Posted on 01/16/2016 10:19:48 AM PST by SkyPilot
You mean our money might actually be worth something again?
Wealth could also be attributed to sweat equity, would it not? That of course is based on productivity, so it’s obviously fluctuating, but one could easily factor that into their asset category, something that can be generated and traded for goods.
Obviously banks don’t consider this but it’s quite important. Just ask China.
In the last 40 years I have never seen such a long and miserable time in this country as the last 10 to 15 and surely the last 7 has been the worst of that time for outright general depression of the people.
Great examples, and great stuff in the rest of your post.
I was reading articles describing the very complex rationale behind the saying that Google, Facebook, and Amazon are actually not profitable.
It is all a web.
On top of that, your statement about the excess of goods out there that people just don't want to buy is correct.
Possible answers
The Kleptocrats steal it — leaving their subjects in debt.
We, as a people, don't really know what deflation is because all the American people have seen for years is inflation.
And yes, deflation is a monster.
I’m foggy on all this myself, but I think the basic problem is fake “wealth” evaporating, not real wealth simply transferring.
Like you and everyone else think your house is valued at $500k. You may borrow against that amount. You are taxed on that amount. You may plan to sell it and retire off the proceeds.
But then you find out no one is willing to pay more than $200k for it. Essentially that $300k never existed, but you made assumptions that depended on it.
In the last year of the Clinton Administration the stock market collapsed. No one blamed Clinton.
In the last year of the BUSH Administration, the stock market collapsed. Everyone blamed Bush.
I’ve been expecting the market to collapse in the Obama Administration and HERE IT IS! So, who do we blame for this one?
Aaaannnd. . . it’s gone.
It's a strange beast. At the end of the article, Noble says this:
"Given that their efforts have not yielded the desired or necessary results, what can they realistically do that they haven't already? The next thing is to give money to Main Street. That is, give money to the people instead of the banks.
Obviously puffing up bank balance sheets and income statements has only made the banks richer. Nobody else besides a very tiny and already wealthy minority has really benefited. Believe it or not, the central banks are already considering shifting the money spigot towards the public. You might receive a credit to your bank account courtesy of the Fed. Or you might receive a tax rebate for last year. Maybe even a tax holiday for this year, with the central bank monetizing the resulting federal deficits. Either way, money will be printed out of thin air and given to you. That's what’s coming next. Possibly after a failed attempt at demanding negative interest rates from the banks. But coming it is. This "helicopter money" spree will juice the system one last time, stoking the flames of inflation. And while the central banks assume they can control what happens next, I think they cannot.
Once people lose faith in their currency all bets are off. The smart people will be those who take their fresh central bank money and spend it before the next guy.
In a deflationary environment, what you will see is doctors and dentists closing their practices as fewer people use their services as the unchanged prices. Same goes for plumbers and repairmen. Some work will get done because it MUST get done, but in other cases the customers will simply defer repairs indefinitely.
Yeah, me too. I fear deflation, which staves off value-destroying inflation, in the same way I fear global warming, which staves off the next Ice Age. You have to have a heart of stone not to laugh a proponents of the free market trying to manage an economy.
Right. The banks and governments make is seem that if the markets collapse all the houses will collapse on their occupants.
But what’s really going on is you lose purchasing and bartering power if your asset loses its perceived value. If that happens uniformly, then whoever is getting the upper hand on the appraisals gets the wealth transfer, right?
Yes. Same thing with stocks.
Stocks also fuel the IRAs and 401Ks.
And we have had a "booming" stock market based on......? What exactly? I say part of that "boom" was QE1, QE2, QE3, and ZIRP. But the real economy was in Depression. Real unemployment was over 20%.
If I remember correctly, that type of scenario unfolded in mortgage banking back in the 1980s. Congress helped the S&L industry through its crisis by instituting a tax break that allowed banks and savings/loan institutions to write off losses against profits they had previously reported on tax returns dating back many years.
Do you think that is a correct statement? Value your opinion.
They did.
Why is that a problem? What's the proper amount of debt growth versus GDP? Why?
. What if someone in the room buys some corn from one of the other people in the room. The guy growing the corn just created money from the ground. In essence, he created wealth. Now there is more money in the room because someone brought some corn into the system.
Imagine the game Jenga with the base number of pieces, which under a normal backed monetary system grows by ~1 piece per game cycle (or 1-2% as a backed money system would).
Now you start to play the game (near or totally unfettered credit issuance being comparable to pulling lower pieces out and stacking them higher).
Eventually you will get to the point where the tower is multiple times higher than the wealth (pieces) supporting it. It, like the financial system, is going to fall. The sum total of world wealth is still going to be there, but it needs to be reaggregated and put together, from the scattered pieces of our Jenga pile to the wreckage of a financial system going through years of bankruptcies and asset sorting...
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