Pic Of The Day!!! ….. Word Of The Day!!!!

image

Advertisements
Image | This entry was posted in Economics, News and politics. Bookmark the permalink.

28 Responses to Pic Of The Day!!! ….. Word Of The Day!!!!

  1. gator69 says:

    Idiocracy.

  2. gator69 says:

    Government debt threatens to send U.S. economy into death spiral, CBO warns

    Rising federal debt threatens to choke economic growth within a decade, beginning a death spiral that will sap revenue from government programs even as demands grow, forcing the government to borrow even more, Congress‘ budget watchdog said in a frightening report Tuesday.

    Budget cuts or tax increases now would help avert that scary scenario, leaving the economy far stronger than it otherwise would be, the Congressional Budget Office said in the starkest warning yet by the independent agency that putting off tough decisions will only make things worse.

    The report — the first major one under new CBO Director Keith Hall — also takes aim at some traditional liberal arguments, finding that government investment yields only half the return on investment compared with the private sector and that money transfers to the poor act as “implicit taxes,” keeping them out of the labor force and depressing the economy further.

    http://www.washingtontimes.com/news/2015/jun/16/government-debt-threatens-to-send-us-economy-into-/#ixzz3dKM3sk3M

    Somebody is going to be getting an IRS audit!

  3. Lars P. says:

    We must act now! There is no time to waste!! What future do you want?

    ” More beautiful young women running about, wearing less clothing, and a scorching beach friendly tropical climate. We must act now, before its too late!”

    http://wattsupwiththat.com/2015/06/16/claim-climate-change-more-women/

  4. gator69 says:

    I am willing to take applications for.. er… asylum, from these climate refugees. Please include recent photos.

  5. Bruce of Newcastle says:

    Perfect definition of Greece, where the government has now said they have run out of money and won’t be able to pay the payments to IMF this month.

    But they won’t agree to lower welfare payments, or increase VAT.

    The force of economic gravity is about to do this for them.

    And the activists are out on the streets again demonstrating against austerity. Well my news to them is the end of the month is going to teach them a small and exquisitely painful lesson: there hasn’t been any actual austerity………yet.

    • Lars P. says:

      Well, maybe this is a bit too simplistic view Bruce.
      What Greece says is: where did that money come from that the banks borrowed to Greece? The answer is, just conjured out of thin air.
      So the banks conjured money out of thin air, and expect 7 % interest from Greece to pay for it + full repayment. Does this not seem a bit strange to you? See also greek debt committee findings:
      http://www.zerohedge.com/news/2015-06-17/greek-debt-committee-just-declared-all-debt-illegal-illegitimate-and-odious

      • DirkH says:

        “So the banks conjured money out of thin air, and expect 7 % interest from Greece to pay for it + full repayment.”

        Banks don’t hold a gun to your head and force you to take it. Greece was happy to borrow while the borrowing was good.

        • DirkH says:

          …of course at this point we need to question the authority of a democratic government with a 4 year outlook to be able to inflict much longer term economic damage on its host nation…

          Democracies are much easier to turn into bankrupt debtors than Monarchies. (That’s why the Rothschilds tried so hard and finally succeeded in ousting or neutering all monarchs in Europe)

        • Lars P. says:

          “Banks don’t hold a gun to your head and force you to take it. ”
          Yep, that is correct.
          On the other side banks are happy to borrow. Why? What can a bank lose? Conjuring money out of thin air, they either get paid back + interest or take over the assets as guarantee. On the other side the money conjured did not cost the bank anything, just the effort to type in the number in a computer.
          In addition being able to conjure money out of thin air distorts real price discovery on the market.
          You have good “credentials” you borrow cheap, no so good you pay extra. Same thing, different prices with exponential increase.
          The whole fiat money system is wrong. The only ones that seem at the moment to have a sound discussion about it seem to be the icelanders with the proposal to end fractional reserves for the banks.
          Then you may have the banks concentrating on the work they should do and not speculating.

        • DirkH says:

          “On the other side banks are happy to borrow.”

