What Does Paul Ryan NOT Understand about Reserve Banking?

[Winehole23]

Not helpful. I don't understand quantum physics either.

[LnGrrrR]

Not helpful. I don't understand quantum physics either.

It's alright, not many people do, and those that do really don't understand why. Suffice to say that quantum mechanics isn't about what is or isn't, but the probabilities of what might or might not be. To give a simple analogy, let's say you flip a coin. It lands on your hand and you cover it. It's obviously either heads or tails. But in quantum mechanics/physics, it's actually both heads and tails, until you "collapse" the possibilities by lifting your hand and revealing heads or tails.

It's EXTREMELY counterintuitive, but it happens, and it is "right".

[baseline bum]

It's alright, no people do, and those that do really don't understand why. Suffice to say that quantum mechanics isn't about what is or isn't, but the probabilities of what might or might not be. To give a simple analogy, let's say you flip a coin. It lands on your hand and you cover it. It's obviously either heads or tails. But in quantum mechanics/physics, it's actually both heads and tails, until you "collapse" the possibilities by lifting your hand and revealing heads or tails.

It's EXTREMELY counterintuitive, but it happens, and it is "right".

FIFY

[baseline bum]

dp

[scott]

Looks like everything is under control here

[2centsworth]

I think it's irrational to ever think we can balance the budget, but slowing down the geometric growth of debt is certainly a reasonable goal IMHO. The pain that would be necessary to truly balance the budget is just not politically expedient for either party.

Please explain the downside to this "geometric growth"? Quantify the risks and tell me when these consequences are going to happen.

[CosmicCowboy]

Please explain the downside to this "geometric growth"? Quantify the risks and tell me when these consequences are going to happen.

Good question. I figure 5-10 years till the tipping point. US currency has been THE reserve currency of the world. There are demands for dollars to do currency exchanges worldwide. As the US government and the Fed continues to massive amounts of "new" currency into the market to finance deficits as far as the eye can see the rest of the world is looking for dollar alternatives. When they find it the dollar is gonna go to .

I am literally betting my financial life on it. Dave Ramsey. By the end of the year I will literally have over a million dollars of low interest long term fixed interest dollar debt placed in hard assets that can roll with inflation.

[boutons_deux]

"When they find it the dollar is gonna go to ."

which is great for USA exporting industries, while making Chinses garbage more expensive to import, so corps start mfr more garbage in the USA.

[Big Empty]

"But with an inverse yeild curve, the us currency is destined for deflation. Thus allowing us to dig for gold to back our fiat currency, which in turn would allow exports to rise against our dowluh. And then we can deciminate our deficit, and cosmic cowboy can make another million dollars"
"

[Winehole23]

Looks like everything is under control here

little help?

[2centsworth]

Good question. I figure 5-10 years till the tipping point. US currency has been THE reserve currency of the world. There are demands for dollars to do currency exchanges worldwide. As the US government and the Fed continues to massive amounts of "new" currency into the market to finance deficits as far as the eye can see the rest of the world is looking for dollar alternatives. When they find it the dollar is gonna go to .

I am literally betting my financial life on it. Dave Ramsey. By the end of the year I will literally have over a million dollars of low interest long term fixed interest dollar debt placed in hard assets that can roll with inflation.

here is what I think you should consider.

1. Most hyperinflation proponents thought the tipping point was 2012(i.e Bill Gross, Mark Faber, Peter Schiff, etc...) In fact, Stansberry(hugely circulated in conservative circles) predicted the US would lose their reserve currency status in 2010.

2. Our currency really only amounts to credits and debits on a spreadsheet at the Fed. If you take $100,000 of cash (currency) to the IRS to pay your taxes, the IRS will just shred your dollars and credit your account. This means the fed just keeps score and can boost accounts, like they've done significantly over that past 4 years, and still have interest rates collapse. What happened to interest rates when the ratings agencies downgraded US debt? they went down and investors bought more.

3. Velocity is way more inflationary than total debits and credits(dollars). Employment participation rates are at historic lows, incomes continue to shrink and there's a lack of innovation that requires manpower, so the outlook for velocity is dim IMO.

4. Japan, whose debt is also sovereign, has 200% Debt/GDP vs 90% in the US, and Japan continues to struggle with deflation in part because of their aging population.


