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Topic: Lyth0s' Economic Troubles Thread - page 3. (Read 7351 times)

legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 17, 2015, 01:02:57 AM
#32
Negative interest rates are pretty cool and all.  However I want to see even more fiat accounting innovation.  

We aren't using the whole complex plane here people!  Imaginary interest rates are the next big thing, you heard it here first .  

Next step will be directly confiscating money from accounts: -10% interest means your money at banks get a hair cut by 10%

Obviously, if they print more money, there will be more deflation (more money means more debt, thus more austerity  and less spending), a low inflation rate will make banks keep printing until they bought every assets out there

How do you figure if more money is printed that leads to deflation?

FED print 100 dollar, and bought 100 dollar worth of government bonds, and then government have 100 dollar to spend. However, they must make back that 100 dollar plus interest, means the total money in the society will lose $2 when they return that 102 dollar to central bank. So, for each 100 dollar FED print and retrieve, the society as a whole will lose 2 dollar, a temporary stimulation is followed by a even deeper deflation due to less money to spend in future

Even there is no interest charged, this temporary stimulation will increase the incoming and spending of the society for a while, but when it stopped, people are staying at a much higher living cost of everything, with same amount of money in society, thus quickly fall back into recession

The only way out of this deflation spiral is to expand the debt forever exponentially, but then the ballooning interest cost will cut more and more into the income and eventually income will start to shrink no matter how much more debt is raised


I don't think I agree with this. If the $100 is printed and we now owe $102 to the fed, then we have even more money printed to pay our debts back and this cycle repeats. Yes debt forever increases (and at a faster rate than the money supply), but all of this printing leads to inflation (dollar becomes cheaper and it takes more of them to buy the same good)...It's only if we stop printing that we would start to have deflation and economic collapse.

Please tell me if I'm wrong or missing something.

Found a quote from that article that i like
Quote
Innovators are eager to try new ideas, to the point where their venturesomeness almost becomes an obsession. Innovators’ interest in new ideas leads them out of a local circle of peers and into social relationships more cosmopolite than normal.  Usually, innovators have substantial financial resources, and the ability to understand and apply complex technical knowledge.  While others may consider the innovator to be rash or daring, it is the hazardous risk-taking that is of salient value to this type of individual.
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
February 14, 2015, 06:39:53 AM
#31
Negative interest rates are pretty cool and all.  However I want to see even more fiat accounting innovation.  

We aren't using the whole complex plane here people!  Imaginary interest rates are the next big thing, you heard it here first .  

Next step will be directly confiscating money from accounts: -10% interest means your money at banks get a hair cut by 10%

Obviously, if they print more money, there will be more deflation (more money means more debt, thus more austerity  and less spending), a low inflation rate will make banks keep printing until they bought every assets out there

How do you figure if more money is printed that leads to deflation?

FED print 100 dollar, and bought 100 dollar worth of government bonds, and then government have 100 dollar to spend. However, they must make back that 100 dollar plus interest, means the total money in the society will lose $2 when they return that 102 dollar to central bank. So, for each 100 dollar FED print and retrieve, the society as a whole will lose 2 dollar, a temporary stimulation is followed by a even deeper deflation due to less money to spend in future

Even there is no interest charged, this temporary stimulation will increase the incoming and spending of the society for a while, but when it stopped, people are staying at a much higher living cost of everything, with same amount of money in society, thus quickly fall back into recession

The only way out of this deflation spiral is to expand the debt forever exponentially, but then the ballooning interest cost will cut more and more into the income and eventually income will start to shrink no matter how much more debt is raised






legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 14, 2015, 02:47:32 AM
#30
Negative interest rates are pretty cool and all.  However I want to see even more fiat accounting innovation. 

We aren't using the whole complex plane here people!  Imaginary interest rates are the next big thing, you heard it here first . 

Next step will be directly confiscating money from accounts: -10% interest means your money at banks get a hair cut by 10%

Obviously, if they print more money, there will be more deflation (more money means more debt, thus more austerity  and less spending), a low inflation rate will make banks keep printing until they bought every assets out there

How do you figure if more money is printed that leads to deflation?
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
February 13, 2015, 02:46:59 AM
#29
Negative interest rates are pretty cool and all.  However I want to see even more fiat accounting innovation. 

We aren't using the whole complex plane here people!  Imaginary interest rates are the next big thing, you heard it here first . 

