IS Money Safe?

[Brian Degulis]

Well they printed out a quick trillion the other day. We dumped 180 billion into AIG and now they seem hell bent on running it into the ground. And the big guy has no plans of backing down on his new super budget.

So for those of us not invested but with money in banks is it safe? Is it safe from mamouth bank collapse? Will it be worth anything if they keep printing money or are we looking at a shoping bag full of hundereds to buy a sandwich?

I never thought I'd be wondering about this but with no end in sight it seems posible.


Brian

 

[Passages]

Buy gold & silver coins. When it takes $100 to buy a sandwich, metals buying power will remain unchanged.

 

[aquacraig@shaw.ca]

I suspect that all used Hats will cost many thousand more as hyperinflation is the only real bail out. Put your money in tangible assets or you won't have enough to buy them.

 

[Genesis]

So far The Fed is playing circle jerk, no matter how it APPEARS.

They've bought a bunch of "agencies" - that is, Fannie and Freddie paper. But the money they printed to buy them has immediately been redeposited at The Fed, is not circulating, and is earning 1/4% interest. In other words, it does nothing to the money in circulation (and its velocity); ergo, its not inflationary.

Their most recent announcement is more of the same.

So far.

The danger is the collapse in foreign Treasury buying. If Obama and Congress continue to spend like crazy and foreign Treasury buying collapses then we're finished, because the government will be forced to contract spending by roughly 60% instantly. This will in turn crash employment and tax receipts, which will make further reductions necessary.

That's the nightmare scenario, and its entirely possible. The result is a massive deflationary collapse, not hyperinflation. If you have cash, you'll be able to buy assets (land, houses, buildings, boats, cars, etc) for literally a nickel on the dollar - for a short while - but you will need CASH as there will be no financing of any sort.

We got part way into this during the 30s but it never realized as a full-on collapse. It could this time.

 

[Canuck Dennis]

I do not believe that the North American economy is in "serious" danger" there is way too much cash in peoples accounts and in other types of paper, the Gov't may continue to print paper, create inflationary pressures but as people slowly come out into what could be serious inflation they will become very cautious buyers and help to reduce inflationary pressures. The Gov.t will realize very shortly that continous pumping of money into the economy is not really working in the longer term and even those in politics who think socialism is the answer will wake up when they see the downside of their own economic situation, political spins and twists will let them cool their heels and slowly return to a more free enterprise trend of thought. The Banks could if they wished could have the whole bunch chased out of office but hey there is some temporary free money there, grab it for a while then send it back later. The left of centre media is currently propping those goofs up and sooner than later they also will come to their senses.
Just be patient, no panic and common sense will soon return, the losses in 401 K's was not as dramatic across the entire economy as the media is making out or where looses in the market as dramatic as we were led to believe. The ones I would caution are the gold and precious metals buyers, I have not yet met a grocery store who will accept a 1/4 ounce of gold for groceries.

 

[spartonboat1]

If my extremely ball-park figures are accurate (could be +/- 20%), the runup in household worth over the past 20 years was from $10T to a peak of $60-70T, then a loss of $10T over the past 12-15mos; so US wealth was down about 15% last year. Yes, all the equities took a huge hit of 30-50%, but they do not represent the sum of total wealth.

I am not concerned in the short run in the money-supply pump up, but if the administration manages to continue jam through the truly massive spending appropriation bills over the next 2-4 years, we in a heapa trouble. Also, big ditto's on the foreign sales of securities by us. However, if they stop buying our securities and collapsed our economy it would result in serious consequences for them as well.

I wish my very recent empirical observation of Congress were accurate, i.e. its dawning on them how wildly they are exceeding any capability of funding the trillions of spending.

The best 'elevator' story on the US budget was by a West MI congressman on TV this weekend who pointed out that only 4% of the stimulus plan is for infrastructure and 96% is for 'entitlements'. Short, sweet, but scary!!

So my ending question: when does all this money being 'printed' truly jack up the money supply, i.e. inflation kicks in...in about 6-18 mos?

 

[Canuck Dennis]

Will start now, already started her in Canada, retail sales up 1.9% in Jan, inflation up also... Maybe temporary but shows the pent up cash sitting in the system that some are eager to spend unwisely.

 

[aquacraig@shaw.ca]

I think Dennis is right on. All major economies are doing everything they can to increase the velocity and will need to allow inflation to get themselves out of debt. But big Hats now!

