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For the Record (Read 225940 times)

Grey Gold Member Offline Australian Politics Posts: 5341 Gender:	Re: For the Record Reply #735 - Sep 6^th, 2012 at 3:11pm Wel that's all good as long as the little buggers work hard enough to keep the pension cheques coming, Vote Grey for lower wages, more wealth taxes and much higher pensions
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Re: For the Record
Reply #736 - Sep 6^th, 2012 at 7:49pm

Grey wrote on Sep 6^th, 2012 at 3:11pm:

Wel that's all good as long as the little buggers work hard enough to keep the pension cheques coming, Vote Grey for lower wages, more wealth taxes and much higher pensions

I would suggest, not counting on either of those outcomes.

In fact, a little further down the road, I would see any sort of Pension, may be a bonus and not an expectation!

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Re: For the Record
Reply #737 - Sep 13^th, 2012 at 11:32am

Stop targeting Australia's wealthiest: Nasser

BHP Billiton Ltd chairman Jac Nasser has called for an end to political attacks against Australia's wealthiest citizens, saying that it is time the country ask itself whether it would “feel better” if its wealthiest moved to Singapore or Switzerland.

Speaking at a luncheon in Melbourne, Mr Nasser defended mining billionaires Gina Rinehart and Andrew Forrest, who have taken heat recently from federal Treasurer Wayne Swan.

“Would Australia be better off if the top two per cent of wealth creators and high-net worth people left and decided to live in Singapore?,” he said.

“Would we feel better about that? Would we feel better if – you know, in some of these examples, if Twiggy Forest woke up tomorrow, or Gina, or whoever, and decided, 'I've had enough of Australia. I'm going to live in Switzerland.' Would that make us feel better?”

Mr Nasser said the current nature of political rhetoric was pitting the poor against the rich and dividing the country by class and focused on penalising success, rather than asking how success can be enhanced.

“When people would talk about the one-speed economy, and the two-speed economy, it was just driving me nuts,” he said.

“I couldn't understand what they were really saying, except that they wanted to take as shotgun and shoot some of the best athletes in the left foot. It just – it didn't make sense to me.

I think maybe going through what we're going through now is a wake-up call for everybody, including people in the industry, that this – you know, God didn't intend for this to stay this way forever. It is a cyclical industry in a cyclical global economy.”

Link -
http://www.businessspectator.com.au/bs.nsf/Article/Stop-targeting-Australias-wea...
===================================

Aw, poor things?

Yes Jac, "what we're going through now is a wake-up call for everybody" & No Jac, "God didn't intend for this to stay this way forever"

In fact, Jac, cyclical is how it was, which is now changing, as we reach the end of the great cycle in human history, so either the top 1% change & the other 99% change OR the pie will not only shrink, it may be entirely gone, forever!

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Grey Gold Member Offline Australian Politics Posts: 5341 Gender:	Re: For the Record Reply #738 - Sep 13^th, 2012 at 1:25pm I think that if greedy class of G. Rheinhardt and her ilk left the country it would be a much better place, yes. But the wealth of extracted Australia should not be allowed to follow them.
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Re: For the Record
Reply #739 - Sep 14^th, 2012 at 1:20pm

Moody's warns of U.S. credit rating cut if debt problems continue

Moody's Investor Services warned Tuesday that it likely would downgrade the U.S. AAA credit rating if government officials don't deal with the nation's debt problems.

The credit rating firm said negotiations between Congress and the White House on the nation's 2013 budget, and whether they will reduce the high ratio of debt to gross domestic product, will be key to maintaining its top credit rating.

"If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable," Moody's said.

"If those negotiations fail to produce such policies, however, Moody's would expect to lower the rating, probably to Aa1," the company said.

That rating -- a notch below AAA -- would be the equivalent of the rating that Standard & Poor's put in place for the U.S. in 2011 when it downgraded the nation's top-level rating following the divisive debate over raising the debt ceiling.

It was the first credit downgrade in U.S. history, and led to a huge stock market plunge.

