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  #3151  
Old 02-19-2019, 04:10 PM
Danny B Danny B is online now
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Squeezing the working class shrinks real markets

The supply of gold only grows by about 2% a year.
The supply of many commodities grows relative to demand. But, commodities must be consumed to supply future demand. Housing is an area where the upper loop of money renters meets the lower loop of people who need housing. QE has distorted this by creating a demand for housing by people who don't plan to actually live in these houses. The houses aren't actually "consumed".
"the soaring home prices in major Chinese cities isn’t an accident. It’s the product of deliberate local government land policies that favor rich landlords over the average citizen."
Developers are building “ghost cities—“ vast tracts of apartment high—rises and malls that remain largely vacant because the Chinese worker can’t afford them.”

Vacant apartments belong to wealthy landlords who expect to sell them one day at higher prices."
"Meanwhile, holding apartments off the market fuels a huge housing shortage, which pushes the prices for “second-hand” houses ever higher. Shanghai’s Second-Hand House Price Index, for example, has soared from under 1000 in 2003 to around 4000 in 2017."
"Japan has already faced these problems, and it’s counting three lost decades"
https://www.forbes.com/sites/panosmo.../#727742f8ecfc
The Chinese population is rapidly shrinking.
So, the Chinese (et al) money renters have killed demand for housing at the same time that they plan to sell later at a higher price to a presumably growing market.

Here is a long article on MMT and inflation. It claims that the CB will have to create tons of money to support MMT AND tons of money to support the demands of the banks. This will supposedly destroy currencies. I suppose that this is true. So, SCREW the banks and just print for the producing economy.
https://www.goldmoney.com/research/g...-credit-crisis

Armstrong writes about the runup to the 2020 election.
" It appears that all this political obstruction and constant hatred being poured out by the press against Trump will fuel less intelligent people to see him as the Devil incarnate who must be stopped at all costs. This is not going to end nicely and the politics have crossed the line becoming more hate speech with deadly consequences. Neither side will accept the result."
I don't completely agree with this. I know somebody who is the senior IT developer at a beltway firm. He dismisses EVERYTHING that HRC has done as just being an irrelevant fable. less intelligent
" Unfortunately, our computer is forecast a sharp rise in violence in 2020."
https://www.armstrongeconomics.com/i...ical-violence/
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  #3152  
Old 02-20-2019, 05:52 AM
Danny B Danny B is online now
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MMT does NOT increase the debt

The BS is flying thick about what a crackpot idea MMT is. Here are a couple of comments on the text of an article at Zero Hedge. The article is about how MMT ruined Zimbabwe and Venezuela and Germany.

The continued argument against MMT expressed in the above article and others of its ilk is total nonsense. Money is permissive and directive but not causative. It is the old idea of "pushing on a string" when the Fed relaxes monetary policy. You can offer money but you can't make people take it if they see no way to put it to use. But by refusing to offer money the Fed surely can shut down economic activity by denying the means of payment for worthwhile and useless investment alike.

This is the essence of the issue. So long as people have something they wish to do there will be a demand for money. The critical issue is whether the things they wish to do are worth the doing. If the things are not worth doing the money will not be wasted. Money is simply an abstraction which passes from one hand to another directing the usage of real resources. It is the real resources that will be wasted.

It is important to distinguish all expenditure and that includes expenditure under MMT as to whether it is a worthwhile expenditure of real resources or if it is not. It is clear that MMT will waste resources if wielded by irresponsible hands, but this is not a criticism of MMT. It is a criticism of governmental competence which is a different thing. Articles like the one above constantly mix competence with the theory to the detriment of the theory. This only creates disingenuous propaganda against MMT. This class of argument generally arises from those who are determined to starve the economy of sufficient aggregate demand to maintain full employment. Power comes from restricting the money supply to those who have money to loan.

It is certainly true that governments are usually in desperate need of finding money to spend when they are hell bent on spending for political motives that have no underlying value. Governments always resist stopping whatever it is they are doing because of large political constituencies that demand continuation. If they are failing they will throw whatever resources they can find into that continuation.