          I suppose you mean “to lend”.

          ” Why?”

          Because that’s their line of work.

          ” What can a bank lose? Conjuring money out of thin air, they either get paid back + interest or take over the assets as guarantee. On the other side the money conjured did not cost the bank anything, just the effort to type in the number in a computer.”

          Wait wait wait. When a bank conjures money they actually conjure an amount of MONEY and an equal amount of DEBT; and assign BOTH to the same client. Meaning, he can now take a wad of real bank notes from the bank promising to pay it back with interest. Those REAL bank notes are not conjured by the commercial bank but printed by the central bank, so they must be acquired by the commercial bank, and losing them is no fun at all for the commercial bank.

          What can the CENTRAL bank lose? Paper. What can the commercial bank lose? Its existence.

          “Then you may have the banks concentrating on the work they should do and not speculating.”

          You started out with describing a commercial bank doing its ordinary business, loaning money out, not speculating – and described it as a bad thing. Now you say it is the work they should be doing with which I agree.

          We can both see that fractional reserve banking brings problems with it, but in my opinion it is not the key of the current problem – unlimited money printing to re-inflate the collapsing sum of money + credit , a.k.a. QE4EVER, is the problem. The governments are not willing to suffer the (healing) deflationary shock, they do not want to go on (credit binge) withdrawal, so they order more drugs, that’s the problem. The shock would kill off unproductive businesses and would be necessary to rebuild a healthy economy but it is being kicked down the road; unfortunately this requires more and more effort, increases the capital misallocation, and worsens the problem.

        • DirkH says:

          Also, re Greece, everyone is talking about all the ASSETS that the banks took from the Greek, well I wonder what those assets should be. Because banks loaned to Greece whatever Greece wanted as EU politicians promised there would never be a default. These days the German banks have sold their Greek debt but the French banks are up to their eyeballs in it – and all the French debt, AND most of the French banks are owned by the Germans!

          You don’t lend money to a state to be able to confiscate say the Statue Of Liberty once the USA fails to pay the interest; there is no collateral, just the promise of the state to tax its citizens in the future to pay you back.

          I don’t know who came up with that story that the Germans took all the Greek’s “Assets”. It is true that Greece is FINALLY pondering to sell the port of Pirhaeus to the Chinese to get some cash. But that’s a sale, not a confiscation for debt default.

        • DirkH says:

          The biggest landowner in Greece is the MILITARY. They also still own all the land. No German bank has clawed land from them. They are now pondering of renting some of it out, not even selling it. The military, if calculated per capita, is I think the most expensive in Europe.

        • Lars P. says:

          “Wait wait wait. When a bank conjures money they actually conjure an amount of MONEY and an equal amount of DEBT; and assign BOTH to the same client. Meaning, he can now take a wad of real bank notes from the bank promising to pay it back with interest. Those REAL bank notes are not conjured by the commercial bank but printed by the central bank, so they must be acquired by the commercial bank, and losing them is no fun at all for the commercial bank”

          Wait wait. The commercial bank borrows from the central bank, lets say 100 zulus. The central bank did not print those zulus, it was just wire transfer. It printed maybe 5 or 10 for the use of cash bookings…
          The commercial bank borrows to client A 100 zulus – wire transfer – and creates also 100 zulus debt. It gets 6 % interest per year.
          Then to client B 100 zulus – creating another 100 zulus debt with 6.5 % interest.
          Then to client C 100 zulus with 7% interest
          Then to client D 100 zulus … and so on.
          remember, what % should it really hold? 5%? so 20 clients?
          Now what is the interest the bank gets for its 100 zulus? where should that come from?
          Now we have 2000 zulus in circulation 1900 created by the bank 100 by the central bank.
          After 1 year the bank gets some 120-150 zulus interest paid, some 3-4 % of the borrowed money was paid back and distroyed in the process, so we still have some 1950 zulus created from the first 100.
          Lets say the bank uses 20 zulus to pay the salaries and has another 100 zulus capital to borrow, creating new money again.
          In this way you increase and increase the money in circulation much more then the central bank. (Not talking now about bank 1 borrowing 50 zulus to bank 2 and vice versa which then cascades again).

