4310 replies to this topic

[G0ldfinger]

It's amazing to see the kind of ease at which these huge amounts of money are now created out of thin air. No one seems to care much anymore. This is exactly how I remember it from that book about the French hyper-inflation. We all know deep inside how this will end (yes, even you deflationista guys know it deep inside).

Bank of England to print further £50 billion
http://www.telegraph...50-billion.html

[50sQuiff]

 G0ldfinger, on 07 February 2012 - 12:56 AM, said:

It's amazing to see the kind of ease at which these huge amounts of money are now created out of thin air. No one seems to care much anymore. This is exactly how I remember it from that book about the French hyper-inflation. We all know deep inside how this will end (yes, even you deflationista guys know it deep inside).

Bank of England to print further £50 billion
http://www.telegraph...50-billion.html

In all the famous accounts of hyperinflation, the other defining characteristic of the age is manic trading and gambling and the proliferation of a metropolitan speculator class. Sounds familiar doesn't it.

[G0ldfinger]

Yeay!

http://www.bloomberg...3b-in-dec-.html

Quote

U.S. Consumer Credit Climbed by $19.3B in Dec.
...
Consumer borrowing in the U.S. rose more than forecast in December, driven by demand for auto and student loans.

Oops:

http://www.bloomberg...awyers-say.html

Quote

U.S. Student Debt Could Be Next ‘Bomb’
...
Almost half of U.S. bankruptcy attorneys representing consumers say that potential clients with student-loan debt have “significantly increased” over the past three to four years, a survey found.

Oh, gee, printy-printy!!

[G0ldfinger]

Minsky's theory was for private borrowers. We'll have to adapt it to sovereign borrowers. Here is the original idea:

http://en.wikipedia....lity_hypothesis

Quote

Understanding Minsky's financial instability hypothesis
...
He identified three types of borrowers that contribute to the accumulation of insolvent debt: hedge borrowers, speculative borrowers, and Ponzi borrowers.

The "hedge borrower" can make debt payments (covering interest and principal) from current cash flows from investments. For the "speculative borrower", the cash flow from investments can service the debt, i.e., cover the interest due, but the borrower must regularly roll over, or re-borrow, the principal. The "Ponzi borrower" (named for Charles Ponzi, see also Ponzi scheme) borrows based on the belief that the appreciation of the value of the asset will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with the cash flow from investments; only the appreciating asset value can keep the Ponzi borrower afloat. Because of the unlikelihood of most investments' capital gains being enough to pay interest and principal, much of this type of finance is fraudulent.

Below, I try to translate this into the language suitable for a sovereign borrower:

The "hedge borrower" can make debt payments (covering interest and principal) from current cash flows from investments taxation. For the "speculative borrower", the cash flow from investments taxation can service the debt even in adverse financial and/or economic environments, i.e., cover the interest due, but the borrower must regularly roll over, or re-borrow, the principal. The "Ponzi borrower" borrows based on the belief that the appreciation depreciation of the value of the asset debt by inflation will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with the cash flow from investments taxation under current circumstances; only the appreciating asset depreciating debt value can keep the Ponzi borrower afloat. Because of the unlikelihood of most investments' capital gains benign inflationary environments being enough to pay interest and principal, much of this type of finance is fraudulent must lead to hyper-inflation, or a catastrophic deflationary collapse of the Ponzi financing scheme.

[G0ldfinger]

Uh, wow, Bloomberg is explaining hyper-inflation 101:

http://www.bloomberg...cheap-cash.html

Quote

Iran Anxiety No Match for Central Banker Cash
...
Iran’s nuclear ambitions, Syria’s bloody crackdown and Greece’s potential default are leaving markets unfazed as central bankers take unprecedented steps to prevent the global economy from crumbling.

The VIX, a measure of equity volatility known as the “fear index,” fell to 17.1 on Feb. 3, the lowest level since July, according to the Chicago Board Options Exchange.
...
“Investors are numb and sedated,” Jeffrey Sherman, a commodities money manager who helps oversee $25 billion for DoubleLine Capital LP in Los Angeles, said in a Feb. 7 telephone interview. “Money sloshing around the system leads to lower volatility.”
...
“Don’t overlook a global central bank community that’s intent on keeping liquidity flowing into the system,” Mitchell Stapley, the chief fixed-income officer at Fifth Third Asset Management who helps oversee $14.6 billion from Grand Rapids, Michigan, said in a Feb. 7 telephone interview. “If we learned anything from 2008, it’s that liquidity is the key variable. Liquidity flowing into the system cures a world of ills.”

[G0ldfinger]

Triple post.

 DrBubb, on 08 February 2012 - 03:46 AM, said:

"... When a Ponzi scheme can no longer grow, it collapses."

Correct. BUT the very, very important and crucial thing to understand is that if the "asset" promised by the Ponzi scheme operator is something he can produce at zero cost, the collapse will be a hyper-inflationary one.

Why have so many people problems understanding this???

[fexx]

 G0ldfinger, on 08 February 2012 - 09:57 AM, said:

if the "asset" promised by the Ponzi scheme operator is something he can produce at zero cost, the collapse will be a hyper-inflationary one.

