LDS Freedom Forum

The last few paragraphs say it all...

By the summer into the fall, when employment hasn't materially turned around and both spending and tax receipts have continued to fall, reality will set in.

Congress is increasingly becoming aware that all of these "fixes" thus far since the summer of 2007 have been nothing more than a scam and a fraud - a ripoff of the Taxpayer and Treasury in a vain and vile attempt to keep those who committed willful blindness or even fraud from having to bear the pain of their sins. The American people are becoming increasingly aware as well.

Come summer and fall there will be no political capital available to play games, either in the American public or the Congress. If Congress tries to appease the Wall Street pressure groups again, they will run the risk of having the Capitol put under siege by angry citizens demanding 535 immediate resignations - or worse.

I further believe the American Public is getting damn close to the breaking point. The tone among people I interact with daily and among what I see online and off is shifting from hope and faith to anger with each passing day, and each revelation of another 10 billion here or there that get funneled through some conduit to an offshore bank just raises the pressure another notch. The people now want blood, and I believe the minimum they will accept are thousands of indictments, prosecutions and prison sentences along with forfeiture of these men and women's fortunes. Madoff didn't satisfy, it further enraged.

The government is running a very real risk, as I have noted in the past, of being declared by the people as "the felon" instead of "the cop", and if that happens I don't want to be anywhere near the angry mob that makes that decision.

So for now, enjoy the general upward to sideways trend in the market, but prepare. While the spring may bring hope and summer one of discontent, I believe there is a very high probability that come fall, the peak of Hurricane Season, a very ill wind will be blowing both in New York and Washington DC.

AMEN!

Gman - Help me understand something because I'm still trying to reconcile the deflationary market forces with the inflationary actions of the Fed.

The article surmises that foreigners are selling their U.S. government bonds. It also says that the Fed will place those bonds in the vaults rather than re-sell them. My question is - if foreigners are unloading U.S. debt, won't that cause inflation? After all, the Fed has to redeem the debt sold by the foreigners by printing up the money to pay for them. Thus, even if the Fed does not re-sell them, the new money has already been placed into the system.

Thoughts?

reidbump wrote:Gman - Help me understand something because I'm still trying to reconcile the deflationary market forces with the inflationary actions of the Fed.

The article surmises that foreigners are selling their U.S. government bonds. It also says that the Fed will place those bonds in the vaults rather than re-sell them. My question is - if foreigners are unloading U.S. debt, won't that cause inflation? After all, the Fed has to redeem the debt sold by the foreigners by printing up the money to pay for them. Thus, even if the Fed does not re-sell them, the new money has already been placed into the system.

Thoughts?

reidbump, did you see the article I posted a few days ago about how the 'Fed' plans to increase our money supply by 1,500% this fall? That would result in hyper-inflation, would it not? Printing up more and more money is not deflationary... why is it that some people can't understand this concept? If you have one dollar bill and suddenly there are 14 more printed up for every one, does not the original one suddenly become worth less, thus, you need more dollars than before to buy the same stuff? It isn't rocket science, but some here in the forum are convinced we're going to enter into a deflationary depression. We're going through a little deflation right now, but it won't last.

There will be more money but it won't go the people. The people will have less money (layoffs, unemployment, etc.) The dollar won't be worth anything on one hand, but on the other hand nobody will have a dollar to buy anything Supply/demand. If hyper-inflation were likely I wouldn't care that I am upside down on one of my cars (the SUV) and my house. Instead of trying to sell my house now for $350k ($30k less than last yrs appraisal) I should just wait until this fall (hyper-inflation time) and sell it for $700k?? Not likely.

Google "velocity of money."

If you have one dollar bill and suddenly there are 14 more printed up for every one, does not the original one suddenly become worth less, thus, you need more dollars than before to buy the same stuff?

Not if you're throwing them into the burn barrel faster than your printing. Remeber these are computer dollars going into black holes out there. The profits were taken years ago with the exception of the free money the fed is handing out to it's friends, but that money isn't hitting the street yet and likely won't in sufficient quantities to counterbalance the losses others are incurring. Likewise a LOT of the money is going overseas where it will never really be repatriated.