Next step will be directly confiscating money from accounts: -10% interest means your money at banks get a hair cut by 10%

Obviously, if they print more money, there will be more deflation (more money means more debt, thus more austerity  and less spending), a low inflation rate will make banks keep printing until they bought every assets out there
legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 13, 2015, 12:38:52 AM
#28
News 2/12/15

China to state companies: No profit growth, no pay raise

Quote
SASAC notified centrally administered SOEs on Feb. 9 that they “must not increase the total amount of salaries” if their profit target this year is lower than last year’s profits

It's all about profit and shareholders nowadays, even in these chinese government sponsored companies, which should really be more worried about at least creating products that industries need that potentially could not be handled by the private sector on its own...

One big fear with a strong dollar: a stock market bubble

Quote
“We are already at the level where stocks are simply expensive. If markets rise from this level significantly due to foreign demand or lack of alternatives - this will form a bubble,” Smith said.

Article talks about already having 4% growth this year, compared to a total of about 9% stock market growth last year. Anyone know any stats about stock price acceleration before a bubble bursts? I assume that the burst occurs just as the acceleration (instantaneous rate of change of price) occurs, but can anyone provide some numbers on this? It's been a while since I've busted out any calculus.

Retail sales slump again, as Americans pocket savings at pump

Quote
Yet retail sales excluding gas were still flat compared to December, a sign that Americans aren’t using their fuel bonanza to spend more on other goods and services. Instead they are saving more.

Saving more? Or they owe it to their debtors?

legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
newbie
Activity: 29
Merit: 0
February 12, 2015, 10:12:38 AM
#26
Negative interest rates are pretty cool and all.  However I want to see even more fiat accounting innovation. 

We aren't using the whole complex plane here people!  Imaginary interest rates are the next big thing, you heard it here first . 
legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 10, 2015, 01:56:13 AM
#24
News 2/9/15

Oil may drop by more than $30 a barrel from current levels
Quote
In a note Monday, analysts at Citigroup raised the possibility that West Texas Intermediate oil prices may fall to as low as the $20 range. Prices on the New York Mercantile Exchange already suffered a loss of 46% last year.

But the recent rally looks more like a “head-fake than a sustainable turning point,” said Citi analysts, lead by Edward Morse.

The oil market should bottom sometime between the end of the first quarter and beginning of the second quarter, with oversupply being a key factor, Citi analysts said.
--Not that Citi ever really knows what they are talking about....but oil was in the $30's range in 2003 prior to the beginning of the oil bubble that burst in 2008 and may still be "bursting".


Greenspan on Greece: Exit from the euro is ‘just a matter of time’

Quote
I don’t think it will be resolved without Greece leaving the eurozone...

A defiant Tsipras told lawmakers Sunday that he would be unwinding several austerity measures that were conditions of its international bailout. He said he’d be raising minimum wage, dropping a property tax, and a few other goodies Europe’s leaders are sure to be flipping out over right now

The country’s €240 billion (roughly $272 billion) rescue runs out at the end of the month, and Greece’s government has warned that the money could run out in a few weeks. Analysts at Bank of America Merrill Lynch said in a note Monday that the country probably can get through International Monetary Fund payments in March, but not likely past May.

--Tsipras is giving a much F* you to Germany by essentially stating that it is going to increase spending in certain sectors. Germany and the ECB won't give further aid. Predicting the conclusion of all this mess is tough. On one side if Greece leaves the Euro other countries that are in debt may follow suit and we could have a complete collapse of the European Union. On the other hand greece only makes up a very small part of the Euro's economy (somewhere around 2%) which may lead one to believe that them leaving the EU would have a very small effect.

I personally think if Greece leaves the EU 1-2 years down the road more countries will follow suit eventually just leaving behind Germany Tongue
sr. member
Activity: 299
Merit: 250
February 08, 2015, 06:04:13 AM
#23
Nice thread Lyth0s ! Please keep us posted when you have time...
legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 08, 2015, 01:42:35 AM
#22
News 2/7/15


Ukraine’s currency just collapsed 50 percent in two days
Quote
Ukraine has no money and barely any economy. It's already talking to the IMF about a $15 billion bailout and what's euphemistically being called a debt "restructuring"—i.e., default—as its reserves have dwindled down to $6.42 billion, only enough to cover five weeks of imports.

The hyrvnia fell from 16.8 to 24.4 per dollar, and then again to 25.3 on Friday, on the news that the government wouldn't intervene it in anymore.

--Just goes to show how fast the "value" of fiat currencies can fall once people realize their true worth....zero.
legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 07, 2015, 07:14:48 PM
#21
Here's google translate of a Denmark bank introducing negative .5 deposit rates for some customers

"For the first time in the history of Denmark is it going to cost money to have a regular bank account in a bank.