          Keeping in mind the above, one interesting question: Why is the 3 % deficit the target? why not 0? Does this not continuously increase the money in circulation? (much more then the official money printing)

          Btw, I did not said the germans took the greek assets. I am looking only at the fiat money part of transactions and the way of generating new money through debt & through banks. Where from are the many many trillions wired around? Not printed money but debt created money.

        • DirkH says:

          What you describe is the leverage the bank generates, thus increasing its potential profits but also its potential risk. That is also not key of the problem. As I said, the key is the unwillingness of everyone involved to let the sum of money and credit (as you said, credit creates virtual money, so it is part of the sum) shrink, which it does once people pay down their debts.

          All this talk of how interest increases the sum automatically is wrong. Credit and debt are created equally (with the exception of the seed money from the central bank but that is a tiny fraction) so there is no automatic growth. It can go down but this is prevented by the QE measures.

        • Lars P. says:

          I see the leverage as part of the problem. I helps create money – using this leverage simplifies the creation and the growth of oligarchy – this speeds up and simplifies the process.
          Financial processes get much faster and easier to create money then production.
          This money will be then used to buy assets – like production assets or other, etc etc.
          However this is not investment but speculation. It gets much easier to further increase the money through further financial transactions – over financialisation which cannibalizes the industry. It is one of the problems that we have.
          If a barrel of oil changes ownership 50 times that is no investment, it is speculation and in the end it makes it more difficult and more expensive for the ones who want to use that oil. Same with any other resource where the speculation money goes.
          Fractional reserves is a reminiscence from the past, it was good then, but has no use and place now.

        • DirkH says:

          Sigh. The fashionable speculator bashing. A speculator, who is that? Somebody who is invested in something, right? Now, we ALL are invested in something all the time, and we tend to be invested in THAT kind of asset we expect to serve us best, in my case, currently Gold, might be stocks, cash, Euros, Dollars, bonds, houses for other people. I’m SPECULATING that Gold will be repriced to the upside. My employer gives me CASH all the time, I don’t WANT cash, I get nervous when I have too much of it because I think it’s a bad INVESTMENT.
          As speculators move from asset to asset(as I do when I exchange the cash I earned for something more preferrable) they help to find the prices for assets.
          As to “the banks buying up everything with conjured money”, that is EXACTLY what the Fed and the ECB are doing, they buy HIGH (bonds) and sell LOW(IF they CAN ever sell the stuff again that is). They are the bagholders of last resort. Or look at the Bank of England selling its Gold under G Brown for the exact bottom price (even announcing it beforehand to guarantee they would get the lowest price ever).
          Actually the crime is that the (Western) central banks intentionally maximize the idiocy of their behaviour, probably to grant all their cronies a favor. Not the BuBa though. Germans preserve their stubborness in one area.

        • cdquarles says:

          Good job, Dirk.

          Again, the understanding of economics, by some, is appalling.

          1. Interest is the time discount of money. Money right now is the most valuable kind. Money yesterday has no value, for the past is dead and gone. Money tomorrow *might* have value. So, to compensate me, today, to let you use my money, you promise to pay me my loan plus the time value of money. The more uncertain the future is or if the borrower has proven himself to be unreliable, the more that time discount must be to adequately compensate me for the loss, to me right now, by lending you my money.

          2. ALL economic decisions are made under conditions of uncertainty. THUS ALL ACTORS in a free market are SPECULATORS. NO ONE KNOWS WHAT THE FUTURE HOLDS, other than at some point each individual actor will die.

          3. Speculators buy when you want to sell, regardless of why you’re selling and only buy if the price is right, TODAY, at the point in time the sale is made. TOMORROW IS NOT KNOWN and the uncertainty requires a risk premium. Speculators sell when you want to buy, regardless of why you’re buying and only sell if the price is right, TODAY, at the point in time the sale is made. TOMORROW IS NOT KNOWN! Thus the uncertainly requires a risk premium.