Restricting the use of resources is, however, no panacea. Most resources will decay if not used. Factories and equipment rust and people forget their skills as they go unused. One really does not have the option of not using resources. One must be vigilant to see they are used well and in sufficient quantity. This idea is generally ignored.

One side in this debate wants to conserve resources until paid for by equivalent value already in existence. If this were really necessary no economy could grow or shrink. In fact there could be no economies at all for all economies are called into existence out of nothing.

The idea of there always existing a preceding value is antithetical to the very concept of growth. True growth is from an accounting perspective completely ex nihilo and is validated only by producing new money to represent it. The actual increase in value occurs completely in the real sector insulated from the financial sector. It is accounted for crudely by the measure of profit. A measure which can easily be distorted by other economic and financial considerations. A concept of real profit is needed which reflects real revenue minus real cost. That real profit is then given a financial value through representation in new money. This is necessary because assigning a concept of real value over a collection of heterogeneous items independently of a concept of money is effectively impossible.

The other side is sure or pretends to be sure that whatever is done will be golden. All expenditure will produce only real profit. There are no real costs so all the money spent will create real value which is equivalent to the expenditure itself. One can write off all sunk costs at zero value. If this is true there can be no inflation. These people proceed without evidence or from outright fraud. Neither is an acceptable attitude but the first is more pernicious for it is commonly believed. The second is merely laughable.

The MMT rests upon the idea that whatever is worth doing will receive proper validation in monetary terms. The money is only there to grant permission to proceed. Violation of this idea is contrary to all sensible expenditure, not just MMT. It is also the basis of the pernicious assumption that preceding value must be offered for newly created value. The assumption exists that the offered value will be equal to the newly created value in real terms. This need not be true when money is used to equate values. It is the effort to keep it at least approximately true that is important.

The idea that we are anywhere near the full or, more importantly, the efficient use of real resources is nonsense. The government has been cooking the statistics for years. Aggregate demand has been suppressed for years. The rate of return on real investment on the whole has been suppressed. This is evident in the prevailing low interest rates which do not stimulate real investment. The idea that we are anywhere near full employment is laughable. Look to the participation rate.

Moreover, it is increasingly clear that there is very little in the US worth employing labor to do. Business can find nothing to do with the Fed's output of green but to buy back their stock. The movement to offshore investment since the 1970's is indicative of falling domestic returns. The idiocy of the Green New Deal is a major and very observable argument for the idea that the US is incapable of doing anything but waste resources. The US is determined to "save" the planet at the expense of the human race. Fracking is constantly accused of producing oil at excessive cost. Operations to loot foreign countries such as Syria and Venezuela are indicative of the mindset of government towards domestic investment. Why build it when you can steal it abroad?

No doubt MMT will be introduced for truly reprehensible motives, but that is not the fault of MMT. It is the fault of those who advocate it who would wield it irresponsibly. The greatest virtue of MMT if it survives this abuse will be to destroy the idea that equivalent value must already exist before new value is made. As stated above growth cannot occur if this point of view is strictly held. New growth is not a financial construct but comes out of labor, capital, technology and organization. Finance creates new money to represent its coming into existence and assigns a value in financial terms which can be recognized by the financial system. This number need not be correct so there can be either inflation or deflation. There is no preexisting value involved.

2nd;
The inflation in Weimar Germany was due to a triangular flow of debts incurred due to Versailles Treaty. Also, the Reichsbank was privatized under the Dawe's (an American) plan.

It was bear raiders shorting the Mark, which caused the hyperinflation. It actually took taking the Reichsbank back under government control (under the Chancellorship) to stop the hyperinflation using rentenmarks and not allowing shorts.

Whenever you do a short, you have to borrow new marks into existence i.e. they are loaned into existence against dollars, or gold or some foreign currency. This is how the new money came to be "printed." Dudley doesn't know squat.

With regards to Venezuala, it is import dependent and has dollar debts. By not allowing the sale of oil, the Venezuala loses their FX, which puts pressure on their exchange rate, which then allows it to be bear raided. Sound familiar?

Let's compare: Russia has plenty of FX, little in the way of dollar debts, and they are making stuff themselves. No way a bear raider can screw over Russia with hyperinflation, although they tried with the sanctions.