Moody's and the other leading credit rating company, Fitch Ratings, kept the U.S. at AAA level after Congress and the White House agreed to an increase in the debt ceiling. But Moody's changed its outlook to negative, meaning there was a risk of a downgrade in the future.

Moody's said it would keep the AAA rating with a negative outlook until budget negotiations are completed.

The U.S. national debt topped $16 trillion for the first time on Aug. 31 amid lower revenues caused by the Great Recession and increased government spending to try to boost the economy. That brought the ratio of debt to GDP to more than 100%.

The Congressional Budget Office estimated last month the budget deficit for the 2012 fiscal year, which ends Sept. 30, will be about $1.1 trillion.

Link -
http://www.latimes.com/business/money/la-fi-mo-moodys-us-credit-rating-debt-2012...
===================================
With a Deficit of some $1.1 Trillion, Debt of over $16 TRillion & an "official" Debt to GDP ratio of over 100%, any sane person should ask, why ALL of these Ratings Agencies did not impose "Junk Bond status" on US Debt already?

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Re: For the Record
Reply #740 - Sep 14^th, 2012 at 5:22pm

The big guns: US Fed launches QE3

The Federal Reserve has announced bold, open-ended steps to stimulate the US economy and reduce high unemployment, saying it will spend $US40 billion ($38 billion) a month to buy mortgage-backed securities for as long as necessary.

After trading flat before the Fed’s announcement, US stocks surged to multi-year highs and Australian stocks are set to follow. The Dow and the S&P 500 both closed at their highest levels since December 2007, while the Nasdaq ended at the highest since November 2000.

The US dollar fell, oil prices rose and gold hit a six-month high
, and the Aussie dollar shot higher to $US1.0543, its highest level since August 10. Locally, the futures market is pointing to gains of about 0.75 per cent when the market opens.
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The central bank also extended a plan to keep short-term interest rates at record lows - close to zero - until mid-2015, or six months longer than it had planned. And it said it’s ready to take other steps even after the economy improves under a ‘‘highly accommodative stance of monetary policy’’.

The plan
‘‘The idea is to quicken the recovery,’’ Fed chairman Ben Bernanke later told a news conference. But he made it clear he thinks the economy will need the Fed’s intervention even after the recovery strengthens, saying
the country’s employment situation ‘‘remains a grave concern’’
.

A new Fed forecast said it thinks unemployment, now at 8.1 per cent, won’t fall below 8.0 per cent this year.

"If the outlook for the labor market does not improve substantially, the committee will continue its purchase of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability," the Fed said in a statement.

In an additional move that reflects just how concerned Fed officials are about the economy, policymakers said they would not likely raise interest rates from current rock-bottom lows until at least mid-2015. Previously, it had set such guidance at late 2014.

"To support continued progress toward maximum employment and price stability, the committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens," the central bank said.

"They are definitely stepping up," said William Larkin, a portfolio manager at Cabot Money Management in Salem, Massachusetts. "It creates an inflation outlook concern because if you are doing it for this extreme for this length of time, my biggest question is what is going to happen to inflation in two years?"

Pushing on a string?
The decision comes in the face of widespread questions about the likely effectiveness of a further foray into unorthodox monetary policy, including from Republican presidential nominee Mitt Romney.

Senator John Cornyn, head of the Senate Republican Campaign Committee, said the Fed appeared to be "trying to juice the economy" ahead of the presidential election to help Obama. "It looks to be political," he said.

Brazilian Finance Minister Guido Mantega said he would keep a close eye on the impact of the Fed's monetary easing on Brazil's real currency. Mantega had accused the Fed's earlier bond buying of unfairly weakening the US dollar.

In its statement, the Fed said the fresh MBS purchases, which it will start on Friday, would come on top of its so-called Operation Twist program, in which it is selling short-term bonds to buy longer-term Treasury debt.

"These actions, which together will increase the committee's holdings of longer-term securities by about $US85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and to help make broader financial conditions more accommodative," it said.

