The Game - Part I: Queen of Hearts - Eric Janszen

[metalman]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

Underlying racial tensions might also play a part. Lived next to an indian reservation in a rural area and the whites, natives, and mexicans (all substantial portions of the population) are living in three different worlds with plenty of mild-to-medium tensions between them. Take away sense of security aaaand go!

guns are like suvs... great in the country, bad news in the city.

[metalman]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

i don't know if you've noticed the price of crude oil lately, but - in real life - it appears that the financial system has figured out the answer to your question. this reminds me of an old science joke: "i know it works in practice, but does it work in theory?"

if one of us here figures out how they're doing it, we'd be stupid to tell anyone else. first we'd use the info to get rich... then... after that... 'it' won't work anymore.

ask soros. it's not like you can profit on a run on a country's currency over and over again.

[goadam1]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

guns are like suvs... great in the country, bad news in the city.

Guns as topic on Itulip:

[metalman]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

Guns as topic on Itulip:

wups... thx for the reminder. don't wanna see this thread shipped off to ran & rave. :eek:

[Chris Coles]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

Thanks Chris, that helps me understand things a bit more clearly, but my original question still stands.

If right now we are simply replacing all the leveraged debt and no one is lending it, we cannot possibly be adding to the monetary supply. So while this possibly refutes the deflationist argument that we are not going to have deflation because we are printing money to maintain leverage, we cannot possible have inflation result from this either.

So I have to ask again: what is the mechanism by which we are devaluing our currency against oil?

W R O N G !! That is precisely why EJ has factored in the potential for a sudden stop "event". You see, they are indeed adding to the monetary supply and is why various commentators have repeatedly commented upon the perception that the numbers simply do not add up correctly.

When a business, let alone a government, let alone several governments; cooks the books to cover up whatever they wish, it can take years for the truth to come out. Or, an "Event". If you have ever worked with any form of pressurised system, and taken it to its maximum capabilities, you will know just how fast the change from apparent stability to complete failure can be.

Something stupidly simple, totally unexpected, is going to be the trigger, but do not hold your breath, it just might not happen. But that is what makes the whole debate so interesting.

[raja]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

The presence or absence of guns is not decisive. I would feel quite safe in rural Texas towns where many men carry guns, regardless of what happens in Washington, DC. I would feel unsafe in decaying urban areas if our American economy or national government decay further. What matters is the quality of the local communities.

PC,

I was referring to the widespread ownership of guns as a "facilitator" of revolution in the US vs. Russia . . . not as an issue of personal safety.

[ThePythonicCow]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

PC,

I was referring to ...

Ah - ok. Thanks, Raja.

[peterchristopher]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

You see, they are indeed adding to the monetary supply and is why various commentators have repeatedly commented upon the perception that the numbers simply do not add up correctly.

OK I get what you are saying, but to use the language of the deflationists, are you specifically saying that inflation can and will occur based on an increase in the base money supply (M0) alone? The deflationists say that in a fiat-based, fractional reserve system inflation occurs when base money is multiplied through lending. The amount of inflation that can occur from M0 is an order of magnitude smaller because it is not multiplied by lending.

Are you saying that we are printing money on a level that is an order of magnitude greater than before to compensate for the lack of this multiplier? Or are you saying that something has replaced bank lending as the multiplier of M0?

[peterchristopher]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

OK so basically you guys are saying that we know the what but not the how with respect to the mechanism of the dollar's devaluation against oil?

Pythonic Cow alluded to the end of dollar hegemony being the mechanism by which this devaluation occurs. Which would suggest that our government is backing a new reserve currency to replace the dollar (such as the IMF's SDRs). This would flood the market with dollars form foreign holders who don't want or need them anymore, and inflation (not to mention the complete destruction of the US Dollar) would indeed occur in such a scenario.

[Chris Coles]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

OK I get what you are saying, but to use the language of the deflationists, are you specifically saying that inflation can and will occur based on an increase in the base money supply (M0) alone? The deflationists say that in a fiat-based, fractional reserve system inflation occurs when base money is multiplied through lending. The amount of inflation that can occur from M0 is an order of magnitude smaller because it is not multiplied by lending.

