Saturday, November 20, 2010
Dueling articles:
Bernanke blames China for some of the US monetary problems by keeping its currency weak compared to the US dollar.
The Chinese government is causing controversy by increasing the reserve requirement for banks, a move which will tend to deflate and strengthen the currency.
So which is true? Both?
Bernanke blames China for some of the US monetary problems by keeping its currency weak compared to the US dollar.
The Chinese government is causing controversy by increasing the reserve requirement for banks, a move which will tend to deflate and strengthen the currency.
So which is true? Both?
Friday, November 12, 2010
I've been watching the price of oil lately, and while in the short term the market continues to stymie me, from what I can tell, in the medium-to-long term the price of oil is governed by a negative feedback mechanism and is thus (potentially) predictable.
Our economy is reliant on petrochemicals and energy generated by burning fossil fuels. Should the price of oil rise too high, the economy will collapse. When the economy threatens to collapse, the demand for oil goes down, which means prices retreat. Therefore, oil follows a value which sucks any usable excess out of our economy, short of a level which would crash it.
Or in other words, our country is being steadily milked of its cash, not enough to kill the cow but too much for the cow to be happy.
Our economy is reliant on petrochemicals and energy generated by burning fossil fuels. Should the price of oil rise too high, the economy will collapse. When the economy threatens to collapse, the demand for oil goes down, which means prices retreat. Therefore, oil follows a value which sucks any usable excess out of our economy, short of a level which would crash it.
Or in other words, our country is being steadily milked of its cash, not enough to kill the cow but too much for the cow to be happy.
Thursday, November 04, 2010
So, the Fed is going to expand the money supply, as I've been anticipating. The stock market is taking it well, which is a mixed sign; business revenues will go up in pace with inflation, and assuming the economy doesn't tank stocks are a good investment. The rise in stock prices means investors think the economy will hold together despite inflation.
The expansion of the money supply will show up (eventually) as inflation, and not as a devaluation, which IMO is not ideal for the economy. Worse yet, there is no sign of any austerity measures, which means the fundamental issues with government spending aren't being solved. Expect further "easing" by the Fed in a year or less.
The expansion of the money supply will show up (eventually) as inflation, and not as a devaluation, which IMO is not ideal for the economy. Worse yet, there is no sign of any austerity measures, which means the fundamental issues with government spending aren't being solved. Expect further "easing" by the Fed in a year or less.
Sunday, October 17, 2010
So, the Fed is considering "inflation" as an economic fix.
Whoo boy.
I've been talking about devaluing the US dollar as a necessity for saving it. The Fed, on the other hand, is going to perform that devaluation in a way that will damage the dollar badly, if not destroy it entirely.
The problem with fiat currencies is they depend almost entirely on trust. When you lose trust in a currency, it becomes worthless. The dollar is based on the "full faith and credit" of the US government, so when that government goes bankrupt, it heralds the end.
To save the US dollar, the Federal government would need to:
(1) Adopt austerity measures and slash the budget.
(2) Either: (a) Raise taxes sufficiently to retire the debt (which would tend to shut down the economy) or (b) Print money to pay off the outstanding debt (which would result in a moderate to severe inflation until the debt was paid off).
What the Fed plans to do is:
(1) Have the US government issue bonds, which the Fed will buy.
(2) Pay the government with newly minted dollars, which it will use for even more spending.
(3) Repeat the cycle every year, since the government is unwilling to reduce its budget, continually expanding the money supply and pushing inflation into hyperinflation as the dollar becomes wastepaper.
(4) (The people who hold our government in thrall will) Profit.
Whoo boy.
I've been talking about devaluing the US dollar as a necessity for saving it. The Fed, on the other hand, is going to perform that devaluation in a way that will damage the dollar badly, if not destroy it entirely.
The problem with fiat currencies is they depend almost entirely on trust. When you lose trust in a currency, it becomes worthless. The dollar is based on the "full faith and credit" of the US government, so when that government goes bankrupt, it heralds the end.
To save the US dollar, the Federal government would need to:
(1) Adopt austerity measures and slash the budget.
(2) Either: (a) Raise taxes sufficiently to retire the debt (which would tend to shut down the economy) or (b) Print money to pay off the outstanding debt (which would result in a moderate to severe inflation until the debt was paid off).