The latest purchases build on the $US2.3 trillion in US government and housing-related debt the Fed has already bought.

In the Fed's first two rounds of so-called quantitative easing, dubbed QE1 and QE2, the central bank bought bonds closer to a pace around $US100 billion per month.

"Swallowing the key"
By buying mortgage-linked debt, the Fed hopes to press mortgage costs lower and force investors into other assets, lowering their yields as well. Those lower borrowing costs should spur greater lending activity and foster faster economic growth, officials believe.

US economic growth cooled in the second quarter, coming in at a tepid 1.7 per cent annual rate, and forecasters do not believe it is doing much better now.

The economy created just 96,000 jobs last month, less than needed to keep up with population growth. While the unemployment rate edged down to 8.1 per cent, it was only because so many Americans gave up on the search for work.

The Fed will provide fresh forecasts that could show softer projections for economic growth and higher unemployment, which would help provide a rationale for its decision.

Stephen Stanley, an economist Pierpont Securities in Stamford, Connecticut, said that by tying its purchases to progress reducing US unemployment, the Fed had "basically locked on the handcuffs and swallowed the key."

Link -
http://www.smh.com.au/business/world-business/the-big-guns-us-fed-launches-qe3-2...
================================
I would have no problem with any of the FED &/or ECB measures, IF they were going to do what has been done numerous times before, in the modern Economic era.

However, given the basic Global factors, which have been in play & will continue to be in play, for at least the next few decades, THIS TIME IS DIFFERENT & THESE MEASURES WILL ONLY FINALLY EXACERBATE AN ALREADY BAD SITUATION!

There are a number of reasons, why the US & Global Economy now finds itself in this situation, but the US job creation figures clearly indicate there is a problem.

As this article says, "the economy created just 96,000 jobs last month, less than needed to keep up with population growth", but that is only the tip of a massive jobs iceberg.

In fact, since Obama took over, job creation has averaged just over 80,000 per month, whilst the US Population growth of around 1% means that anything under 150,000 jobs created each month has the US Economy going into reverse and that is what is continuing to happen!

Btw, for those who would say, see the Lefties can't run an Economy, they should know that the US Conservatives under Bush, LOST AROUND 16,000 JOBS ON AVERAGE, PER MONTH, OVER 8 YEARS!

Making an Economy recover, has nothing to do with magically summoning up $'s, from nowhere. That ploy, will finally arrive back on the USA's doorstep, via a decline in the value of the purchasing power of the US$, which will most likely be hastened, as a growing number of countries seek to dethrone the US$ as the Global Reserve currency and kick it out as the sole currency for paying for Crude Oil.

Good Luck & watch the Debt!

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Re: For the Record
Reply #741 - Sep 15^th, 2012 at 4:17pm

The west can't hold up nation, says Colin Barnett

WEST Australian Premier Colin Barnett has warned that his resources-rich state cannot hold up the Australian economy alone, as he warns the rest of the nation to leave WA's "bogans and billionaires" alone.

Mr Barnett, speaking at the conference hosted by The Australian and The Wall Street Journal in Sydney yesterday, said while the resources sector could sustain the West Australian economy, it was unreasonable to expect it could do the same for the Australian economy as a whole.

"The strength of the mining industry has concealed some of the weaknesses of the Australian economy," he said.

"The mining industry and the China relationship can sustain the West Australian economy for decades to come, but not the Australian economy as a whole.

"The mining industry is neither the saviour nor the destroyer of the Australian economy."

The parochial Premier highlighted his state's strong ties with China, saying the economic relationship between China and Australia was very much between the Asian giant and his state.

Western Australia provides 72 per cent of Australia's exports to China, while about 80 per cent of investment by China's state-owned enterprises in Australia is in Western Australia, according to statistics outlined by Mr Barnett.

"My state has been described as a 'dig it up, ship it out' economy ... others think we are China's quarry, and others think we are just bogans and billionaires.

"Well if we are, we know what we are doing - just leave us alone," he said.