We are still seeing massive deflationary forces out there and what can stop that? How can the money be put into the hands that will spend it? 10%+++ unemployment and not getting any better, how, where, when will this money show up?

I repeat the magic inflationary question:
How, where, when will this money show up?

Will we see employment turn around and wages rise and put upward pressure on consumer prices? In what sectors?

I just do not see any possible engine for it short of a literal helicopter drop and given that ALL the bailout monies have gone to top level insiders and we do not even see Civilian Conservartion Corps programs being trumpeted let alone implemented, I doubt the impetus is out there lurking around the magic corner we will trun and see hyper-inflation. It just isn't coming except for that brief magic moment when we print the supernote and bail on our debts. Then anarchy.

SMP - do you see foreigners' loss of confidence in the dollar as countering deflation and causing inflation? Even if the Fed doesn't print the $1 billion note won't a loss of confidence destroy the dollar's value anyway? Further, won't foreigners' refusal to buy our debt leave the Fed with being forced to monetize our own debt (which I believe is what it has started to do since last week)?

shadow wrote:If hyper-inflation were likely I wouldn't care that I am upside down on one of my cars (the SUV) and my house. Instead of trying to sell my house now for $350k ($30k less than last yrs appraisal) I should just wait until this fall (hyper-inflation time) and sell it for $700k?? Not likely.

I've heard this argument but I believe it is based on a misunderstanding of the consequences of hyperinflation because once confidence in the currency is lost, the currency is no longer accepted as a medium of exchange. Thus, your bank would not accept your worthless inflated dollars as payment toward your mortgage.

reidbump wrote: I've heard this argument but I believe it is based on a misunderstanding of the consequences of hyperinflation because once confidence in the currency is lost, the currency is no longer accepted as a medium of exchange. Thus, your bank would not accept your worthless inflated dollars as payment toward your mortgage.

It's in the contract. They have to. Not that it matters, we won't see the money as Pitchfire already mentioned.

shadow wrote:It's in the contract. They have to. Not that it matters, we won't see the money as Pitchfire already mentioned.

I would like to think so, but practically speaking you know that would not happen. Courts would refuse to enforce the contracts because the parties were not getting what they bargained for, an act of God intervened to void the contract, worthless paper dollars do not constitute proper consideration for the contract, etc. There are million ways to get out of a contract in that situation.

I also hope SMP is right. I do not want to deal with inflation. I just can't imagine the Fed will not resort to outright printing of money when all else fails.

What will happen won't be as severe as banks accepting only specie for payment of debts. The price increases will not be in real estate, but in commodities. In fact, the rising cost of food and energy will continue to give downward pressure on real estate. People may get raises, but it will all be sucked up by rising commodities costs. Imports will become more expensive also. The sort of hyperinflation wherein signs will be posted reading: "Sorry, no paper money accepted here" will not occur until debts are virtually wiped out because people in debt will continue to accept the paper until their debts are paid.

-a-train

Another way to look at it is not that the value of goods goes up, but the value of the currency goes down. If the dollar loses its global reserve currency status, why should exporting nations accept our dollars? They don't have to, or they may demand more dollars for the same thing. The Fed and the Treasury don't have to do anything beyond the damage they've already done for the currency to drop in value. When the shelves are going bare, you'll pay whatever you have to get what's left.

Also, government spending is a highly inflationary force. I'm not talking about the bailout money the ship to the banks. That just goes into a black hole, as SMP says. I'm talking about all the crap they actually dole out money for that ends up in the real economy. The stimulus, the entitlements, defense spending, and all the paychecks for government workers. More people are hanging off the gov't teat than ever before, and they seem to want it that way. How can you resist the force you're dependent on? In any case, that money ends up in the real economy, and they're shoveling more and more of it in there as time goes on.

SMP - do you see foreigners' loss of confidence in the dollar as countering deflation and causing inflation? Even if the Fed doesn't print the $1 billion note won't a loss of confidence destroy the dollar's value anyway? Further, won't foreigners' refusal to buy our debt leave the Fed with being forced to monetize our own debt (which I believe is what it has started to do since last week)?