 

[Trojan]

Once Obama gives enough money away and starts to barrow more money. The interest on his loans will be so great that we the USA will not have enough money to pay the interest and the US money structure will collapse. If you want to protect your self, buy gold or put your money in a foreign country bank that has there own money. And not pounds because England is in the same boat as the US.
If you want to read something that if it is true will scare the hell out of you. And I sure hope he is wrong. Look up Hal Turner and see what he has to say. He lost his career because of the information he released. Home invasions have already started. What next?
We need to bring our jobs back home and to rebuild our factories. We don't have enough equipment or man power to fight off any country. We soon will be in a position for an easy take over. I don't like that feeling. We are not a world power any longer. Look around there are very few manufacturing plants, steel plants, press shops. We are extremely limited on our part to build anything. Even our rocket parts are foreign made. Out of work yet, keep buying foreign built items. Sorry for the doom and gloom, but I don't see any rosey picture for the future. During the depression there was a direction, but in this mess, I currently don't see any direction.

BILL

 

[captddis]

You are right. Perot was saying this in 1992 and everyone called him crazy. You need to have a product. You need industry. We have become a nation of middlemen showing the rest of the world how to do things. What happens when they do not need the middlemen?

I am sure that if we had to fight a war, China would keep us supplied. Not.
We need to be self sufficient.

 

[Brian Degulis]

So far The Fed is playing circle jerk, no matter how it APPEARS.

They've bought a bunch of "agencies" - that is, Fannie and Freddie paper. But the money they printed to buy them has immediately been redeposited at The Fed, is not circulating, and is earning 1/4% interest. In other words, it does nothing to the money in circulation (and its velocity); ergo, its not inflationary.

Their most recent announcement is more of the same.

So far.

The danger is the collapse in foreign Treasury buying. If Obama and Congress continue to spend like crazy and foreign Treasury buying collapses then we're finished, because the government will be forced to contract spending by roughly 60% instantly. This will in turn crash employment and tax receipts, which will make further reductions necessary.

That's the nightmare scenario, and its entirely possible. The result is a massive deflationary collapse, not hyperinflation. If you have cash, you'll be able to buy assets (land, houses, buildings, boats, cars, etc) for literally a nickel on the dollar - for a short while - but you will need CASH as there will be no financing of any sort.

We got part way into this during the 30s but it never realized as a full-on collapse. It could this time.

So you don't see a possability of the Gov. creating inflation with all the money they're pumping in. Do you think they will stop or do you think no matter what they pump in it just won't work? I'm asking because I have to make some decisions.


Brian

 

[Genesis]

So you don't see a possability of the Gov. creating inflation with all the money they're pumping in. Do you think they will stop or do you think no matter what they pump in it just won't work? I'm asking because I have to make some decisions.


Brian

All The Fed has to sell is money.

Think about this one Brian - if you were a bank, and loaned me $200,000 to buy a house, would you like the money I paid you back with to be only able to buy a motorcycle?

That's the problem the "hyperinflationist" thesis guys can't answer - why would The Fed blow its own head (and that of every other bank, their friends) off?

They might do it on accident, but I'll take the bet that they won't do it on purpose.

Now what they want you to THINK they're going to do is a different matter. Their worst nightmare is people BELIEVING in deflation, because if you can buy that boat for $20,000 tomorrow why would you pay $100,000 for it today? It the BELIEF in deflation takes hold you can get a monetary velocity collapse which is nearly-impossible to get out of.

Second, for hyperinflation to take hold (absent an all-on dictatorship, in which case none of us care) you need to couple higher prices to wages so the spiral can be maintained. Without that the price rise simply crushes demand and produces more unemployment and thus a price collapse as demand goes to zero.

 

[Brian Degulis]

I'm not suggesting they're goal is hyperinflation but I don't think they know what they're doing either. What scares me is there just doesn't seem to be any hesitation in massive spending. I don't really know much about any of this stuff and maybe I'm getting paranoid but I'm starting to wonder about banks collapsing and the ability of the Gov to pay on the FDIC insurance.

I have one mortgage in my life on my home it's fixed @ 5%. I could pay it off with no problem and if wide spread bank collapse is feasable it makes sense to pay it off. On the other hand if deflation is more feasable it makes more sense to have that money available to scoop up real property at greatly reduced cost.

Brian

 

[Canuck Dennis]

The best deal is always to borrow to the max when interest rates and inflation is low, also, if in fear of bank collapse, borrow more from that bank.

Interesting scenario, individual is going broke, cannot buy anything, bank going broke, taxpayer can't wait to shovel money at it.

All media and Gov't employees should change language when talking about Gov't spending etc. it should be called "Taxpayer is spending" or" Taxpayer is investing or lending"

 

[MikeP]

Sadly, if you read history, you will see that every great nation/empire became a non-great nation pretty much the same way we are doing it. We are just following the same human nature pattern that has existed throughout history. Not surprising since humans haven't changed at all since we showed up on the planet. Hey, good thing the dinosaurs were gone, right?