My experience with conservatives, and I'm not necessarily accusing you of this, is that the root of their anger is a fundamental belief that en lements are fundamentally wrong and destructive long-term. Though I can go along with that somewhat, I wish their underlying anger wasn't aimed at dark people, but instead pointed at the biggest drivers of those en lement debts, anglo retirees who have not paid in nearly as much as they will receive in benefits from the governement. Yet, Republicans will continue to talk about welfare babies and foodstamps like those programs even come close to the handouts received from Medicare. It's called demagoguing the white vote, and yes I understand the other side demagogues too.

[CosmicCowboy]

We are clearly in uncharted waters. Logic dictates that the Fed will eventually have to unwind it's position which should have the reverse effect on interest rates.

[2centsworth]

We are clearly in uncharted waters. Logic dictates that the Fed will eventually have to unwind it's position which should have the reverse effect on interest rates.

they don't have to unwind because they are not accountable to anyone, which means all debtors accept fed notes. Now if debtors required the fed to repay in gold or in Euros our economy would collapse much like Weimar Germany that was required to repay their debts in currency other than their own.

We are blessed as a country.

[CosmicCowboy]

I read the same opinions that you have that deficits don't matter.

I understand we can run deficits forever but rule of thumb is the percentage of GDP shouldn't exceed the inflation rate + GDP growth or around 5%. Running annual deficits of 10% of GDP is unsustainable IMHO.

[ElNono]

Next time you hear a politician dumbing down the world economy by comparing it with a household economy, run as fast as you can...

[2centsworth]

I read the same opinions that you have that deficits don't matter.

I understand we can run deficits forever but rule of thumb is the percentage of GDP shouldn't exceed the inflation rate + GDP growth or around 5%. Running annual deficits of 10% of GDP is unsustainable IMHO.

I'm not totally disagreeing with you, but what makes 10% deficits unsustainable (we are running at 6.25% 1/16)? Rhetorical question so I'll answer, interest payments, because like taxes and spending cuts, interest payments take money out of the economy.

Here is where we probably will agree, Obama is clueless.

[CosmicCowboy]

Next time you hear a politician dumbing down the world economy by comparing it with a household economy, run as fast as you can...

That is a dumb analogy but there ARE limits and just because we don't know exactly where they are doesn't mean we should ignore them.

[ElNono]

Tangential... did you guys heard about Japan's announcement they're doubling their monetary base in two years?

They're targeting an annual 2% inflation rate, and that's basically what it would take for them...

http://uk.reuters.com/article/2013/0...93916B20130410

[2centsworth]

That is a dumb analogy but there ARE limits and just because we don't know exactly where they are doesn't mean we should ignore them.

there are limits like global warming alarmist believe there are limits. however, to live like it's a imminent threat is a huge mistake when we should focus on creating good paying jobs and inventing great new labor intensive technologies.

[ElNono]

That is a dumb analogy but there ARE limits and just because we don't know exactly where they are doesn't mean we should ignore them.

We certainly know other countries have tested such limits much farther than we have and are still fighting with deflation... so we definitely know where some of those limits are not at.

But the analogy is dumb way before then: Households don't control their own currency.

[CosmicCowboy]

there are limits like global warming alarmist believe there are limits. however, to live like it's a imminent threat is a huge mistake when we should focus on creating good paying jobs and inventing great new labor intensive technologies.

Oh, I think a 5-10 year window is reasonable for inflation induced by the actions of the Fed to return with a vengeance. Like I said, I'm betting a lot of money on that opinion.

[2centsworth]

Oh, I think a 5-10 year window is reasonable for inflation induced by the actions of the Fed to return with a vengeance. Like I said, I'm betting a lot of money on that opinion.

here's an excerpt from ElNono's post "But with the central bank now on track to buy up 70 percent of the Japanese government bonds issued each month...." imagine that talk in the US hahahaha

[2centsworth]

Oh, I think a 5-10 year window is reasonable for inflation induced by the actions of the Fed to return with a vengeance. Like I said, I'm betting a lot of money on that opinion.

well at least we know 6trillion in 4 years wasn't enough of a trigger. In fact, that was a real downer.

[CosmicCowboy]

well at least we know 6trillion in 4 years wasn't enough of a trigger. In fact, that was a real downer.

Yeah. We will probably do at least that in the next 4 years as well. Certainly doesn't bode well for the dollar.

[2centsworth]

Yeah. We will probably do at least that in the next 4 years as well. Certainly doesn't bode well for the dollar.

the projection is 3.8.