The Premier of the resources state, referring to the debate about the mining "boom" being over, said he rejected that notion.

"Anyone who follows mining and commodity prices understands that volatility is normal," he said. "Anyone who follows Asia knows that the China expansion has a long way to go.

"This latest dip in prices is nothing new and will certainly happen again. My frustration is with a boom-bust mentality and the way that distorts economic thinking and policy at a national level."

Mr Barnett said instead of worrying about China's growth rate, Australia needed to focus on its relationship with the economic powerhouse, which he said had been dented by a series of events, including the introduction of the mining tax.

"It is hardly surprising that China was offended by the introduction of the mining tax given that it applied only to iron ore and coal, the two major commodities China buys from Australia," he said.

"I have heard it referred to as anti-Chinese, even though that is clearly not the case. The message was unclear."

He said both the federal and state governments needed to ensure consistent and stable policy, which is then clearly communicated to China, to ensure Australia maximised the "China opportunity". He added that Australia was to blame for not clearly setting the rules of the game when the economic powerhouse first rushed into the nation's resources sector.

"It seemed to me at the time that China had failed to distinguish between what might have worked in a developing African nation and what was required in a top 20 nation such as Australia," he said. "There was no setting of the rules of the game. That was Australia's fault, not China's."

Link-
http://www.theaustralian.com.au/business/in-depth/the-west-cant-hold-up-nation-s...
==================================
Like many Politicians (Left or Right) and TPTB, Barnett lives in the past, not in the future & he lives by what he thinks things should be, not by what is now reality!

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Re: For the Record
Reply #742 - Sep 19^th, 2012 at 5:21pm

Japan Eases Monetary Policy in Surprise Move

TOKYO—The Bank of Japan decided on surprisingly strong steps to further ease its monetary policy Wednesday following recent easing action by the Federal Reserve, as the central bank looks to tackle entrenched deflation, the strong yen, and slowing global growth.

The central bank's policy board decided to increase the size of its asset-purchase program—its main tool for monetary easing with interest rates near zero—to ¥80 trillion ($1.01 trillion) from ¥70 trillion, and also to extend the deadline of the program by six months to the end of 2013.

While some had predicted that the BOJ would take additional steps, the combination of an expansion and an extension of the asset purchases was at the higher end of expectations.

"The BOJ took more action than we anticipated," Finance Minister Jun Azumi told reporters, adding that the decision was timely given signs of slowing growth in the Japanese economy.

The BOJ's move follows easing action by other major central banks. The Fed introduced another round of quantitative easing last week, which put renewed upward pressure on the yen, while the European Central Bank earlier this month introduced an unlimited sovereign-debt buying program in an attempt to end the euro crisis.

The central bank will purchase another ¥5 trillion of Japanese government bonds by the end of December 2013 and buy additional ¥5 trillion of short-term government bills by the end of June 2013.

The BOJ's decision was backed by its bleaker view of the economy. It downgraded its assessment of the economy for September, saying "the pick-up in economic activity has come to a pause."

Link -
http://online.wsj.com/article/SB10000872396390443816804578005260696436022.html
==================================
This comes from a government leading the Debt chart and they have 20 years behind them, to confirm that it's just not working!
http://chart.googleapis.com/chart?cht=bhs&chs=854x351&chxt=y%2Cx&chxl=0%3A%7CGre...

Via the following article -
http://www.gfmag.com/tools/global-database/economic-data/11855-total-debt-to-gdp...

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Re: For the Record
Reply #743 - Sep 21^st, 2012 at 8:47am

Fakes

Tungsten-Filled 10 Oz Gold Bar Found In The Middle Of Manhattan's Jewelry District.

It is one thing for tungsten-filled gold bars to appear in the UK, or in Germany: after all out of sight, and across the Atlantic, certainly must mean out of mind, and out of the safe. However, when a 10 ounce 999.9 gold bar bearing the stamp of the reputable Swiss Produits Artistiques Métaux Précieux (PAMP, with owner MTP) and a serial number (serial #038892, likely rehypothecated in at least 10 gold ETFs across the world but that's a different story), mysteriously emerges in the heart of the world's jewerly district located on 47th street in Manhattan, things get real quick.