What the Fed plans to do is:
(1) Have the US government issue bonds, which the Fed will buy.
(2) Pay the government with newly minted dollars, which it will use for even more spending.
(3) Repeat the cycle every year, since the government is unwilling to reduce its budget, continually expanding the money supply and pushing inflation into hyperinflation as the dollar becomes wastepaper.
(4) (The people who hold our government in thrall will) Profit.
Sunday, July 11, 2010
So, Obama wants illegal Mexican immigrants in the United States, but he doesn't want them to have jobs. After all, working immigrants might think fiscal responsibility was a good thing, and might vote against the Democrats.
Thursday, June 17, 2010
Okay, so why is the Federal government preventing vacuum barges from sucking crude oil out of the sea in the Gulf? I've heard many conspiracy theories...
"You never want a serious crisis to go to waste." Claiming they're exacerbating the spill to forward political ends doesn't fit; no matter how many barges they deploy, they'll never get more than a fraction of the oil that's been let loose in the ocean; their efforts simply wouldn't reduce the pollution enough to matter. No sense wasting effort and spawning a media frenzy over blocking the barges.
"They're hiding something that's in the oil!" Unlikely. Even with all the military materiel that was dumped in the area of the well, anything that would've ruptured near the site would've been heavily diluted. Even a large amount of VX would become overly dilute.
"They're hiding the size of the spill!" I don't see how the barges would make a difference.
My guess? They're trying to keep the oil from being salvaged. Large amounts of oil recovered from the ocean would be sold and refined into useful products, increasing the petroleum supply and driving down prices. A bit of cash thrown at the Obama administration to keep this oil off the market would pay off in keeping the cash rolling in for the oil companies.
"You never want a serious crisis to go to waste." Claiming they're exacerbating the spill to forward political ends doesn't fit; no matter how many barges they deploy, they'll never get more than a fraction of the oil that's been let loose in the ocean; their efforts simply wouldn't reduce the pollution enough to matter. No sense wasting effort and spawning a media frenzy over blocking the barges.
"They're hiding something that's in the oil!" Unlikely. Even with all the military materiel that was dumped in the area of the well, anything that would've ruptured near the site would've been heavily diluted. Even a large amount of VX would become overly dilute.
"They're hiding the size of the spill!" I don't see how the barges would make a difference.
My guess? They're trying to keep the oil from being salvaged. Large amounts of oil recovered from the ocean would be sold and refined into useful products, increasing the petroleum supply and driving down prices. A bit of cash thrown at the Obama administration to keep this oil off the market would pay off in keeping the cash rolling in for the oil companies.
Tuesday, May 25, 2010
Are you guys ready for WWIII?
The crazy guy in charge of North Korea is threatening war. The crazy guy in charge of Iran is threatening war. Mexico is threatening war (on Arizona), and has been at war with itself for years now. Greece. Grenada. All these guys know the US armed forces are a bit overextended, so there's an opportunity (or at least, these crazy guys can pretend there's an opportunity to stoke their ambitions). We've got global currency issues. Worst of all, the Lost TV series ended!
I don't think (I'm hoping they won't) superpowers will be fighting each other, but I do think there's a significant chance we'll see a surge in wars declared around the globe, enough for the phenomenon to be considered another World War. Expect the US and Europe to use the violence as an excuse to devalue their currencies (yes, I'm going on about that again). We may even reach the point where the draft will be reinstated in order to send "peace officers" all over the globe.
The crazy guy in charge of North Korea is threatening war. The crazy guy in charge of Iran is threatening war. Mexico is threatening war (on Arizona), and has been at war with itself for years now. Greece. Grenada. All these guys know the US armed forces are a bit overextended, so there's an opportunity (or at least, these crazy guys can pretend there's an opportunity to stoke their ambitions). We've got global currency issues. Worst of all, the Lost TV series ended!
I don't think (I'm hoping they won't) superpowers will be fighting each other, but I do think there's a significant chance we'll see a surge in wars declared around the globe, enough for the phenomenon to be considered another World War. Expect the US and Europe to use the violence as an excuse to devalue their currencies (yes, I'm going on about that again). We may even reach the point where the draft will be reinstated in order to send "peace officers" all over the globe.
