Topic: World is highly leveraged we count on speculation (Read 124 times)

Wow, what a big rant without much of a point. You constantly refer to yourself as the "we" in here, but lots of people write about these subjects without actually participating in the economic system they think they can describe. The reality is the world has been this way for a long time, sure it has refined a bit decade by decade, but the capitalist way is to play the game. There is no point complaining about it or just moaning about being a victim, it is simply the best economic system we have available so you need to figure out the best way for you to navigate it. There will always be times of boom and bust, sure there is leverage out there but it has an equal chance of deflating slowly so just adapt to the current environment.

They just have to live in rural areas.
https://www.redfin.com/state/Arizona/housing-market

You can get a single family home for 100k even under.
While you are correct on the assessment that there is plenty of room for raising the debt ceiling you have assumed too much in regards to housing. Where everyone wants to live, yes houses are expensive, still people could rent before living under bridges.

You have raised some deep concerns about the current budget and effects due to excessive spending and speculation. Indeed, the world's financial system is closely related and often over-stretched by a wide range of traders and financial tools that tend to confuse transparency and risk management. The economic concept of the bubble does indeed fit nicely here; it certainly underlines the instability in such value chain changes.

You are quite right to point out that the job of the Federal Reserve and other central banks is to manage monetary stability through interest rates and measures of monetary policy, for instance, so as to keep the system going. The thing is, such measures often give a temporary semblance of stability while increasing further the chances of a mega crisis.

Your views on how real property is handled are well captured. Indeed, cash, cryptocurrencies, and even commodities as tangible assets do offer some protection compared to more speculative currencies. Surely, cryptocurrencies have the advantage of being transparent through blockchain technology, ensuring ownership and transactions. Cash remains a reliable direct store of value, while gold, for all its historical role as a safety net, still has to deal with issues of transparency and speculation.


Leverage and potential risks, especially if not properly managed. I agree that while leverage is in itself a common and indispensable tool within today's economy, it's when it becomes excessive or badly structured that the problem arises.

As I mentioned above, the interdependence and sophistication of the financial system are actually the seeds that give birth to macroeconomic crises, whether these are purely domestic in origin or international in nature. Recent events across economies illustrate how interdependent and flexible the system is: problems in one single macroeconomy can easily come to the fore and affect others, which raises the tightrope that must be tread in effectively managing profitability.

Your point on faith and health is so fundamental. In the countries relying on an institution for investigation and enforcement of crime, like the United States, the budget is usually very stable and sure. This assurance keeps the revenue going and leverage well-managed. On the other hand, corruption and unpredictability, which we see in other economies, can erode leverage and raise risk, hence unstabling the system.

That's the important thing to understand. Yes, the world is full of leverage and there will be occasional "hiccups" of great economic disasters. Sometimes it will be the Chinese economy going through a deep recession, other times it will be America, the contagion can even spread around the world and affect everyone. However leverage if reasonably controlled is not a problem itself and it's used in all sorts of places. You're right that it's all about trust, because a society like America is relatively open and you might expect most wrong doing to be investigated - people have faith in that and it allows their economy to grow much bigger than China, that suffers from a lot of corruption flowing from the very top. Corruption can severely distort leverage and make it much more dangerous.

Japan has a national debt that is 227% of their GDP. USA has a national debt to GDP ratio of 120%. I'm sure that the USA can survive a debt to GDP ratio of around 250%. There's still plenty of room for the US national debt to grow. This means that the global financial bubble, created by the US Federal Reserve can keep growing at least for one or two decades. Buying a small house in the USA would cost around 10 million dollars and more people will be living on the street and sleeping under bridges. Fractional reserve banking plus the crazy money printing machine created by the Federal Reserve are the main reasons causing the "leverage" you are talking about. The good thing is that the US dollar will get devalued and the rest of the world might get rid of the US dollar global domination in the next few years.

Of course, developing countries need loans that are intended for their progress. However, the government must ensure that the loans are managed properly so as not to burden high taxes for its people in the future. Of course, as citizens we do have to pay taxes, but along with that, comes the right to question transparency and accountability in the management of funds in the country.