The Secret Service, which deals with counterfeits, said it is investigating.

And cue panic on the realization that virtually any gold bar in the world, not just those in Europe and Australia, which have already had close encounters with Tungsten substitutes, but also New York may be hollowed out and have a real worth of a few dollars max. Which, sadly, is fitting considering our main story from last night was the realization that an unknown amount of Chinese iron ore had either never existed or had simply vaporized, and was no longer serving as the secured collateral to various liabilities circulating in the electronic ether. After all, only the most naive out there could conceive of gold being sacrosanct when every other asset class is being diluted to infinity by a regime that has long since run out of money.

Link -
http://www.zerohedge.com/news/tungsten-filled-10-oz-gold-bar-found-middle-manhat...
=================================
Be careful, be very careful, out there!

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Re: For the Record
Reply #744 - Sep 22^nd, 2012 at 11:49am

Choices

Choice, it is that most human of gifts; it is what sets the human species apart from everything else on this planet.
Our capacity to understand that we can choose and our ability to act on that choice has seen humanity achieve things, previously thought impossible.
However, humanity has also evolved into a highly adversarial society, which is based primarily on a philosophy of, it must be good for me and I want it, now!
But, because what is good or right, is based on our own individual perceptions of life and our own heredity, consensus and agreement are becoming an increasingly rare commodity.
That said, there are times, often generally agreed by historians in hindsight, when human events come to a crossroad and we are now in the midst of one of those historic times.
Paramount amongst our choices, it is vital that we send a clear message that no individual, group or nation can use or threaten to use; Economic, Psychological or Physical force against any other individual, group or nation.
It is also apparent that we humans, our Politics & our Economics, are interlocked with the Environment
of the planet, whether we want or not, whether we like it or not, even whether we admit it or not and unless we act quickly, to live within our means, which means our Population must live within the means that the planet can sustain over time, then we will most likely destroy our environment & ourselves.
Of course, in the longer (planetary) term, the planet will undo the damage we may wreak upon it, but in the short-medium term, we humans & the planets environment are actually co-dependent on each other.
At present, we humans are in a headlong rush to Grow, which is reflected in our Population growth and Energy usage, over the past century or so.
The problem is that the planet is finite, as are its Resources, such as Energy (Oil, Coal, Gas etc), fresh water & capacity to feed the growing Global Population.
We are now exceeding the planets capacity to sustain us, even at current Global Population levels and unless we change our Political & Economic paradigm soon, we will push the planet too far and it will start to push back.
In short, the time has come when we are faced by stark choices, if we fail to sustain the Environment, and then the Environment will fail to sustain us!
At this point in time, we can not pass the buck, neither should we kick the can further down the road and nor can we simply print more bucks, as each of those alternatives will simply exacerbate future difficulties.
There are crucial decisions to be made and the choices we make now, will decide the future of humanity for a long, long time!
There is a need to say clearly and in a united voice that this world needs to be in better shape, to provide future generations of humanity a fair chance of survival!
Reconciliation with our past and future, information equality, fair Economic outcomes for all, an understanding that we all have responsibilities, as well as rights and that we are all interlocked in these future outcomes, are vital issues for our future.
In seeking new expectations from life, we will need the courage to traverse paths that do not yet exist and the wisdom of true leaders, who understand that short term personal gain, can not come at the expense of the best longer term interests of all, nor at the expense of failing to take the correct actions, when needed.
The choice, as always, is ours.
So, understanding that we simply can not continue with the status quo, we need to seek the correct balance and we need to make sure that our decisions, our choices, are heard by all.
We should also remember that for every action or non-action, there are consequences and that all real change starts with you and with me, it starts with us!
Good luck to us all and watch the Debt!