          4. Speculators are required for markets to function as price finding mechanisms. Interfering with this using governmental force does not change that fact. Government interference only makes the costs of obtaining information and applying it in a timely fashion more costly. Making this more costly INCREASES the chances of GENERAL MALINVESTMENT. On the other hand, a few well defined rules, discovered by economic actors and agreed to by the actors are all you need for a self-regulating market. Governments may need to be called upon to enforce these rules when actors cannot satisfactorily resolve disputes among themselves; but governments should never seek to impose their values and rules on market participants.

          5. Finally, NO ECONOMIC GOOD HAS AN INTRINSIC VALUE. ALL ECONOMIC VALUES are SUBJECTIVE and RELATIVE MARGINAL USE values to both parties to the transaction. The transaction will not occur in a free-market if no mutually agreeable price is found. Economic values are not the only value(s) one can perceive; but when a trade is to be made, only the economic value of subjective marginal utility count. There is no such thing as an externality. Whatever subjective process(es) are used to reach the specified price, only those count; and not all of these will hold explanatory information for any given transaction or series of transactions. Transactions made under duress explain nothing other than one or both of the parties were coerced into it, and thus have no price finding information. The laws of economics apply to ‘legal fictions’ as artificial persons as much as they do to real persons. Functionally, any organization is a single person for the purposes of economic decision making.

          PS, Why, then, is it that governments cannot make economic decisions? Governments possess the power of coercion and have no bones about using it.

        • Lars P. says:

          “Sigh. The fashionable speculator bashing. A speculator, who is that?”
          The problem is when the market consist only of speculators. Investors. Who is that?
          “Actually the crime is that the (Western) central banks intentionally maximize the idiocy of their behaviour, probably to grant all their cronies a favor.”
          Correct.
          Speculators do have their place, as well as investors and banks. The problem is when one side of the equation is made too easy, you flood the market with easy money that then create bubbles of trillions. Those trillions moving through the too small for them economy are like the elephant in the porcelain room.
          Those trillions are done out of debt, leveraging the debt money of the respective nations through the central banks and the respective banks.
          Banks are not bad as such, (as well as speculators). But if you give them the tool how to conjure money out of nothing and get fast rich rich rich they will use it with little thoughts about any other considerations.
          Banks are needed and should do a useful job. They are no devils but no angels neither. If they would not get the easy money, then they would need deposits.
          If they would need deposits, then they would better take care of customers, etc.
          But of course you can read only about speculators and banks and say that I am only bashing banks and speculators without trying to understand what I try to say…

        • DirkH says:

          Thanks, CD. Actually, as a speculator I repeatedly helped poor souls who needed to get rid of their stocks very urgently by buying them up. Last time during the Lehmann crisis. Luckily I was in cash because I sold everything the summer before, becoming very nervous during the highs.

          Then I kept on buying all the way up. It worked rather well, but a rising tide lifts all boats. So I’m not particularly proud of my performance, I made more mistakes than I can even remember.

          Now I would be very nervous again, were I still in stocks.

        • DirkH says:

          Lars P. says:
          June 19, 2015 at 4:29 pm
          “The problem is when one side of the equation is made too easy, you flood the market with easy money that then create bubbles of trillions. Those trillions moving through the too small for them economy are like the elephant in the porcelain room.
          Those trillions are done out of debt, leveraging the debt money of the respective nations through the central banks and the respective banks.”

          Well that’s just the run up to hyperinflation due to QE which is the polite way of saying moneyprinting. Don’t be too impressed by large numbers.

          US politicians do not talk about sequesters, debt ceilings etc anymore, because they have agreed that they won’t bring up the theme anymore.

          That means they have resigned themselves to the inevitable. It’s already over. Now duck and wheather the storm.