We as citizens can also monitor the use of these loan funds. Transparency from the government in terms of the use of budget funds is what has been expected so far, so that a lot of money is borrowed because of debt and taxes that have not come along with interest that must be paid can be used effectively and certainly provide benefits over time for many people.

On the other hand, the government also needs to consider other loan alternatives, such as increasing spending efficiency or finding new sources of income that do not burden the people too much. That way, the country can develop without adding to the burden of excessive debt.

Actually, this is reasonable in my opinion because every developing country definitely needs funds to make their country progress, but with limited funds, they apply for loans to the World Bank.
Regarding low or high interest rates, it is already a risk for the borrower in my opinion
So as a citizen, we can only accept the government's decision and are required to obey taxes, that's all in my opinion

The world finacial system is over leveraged and not just over leveraged but over brokered the small banks brokering bigger banks and so.

The world is like bubble and huge leverage of everything it's like we all are futures traders when we have high leverage and everytime we get to point of "margin call"the fed will add margin and leverage going higher.
Who knows what's the aassets real valuation of gold or real estate but that's for sure all of this is over leveraged.

Until the fed will rescue the markets together with other central banks all of this will continue but for how long ?

To be honest nobody neither the fed knows how long this bubble will going on and nobody don't tell this on the news If people panic then bigger guys the smart ones can't do their exit of the sinking ship titanic...the last times all the passangers will get good food on house the good wines and music will play and elite will be on safe boats while the average people still eating and enjoying the good food.
When that day will come Im sure we see super bullish markets and super low rates...but then the elite will exit of all the high leveraged and highly speculated assets and markets.


The financial system is like 90% of air and 10% of real valuation some leverage is good for the markets but we are over leveraged and over brokered we have brokers from brokers and they have brokers from another brokers.

that's why you want to hold real assets what you control and wich is far away from speculation.
The cash off course and cryptocurrency and even gold is speculated we don't know how much there is actual gold on spot there is also a lot paper gold contracts.

Yes the speculative assets are good for making profit but when we talk about holding the real wealth then they are not good untfortunately many people don't think about this.

Big part of world speculation was done by London banks by libor system so others lost because of their inside trading and rates inside manipulation.

Look what was happening with credit susisse bank people tought it was safe but a lot people Lost their wealth when credit suisse crashed.

The gold is no better Investment because the lack of transpancy the btc have very transparent system everybody can on blockchain how many coins and wallets so that fact make it real.
With cash it's the same i see how much i have in my pocket it's mine and i can feel and touch it.
With gold ...well it's too much speculation we don't know the real price of gold there is too much speculation only way it can be fixed If gold will go on blockchain so each gold buying selling will be visible on blockchain.
And bond markets ...well that's the gamble because you need guess there is always who bonds off from you.

Just to keep the speculation on the fed will print money and inflation goes higher just to keep up all the leverage they keep rates low but with this the average person lose we see the priorities of central banks the leverage and speculation is way more important then people.

The healthy thing is to detox from this bubble let out the air and let the over leveraged things fall it will hurt a lot economy at first but If we continue then one day the crash will be huge the bubble will pop it will crash everything.

What's interesting is that even those who make money of speculation and high leverage the financial instutions and smart people the ex London libor guys and bankers starting to focus on move their wealth into more real assets like cryptocurrency....the most uneducated people ignorant and very confident ones Will stay on stock market on gold and real estate wich is highly over leveraged .... it's like Titanic the elite will get first safe boats and then the rest of the people will fall together with this super leveraged system.

Also what we need to know there is a lot sublenders on car finaces and mortgages when bigger margin call come then people who was paying their mortgages or car loans will lose their assets on finance because when sublender goes on bust all the assets will be taken by the main owner.

And i don't want to deal with this i focus on real assets If i have fiat currencies then it's either on cash or in stablecoins.

So far we know the real assets are crypto and cash If anyone got more ideas then you can tell us here don't tell it's gold because gold price is super speculated and paper gold contracts over leveraged same with silver.

Off course the food cans can last long aswell you can always eat or exchange them they are good wealth storage assets the canned meats can last long.