A perfect synopsis GF, anything else is overcomplicating matters.

This time next year, Rodney, we'll all be millionaires...

[halight]

I was not sure were to post this video,
So its here. Some of you might have seen it before.

[50sQuiff]

Spotted at my tube station:

[halight]

 50sQuiff, on 15 February 2012 - 08:42 PM, said:

Spotted at my tube station:

Comming to a country near you!

[G0ldfinger]

 50sQuiff, on 15 February 2012 - 08:42 PM, said:

Spotted at my tube station:

Haven't I always told you they were one of those to go hyper first?

[Jake]

 G0ldfinger, on 15 February 2012 - 10:24 PM, said:

Haven't I always told you they were one of those to go hyper first?

BOJ targets inflation of 1%, boosts easing
¥10 trillion more added to asset purchase effort, to go for JGBs

http://www.japantime...20120215a1.html

and today...

http://www.japantime...20120216a1.html

Hideo Kumano, chief economist at Dai-ichi Life Research Institute, expressed a similar view, saying the BOJ "is now caught in a race for monetary easing" with central banks in other major industrialized nations.

[G0ldfinger]

In Greece today we get a little taste of what would have happened globally if Ben, Jean-Claude and all the others would not have instantly hyper-inflated.

Now we're all happy campers, and hyper-inflation in price terms is baked into the monetary cake. One kind of pain (the socially less acceptable one) has been traded for another one (the socially and politically more acceptable one). The total amount of pain will be the same, of course.

[G0ldfinger]

http://www.bloomberg...ens-growth.html

Quote

China Cuts Bank Reserve Reqs; Exports ’Grim’
...
China follows Japan in expanding monetary easing...

Who's going to go hyper first? China possibly is ambitious to be number one again!

Quote

Japan unexpectedly added to monetary easing last week by expanding an asset-purchase program, ...

This is totally and utterly unexpected. I had thought they'd simply turn to a double surplus and drain all the gazillions that they had printed.

Quote

Before yesterday’s announcement, Ken Peng, a Beijing-based economist at BNP Paribas SA, said the Chinese government needs to be “careful not to overshoot monetary loosening, as it did in the financial crisis.”

Oh, come on, we all know that nowadays you can print gazillions and it will never ever turn into delayed but very stubborn hardcore hyper-inflation. Instead, there are theories of hyper-deflation out there. So, flood us with those quintillions, please! I feel like my tax and insurance and food and energy bills have just dropped by 50% (oh, wait a minute...).

[halight]

GF,
Do you think any of the new money thats been printed since 2009 will ever be take out of the system ?

[G0ldfinger]

 halight, on 19 February 2012 - 08:50 AM, said:

GF,
Do you think any of the new money thats been printed since 2009 will ever be take out of the system ?

No. Not in any meaningful manner.

[halight]

Ok, GF, or anybody that cares to answer. Id like to know what will happen to the price of gold if the USA goes hyper within the next 10 years. By hyper i mean 25-35% per year on year for every day sort of stuff like food and fule. Not TVs or junk taht people can live without. The stuff that hurts normal peoples cost of livving.
Now i do know that any country that is pegged to the doller, like china would be hit very bad if they did not cut there doller links. But i would like to know about the pound and the euro. What would happen to the price of gold in pounds and euros ?  The pice of the doller would sink agenst both. So would the gold price drop for anyone buying in euros and pounds ?

[Jake]

 Jake, on 16 February 2012 - 06:18 AM, said:

BOJ targets inflation of 1%, boosts easing
¥10 trillion more added to asset purchase effort, to go for JGBs

http://www.japantime...20120215a1.html

and today...

http://www.japantime...20120216a1.html

Hideo Kumano, chief economist at Dai-ichi Life Research Institute, expressed a similar view, saying the BOJ "is now caught in a race for monetary easing" with central banks in other major industrialized nations.

More woeful news from Japan.

http://www.japantime...20120221a1.html

The deficit ballooned 207.7 percent from January 2011 — the most in a single month since record-keeping began in 1979.

It is also the first time the deficit has broken ¥1 trillion in a single month. The previous single-month record was ¥967.9 billion set in January 2009 after the collapse of Lehman Brothers triggered a global financial crisis.

The large deficit was highlighted by a sharp rise in energy imports, which have been surging in the wake of nuclear power plant shutdowns caused by the Fukushima crisis.

Purchases of crude oil jumped 12.7 percent, but purchases of liquefied natural gas soared 74.3 percent in January

[malvern hills]

I raed this earlier.
What the  hell are they doing shutting down 95% of their nuclear capacity while being so over indebted, and having to import the difference in nat gas.

Fukushima was shocking and tragic , but they are compounding their problems.
I think the Japanese are loosing control I'm afraid.

[halight]

Bank of England considered £75bn of QE

Two rate-setters believed the economy needed an even bigger stimulus than the £50bn injection agreed this month despite mounting evidence that the Bank of England reckons the worst is over, the minutes to this month’s Monetary Policy Committee (MPC) meeting showed.


http://www.telegraph...75bn-of-QE.html