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perceptions_now Gold Member Offline Australian Politics Posts: 11694 Perth WA Gender:	Re: For the Record Reply #745 - Sep 27^th, 2012 at 4:26pm
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Re: For the Record
Reply #746 - Sep 27^th, 2012 at 7:34pm

Really Plosser? (The Fed Is A Fraud)

Bloomberg gave this some ink...
Quote:

“We are unlikely to see much benefit to growth or to employment from further asset purchases,” Plosser said in a speech today at the district bank in Philadelphia. “Conveying the idea that such action will have a substantive impact on labor markets and the speed of the recovery risks the Fed’s credibility.”

Unlikely?

Stop speaking in half-truths.

Employment Rate of Population Chart
http://market-ticker.org/akcs-www?get_gallerynr=3581

None of the QE games have done a damn thing for employment.

Employment is factually, when looked at through the only lens that matters, the percentage of working-age people who have jobs, no better than it was when QE was first initiated.

This, incidentally, is why I was

all over Bernanke originally on the announcement

; he has the same charts I and everyone else does and therefore The Fed Statement was a knowing, intentional fraud as there is no evidence that any of the previous QEs have done anything whatsoever to improve the job market and Bernanke knows it.

Link -
http://market-ticker.org/akcs-www?post=211981
=================================
The US Employment rate is certainly not improving, despite the QE moves of the US FED.

That said, the FED supports the banks (who own the FED), not the taxpayers, not the unemployed.

It should be remembered that Baby Boomer retirements are also impacting the Employment Participation rate and that is keeping the rate artificially lower than it would otherwise have been.

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Re: For the Record
Reply #747 - Sep 30^th, 2012 at 9:43pm

QE Trumps Horrible Economic Data

You couldn't have dreamed up the crummy economic data received Thursday. The leading stinkers were GDP (1.3% vs. 1.7% expected) and Durable Goods Orders (-13.2% vs. -5% expected, and prior 4.2%). Along for the ride were Pending Home Sales (-2.6% vs. .3% expected, and prior 2.4%) and Jobless Claims, which beat (359K vs. 376K expected, and prior revised higher to 382K). The bullish spin for the poor GDP data was caused by the drought that doesn't jive with the calendar, as it doesn't support such a claim. The poor Pending Home Sales data was spun by bulls as caused by a lack of inventory. Of course, this is hilarious, since if you asked any banker with REO, they'll tell you they have plenty of inventory.

Jobless Claims data looked positive on the surface, but "headline" numbers showed claims down by 141K. However, cumulative "revisions" show only 2K lower in 2012, as the chart below shows. In an election year, unsurprised, the Department of Labor has asserted it may have underestimated job growth by 380K. (There will be plenty of spin there.)

Spain, of course, remains in the headlines as the budget process is slowly being unveiled. It seems to be more about buying some more time than doing anything constructive. Frankly, they're borrowing from their social security trust fund, which might see them through October. Per BNP, with a hat tip to Zero Hedge:

Spain is edging closer to asking for financial aid, but it's a long, slow process. We think Spain will find it very difficult to hold out longer than October, though a transfer from the social-security stabilization fund could give it some room to maneuver.
After today's announcement of the 2013 budget and planned structural reforms, the next event is tomorrow's publication of the results of the bottom-up bank audit.
The Eurogroup should take a broadly positive view on the new measures, assuming it is given more detail, allowing the Spanish government to spin any bailout as a reward for form. This could remove part of the stigma associated with it, at least domestically.
The country's regional elections on October 21 could be the last obstacle to an aid request. Another glitch, however, is Catalonia's call for an early election in November and a potential referendum on regional autonomy.
Any unused funds from the bank bailout may be used to lower the final cost of a sovereign bailout, something that should appease Germany. But we don't think these funds will be enough and expect Spain to request additional funding.

And so it goes -- kick the can, buy some time, let others deal with it, and etc. The demonstrators will tire and be confused is their hope.

So stocks rallied on the combination of the Bernanke/Draghi Put. It's just the way things are, and who are we to fight the tape?

