Topic: How long do you think we have? (Read 4451 times)

As for the Germany, seems they already are in state of almost-orthogonal part of the exponential curve:

It makes me think we probably won't even have time to go bancrupt by ourself, I think that when Greece, Portugal and others will go to real crash, the Eurozone will crash as well with Germany in the center. They will take us down no matter we are not in Eurozone.

I am just thinking what will come from that. Some miraculous fiat reform? Second Hitler? Civil war?

In CZK?

how much is BTC worth now?

This. You see for example here (Y axis in bilions of CZK) that the government is spending more than it gets each year for more than a decade now. Supposed difference for this year is 100 bilion. The interest rate is holding for this moment because of the bonds-for-citizens emission but what I've read, even these have mostly been bought by small and medium investment companies. Sooner or later they will stop buying it and regime will have to lend from big bank groups again. Before that, the interests already begun to rise exponentialy and this will only give them few years, after that it will continue with the same.

In a normal soceity your right you pay for infrastructure and it pays for itself over time but most of the money printed went to bailouts from bad choices and to paying interest and warfare. War is very inflationary u blow up a bomb and thats it ur in instant debt. The us doesnt use its machines enough to warrant the money yet more is poured in to deter attackers and keep usd currency afloat.

Read up on the real housewives of wallstreet.. most of qe went to random joe blows like a bankers ex wife for business startup money for example. Why does she get that and others can starve? Feds books r closed and thats inflationary in itself.

The problem is that government deficits are never occasional, they are the norm, and cumulative. Further, GDP is exaggerated. GDP from credit financed consumption counts the same as GDP from production (and shouldn't), resource depletion and environmental destruction is not deducted from GDP. Real GDP is also smaller because Inflation is understated though institutional bias (government paid economists) and hedonics.

There could be a reason that central bank do not write off their holding of government bonds: It will enforce the government to have some fiscal discipline just like any other enterprises

Government can buy 1 billion dollar worth of fireworks and fire them. There will be workers who make 1 billion dollar from the government order. Then those 1 billion dollar will flow to the society and cause inflation

But if government build 1 billion dollar worth of subways in the city. Then they will slowly take those dollars back through tickets sale, thus reduce the inflation pressure (Actually the rise of ticket prise is already an inflation, but that can be regarded as an increase in quality of life)

The whole point of debt based money issuing is to make sure the money will flow back through future consumption. But since there is interest, and consumption is usually less than income (long term wise), this scheme will just accumulate more and more debt that can not be paid back

Currently the government can only pay back the interest, when interest payment can not be sustained anymore, I guess central bank will have to write-off debt, or simply do not require an interest payment from the government (And that will not cause inflation, since no extra money are added to money supply)

(Reuters) - The Czech central bank lowered on Friday its forecast for the 2013 public sector deficit to 2.3 percent of gross domestic product (GDP) from 2.4 percent.  It trimmed its outlook for the 2014 deficit to 2.0 percent of economic output from a previous forecast of 2.2 percent. In 2015 the Czech central bank sees the public sector deficit at 2.3 percent.  The bank also cut its outlook for the 2013 public debt to 47.2 percent of GDP from a previous expectation of 48.1 percent.  In the 2014 the Czech central bank assumes the debt level should reach 48.0 percent of GDP, down from 48.5 percent forecast earlier.  In the 2015 the Czech central bank expects the debt level to reach 48.1 percent of GDP.

No offense look at the numbers in Argentina.  I would not worry until your deficits are running over 10%.  debt/gdp is not that important it is interest payments compared to revenues.

You can start by realizing there is no free market now anywhere but maybe in Somalia. So it cannot regulate itself because many of the natural mechanisms are supressed by regimes. It is still way better than socialism but I agree it is getting worse because of regimes are pushing us toward socialism.

Basic needs? Like car, TV, Internet connection, mobile phone, all the unneccessary machinery everybody has at home and complains how poor he is? Oh COME ON. The overall standard of life is increasing steadily. And because of people like you it only gets worse. It may be good to have a look at the socialist regimes before 1990: yeah, almost everybody got the same shit so they couldn't envy each other. But their standard of life has been much worse than standard of life of say 95+ % people of western countries.

So I will tell you this only once: I HAVE FORTUNATELLY BEEN BORN JUST WHEN THIS MADNESS ENDED. I DO NOT WANT TO TRY THAT ON MY OWN SKIN. SO GET BACK TO THE HOLE YOU CAME FROM IF YOU WANT THE REGIMES TO GET MORE POWER. Thank you very much. The only way to get better is to cut regime's powers and get more freedom.

Well, I parenthetically defined "wealth" as better living standards, not money. But I don't want to get into an argument of definitions; what was destroyed during the crises was unused purchasing-power that could not last. Nominal levels were too high, and too few people were converting paper balances to real assets to make that obvious until everyone did simultaneously. Classic.