Oh and then the Zimbabwe canard. These retards always bring up Zimbabwe. Jeez. It is an African country run by Negroes. Say no more. They killed off their white farmers, and hence their money no longer matched goods and services production. They killed off their economy, so somehow that is MMT?

https://www.zerohedge.com/news/2019-...a-and-zimbabwe
The article talks about the huge and increasing debt load with MMT.
Bill Gates, who slammed MMT as "Crazy talk" saying that the theory's core principle of "not worrying about the deficit"
There is NO deficit if the treasury just prints fresh money.
But it will come and bite you. The people you owe the money to, you will have a problem." You don't owe money yo anybody. THAT is the problem for bankers.
"suggests that a government like the U.S. needn’t worry about debt at all. As long as it borrows in its own currency, there is no risk of default or bankruptcy. It can spend as much as it wants on any projects,
THEY DON'T BORROW.
Alas, there is no free lunch. For one, the economy might not have enough resources — in the form of workers and industrial capacity — to meet the combined demand from the government and the private sector. The result would be inflation, as too much money chased too few goods and services.

Fueled by income and strong consumer demand, demand-pull inflation occurs when the economy demands more goods and services than are available.
If U.S. debts were to keep growing, at some point the Fed would face a dilemma. It could increase interest rates to maintain foreign (and domestic) demand for dollar assets, at the cost of damping U.S. economic growth.
How stupid do you have to be to believe that U.S. debts will keep growing if the treasury PRINTS instead of borrowing?
The U.S. economy is operating pretty close to capacity — especially in the labor market
BS to the max.
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  #3153  
Old Yesterday, 05:26 AM
Danny B Danny B is online now
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Printing ever more.,,, China going DOWN

The above cited article slamming MMT is written by FED Governor Bill Dudley.
https://www.zerohedge.com/news/2019-...a-and-zimbabwe
Ben Franklin, "We just print whatever amount of money is needed for the producing economy"
Of course, the FED prints whatever money is needed by the money renters. MMT would completely replace the FED bond market. All the people living off their portfolio have an income thinks to wet-ink money from the FED. 50% of the gains in the stock market are courtesy of the FED. In Europe, it is 100% due to the ECB. The monetary inflation flows directly into the pockets of the people who rent their money. There is NO STIMULUS for wage inflation.
There are a couple of very good charts on this page.
https://northmantrader.com/2019/02/19/the-lost-war/
We are obviously reaching a peak. Balance sheet reduction at the FED was reported to be equivalent to a 1.5% increase in the interest rate.
2/20 Blain: it feels like a liquidity storm is coming soon – Zero Hedge
2/20 Fed to end balance sheet reduction by the end of the year, minutes say CNB
The FED is trying to free up some liquidity.

Dudley lambasts MMT but, wants to do QE on a regular basis. Tell me the difference
https://www.truthdig.com/articles/th...tative-easing/

Because of technical constraints, the stock market is lined up for a 10% correction. EVERYBODY is betting that the FED will come through and pump up the markets.
https://www.zerohedge.com/news/2019-...better-deliver
The FED created quite a bump in the road in December. Reportedly, Powell got scared and backed off. What will happen this time?
https://www.forbes.com/sites/bobhabe.../#e7a09b82de4d

"China has not shown much capacity for developing high technology on its own, but it has been quite effective at stealing such technology
Unfortunately for China, this growth by theft has run its course. The U.S. and its allies, such as Canada and the EU, are taking strict steps to limit further theft "
"China assumed it was “business as usual” as it had been during the Clinton, Bush 43 and Obama administrations. China assumed it could pay lip service to trading relations and continue down its path of unfair trade practices and theft of intellectual property."
"China Large-Cap ETF (NYSE:FXI).

FXI peaked at $54.00 per share on Jan. 26, 2018, almost exactly on the day the trade wars began. The index has trended steadily downward from there to the current level of about $42.50 per share, a 21% decline with volatility along the way."
"March 1, 2019, is the deadline for the current “truce” in the trade war intended to facilitate negotiations. U.S. demands — especially in the area of verifiable limitations on the theft of U.S. intellectual property — are impossible for China to meet because it depends on such theft to advance its own economic ambitions."
"But the big issues including limits on U.S. investment in China, forced technology transfers to China and theft of intellectual property will not be resolved.