Thus introduces FIH from next month minus interest on customers' bank accounts. This brings the bank's customers continue to fork out for funds deposited in an account at FIH.
The new system applies to the bank's day -to-day account, which is what you might call a regular salary account - minus interest rate of 0.5 per cent . shall enter into force on 9 March and will both apply to residential and business customers .
not surprisingly,
According to one expert , it is far from surprising that FIH introduces less interest .
- FIH is about to close their bank down , and by introducing less interest forcing some existing customers out . So if someone were to do it, it was them , said John North, director of Mybanker .
FIH justify the step with the bank pays money to funds deposited in the National Bank.
It happens after three hectic weeks in which National Bank has reduced the deposit rate four times - most recently yesterday afternoon , when it was lowered by a further 0.25 basis points to -0.75 percent .
- It is expensive for FIH , but you could say that it comes at an opportune time . But it is also a proof that it is bad business , customers are the acidic , says John Norden .
Calls for calm
Although FIH now has taken the historic step and introduced less interest , there are no indications according to John Norden that other banks will follow suit.
- We are in a very unusual situation with low interest rates , but I do not think it gets other banks to do the same. It is clear that there is a pain threshold , but it is difficult to say when it is reached, explains John parts."


"Low interest rates" is a clear understatement to "negative interest rates". And there are starting to be more and more cases of these negative interest rates, take the German banks for additional examples.
newbie
Activity: 29
Merit: 0
February 07, 2015, 05:31:46 PM
#20
Following Smiley 

Maybe central bankers are trying to tell us something..  time to get your value out of virtual fiat asap. 
legendary
Activity: 961
Merit: 1000
February 07, 2015, 05:38:38 AM
#19
Here's google translate of a Denmark bank introducing negative .5 deposit rates for some customers

"For the first time in the history of Denmark is it going to cost money to have a regular bank account in a bank.

Thus introduces FIH from next month minus interest on customers' bank accounts. This brings the bank's customers continue to fork out for funds deposited in an account at FIH.
The new system applies to the bank's day -to-day account, which is what you might call a regular salary account - minus interest rate of 0.5 per cent . shall enter into force on 9 March and will both apply to residential and business customers .
not surprisingly,
According to one expert , it is far from surprising that FIH introduces less interest .
- FIH is about to close their bank down , and by introducing less interest forcing some existing customers out . So if someone were to do it, it was them , said John North, director of Mybanker .
FIH justify the step with the bank pays money to funds deposited in the National Bank.
It happens after three hectic weeks in which National Bank has reduced the deposit rate four times - most recently yesterday afternoon , when it was lowered by a further 0.25 basis points to -0.75 percent .
- It is expensive for FIH , but you could say that it comes at an opportune time . But it is also a proof that it is bad business , customers are the acidic , says John Norden .
Calls for calm
Although FIH now has taken the historic step and introduced less interest , there are no indications according to John Norden that other banks will follow suit.
- We are in a very unusual situation with low interest rates , but I do not think it gets other banks to do the same. It is clear that there is a pain threshold , but it is difficult to say when it is reached, explains John parts."
legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 07, 2015, 03:14:24 AM
#18
News 2/6/15

Ex-Credit Suisse CEO: Invest in Gold and Bitcoin Long-term, Not Fiat

Quote
The only investment that demonstrably keeps its value over a long period is gold, and in future perhaps also bitcoins.

...they'll no longer be buying when rates sink, and no longer be selling when they rise. It simply costs too much in terms of capital... Therefore markets can tumble a lot faster than in the past...

Central banks can print money limitlessly and these days they are telling us that openly. It's therefore no longer recoverable.

--This is what I mean when I say there will be a gradual movement of smart money then mainstream money into bitcoin as more and more people realize that eventually their fiat will be worth nothing due to limitless printing by the central banks.

Recent numbers published by the US Bureau of Economic Analysis.
GDP growth for Q4 was reported as 2.6%: http://www.tradingeconomics.com/united-states/gdp-growth
GDP deflator for Q4 all the sudden went from the usual 1.4% to -0.1% !!! Tricky bastards! : http://www.tradingeconomics.com/united-states/gdp-deflator
Quote
My analysis:
What does that mean? Real GDP growth for the US in Q4 was only 1.1%!!! which is an absolutely terrible growth rate. The government uses the GDP deflator to supposedly account for inflation/deflation in GDP numbers, but that also gives them a LOT of lead way to fudge the numbers however they want and thus they are reporting a much better (still mediocre though) GDP growth than actually occurred for Q4.

legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 07, 2015, 02:36:48 AM
#17
Well the idea behind QE is to print money to give to banks, the banks should then be loaning out that money to business etc and thus not only spur economic growth but also cause a bit of inflation to reach their 2-3% inflation goals. Eventually that money will hit the market and then a while down the road people will realize that monetary policy has made the money less valuable and THEN inflation hits. I honestly expect to see BIG changes in peoples (mainstream) attitude to fiat currencies by the end of 2016.