In any event, I think I see the root of your issue. Essentially, you think a small group of people can successfully plan an entire economy, benevolently taking into account all the complexity of human desires and actions that that necessarily entails. From an academic perspective, I agree that it should be possible to control the money supply such that ideal low-friction conditions are achieved, and targeted expansions/contractions of the money supply should be able to provide short-term nudges in the "right" direction for the business-cycle, etc...

The problem is that humanity doesn't work that way. Economies are incredibly complex, and it's downright arrogant to think that a small group of people can distill all the variables, with all their error curves and varying relevance, into sensible action. Human economy is a complex chaotic system, in the true mathematical sense of the term. Small inputs can lead to huge and unpredictable results. What you will inevitably get if you try to directly manage it is a small group having an increasingly outsized influence on the economy as a whole, and having to use ever increasing measures to get their desired effects, until one day, it just doesn't work anymore and the whole thing fails.

I agree that the math for controlling the money supply looks nice. I just think it's awfully arrogant for someone to think that they're smart enough to successfully shoe-horn the myriad and unknowable complexities of humanity into that model.

You don't understand my objection. Normal people are working for less also in industrial countries, so short in income that they cannot pay for their basic needs. It becomes modern slavery, the Greeks are an example, but also in America and in Germany. And there are dieing many now and in the future. You get forced into hard work for anybody or any useless doing, but not for yourself. Your death doesn't matter, in neoliberalism, you simply did not work hard enough.

Neoliberalists say, you can refuse to do a work. But they are lying, because in Germany you get sanctionized then. The neoliberalists say, the market regulates itself. But they are lying, the banks have been rescued, it is the opposite of a free market. And the crooks of Goldman Sachs and Deutsche Bank are free and are doing their destructive work over and over.

What do you think how many bangsters will go to prison through the aluminum syndicate of BlackRock, JPMorgan and Goldman Sachs?

Yup there are alot of shadow stats the the gov't uses to try to portray a brighter picture to the public. In fact gold is in itself a shadow statistic as the more it rises the more it invokes fear in the public's eyes of financial stability. That is why JPM is given a green light to manipulate at will with bottomless accounts. Ofcourse they can't short to bring it down all of a sudden because they are in the business to make money afterall!

I believe you that real inflation is that high, but we won't know for sure as no official stats exist, there are alot of economists that have models to show what the SGS alternate CPI is instead of todays official numbers.Either way its all psychology, if people believe its sunny, the market rises on good mood until hard limits are met anyways.

Jealous?

Dying how, work accidents? That happens. I guess you have some idea about how many people this will employ to built and the company which will make money on making this will also invest that further and so on. Many new technologies could be invented on this. And so on. Don't be low jealous scum…

Indefinitely. It's called inflation.

This is an example for what the superrich can do with their money:
http://www.welt.de/finanzen/article119877724/Luxus-U-Boot-fuer-Superreiche-mit-Kino-und-Pool.html

The price is 1.7 Bio. Euro. For this toy, that they use twice a year, there are many people dieing.

+1

Today I was reading that the gain in wealth of the superrich people was 7.6% in 2012. The superrich are the ones in the world who owns 30 Mio. USD and more.

The rise of 7.6% is a sum of the real inflation and the movement from money from the 99% to the 1%. The inflation is already very high, but few do recognise this. For inflation you must not grow the price, you can also reduce the quality of the product.

The same affect is with Gold or Bitcoins against fiat money. If Gold or Bitcoins or other true values are rising, the people that are holding USD (and other inflating fiat like Yen) will loose. But because the market of Bitcoins is so small yet, nobody cares. As soon as Bitcoins become too expensive, the government will pay attention because of the drop of value of the fiat money that is hold by the powerfull superrich.

How about since the thought of bankruptcy would cause panic in the financial market, the leaders of G7 meet to discuss and confirm that one world currency be established and led by the FED which has the tools necessary to succeed. Sounds like a good headline.

Isn't it the very point of all this?

Because perpetual expansion is a requirement of our banking system, every year new loans must be made to pay for interest accruing on past debt. You will not be able to "downsize" or overhaul without someone taking the fall for the current debt. Either the people claim bankruptcy and lose their credit, where the FED is the receiving end of all assets, or the US gov't claims bankruptcy and the foreign (China) bond holders are on the hook as well as the banks/FED themselves in US who bought the bonds (Probably a war scenario). I like to think that the US citizens will be forced into bankruptcy, giving up their assets to the FED which is a private corporation BTW.