The dollar (UUP) fell; the euro (FXE) rallied; bonds (TLT) fell; commodities (DBC), (USO), (GLD), (DBB) and so forth) rallied. Stocks were led higher, broadly by technology and ideas from China that more stimulus would be on the way. Further, it was reported that China authorities added $58 billion to money markets yesterday.

Concluding Remarks
It is pretty comical to see a headline touting a market rally solely on strong employment data. Ignored in most articles with bullish spin was the dreadful GDP, Durable Goods and Pending Home Sales data. But this is the market we have. We're also nearing the end of the month and quarter. Fees and bonuses are on the line for portfolio managers, and let's just say they're human. So, a little window dressing is usually in the cards.

Vanguard just cautioned investors: "Don't react to news events like the downward revision of GDP. It's just 1 piece of info that markets are already pricing in."

Link-
http://seekingalpha.com/article/893141-qe-trumps-horrible-economic-data?source=e...
=================================
"QE Trumps Horrible Economic Data"

Short term, Yes! The question is how long?

Longer term, No!

AND, in taking these actions, they will inevitably make the final outcomes worse!

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Re: For the Record
Reply #748 - Sep 30^th, 2012 at 10:52pm

Why Today's System Of Fiat Money Is Doomed To Fail And What It Means For Investors

There is a clear link between our system of fiat (paper) money, the supply of money and credit in an economy, and the 30-year boom that came to a dramatic end in 2008. It's only by understanding this link that investors (and anyone with wealth) can appreciate just how fragile our financial system is, and what to do to protect themselves from its inevitable collapse.

First, we need to establish the link between fiat money and the amount of money in an economy.

Today, for the first time in history, we have a situation where all the world's currencies are fiat, which means they are money only because of government edict, i.e. because the law says so. None of these currencies have any intrinsic value, nor are they backed by any kind of reserves, such as gold or silver, or any other portable, durable, easily divisible item that is likely to be accepted as payment.

In the words of Federal Reserve Chairman, Ben Bernanke, "US dollars have value, only to the extent that they are strictly limited in supply."
Therefore, as more dollars, euros, or British pounds are created, their value declines.

What this means is that when a government wants to pay for a new welfare program or campaign promise, there is nothing to stop them from creating more dollars, euros, or British pounds to pay for it, and they can do so essentially at the touch of a button.

Now that we have established the link between fiat money and the supply of money in an economy, we need to examine the link between the amount of money in the economy, and the boom-bust cycle that culminated in the global financial crisis of 2008. This is a process which is best described by the Austrian theory of the business cycle.

The Austrian theory of the business cycle makes the case that interest rates play a vital role in a healthy economy. That's because interest rates coordinate production over time. For example, when consumers save their money rather than spending it, interest rates have a natural tendency to decline because there is an abundance of available capital.

It's these low interest rates that encourage businesses to borrow money and begin expanding and developing new products. This is precisely the time when they should be expanding, because it's the time when consumers are saving, and therefore they will have money to spend on new goods and services at some time in the future.

Conversely, when consumers decide to spend their money today, rather than saving it, the supply of available capital falls, and so interest rates rise. This, in turn, discourages businesses from borrowing money to expand, which is a good thing because consumers won't have the money to buy their products when their expansion is complete.

So as we can see, by sending signals about the cost of borrowing, interest rates play a vital role in a healthy economy.

The problem arises when central banks intervene in the free market and artificially suppress interest rates, which is what they are doing today, and what they've done for the past thirty years.

When central bankers push down rates artificially, they send false signals to businesses encouraging them to borrow money to expand, because it's cheap to do so. The problem is, consumers aren't saving so they won't be able to buy the goods and services these companies produce once their expansion is over.

So by interfering in the free market to stimulate what they call "aggregate demand," politicians and central bankers actually perpetuate the boom, causing even greater misallocations of capital and malinvestment. Eventually, when the artificial boom finally turns to bust, as the laws of nature say it must, the bust is much bigger than it otherwise would have been had the politicians let the market correct itself.

