Topic: Lyth0s' Economic Troubles Thread - page 3. (Read 7422 times)

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

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

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

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

News 2/12/15

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


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


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


Saving more? Or they owe it to their debtors?

Good Find! I think Norway, Japan or the USA is next.

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 . 

Sweden joins the NIRP brigade

http://www.zerohedge.com/news/2015-02-12/sweden-central-joins-nirp-club-lowers-interest-rate-01-launches-qe

News 2/9/15

Oil may drop by more than $30 a barrel from current levels--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’
--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

Nice thread Lyth0s ! Please keep us posted when you have time...

News 2/7/15


Ukraine’s currency just collapsed 50 percent in two days
--Just goes to show how fast the "value" of fiat currencies can fall once people realize their true worth....zero.

"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.

Following  

Maybe central bankers are trying to tell us something..  time to get your value out of virtual fiat asap. 

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."

News 2/6/15

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


--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

You're spot on.

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

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).


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.

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.

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

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?