LDS Freedom Forum

http://www.iht.com/articles/2009/03/18/business/fed.php

It's finally happened. The Chinese aren't buying enough, so they're printing it. This is going to unravel really fast! For all you deflationers out there - we're going down the road no nation has ever travelled and survived - we're destroying our currency and it will result in massive inflation. Gold rose $26 yesterday, and signs of inflation are gearing up.

Not only that, check this out...

http://www.reuters.com/article/newsOne/ ... CY20090318

LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Weimar, Germany... Zimbabwe... here we come!

So what do we do?

We keep pointing out problems (I'm guilty), but provide no solutions. Let's talk about action steps... hopefully we have already been preparing... nonetheless... solutions.

clarkkent14 wrote:So what do we do?

Food, guns, gold, silver, pay off debt to the extent possible, and pray.

http://www.telegraph.co.uk/finance/brea ... ation.html

The US Federal Reserve is increasing its balance sheet by another $1 trillion, including $300bn of Treasury bonds, the Federal Open Market Committee said on Wednesday. Fed policy is now high-risk, and resurgent inflation may strike sooner than expected.

This isn't even close to monetizing any debt (debt is still being created faster than any monetization) and in fact pales in comparison to the deflation we are seeing. There is good rational commentary out there if you're willing to head out of the bomb shelter long enough to read it.

If it is a sign of much bigger things to come, ergo can actually be politically sustained, we may see the equation start to tip, but crying inflation when so much money is on fire is silly.

What China thinks of it is another question.

As to gold that is a hoe-hum rise all things considered. It hasn't even returned to last years levels yet.

The prophet's counsel is clear, so the debate should not even include what to do about it. That said, I have never seen where that counsel included speculation in anything's value. It hasn't and won't because we don't work that way.

clarkkent14 wrote:
So what do we do?


Food, guns, gold, silver, pay off debt to the extent possible, and pray.

This is about the best we can do now. Our dollar is going to plummet soon, I fear. The Fed is printing up trillions of dollars....and that's going to devalue the dollar for sure. I think that now is the time to get our storage and commodities or it will be too late.

SwissMrs&Pitchfire wrote:This isn't even close to monetizing any debt (debt is still being created faster than any monetization) and in fact pales in comparison to the deflation we are seeing. There is good rational commentary out there if you're willing to head out of the bomb shelter long enough to read it.

If it is a sign of much bigger things to come, ergo can actually be politically sustained, we may see the equation start to tip, but crying inflation when so much money is on fire is silly.

What China thinks of it is another question.

As to gold that is a hoe-hum rise all things considered. It hasn't even returned to last years levels yet.

The prophet's counsel is clear, so the debate should not even include what to do about it. That said, I have never seen where that counsel included speculation in anything's value. It hasn't and won't because we don't work that way.

The point is they're starting to print money to finance the stimuli and debt, not by selling more long term T-Bills. I don't think it means we are going to have inflation overnight (we won't). I realize that we are in a deflationary period and a little inflation won't kill us, but it will spook the long-term investors that may tip the scale and crash the bond market. There are people that whip this up because they wan't to push gold as well, just as there are people that try to pish-posh the effects of Keynesian debt-financing (A Federal Reserve lie).

Riddle me this: How can we continue dropping interest rates while inflating the currency? Let's stomp on the yield curve won't we?

SwissMrs&Pitchfire wrote:If it is a sign of much bigger things to come, ergo can actually be politically sustained, we may see the equation start to tip, but crying inflation when so much money is on fire is silly.

Most of that "money" is just dropping asset values and illiquid items on bank ledgers. This stuff doesn't exist in the tangible economy us lesser people live in. The negatives we see from it is banks not lending, which may affect our employers and their ability to buy/sell and keep people employed, but won't hold down prices for things the dollar can't buy soon. All those derivatives killing all those companies is pie-in-the-sky stuff unconnected with anything of substance.

All these falling real estate prices, consumer electronics, etc. haven't changed the fact we are/will be paying much more for things we really need, like clothes, medicine, food, gas. Debt monetization has already, in 24 hours, appreciably weakened the US dollar. Since we import heavily in all those categories, the weakening dollar will jack up those prices higher. Moreover, the issue of ditching the dollar as the global reserve currency has come alive again. That's bad news for us, because without reserve currency status, we'll have to actually compete for goods like oil on the global market, and the dollar will be a huge millstone around our necks.

If Bernanke's actions lead to too many people losing faith in the dollar, no one is going to care if the bankers are doing Heath Ledger imitations of building bonfires with piles of cash. If food is scarce/expensive and people can't fill their gas tanks, the things that do cost less won't matter so much - even the value of our homes (those that still have them). People will sell the TVs, cell phones and laptops they cared so much about previously to put food on the table. They'll be cheap because no one will care.

This is going to be an interesting year. I hope everyone is ready.

Everything is going to be just fine... Obama tells me so and so does Bernanke.

