in our example, suddenly I have a gigantic paper gain as the house has a paper value of $500,000,000 but I still only owe $1,000,000 in debt to the bank for the mortgage. Suddenly, I am virtually debt free vs. the equity of the house.

Clearly, the one who needs to brush up on his economic literacy is you.

 

[makloda]

Quote from Emini Maestro:

People in money and power only want more of the same, and that greed knows no international boundaries. I cited Argentina because they used to have a middle class like America. I choose to judge national financial reality in objective numbers, instead of political opportunity and what-I-can-get-out-of-it. As if the DOW rising concurrently with gold was normal and nothing to alarm the taxpayer...

I prefer the side that fixes the problem, by letting the market right iself without the meddling of government and related agencies. I reject the notion of stringing out the credit and debt, to hope someone will bail out the USA of it's own demise. I prefer short-term pain for long-term gain. I prefer work over welfare. I prefer to keep my dollars' worth as opposed to giving away 97% of its purchasing power since 1913. I prefer the hard way, because it is the only way to fix this service economy back into a manufacturing one, where wealth can be generated by more than just those already wealthy. No one and nothing can get out of debt by incurring more and more debt. Ask anyone with a credit card.

I also prefer to learn from history, instead of following idealism and my own greed determine what I pursue. America is on the same path as Argentina. But then you already know that, as you know all about that, right?

Your mortgage will be of secondary concern when everything in your local grocer is too expensive to stock in your kitchen.

You type up all this political mumbo-jumbo but you can't answer the question.

I will ask again: in the scenario of run-away hyperinflation (e.g. 50,000% a year annualized), which side would you prefer. Would you rather be OWED $1,000,000 of paper money on 30 year fixed interest terms? Or would you rather OWE somebody $1,000,000 of paper money on 30 year fixed interest terms?