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Perfect Example of How Underwater the Debt Ridden Consumer Is.
- Thread starter Comanche
- Start date
Its not just the US. China's growing at 10 percent a year, but its interest rates really negative when pegged to the dollar. The whole world is stuck in this inflate or die scenario where no on can ever stop priniting because we have to keep monetizing old debt by adding new debt. I would imagine that this system ends in soaring inflation that the government can no longer can control and confidence is lost completely.
Quote from JamesVU2000:
Its not just the US. China's growing at 10 percent a year, but its interest rates really negative when pegged to the dollar. The whole world is stuck in this inflate or die scenario where no on can ever stop priniting because we have to keep monetizing old debt by adding new debt. I would imagine that this system ends in soaring inflation that the government can no longer can control and confidence is lost completely.
Governments and Central Banks created it... they could stop it, if they wanted to.
FWIW...
Money Pump History⦠Inflating money and credit while debasing the currency is not new. It has been going on since the beginning of government. Most often, itâs practiced by some greedy politicians in small countries who go overboard with it and eventually bankrupt most of their citizens. However, even the great Roman Empire fell victim. Rome had conquered most of the known world around the Mediterranean, so there were no new places left to invade, kill the people and take their assets (or at least make them subject to Roman rule so they could pay tribute and taxes). Rome outspent its means and lived the high life. They found that a large military was necessary to keep the subjects in line but was a heavy burden on the treasury. They resorted to coin clipping and the reminting of coins to remove valuable metals like gold and silver to replace them with copper and other lesser metals. Eventually, Rome destroyed itself financially.
I read a couple of years ago where some financial historian researched the archives to find that there had been 316 known cases where government went hog-wild on the money pump and eventually destroyed its currency while bankrupting its citizens. Most of course, were small countries and regimes⦠but still.
A very recent example was Turkey, 1982-2005â¦
1. During that time, their stock market soared more than $2 Million Percent⦠68% average compound return (yippee, right?).
2. By 2005, a cup of coffee cost 3 Million Lira
3. Later in 2005, the currency was revalued 1 Million-to-1, so that a cup of coffee now cost âonlyâ 3 New Lira
4. In spite of a 2 Million Percent gain in their stock market, the currency devaluation resulted in investors losing 98% of their capitalâs buying power.
(Figures reported from memory⦠you can look this up on the net if you want more detail.)
America is on the same money pump path, though not at the same breakneck pace. It will take us longer to self-destruct, of course, but we will see a significant decline in our standard of living throughout the rest of our lives. Our children and grandchildren will likely face economic ruin.
Different This Time⦠Actually, it is. This time itâs not just one country fudging its money, itâs the entire world. Many countries are pumping money at 10+%, but a few are more than 20%⦠Russia reportedly is 49%. That is all ultimately very bad. (Usually when a country prints too much money, its currency suffers greatly. However this time everybody is doing it, so they are all comparatively bad. The world seems to think the US is either the worst offender or has the biggest problems facing it in the future, as the US Dollar is down about 40% vs. the Euro and British Pound over the last 5 years. I donât know whether this is just an example of mass greed or whether there is collusion behind it in an attempt to cushion the approaching US Baby Boomer Entitlements obligations.)
Money Pump History⦠Inflating money and credit while debasing the currency is not new. It has been going on since the beginning of government. Most often, itâs practiced by some greedy politicians in small countries who go overboard with it and eventually bankrupt most of their citizens. However, even the great Roman Empire fell victim. Rome had conquered most of the known world around the Mediterranean, so there were no new places left to invade, kill the people and take their assets (or at least make them subject to Roman rule so they could pay tribute and taxes). Rome outspent its means and lived the high life. They found that a large military was necessary to keep the subjects in line but was a heavy burden on the treasury. They resorted to coin clipping and the reminting of coins to remove valuable metals like gold and silver to replace them with copper and other lesser metals. Eventually, Rome destroyed itself financially.
I read a couple of years ago where some financial historian researched the archives to find that there had been 316 known cases where government went hog-wild on the money pump and eventually destroyed its currency while bankrupting its citizens. Most of course, were small countries and regimes⦠but still.
A very recent example was Turkey, 1982-2005â¦
1. During that time, their stock market soared more than $2 Million Percent⦠68% average compound return (yippee, right?).
2. By 2005, a cup of coffee cost 3 Million Lira
3. Later in 2005, the currency was revalued 1 Million-to-1, so that a cup of coffee now cost âonlyâ 3 New Lira
4. In spite of a 2 Million Percent gain in their stock market, the currency devaluation resulted in investors losing 98% of their capitalâs buying power.
(Figures reported from memory⦠you can look this up on the net if you want more detail.)
America is on the same money pump path, though not at the same breakneck pace. It will take us longer to self-destruct, of course, but we will see a significant decline in our standard of living throughout the rest of our lives. Our children and grandchildren will likely face economic ruin.
Different This Time⦠Actually, it is. This time itâs not just one country fudging its money, itâs the entire world. Many countries are pumping money at 10+%, but a few are more than 20%⦠Russia reportedly is 49%. That is all ultimately very bad. (Usually when a country prints too much money, its currency suffers greatly. However this time everybody is doing it, so they are all comparatively bad. The world seems to think the US is either the worst offender or has the biggest problems facing it in the future, as the US Dollar is down about 40% vs. the Euro and British Pound over the last 5 years. I donât know whether this is just an example of mass greed or whether there is collusion behind it in an attempt to cushion the approaching US Baby Boomer Entitlements obligations.)
The refusal of other countries to let there currencies appreciate is certainly part of the problem. At some point massive inflation is going to erupt in EM countries trying to peg to the dollar. Thats when things will get very messy. Remember when mexicans took to the streets over the tortilla. Wait until it happens in china.
Quote from JamesVU2000:
The refusal of other countries to let there currencies appreciate is certainly part of the problem...."
There could be a big debate on this. I personally believe the cry for China to allow its currency to rise is all a ruse from the US. We [well, not us.. our criminal politicians], are trying to make China the scapegoat when the real problem is the US.