The USA is going drop dramatically down the "great power/influence" list in the future, just like every power before us has. I suspect it will still be a while in the future but it is going to happen. It ALWAYS happens. As a great power we haven't made 100 years yet. Don't think we'll match the run Great Britain had, let alone Rome...

I think most of us have lived in the best of times...

 

[Trojan]

We are the dinosaurs. There is hope if we all can stay together. I am afraid you are going to see who our, your true friends and family are. The hard way.

BILL

 

[Brian Degulis]

Sadly, if you read history, you will see that every great nation/empire became a non-great nation pretty much the same way we are doing it. We are just following the same human nature pattern that has existed throughout history. Not surprising since humans haven't changed at all since we showed up on the planet. Hey, good thing the dinosaurs were gone, right?

The USA is going drop dramatically down the "great power/influence" list in the future, just like every power before us has. I suspect it will still be a while in the future but it is going to happen. It ALWAYS happens. As a great power we haven't made 100 years yet. Don't think we'll match the run Great Britain had, let alone Rome...

I think most of us have lived in the best of times...

That's a very sad analysis I hope your wrong but fear you could be right. I'd like to think my kids will have the same opourtunity I've had. I do think there is hope based on this countries history. Nixon Carter Reagan Bush Obama ????. We need fresh vibrant candidate that believes in the principles this country was founded on.

Brian

 

[aquacraig@shaw.ca]

Mike's comments are accurate and probable if the US goes protectionist. If not, then the beauty of the modern world is that you can do some things well and prosper! That probably won't be banking... but you folks have huge creative abilities in technology, design and engineering which all lead to great up-start businesses. Don't expect to make everything, and don't try to sustain all old obsolete businesses, and new emerginging opportunities will present. Your success is based on attitude. Failure is based on government trying to stop attitude change.

Craig

 

[spartonboat1]

I am very concerned about the massive spending and deficits. However, since the prior major slowdown in the 1970's (the 1980's was worse), new companies started, that DID NOT exist previously include:
Apple, Microsoft, Berkshire Hathaway, Walmart, Cisco (networks), Oracle (databases), others I can't remember. Those companies are the source of income of the wealthiest families in the world: Jobs, Gates, Buffet, Walton's, Ellison and others. One that is my source of living, Teradata, runs the largest data warehouses in the world: 1) no one heard of a data warehouse in the 1970's, I was 100% clueless then, 2) TD was a startup in the 1980's.

So there is always a lot of upsides ..... in a FREE MARKET ECONOMY! The current meltdown was precipitated by federally mandated sub-prime mortgages in the late 1970's, with increased pressure on banks from fines and jail terms in the 1990's under Clinton/Reno (and our Current US AG!!). I hope that the POTUS loses momentum in the next 6-8 mos. Our goose is cooked if he keeps the bit in his teeth!

 

[mike]

Someone posted a sign on a truck tailgate that said it best "OBAMA = One Bad Mistake, AMERICA". When you culturally and socially "dumb down" a nation with “pretzels, beer and TV”, and only allocate a page or two to studying American government in our schools, the end result is a leftist form of “democracy” and the tyranny of the masses.

Before you know it our Republic is gone forever!!!

It’s interesting that our “great leaders” in both branches of government are all harrumphing about AIG. Me thinkest they protestest too much!!! They are up to their old tricks using the 3D’s for the maximum effect (deign, deflect, defame) focusing on AIG’s $150,000,000 in bonuses, so we don’t get after them for the biggest financial destruction of a nation in the history of man; read $3,000,000,000,000+, trillions and counting. Remember folks they are our servants, and they serve at our pleasure, occasionally its good to remind them of this very important fact. So the question is, when do we rise up and take back our Republic, our founding fathers would expect no less of us??????

Attached are a few quotes from some of our greatest patriots.
========================================================================================
"The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite." -- Thomas Jefferson

"The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first."-- Thomas Jefferson

"Now what liberty can there be where property is taken without consent??" -- Samuel Adams, founding father and leader of the Boston Tea Party

"The moment the idea is admitted into society that Property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence." -- John Adams

"To take from one because it is thought that his own industry and that of his father's has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association--the guarantee to every one of a free exercise of his industry and the fruits acquired by it." -- Thomas Jefferson: Note in Tracy's "Political Economy," 1816.