The best case is that the deadline will be extended and the trade talks will continue. The worst case is that the truce will fall apart and the U.S. will impose massive tariff increases on Chinese exports to the U.S. as planned."
Making China less great.
https://dailyreckoning.com/the-crumb...hinese-market/
https://www.zerohedge.com/news/2019-...ilize-currency
This is determined by the markets.

Apparently, lefties don't handle stress very well. It makes them crazy.
https://news.grabien.com/story-mccab...mpaign=grabien
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Last edited by Danny B; Yesterday at 05:30 AM. Reason: mo info
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  #3154  
Old Yesterday, 10:56 PM
Danny B Danny B is online now
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Smoke & mirrors,,, trying to kick the can a bit further

Armstrong, " in Illinois, there are more than 19,000 retired teachers who get OVER $100,000 per year in their pension"
"The government will do ANYTHING to protect itself."
OK, will GOV kill off the FED and implement MMT to keep itself going?

"Achieving success through hard work, intellectual accomplishment, or a superior product is antiquated and passé. Success is achieved through regulatory capture, bribing politicians, financial engineering schemes, monopolization of markets, and the power of propaganda."
"What leaps off the screen is how businesses are created out of thin air delivering no value to society. It’s all smoke, mirrors, and superficial virtue signaling designed to lure intellectual lightweights to pretend they are a mover and shaker in their social media driven world. "
https://www.theburningplatform.com/2...fyre-festival/

Along with the loss of morality, there is a general lack of character. Whatever we want, we want it now. If things don't go our way, we immediately get stressed out.
https://news.grabien.com/story-mccab...mpaign=grabien
We want to be happy with no effort.
https://dariusforoux.com/the-quickes...-to-happiness/

Here is an article that lists quite a few things showing that we have peaked and, are headed down.
"
Two-Year yield bottomed September 2011
Five-Year yield bottomed July 2012
Ten-Year yield bottomed July 2016
The 30+ year bond bull market is done."


A recession indicator with a perfect track record over 70 years is close to being triggered

"The unemployment rate is often called the most important barometer of a coming recession."
OK, Shadowstats shows the true unemployment rate, using the previous method for figuring this figure. It's now about 22%.
http://www.shadowstats.com/imgs/sgs-...d&t=1549031117
Alternate Unemployment Charts

Since the unemployment rate is so important, it is sure to be falsified.
"Lavorgna says there's probably just a 1 in 3 chance of a recession and he expects the unemployment rate to head lower again, not higher.
The unemployment rate, at 4 percent, is currently 30 basis points from its recent low."
GOV is having to pump in lots of liquidity to make up for a;ll the lost wages. In spite of all the printing, the markets are starting to unwind anyway.
"The unemployment rate has been a perfect forecaster of recession, and it appears to be edging closer to triggering that signal.

"It's never been wrong. It's something to watch," said Joseph Lavorgna, chief economist for the Americas at Natixis."
Because of wishful thinking, people look at the unemployment rate and ignore that 96.2 million Americans of working age are not in the labor pool.
https://www.cnbc.com/2019/02/20/a-re...triggered.html

2/21 Major Chinese port bans Australian coal imports – Bloomberg Sorry OZ, you're toast.
2/21 Shocking Philly Fed collapse: biggest drop since 2011 – Zero Hedge
"As you can see, about $3.3 trillion — or 48% of all current outstanding commercial debt — comes due by 2023. The timing could be problematic."
https://www.marketwatch.com/story/a-...ger-2019-02-20
2/21 Yield curve inverted out to seven years – Mish Bad news for bonds.
2/21 American investor Jim Rogers warns of grim future for japan – Japan Times
What do you expect when you destroy the family to prop up the banks?
2/21 US housing market in freefall as new buyers can’t afford a home – Zero Hedge
All that wet-ink money that went to money renters drove up the prices.
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