a quick look at the bank balance is more than all I need to assure myself that I should spend time studying economics.. even a cursory examination of what's written below will show that "we are but humble pirates…….”
i am not the only one puzzled.
if what I have heard is correct, the executive in the usa has been instructing the fed. to buy bonds.. to finance it's (the govt.’s) expenditures.
the money supply has been very much increased.. the M1 machine, as economists say, has been cranked up and this of course leads to inflation in the medium to long term.... higher or lower.
everyone knows that.. both domestically and internationally. that there will be inflation in the usa at some point is a known known..…..there is also some expectation that the green-back could turn into a toxic asset any tick of the clock basically. if people with large enough holdings lose their sang froid.. (or decide to get out while the getting is still good…..)
bank runs happen.
of course americans are financially savvy people.. I am sure that as soon as the greenback is recognised as valueless they will have already gotten rid of them and be using something else. (cigarettes, small bags of cocaine...) um.. and the only losers will be foreigners stupid enough to be caught with trillions of them…
maybe I’m wrong..
it seems to me that the federal deposit insurance act of 1934 has lead to banks in the usa making very risky loans since that time. <:strokes beard sagely:> this is where the toxic assets bit comes in and the trillions of bailouts… ’34-07… (its obviously the feds who are to blame.)
the first rule of finance is that a dollar today is worth more than a dollar tomorrow. hence investment .. – purchase of new capital goods.. plant and equipment. (or financial investment.)
this is simple enough for me to understand..
the question is:-
a) is this happening in the usa? or with anyone spending dollars? ans.. I don’t think so..
b) when the discount rate is expected to be ‘x’ when x is a know unknown.. but probably way off the gauge….. then how much inflation is this gonna cause?
answer… no one knows.. the dollar is the international (fiat) reserve in a global economy that is unprecedented.
a run on a bank isn’t a rational occurrence. nor does it have to be a national occurrence.
i don’t think there is anyone who can say what will happen. all that can be said is that it is going to happen pretty soon.. and it will never be the same as it has been from 1934 till 2007.
the second principle of finance is that a safe dollar is worth more than a risky one… I don’t think we even need to mention this one.
just a week ago I thought that hyperinflation in the usa was exaggeration .. doom scenario. but when I read up about it.. germany.. Bolivia…(the story there is that the unexpected happens ....) I am beginning to think it is not so far-fetched. and even being provoked.… (dare we say...? I am happy to say that i live in a country where i can.)
national economies are not unbreakable no matter how robust they may at some point in time seem.
i wouldn’t rule it out and I reckon most people are preparing psychologically for it as well.
it comes down to what Beijing decides to do and what would cause them to sell their treasuries (toxic American assets)…. maybe the fact that the usa no longer has control of its currency is the reason why they ( the yanks) wouldn’t mind it happening.. …..though there might be a bit of an argument on the street first..
… but dudes.. it had better be convincing. .. very.
better luck next time.
i’d best buy those new gumshoes I need while they’re still cheap.
2012 seems the useby date for that five buck note left over from last holiday. (mayan calander)
maybe we should start getting used to thinking in redbacks.