If foreigners stop backing more debt, I see that as neutral in and of itself. If we do not print what we cannot sell, it would be deflationary. If however we print anyways then we are inflating the currency base. The loss in confidence will of course lead to a shrinking market for the currency and that could (in a paper dollar world especially so) tip the balance of dollars relative to the size of the market(a very important consideration). But if debt ties up the vast majority of that theoretical value, then it really doesn't have the effect you might expect given that there isn't a lot of buying and selling going on (after all there is a lot of supposed value in MBS' too!). We can afford a decent size hit that way at this stage as the market is shrinking and we really shouldn't spend anyways (though I expect we will for a time until the market understands that we cannot service our debts any longer).

Yes! I do believe the fed will monetize the debt, but here is the kicker, they will not do so until the game is in overtime (which may come sooner than any of us think).

Follow this logic. If there is a far reaching global conspiracy and it's objective is consolidation and control by fraudulent theft, then the absolute best mechansim to achieve that end is the one I see occuring. Get the world's people over-extended with debt (which is exactly how they enslave thrid world countries too (ala confessions of an economic hit man)) and then implode the thing and call in the debt. Then leverage the debt to consolidate power and control (let alone money and resource ownership).

There are huge differences between Zimbabwe and Weimar. In Weimar people had jobs. We do not see any driver for hyperinflation to hit mainstreet (nor will we). We don't have jobs. But we also are not Zimbabwe, nor can we easily be. We have too many roots interconnecting with the "global" economy.

But, I do believe that we will definately see price inflation on commodities due to scarcity (natural caused, and hoarding) and political considerations as well as a shift in the investment world (a rush to invest in anything with inherent value). That may well bode well for gold and silver too, though you would have to sell in time and believe that that market is free from manipulation. Most gold bugs believe that the market is very manipulated but that in the end it will "break out" of their control. I don't think the Lord wants to reward speculators. If it is manipulated (and I believe it is) I can't see any reason to believe that will change over any useful duration (a sustained 1-2 year period of $2000/ounce). If so I believe we would have already seen it.

I believe that the Lord lets justice naturally take it's course and the rich can realize the value of their "precious" on their own. Then there will be plenty for our needs for it as the Lord has said.

Remember that the money is only created by debt. Monetization is constrained by the ability to take on more debt.

In theory and as a sustainable practice yes, but not neccesarily so in reality. Weimar defaulted specifically because they could not afford war reparations.

In both cases the governments had control of the printing presses. We don't have that opportunity or luxury. The "global" economy is completely interconnected by "global" central banks. We are at their mercy!

Yes, but government is completely controlled by those same entities (who is actually getting any of this stimulous? Follow the money.) so the distinction is moot.

I think ultimately it comes down to how we understand the plans of the controlling group and whether or not we believe they can pull it off - or how far they will get before it collapses...

Exactly.

Thanks for the responses Gman and SMP. Here's my follow-up question - If the dollar is not destroyed through hyperinflation, how do the LDGs get us to adopt a global currency? Continued deflation would make my dollars worth more, so what would be the catalyst for ditching the dollar? Or, do you believe that a global currency is not their goal?

reidbump wrote:Thanks for the responses Gman and SMP. Here's my follow-up question - If the dollar is not destroyed through hyperinflation, how do the LDGs get us to adopt a global currency? Continued deflation would make my dollars worth more, so what would be the catalyst for ditching the dollar? Or, do you believe that a global currency is not their goal?

Ditto.

If the dollar is not destroyed through hyperinflation, how do the LDGs get us to adopt a global currency? Continued deflation would make my dollars worth more, so what would be the catalyst for ditching the dollar? Or, do you believe that a global currency is not their goal?

Money that you cannot get works as poorly as worthless money that you can, in fact more poorly in terms of debt repayment. The only question that I have is how do you get the new currency into wider circulation. The answer lies with the banks. Maybe they could lend if given better incentive/backing. Maybe they wouldn't mind loaning out the new currency to pay off the old and begin a new consolidated regime.