Thursday, May 13, 2010
Capitalism. It's evil! It's awesome! It oppresses the people! It's what made America great!
How can all this be possible? Obviously someone is lying.
Actually, it's worse than that. The two major interest groups in the United States are both trying to redefine the term "capitalism" away from its classical meaning, and are tarnishing the entire concept in the process.
So what is capitalism? Capitalism, the bare term alone, is the desire to build capital.
What is capital? Capital is the means of production. Factories and farms are capital. Capital increases the efficiency of producing goods. For instance, tractors and irrigation systems are capital equipment; without modern equipment, US farms might not be able to produce enough to feed our population, much less supply large amounts of food to the rest of the world.
So what's bad about that?
What people currently rail against is what is called Institutional Economics. This term means government gets involved in changing the business environment to favor capitalists. Not only does this tend to include limiting liability, by allowing for corporate structures, but it usually becomes a corrupt system with laws favoring particular businesses, which lobby for new laws and contracts.
This is in contrast to Laissez-Faire Capitalism, otherwise known as the "free market". French for "leave it alone", it means government should butt out of the economy, letting individuals and companies slug it out to see who can serve their customers best.
Corporations continually hold up the "capitalism" flag. "We are capitalism! Capitalism is good! We sustain the economy!" In the meantime, they use the privileges granted by the government to maintain effective monopolies, prevent new systems from entering the marketplace, and screw the customer as much as possible, issues which would be mitigated by a true free market system.
Anti-corporate organizations, on the other hand, oppose "capitalism". Many of them are simply polarizing themselves, taking the "anti-capitalist" side opposite the corporate "pro-capitalist" self-labeling. Some are communists who knowingly encourage this, using the corporations' propaganda to damage the entire idea of capitalism, including free markets.
Please keep in mind that there is more than one form capitalism can take, and that there is some very deceptive rhetoric being used, from multiple directions.
How can all this be possible? Obviously someone is lying.
Actually, it's worse than that. The two major interest groups in the United States are both trying to redefine the term "capitalism" away from its classical meaning, and are tarnishing the entire concept in the process.
So what is capitalism? Capitalism, the bare term alone, is the desire to build capital.
What is capital? Capital is the means of production. Factories and farms are capital. Capital increases the efficiency of producing goods. For instance, tractors and irrigation systems are capital equipment; without modern equipment, US farms might not be able to produce enough to feed our population, much less supply large amounts of food to the rest of the world.
So what's bad about that?
What people currently rail against is what is called Institutional Economics. This term means government gets involved in changing the business environment to favor capitalists. Not only does this tend to include limiting liability, by allowing for corporate structures, but it usually becomes a corrupt system with laws favoring particular businesses, which lobby for new laws and contracts.
This is in contrast to Laissez-Faire Capitalism, otherwise known as the "free market". French for "leave it alone", it means government should butt out of the economy, letting individuals and companies slug it out to see who can serve their customers best.
Corporations continually hold up the "capitalism" flag. "We are capitalism! Capitalism is good! We sustain the economy!" In the meantime, they use the privileges granted by the government to maintain effective monopolies, prevent new systems from entering the marketplace, and screw the customer as much as possible, issues which would be mitigated by a true free market system.
Anti-corporate organizations, on the other hand, oppose "capitalism". Many of them are simply polarizing themselves, taking the "anti-capitalist" side opposite the corporate "pro-capitalist" self-labeling. Some are communists who knowingly encourage this, using the corporations' propaganda to damage the entire idea of capitalism, including free markets.
Please keep in mind that there is more than one form capitalism can take, and that there is some very deceptive rhetoric being used, from multiple directions.
Sunday, May 09, 2010
Tuesday, April 06, 2010
I don't think most people realize what a mess the US dollar is in.
Last year the United States Treasury issued $300 billion in bonds, which were purchased by the Federal Reserve Bank. The Fed paid for the bonds with freshly minted currency. This action essentially means the printing presses are being run to pay for our debts. At the end of this road this action defines lies hyperinflation and the destruction of the dollar.