Here's how it goes

1.fed prints money
2.fed buys government bonds
3.most of the government debt is owed to the fed
4.a few years laters the fed cashes out its bonds
5.a big portion of taxes goes towards paying the fed
6.people get angry and fed up of paying the fed
7.a coup d'etat follows
8.the military junta declares a temporary dictatorship until things settle down
9.people go with it until they get tired of it
10.American springs happens
11.America is reborn as a libertarian nation with sound money, no income tax and a flat tax code(whichever tax will take the income tax place)
or
1.nothing happens and we slowly cut spending and pay the debt

I just wanted to say that I think there is a difference between the "1%" in terms of the financial 1% and the power/politician 1%.  The power 1% control the guns, and the money 1% often (not always, there are bad apples in every group) are trying to protect themselves from the thugs who control the guns. 

As long as so many things are subject vote instead of liberty guaranteed by right, you are going to have corruption and politicians trying to sell themselves to the highest bidder.  There will be no incentive for most of them to remove the temptation since they are profiting from it.  When everything is political, no one is safe from another gang of thugs.

I agree about the implications to BTC etc.  ;-)

Like someone said its a zero sum game, someone has to lose in order for someone to gain. The 1% gains 99% lose means that the 1% can gain ALOT while the 99% barely notices (until now) that it has been losing. The ponzi scheme the US runs affects the entire world not just a nation. Thus the inflation rate is indicative of the fact that the currency is wide spread and used across the globe, meaning that as the system grows and expands some more, that when inflation does it, it will hit so hard that it will completely crush the entire global economy. There's no turning back and nowhere you can go run to avoid a collapse. If you input $5 trillion into the economy and the inflation barely budges this tells you the system is designed to be a too big to fail type of economy in that since a normal nation would be bankrupt by now the US isn't because it is being used across the globe. That doesn't mean you can print $15 trillion more, but just that it will take a longer period of time to realize the inflation since that $5 trillion has to be coughed up by the 99% somehow. The fact that the hockey stick curve is steepening tells me they are prepared to print even more to raise inflation to acceptable levels (nation wide) but forgetful of the fact that it is only because the whole economy relies on the USD that it is why inflation is not rising and it will rise after all that money is flushed out of the hands of the elite and/or military bombs wasting the debt in thin air.

This is the reason btc hit $266 that is no small feat. The pattern it is creating suggests deeper problems for our economy and very bullish for bitcoin economy. Also now that JPM openly is seen to manipulate precious metals, average joe's and investors are looking away from holding PM contracts in the open market and into other forms of investments which act as safe havens (other than jpy/usd/chf). These ones are now in the hands of central bank intervention which will make matters worse long term.

Also you may notice a spike in inflation if and when middle east oil producing nations get away from the petrodollar system and uses something else,a nything else

This status only delays inevitably of economics as you say. It also contributes to the widespread misunderstanding as to whether or not the USD is fallible.

The "wealth" destroyed was perceived paper wealth and not real wealth. It is a correction due tof unny fiat money fabrications.

That applies for both physical goods and services and money still only is a way of exchanging one for another more easily.

+1

Unlike Zimbabwe the US can print a lot more money per unit GDP because it has the reserve currency. No one in the world had Z$ as a long-term store of foreign exchange, or Zimbabwean treasury bonds in an investment portfolio. Eventually however, Fed money printing will cause dollar repatriation back to the US and massive local inflation there.

Some kind of need (security for example) can not be satisfied by goods/services, they need lots of money to satisfy. Economy books usually say that today's saving is for tomorrow's spending, but in reality many people die with lots of money left for his children, and banking families typically accumlate more and more money for each generation

The Fed buying bonds is probably a trick to avoid printing money directly to cover the government deficit. They don't even buy them directly, but via the banks. And they don't really pay the money to the banks, because the payment is deposited directly in the Fed. This is the creation point. The money is created by the fed at the touch of the button, but appears as deposits from the commercial banks. But now the banks have deposits, which is reserve capital, which give them the ability to lend. Nobody can see through that.

Eurostat releases reports for governments debts and deficits.

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home

http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-22072013-AP/EN/2-22072013-AP-EN.PDF

http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-22042013-AP/EN/2-22042013-AP-EN.PDF

Those numbers are extremely bad. Very hard to imagine how it could go on for more than 5 years without some kind of defaults or money creation by the ECB. Either way, both are bullish for bitcoin!

Money only is an universal vehicle, device or tool, does not matter how you want to name it, to exchange different types of goods. Money on its own is no wealth at all because if people loose trust in one type of money, it is useless. Money only has value if it is backed by some real wealth, or if people believe in it. And trust in USD falls down the whole time, that's why the "trust" must be exported by force.

Because of money's universal equivalence property, money itself IS wealth. Are you sure that when you lost money, you did not lose any wealth? Economy books always say that money is not wealth, but how come the wealth was destroyed in financial crisis while none of the houses/cars/goods/services were destroyed?