Col. Flagg wrote:Everything is going to be just fine... Obama tells me so and so does Bernanke.

My hopes are fading for Obama. He's been in office since January and he has yet to fill the gas tank in my car nor has he paid my mortgage . I'm beginning to think he's a.... dare I say.... politician.

Anyway, back to reality... as I mentioned earlier, those who read about the 7 yrs of famine Pres. Hinckley mentioned multiple times might notice the part that says the money failed Monetizing the debt is one step closer to failing the money.

shadow wrote:Anyway, back to reality... as I mentioned earlier, those who read about the 7 yrs of famine Pres. Hinckley mentioned multiple times might notice the part that says the money failed Monetizing the debt is one step closer to failing the money.

Good point.

Here's an interesting (long, but a good read) article to read about the different ways our economy could go bust:

http://www.marketskeptics.com/2009/03/f ... in-us.html

262 Billion = US monetary base as of September 2008 (minus dollars held abroad)
3,818 Billion = projected US monetary base in September 2009 (minus dollars held abroad)
3,818 Billion / 262 Billion = 15-Fold Increase in US monetary base

This is a staggering devaluation of the US currency! It means that for every dollar in America in September 2008, the fed is going to created fourteen more of them!

The error in Karl Denninger's logic is that hyperinflation will happen despite falling consumer purchasing power because the flow of goods into the US will dry up. Here is the hyperinflationist scenario I see occurring:

You walk into a retailer and two thirds of the shelves are empty. You walk over to shelves, and you see prices have doubled.

Why are the shelves empty?

Because China broke its dollar peg and the dollar is plummeting against foreign currencies. Retailers could only afford to restock one third of their normal inventory.

Why are costs twice as high?

A) Cost of importing inventory has more than doubled. "Cheap Chinese consumer goods" aren't "cheap" anymore.
B) With two thirds of supply wiped out, retailers can raise despite growing unemployment and falling wages.

Over the last thirty years, the steady outflow of 580 billion dollars has helped drive down interest rates. For example, If 10 billion dollars leaked out of the US and began circulating abroad, the fed would print 10 billion and buy treasuries in order to replenish the domestic money supply. So the 580 billion dollars held abroad resulted in the purchase of roughly 580 billion treasury bonds by the fed, thereby increasing demand for US debt.

While the accumulation of oversea dollars has been beneficial in the past, today the large pools of dollars circulating in foreign hands pose a threat. With many dollar alternatives becoming available, US oversea currency looks increasingly likely to start flowing back home. The main currencies with the potential to displace dollars are:

A) The Chinese yuan which is becoming an international currency
B) The Khaleeji, a new currency being launched by Gulf states which will be possibly backed by gold.
C) The Euro with its partial gold backing
D) Gold

Furthermore, now that the fed has begun creating money at an accelerating rate, the extensive foreign holdings of US currency might exacerbate the effects of inflation fears. As foreign dollar holders’ confidence in the dollar is eroded, they will trade their dollars for alternate stores of value (yuan, euro, gold, etc…), potentially sending a flood of currency back to the US. If the Fed failed to reduce the supply of currency to counteract dollars being unloaded from abroad, the inflationary consequences would be made worse as the mass reversal of currency flows from foreigners to the US becomes overwhelming.

The other is the loss of their dollar funding. The enormous leverage employed by European banks to purchase toxic AAA rated assets was funded in great part by loans from US money market funds. After Lehman's default led to massive withdrawals from those money market funds, European banks lost access to billions in dollar funding.

If European banks are forced to sell their 8 trillion US assets, it will crash the credit markets, and they will have to recognize enormous losses. Since the fed is desperate to prevent the collapse of the US financial system, it lent those European banks 600 billion dollars so that they wouldn't be forced to sell. Meanwhile, European banks accepted this 600 billion because they don't want to recognize losses on their toxic US securities.

So when does this trigger get pulled? September?

pjbrownie wrote:http://www.iht.com/articles/2009/03/18/business/fed.php

It's finally happened. The Chinese aren't buying enough, so they're printing it. This is going to unravel really fast! For all you deflationers out there - we're going down the road no nation has ever travelled and survived - we're destroying our currency and it will result in massive inflation. Gold rose $26 yesterday, and signs of inflation are gearing up.

http://www.larouchepac.com/node/9676

March 20, 2009 (LPAC) -- In response to a report on the latest measures implemented by Federal Reserve Chairman "Helicopter Ben" Bernanke to "restore financial stability," economist Lyndon LaRouche had the following comments: "These actions put us on the edge of a hyperinflationary takeoff, like that of Weimar Germany in 1923. The pumping of money by Bernanke is part of a British operation to sink the United States. Anyone who continues this thing is a traitor to our nation, whether they are witting, or not."

Do a Google search in Weimar, Germany and see what happened to their currency by printing and printing and printing... we don't want any part of that consequence, but thanks to the 'Federal Reserve', we're gonna get just that!