By the way I was perusing the Teachings or Discourse of Brigham Young (never remember which one) and found a few good gold quotes (wheat worth it's weight in gold, ergo the reverse is also true, gold worth it's weight in wheat; And using gold for plates and cups and forks etc...; as well as a good quote about farmland being the true valuable thing as far as substance goes. I heartily agree!)

http://books.google.com/books?id=Hm8tAA ... &ct=result

This is from the Journal of Discourses, volume one, page 250:


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Quote:

Were I to ask the question, how much wheat or anything else a man must have to justify him in letting it go to waste, it would be hard to answer; figures are inadequate to give the amount. Never let anything go to waste. Be prudent, save everything, and what you get more than you can take care of yourselves, ask your neighbors to help you. There are scores and hundreds of men in this house, if the question were asked them if they considered their grain a burden and a drudge to them, when they had plenty last year and the year before, that would answer in the affirmative, and were ready to part with it for next to nothing. How do they feel now, when their granaries are empty? If they had a few thousand bushels to spare now, would they not consider it a blessing? They would. Why? Because it would bring the gold and silver. But pause for a moment, and suppose you had millions of bushels to sell, and could sell it for twenty dollars per bushel, or for a million dollars per bushel, no matter what amount, so that you sell all your wheat, and transport it out of the country, and you are left with nothing more than a pile of gold, what good would it do you? You could not eat it, drink it, wear it, or carry it off where you could have something to eat. The time will come that gold will hold no comparison in value to a bushel of wheat. Gold is not to be compared with it in value. Why would it be precious to you now? Simply because you could get gold for it? Gold is good for nothing, only as men value it. It is no better than a piece of iron, a piece of limestone. or a piece of sandstone, and it is not half so good as the soil from which we raise our wheat, and other necessaries of life. The children of men love it, they lust after it, are greedy for it, and are ready to destroy themselves, and those around them, over whom they have any influence, to gain it.

http://theboard.byu.edu/index.php/templ ... l&id=48564

SwissMrs&Pitchfire wrote:Money that you cannot get works as poorly as worthless money that you can, in fact more poorly in terms of debt repayment. The only question that I have is how do you get the new currency into wider circulation.

True, but that isn't very helpful. I could see Americans accepting a regional/global currency without hyperinflation in the event that they were offered debt forgiveness in exchange for accepting the currency. Other than that scenario I think hyperinflation is the way to get us to accept a new currency.

Re the B.Y. quote he is absolutely right, but that does not negate the fact that gold has been the preferred medium of exchange since the beginning of time. Wheat will always carry more inherent value than gold because you can eat it, but absent a complete destruction of the economy, gold will have its place. I imagine that is why we are counseled to have a food storage and a financial reserve.

I actually believe this is a great time to sell Gold. If I had gold, I would sell it and build a larger food storage or get some land.

I talked to a friend in Michigan yesturday. The county next to hers has 24% unemployment.

Gman007 wrote:Early last year people started dropping or reducing their auto insurance while auto theft climbed to new records. I haven't followed up on the details as of late.

People in Utah, probably across the nation, are dropping their insurance coverage or dropping their insurance altogether too. Not good for us agents, but I'd do the same thing. Food or insurance? Hmm...

An increase in theft is partially due to people "losing" their own cars and reporting them as stolen so the insurance pays the lien off. No more car payment! Insurance fraud is always high during economic troubles. More cars/property are stolen and more houses burn

shadow wrote:

Gman007 wrote:Early last year people started dropping or reducing their auto insurance while auto theft climbed to new records. I haven't followed up on the details as of late.

People in Utah, probably across the nation, are dropping their insurance coverage or dropping their insurance altogether too. Not good for us agents, but I'd do the same thing. Food or insurance? Hmm...

An increase in theft is partially due to people "losing" their own cars and reporting them as stolen so the insurance pays the lien off. No more car payment! Insurance fraud is always high during economic troubles. More cars/property are stolen and more houses burn

Excellent point.