        • cdquarles says:

          Lars,

          You would not have gotten the push-back if you had used the word ‘governments’ instead. Your comment read like the thousand and one other rants demonizing speculators. The problem here is governments. Governments love inflation, especially indebted governments. Inflation isn’t rising prices. Inflation may or may not result in rising prices, for prices are a double differential equation (or better yet, may be a double integral equation), so to speak; so the first derivative of a price change tells you nothing about what in the price change was from some combination of increased demand for the good in question, decreased supply of the good in question, increased supply of circulating money/money substitutes, or decreased demand [to hold] for circulating money/money substitutes.

          Whether you allow or make banks lend against demand deposits not fully backed is functionally the same. The ‘excess’ credit becomes a circulating money substitute. Governments like this, for it eases their debt financing, plus, as a bonus, governments get to require everyone inside the country (or the world if said country’s currency is the world’s reserve currency) buy/hold their bonds as ‘collateral’ or ‘legal tender’. Governments seemingly can’t lose under this scenario until their machinations crater the economy, or the society, or both; which results in a change of governments.

          In a national bank scenario, this makes all banks arms of the government for the purposes of government finance; whether overtly or covertly (see: US Federal Reserve Banks and their ‘voluntary’ country bank affiliates). Private banks run like this simply cannot ‘conjure’ up money via fractional reserves indefinitely. First, their notes would circulate at a discount, especially against any other private banks not using fractional reserves. Second, once depositors become convinced that these banks can’t make good their ‘warehouse receipts’, the depositors will pull their deposits (remember, we are talking demand deposits here). That will ‘de-leverage’ the bank, then you have the disintermediation effects (borrow short at ‘high’ rates to lend long at ‘low’ rates) when the inflation becomes visible; and, if everything does work out, the loan payments are all paid in full and the self-amortization takes care of the leverage.

          Again, banks and speculators are not the enemy, except to fascists/Marxists. The enemy here is tyrannical, overbearing, too big for their britches governments.

        • suyts says:

          Beautiful stuff!!!

          Guys, please allow me to opine …. and state some things clearly.
          Fractional banking, does indeed, create money from where none existed before. They lend money on a fraction of the money they actually have. They are typically repaid the money they loaned/didn’t really possess. They rinse and repeat. That’s how they roll. It’s the system set in place before them.

          I think, originally, this worked for the benefit of mankind. The invented money went to people who advanced our world. Today, however, it’s a different story. The innovations, for the most part, don’t do anything useful or productive, but, simply appease the masses.

          It isn’t so much the system in place, rather, the populace’s unwillingness to do what is right.

          Here’s a question …..
          Why would a long established and solvent bank need to borrow any money from a central bank? …….
          Here’s an answer …..
          They don’t “need” to. But, when they do, it dilutes the risk.
          If I had $1,000,000 and a person wanted to borrow $1,000,000 from me, I’d tell them to go take a hike! It’s all I’ve got and I won’t risk it, regardless of how sure the deal was. However, if someone (a central bank) said they’d give me 1/2 of the money, and that I would have to pay the person back a fraction of the interest I would charge, then …. well, I’d seriously consider the proposition.

  6. alakhtal says:

    Reblogged this on Liberalism is Trust Fucked with Prudence. Conservatism is Distrust Tainted with Fear and commented:
    INEPTOCRACY: Government system where moron extraordinaire are elected by unemployables, and rewarded with goods and services paid for by confiscated wealth.

  7. alakhtal says:

    INEPTOCRACY: Government system where moron extraordinaire are elected by unemployables, and rewarded with goods and services paid for by confiscated wealth.

  8. gator69 says:

    Printing money meant something when that currency went to the productive members, and the productive ventures of society. As assets grew, the need for more currency was warranted. Printing money for the unproductive members, and the unproductive ventures of society dillutes the currency, and wrecks the economy.

  9. gator69 says:

    Will she? Or won’t she?

  10. DirkH says:

    That’s a Bismarck Herring or a Rollmops (which is the same but younger smaller fish I think).

    Of course she will, they’re yummy! Great source of Vitamin A and Omega 3.

    • DirkH says:

      Ah, no, it’s a Matjes, slightly different recipe, same fish. The Matjes days have just begun, I am told.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s