Are you saying that we are printing money on a level that is an order of magnitude greater than before to compensate for the lack of this multiplier? Or are you saying that something has replaced bank lending as the multiplier of M0?

I can only give you my personal viewpoint, which is that no one knows for certain what has happened and what will happen. Our only valid route is to debate and by that mechanism, try and figure out all the variables, so that, when events occur, you have already thought about the implications and can adjust your strategy accordingly.

Yes, I sit right at the middle of the fence, with my eyes and ears open.

[Sharky]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

So I have to ask again: what is the mechanism by which we are devaluing our currency against oil?

The mechanism is artificially low interest rates.

Here's how it works: capital is attracted to yield (real return); when yield is low in the US, capital moves to places where it's higher (out of the US); the result is net selling of the USD, which devalues it relative to other currencies; a weaker dollar drives up the cost of imports, including oil; as import and energy costs increase, so does inflation.

That's the theory, anyway. In practice, the holders of dollars will steadily see their value decline; as they do, they will tend to act to preserve as much value as they can; unfortunately, moving hundreds of billions of dollars quickly isn't easy without further damaging the value of existing assets; one very likely solution is to spend those holdings in the US, rather than internationally: hence the steady flow of foreign companies buying US companies and associated assets (real estate, etc); however, the flow is still a trickle today; it could easily turn into a flood, which would result in a huge inflation spike; further devaluation at a minimum; hyperinflation as a worst case.

[Slimprofits]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

The mechanism is artificially low interest rates.

Here's how it works: capital is attracted to yield (real return); when yield is low in the US, capital moves to places where it's higher (out of the US); the result is net selling of the USD, which devalues it relative to other currencies; a weaker dollar drives up the cost of imports, including oil; as import and energy costs increase, so does inflation.

That's the theory, anyway. In practice, the holders of dollars will steadily see their value decline; as they do, they will tend to act to preserve as much value as they can; unfortunately, moving hundreds of billions of dollars quickly isn't easy without further damaging the value of existing assets; one very likely solution is to spend those holdings in the US, rather than internationally: hence the steady flow of foreign companies buying US companies and associated assets (real estate, etc); however, the flow is still a trickle today; it could easily turn into a flood, which would result in a huge inflation spike; further devaluation at a minimum; hyperinflation as a worst case.

Thank you Sharky.

[peterchristopher]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

Thank you Sharky.

100% agreed. Thank you Sharky, that is exactly the answer I was looking for.

[strittmatter]

Re: The Game - Part I: Queen of Hearts - Eric Janszen

I can only give you my personal viewpoint, which is that no one knows for certain what has happened and what will happen. Our only valid route is to debate and by that mechanism, try and figure out all the variables, so that, when events occur, you have already thought about the implications and can adjust your strategy accordingly.

Yes, I sit right at the middle of the fence, with my eyes and ears open.

kind of reminded me of something Armstrong stated in his latest, "Is America On The Verge Of Another Bank War..........."

One reason everyone should learn technical analysis is because most professionals use various forms. It matters not if you in fact believe in it or not, others do. So you should understand at least when this group will be doing something for you sure as hell do not want to be caught standing in a field when the cattle start to run.

http://www.martinarmstrong.org/economic_projections.htm

The first 2/3 of this writing (a little windy) Armstrong gives his historical perspective of events, causes and conditions that led to the creation of the Fed, then ends with his how's and why's for where we are today.

His views on interest rates, money flows and the psychology of it all does in fact line up with sharky's explanation here:

Originally Posted by Sharky
The mechanism is artificially low interest rates.

Here's how it works: capital is attracted to yield (real return); when yield is low in the US, capital moves to places where it's higher (out of the US); the result is net selling of the USD, which devalues it relative to other currencies; a weaker dollar drives up the cost of imports, including oil; as import and energy costs increase, so does inflation.

MHO.