Unfortunately, it was John Maynard Keynes, rather than the Austrian economists like Friedrich Hayek and Murray Rothbard that won the intellectual debate, and so we continue to follow a broken economic model which has been completely discredited.

The bottom line
What all this means is that politicians and central bankers will go to extraordinary lengths to try to resurrect the artificial boom and keep the credit bubble expanding. They will continue to punish savers and encourage investors to take risks. They will keep the price of money (interest rates) artificially low for as long as they can. And they will continue to bailout insolvent nations, banks and companies.

Eventually, however, there will be a trigger that bursts the credit bubble. Perhaps it will be another financial crisis, or perhaps the OTC derivatives market will blow up, or maybe the trigger will be a war.

Regardless of the trigger, the important thing to realize is that our current system of fiat money, fractional reserve banking, too-big-to-fail, crony capitalism and Keynesian economic doctrine is not sustainable. And when the bubble finally bursts, we will experience a severe deflationary depression during which we will hopefully redesign our economic system, starting with our broken money. Then, and only then, can we begin a new cycle of true lasting prosperity.

In order to protect themselves from this inevitable collapse, investors need to consider holding a portion of their wealth in physical gold and silver outside the banking system. Once they have accumulated this safety net, they can then begin looking at other assets that are likely to do well during this period.

Link -
http://seekingalpha.com/article/892841-why-today-s-system-of-fiat-money-is-doome...
=================================
There is, of course, another reason for an expanding "Monetary supply" and that relates to Politicians & the Federal Reserve wanting to try to bail out the Financial sector and TPTB, notwithstanding the fact that THEY (the Financial sector and TPTB) were the main culprits, in making some very poor decisions!

Btw, I think Bernanke will most likely be proven to be correct, when he says, "US dollars have value, only to the extent that they are strictly limited in supply."

The timing, as usual is somewhat difficult to predict, but at some point in time, "printing Trillions of $'s" will come home to roost!

In particular, one should consider the likely outcomes for the US$,
were settlements in the Global Crude Oil market, to cease being mandated in US$'s.

That said, it should also be noted that much of the old system & remedies are already "null & void". In simple terms, THEY JUST WON'T WORK!

And the major reasons are -
1) Once in history Demographics.
2) We are NOW at the top of a once in history Energy Pyramid.
3) We are NOW at the top of a once in history Debt Pyramid.
4) Even the Global Climate has had enough and it is now changing!

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Ex Dame Pansi

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Australian Politics

Posts: 24168

Re: For the Record
Reply #749 - Oct 1^st, 2012 at 5:16pm

Mining is taking a serious hit. It is clear that China has slowed down considerably. I'm not sure if QE3 will have any effect on the US job situation, but it helps to raise the worth of gold, the only genuine currency in times of desperation (fiat money is doomed).
.......................................................................

At a mining conference I went to last week, some of the company executives presenting looked pretty miserable.

A quick look at the company’s balance sheet explained the glum faces in most cases.

After two bleak years for the mining sector, investors are getting fed up. Looking for fresh capital seeking resource exposure is not easy, and I’ve heard of plenty of recent capital raisings only just get across the line, or failing altogether.

It’s good to step back and remind ourselves just how far mining stocks have fallen in recent years. So this chart tracks the 38% drop in the metals and mining index (XMM) since its 2011 peak.

A Tale of Two Commodities: Iron Ore Crashes while Gold

Gold still looks good after its run. For one thing, the fallout in the iron ore sector will send a lot of capital in the Australian market looking for a new home. Gold stocks will fit the bill, pushing gold stock prices up. Then the Federal Reserve’s latest round of money printing (QE3) will support a steady gold price rally as the months roll by.

Check out more at:

http://www.moneymorning.com.au/20121001/what-if-the-fallout-in-the-iron-ore-mark...

"When the power of love overcomes the love of power, the world will know peace." Hendrix
andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up.....

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