That's the plan, but now every major institution knows this and they will not loan out that money to business (due to already severe over production of almost everything), those money just went to other area like commodities and bonds

You're spot on.
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
February 07, 2015, 01:53:44 AM
#16
Well the idea behind QE is to print money to give to banks, the banks should then be loaning out that money to business etc and thus not only spur economic growth but also cause a bit of inflation to reach their 2-3% inflation goals. Eventually that money will hit the market and then a while down the road people will realize that monetary policy has made the money less valuable and THEN inflation hits. I honestly expect to see BIG changes in peoples (mainstream) attitude to fiat currencies by the end of 2016.

That's the plan, but now every major institution knows this and they will not loan out that money to business (due to already severe over production of almost everything), those money just went to other area like commodities and bonds
legendary
Activity: 1260
Merit: 1000
World Class Cryptonaire
February 07, 2015, 01:47:15 AM
#15
Nice posts, keep it going!

The negative interest on bonds proved that people who have fiat money are desperately buying any asset that they can get their hands on. I have not been able to imagine a possible event to trigger the collapse of fiat money, but I think it is coming from the shaken confidence, and it is getting close

Yeah I agree with this. People are looking for any stable asset they can that will hopefully do better than an inflated currency (which would then end up also bumping the price of the asset up).

Nice posts, keep it going!

The negative interest on bonds proved that people who have fiat money are desperately buying any asset that they can get their hands on. I have not been able to imagine a possible event to trigger the collapse of fiat money, but I think it is coming from the shaken confidence, and it is getting close

Forgot where I read it, but an interesting perspective on this: yields are chasing down the dis-inflation rate. If nominal rates are -3% then even if bonds go to -1% it is still a +2% in effect. But the combination of this, deflation and currency wars all lead to either hyperinflation or monetary reset.

Lythos good point re: Denmark. Being smaller than the EU / US, how long can they expand their balance sheets before it affects them negatively? 

So much of the market price of any asset or currency (which I also view as an asset) is just based on the sentiment of the investors. I don't think there will be a fixed number at which it would start to have an effect. I think it will be more of a gradual change away from fiat and I'll post an article in a minute on the subject.

Quote
I'm think that will not be a problem, the asset side keeps growing and the liability side (money) is actually hold by the large commercial banks, as long as these banks have a mutual agreement with central bank to not let their huge stash of cash flow out, there will be no inflation
Well the idea behind QE is to print money to give to banks, the banks should then be loaning out that money to business etc and thus not only spur economic growth but also cause a bit of inflation to reach their 2-3% inflation goals. Eventually that money will hit the market and then a while down the road people will realize that monetary policy has made the money less valuable and THEN inflation hits. I honestly expect to see BIG changes in peoples (mainstream) attitude to fiat currencies by the end of 2016.
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
February 06, 2015, 11:33:25 PM
#14
Nice posts, keep it going!

The negative interest on bonds proved that people who have fiat money are desperately buying any asset that they can get their hands on. I have not been able to imagine a possible event to trigger the collapse of fiat money, but I think it is coming from the shaken confidence, and it is getting close

Forgot where I read it, but an interesting perspective on this: yields are chasing down the dis-inflation rate. If nominal rates are -3% then even if bonds go to -1% it is still a +2% in effect. But the combination of this, deflation and currency wars all lead to either hyperinflation or monetary reset.

Lythos good point re: Denmark. Being smaller than the EU / US, how long can they expand their balance sheets before it affects them negatively?  

I think that will not be a problem, the asset side keeps growing and the liability side (money) is actually hold by the large commercial banks, as long as these banks have a mutual agreement with central bank to not let their huge stash of cash flow out, there will be no inflation
legendary
Activity: 961
Merit: 1000
February 06, 2015, 08:13:00 AM
#13
Nice posts, keep it going!

The negative interest on bonds proved that people who have fiat money are desperately buying any asset that they can get their hands on. I have not been able to imagine a possible event to trigger the collapse of fiat money, but I think it is coming from the shaken confidence, and it is getting close

Forgot where I read it, but an interesting perspective on this: yields are chasing down the dis-inflation rate. If nominal rates are -3% then even if bonds go to -1% it is still a +2% in effect. But the combination of this, deflation and currency wars all lead to either hyperinflation or monetary reset.

Lythos good point re: Denmark. Being smaller than the EU / US, how long can they expand their balance sheets before it affects them negatively? 
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