And there is cantillon effect, those who first receive the newly created money have to spend it to cause inflation. If he carefully select his spending target (or even move them oversea), the real inflation on the end of the chain might take years to happen, or not happen at all. The result is that more and more money accumulated at the top of the chain, creating huge gap between rich people and poor people

People in foreign countries where "freedom" was exported by US agents or US military paid the price. Germany did not have that luxury until…well, Hitler came in and exported his version of freedom. You know the rest…

Printing one million dollar or one trillion dollar have totally different effect on inflation. All the currencies destroied by severe inflation had a super speed of money supply increase, like 10 fold in one month. Weimar public added 10 zero for its money supply in just one year



However, Fed has created 4 times more money since 2008 and there is barely any significant inflation. Notice that during the same period, the US GDP just increased a couple of percent per year. So, inflation will not be out of control if the money supply do not increase at a crazy speed

Money does not get created from ass, it is NOT how it works. You socialists should finally learn that, other people do not want to pay for your robbery and spending spree.

For normal people who purchase the bond from government, the debt forgiven is the same as default. But for the money creator it is different, since they don't work to create money, it is just some numbers on their balance sheet

You can write off any debt you want but it will be considered a default.  It could have systemic effects particularly due to the amount of derivatives in the market now like credit default swaps.

Umm... There will be massive inflation. It's a zero sum game. You don't *really* think that printing more paper bills actually generates more wealth (ie, better living standards) for humanity, do you? You just get more money chasing the same goods/services, so people start to competitively bid up prices for things and the overall price level rises. In theory, that has no effect on anything; people would make more money and spend exactly the same amount more money. In practice, it triggers massive friction in the form of ever rising prices (because people fear prices for goods they buy will rise, thus they preemptively raise the prices of the goods they sell, etc...), to the point where it's difficult for business to function because the price level is moving too fast.

A big component of a healthy economy is low friction, and inflation/deflation just add lots of unnecessary friction.

Man are you insane? Sure you can print as much money as you want but such money does not even have the value the of paper and ink they are made of. Have a look at Zimbabwe, that's most recent event of how incredibly stupid your idea is and how it ends.

Central bank is always net plus since they create money and lend those money out (the ownership of those money belongs to FED directly after being created)

If the central bank is really controlled by the government, like some people believe, then they have no problem to destroy the bond they purchased from government, means that they just freely give those printed money to government without asking anything for return

Currently FED are buying 40 billion dollar worth of bonds from government each month(with newly created money). If they just destroy those bonds, then government will get 40 billion dollar free money to spend each month. I don't see any problem with this. Of course there will be a loss from central bank's balance sheet (now they have liabilities without corresponding asset), but since they are the money creator, they don't lose anything

On the other hand, if government get free money to spend, they will spend a lot and create lots of jobs

Actually this practice was done 300 years ago by John Law. He first printed out lots of fiat money and use those money to raise the stock price of mississipi company, and then used those stocks to buy back lots of government bonds and then destroied those bonds, thus helped the government to eliminate the national debt

His faliure is caused by the fact that he printed too much money to raise the stock price of mississipi company, and he could not provide enough gold backing those fiat, thus resulted in a bankrun. But today, FED don't need gold to back the fiat

It's because we have a persistent civilization. Persistent idiocracy would be more accurate.

But all the people who must use the currency by law will suffer the consequences.

Anyway, most of this regime's debt is held by private institution or individuals as they are issuing small bonds for people last couple years. I even heard some bonds (not neccessarily those for the individuals) have due date of 105 years. Now who is THAT stupid to believe this regime will be anywhere arround in 100 years? That makes me laugh so hard

It'd have similar effects to a default. Central banks must remain solvent, so tons of money must be printed in order to forgive the debt. This would eliminate all confidence in the currency and government. The foreign debt wouldn't be written off in such a case, but eroded in value to the point where it may's well have been.

What is the consequence of central banks writing off the government debt (debt forgiven)?

You can't write off the debt that is hold by foreign investors, but you can write off the debt that is hold by central banks, but will that action hurt anyone?

This is non-government activity, based on regular national bank updates every 3 months. Even if they stopped releasing the news, we know how much they borrow each year, we +- know the interests so it can go on, even though probably not as accurately.

They'll hit some limit then just stop updating.

That's what the U.S. Treasury has done.  The national debt has been stuck at its $16.7T limit since the end of May.  Everyone knows the debt has been growing since, they just have taken "extraordinary" measures:
 - http://www.cnsnews.com/news/article/100-days-treasury-has-kept-debt-frozen-16699396000000

I've just accidentally run into the counter again at http://www.verejnydluh.cz/. Our current debt is ~1,84 trilion CZK (over 90 bilion USD). Budget for this year was 1,18 trilion. That means, probably next year the debt will rise to 2-year budget.

Of course, everything is fine here, nobody worries. I give it decade max, whaddaya think?