Our Federal government has had a short period of time to try and correct the fundamental problems which caused the need for the money; instead, our enlightened leaders have been busy expanding the govermnent and its expenses. These expansions have been accompanied by new and reconstituted taxes. There is a problem, however; (1) increasing tax rates above our current level is likely to damage our economy and actually reduce tax revenues, and (2) even if one assumes linear returns from increased tax rates the amount expected is not going to cover the (under-) estimated expense the expansion will require.
The result? Energy prices are rising. The dollar is losing value, falling below the Canadian dollar briefly (but I predict again and more drastically).
With a country full of entitlement whores it is unlikely for our government to be able to cut its expenses to the point where the debt can be paid for without destroying our economy. We are in the beginning stages of a disorderly devaluation of our currency, in the form of hyperinflation. A deliberate devaluation might fix the problem, but only with deep cuts in government.
In the next several years, this situation will lead either to a hyperinflation and the eventual end of our government, or to a takeover and socialized command economy, repudiation of debt, then followed by a hyperinflation and the eventual end of our govermnent.
Batten down the hatches, folks, it's gonna be a doozy.
Last year the United States Treasury issued $300 billion in bonds, which were purchased by the Federal Reserve Bank. The Fed paid for the bonds with freshly minted currency. This action essentially means the printing presses are being run to pay for our debts. At the end of this road this action defines lies hyperinflation and the destruction of the dollar.
Our Federal government has had a short period of time to try and correct the fundamental problems which caused the need for the money; instead, our enlightened leaders have been busy expanding the govermnent and its expenses. These expansions have been accompanied by new and reconstituted taxes. There is a problem, however; (1) increasing tax rates above our current level is likely to damage our economy and actually reduce tax revenues, and (2) even if one assumes linear returns from increased tax rates the amount expected is not going to cover the (under-) estimated expense the expansion will require.
The result? Energy prices are rising. The dollar is losing value, falling below the Canadian dollar briefly (but I predict again and more drastically).
With a country full of entitlement whores it is unlikely for our government to be able to cut its expenses to the point where the debt can be paid for without destroying our economy. We are in the beginning stages of a disorderly devaluation of our currency, in the form of hyperinflation. A deliberate devaluation might fix the problem, but only with deep cuts in government.
In the next several years, this situation will lead either to a hyperinflation and the eventual end of our government, or to a takeover and socialized command economy, repudiation of debt, then followed by a hyperinflation and the eventual end of our govermnent.
Batten down the hatches, folks, it's gonna be a doozy.
Sunday, January 17, 2010
[20:35] Rudy: Why do people not see that Venus Project is communism and won't work?
[20:36] Rudy: Maybe I should ask, why do people not see communism won't work?
[20:53] TheSHAD0W: Because a lot of people are doing make-work.
[20:53] TheSHAD0W: It has very little value or satisfaction.
[20:54] TheSHAD0W: And they think that it's the system's fault.
[20:54] TheSHAD0W: And these people are offering a newer system where they get what they want without having to do the make-work...
[20:54] Rudy: I know must of the make work I did was the system's fault
[20:54] TheSHAD0W: And don't realize that there are people who ARE doing meaningful work, who need to be rewarded.
[20:55] TheSHAD0W: And this Communism don't do it.
[20:56] Rudy: I can see that many of the supporters of Communism or Venus Proejct really have no clue about economics, or engineering, or any hard science
[20:56] Rudy: So that does fit
[20:36] Rudy: Maybe I should ask, why do people not see communism won't work?
[20:53] TheSHAD0W: Because a lot of people are doing make-work.
[20:53] TheSHAD0W: It has very little value or satisfaction.
[20:54] TheSHAD0W: And they think that it's the system's fault.
[20:54] TheSHAD0W: And these people are offering a newer system where they get what they want without having to do the make-work...
[20:54] Rudy: I know must of the make work I did was the system's fault
[20:54] TheSHAD0W: And don't realize that there are people who ARE doing meaningful work, who need to be rewarded.
[20:55] TheSHAD0W: And this Communism don't do it.
[20:56] Rudy: I can see that many of the supporters of Communism or Venus Proejct really have no clue about economics, or engineering, or any hard science
[20:56] Rudy: So that does fit
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