"In a free government almost all other rights would become worthless if the government possessed power over the private fortune of every citizen."-- Chief Justice John Marshall

"I own I am not a friend to a very energetic government. It is always oppressive." -- Thomas Jefferson to James Madison, 12/20/1787

"But you must remember, my fellow-citizens, that eternal vigilance by the people is the price of liberty, and that you must pay the price if you wish to secure the blessing. It behooves you, therefore, to be watchful in your States as well as in the Federal Government." -- Andrew Jackson, Farewell Address, March 4, 1837

"The greatest menace to freedom is an inert people." -- Supreme Court Justice Louis D. Brandeis

"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." -- Benjamin Franklin, Historical Review of Pennsylvania (1759)

"...There is no nation on earth powerful enough to accomplish our overthrow. ... Our destruction, should it come at all, will be from another quarter. From the inattention of the people to the concerns of their government, from their carelessness and negligence, I must confess that I do apprehend some danger. I fear that they may place too implicit a confidence in their public servants, and fail properly to scrutinize their conduct; that in this way they may be made the dupes of designing men, and become the instruments of their own undoing." -- Daniel Webster, June 1, 1837

"Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are ruined." -- Patrick Henry, Virginia's Ratification convention, 1788

"Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free"-- Ronald Reagan
"Freedom is a fragile thing and is never more than one generation away from extinction. It is not ours by inheritance; it must be fought for and defended constantly by each generation, for it comes only once to a people. Those who have known freedom and lost it, have never known it again." -- Ronald Reagan

"It is the common fate of the indolent to see their rights become a prey to the active. The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime and the punishment of his guilt." -- John Philpot Curran: Speech upon the Right of Election, 1790.

"The government is merely a servant -- merely a temporary servant; it cannot be its prerogative to determine what is right and what is wrong, and decide who is a patriot and who isn't. Its function is to obey orders, not originate them..." -- Mark Twain

"The man who produces while others dispose of his product is a slave." -- Ayn Rand, author of Atlas Shrugged

"A people that values its privileges above its principles soon loses both." - Dwight D. Eisenhower

"The sacred rights of property are to be guarded at every point. I call them sacred, because, if they are unprotected, all other rights become worthless or visionary. What is personal liberty, if it does not draw after it the right to enjoy the fruits of our own industry? What is political liberty, if it imparts only perpetual poverty to us and all our posterity? What is the privilege of a vote, if the majority of the hour may sweep away the earnings of our whole lives, to gratify the rapacity of the indolent, the cunning, or the profligate, who are borne into power upon the tide of a temporary popularity?" -- Judge Joseph Story, 1852

"I hold it, that a little rebellion, now and then, is a good thing, and as necessary in the political world as storms in the physical." -- Thomas Jefferson, January 30, 1787

"In the beginning of a change the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot." -- Mark Twain

"Whoever claims the right to redistribute the wealth produced by others is claiming the right to treat human beings as chattel." -- Ayn Rand

"Against us are... all timid men who prefer the calm of despotism to the boisterous sea of liberty... We are likely to preserve the liberty we have obtained only by unremitting labors and perils." --Thomas Jefferson to Philip Mazzei, 1796

"The secret of happiness is freedom. And the secret of freedom is courage." – Thucydides

"Liberty without learning is always in peril and learning without liberty is always in vain." -- John F. Kennedy

"The tyranny of a principal in an oligarchy is not so dangerous to the public welfare as the apathy of a citizen in a democracy." --Montesquieu, 1748

"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. ... God forbid we should ever be twenty years without such a rebellion; what country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms." -- Thomas Jefferson to William Stephens Smith, 1787

"The things that will destroy America are prosperity at any price, peace at any price, safety first instead of duty first, the love of soft living and the get rich quick theory of life." -- Teddy Roosevelt

"All of history attests that the centralization and concentration of power breed despotism." -- H.A.Scott Trask

"What the government is good at is collecting taxes, taking away your freedoms and killing people. It's not good at much else." -- Tom Clancy on Kudlow and Cramer 9/2/03

"It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds." -- Samuel Adams

"I have sworn upon the altar of God, eternal hostility against every form of tyranny over the mind of man." -- Thomas Jefferson in a letter to Dr. Benjamin Rush, September 23, 1800. Inscribed in the Jefferson Memorial.

"Man is not free unless government is limited." -- Ronald Reagan: Farewell Speech, 1988

[The purpose of the Constitution is to] “keep the government off the backs of people.” -- Justice William O. Douglas

"I believe there are more instances of the abridgement of freedoms of the people by gradual and silent encroachment of those in power than by violent and sudden usurpations." -- James Madison

"Find out just what people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them; and these will continue until they are resisted with either words or blows, or both. The limits of tyrants are prescribed by the endurance of those whom they oppress." -- Frederick Douglass

"No man is entitled to the blessings of freedom unless he be vigilant in its preservation." -- General Douglas MacArthur

"We've witnessed a fire sale of American liberties at bargain basement prices, in return for the false promise of more security... The America being designed right now won't resemble the America we've been defending... The danger isn't that Big Brother may storm the castle gates. The danger is that Americans don't realize that he is already inside the castle walls." -- Wayne LaPierre