If all the money in the worlds banks were to flood out into the market and be spent simultaneously (for example in a global existential panic) Then the value of the currency would drop to nothing. — Benj96

How so?

Remember that spending is an transaction. There would be this just enormous bout of economic activity and yet afterwards the money would still be in the bank accounts of people and companies. Every storeowner or salesman would have happy memories of that day.

There would be so much supply and very little incentive to take it as real world objects like food, housing etc. — Benj96

?

I think Australia and New Zealand are excellent examples of what we should have done. — Isaac

Yes. Be an island in the southern hemisphere and be so lucky that the virus didn't reach your shores when COVID-19 still was "under the radar" as a peculiar flu. That's a great policy what to follow! :razz:

What exactly is your problem with some finding out he can buy low in one market and sell higher in another? There's a willing seller in the first and a willing buyer in the second. Who's being hurt here exactly? This is all a trader does. — Benkei

This trade is called arbitrage and the traders arbitrageurs. And those traders aren't typically appreciated.

That there's mispricing is the plain theoretical reason. However usually the reason for having different prices in separate markets isn't because the sellers would be ignorant or indifferent of there being higher prices somewhere else.

If we rule out logistical reasons for different prices, typically the price difference is done by government decree to "help" the ordinary people by rationing or fixing prices. That naturally leads to a black market, where the arbitrageur is one of the most hated persons in the society.

Brent crude and WTI do have traded with separate prices, because an arbitrage in the oil market does have it's limitations.

How monetary policy has become basically the method of assisting the stock markets and the financial market is explained quite well in this interview of William R White, who worked in the Canadian central bank and in the Bank for International Settlements (BIS). White tells how the change happened during the Greenspan years and how it has continued to the present and how this has created the excesses we see everywhere now. Central banks have become market makers of last resort, not only lenders of last resort. Yet keeping the normal recessions and sustaining a boom might (and I think will) result in the end in larger economic crashes, which have a political cost.

What is also discussed are the effects on productivity, the support of zombie companies and effects of loose monetary policy to the global economy.

Just another myth. — fishfry

More like professional wrestling. The media frenzy around it.

The GME incident is a beautiful example of the free market in action. — fishfry

Or likely how rules don't matter (naked short selling) and what odd things gets the attention of the media and the people. In other times things like this would be an interest of a small group of market players, not something that politicians would be commenting about.

Gambling is a known vice, so it is something we ought not do. — Metaphysician Undercover

Seems like gambling has replaced investing at least with some people. It has become a recreation. Compared to these times, in 1929 things were reasonable.

The whole Gamestop thing tells this: so some naked short sellers got fleeced by pump and dump speculators and people cheer how the evil Melvin hedge fund were overcome by "small investors" and think this was some kind of statement. I don't see anything heroic or great in this: it all just tells how rotten the whole system is.

If Madoff Securities LLC was still active and people would know that it's a ponzi scheme, I guess there would be those carefree people who would still invest in it. Because ponzi schemes create unbelievable gains before they, uh, have no money and the gig is up. But before that, what an opportunity to make money!!!

The deflationary aspect in my view comes from the speculative bubble bursting or when it bursts. At least we do have the euphoria, which typically happens before a market crash. Stock market crashing does have serious effects on the real economy too. If banks are again on the brink, then the taps then finance the economy, not just for speculation, close. And people will naturally save. Saving rates have been historically high with a personal savings rate of 33%. That naturally will ease inflationary tension for now. And the labour movement seems to be dead and buried in the US, so wages naturally won't rise, could even fall. Hence inflation isn't the real worry now, but deflation. But then what?

The real question is that how much adding that debt and QE and lending to banks will start to erode the confidence on the dollar. Or more generally, in the whole system. And here we come to the question I've been pondering for some time: how reasonable is the Modern Monetary Theory? The idea of just printing money to prosperity feels missing some fundamental understanding of how the economy works. The argument that inflation, if it happens, can be dealt with interest rate hikes sounds not very convincing if the debt is so huge that the interest on the debt would severely cut back other government spending.

Or then, the whole monetary policy is there only to prop up the banks, the owners of the federal reserve, and nobody else. It's not even supposed help the real economy, just to help Wall Street. That may actually be the real answer.

"price stability will prevent crises" we were told. It's really time to revise the charter of Central Banks. — Benkei

Oh, that sounds just like what an economist of the Finnish Central bank (when there was an independent one) said about the worst economic depression the country was in: "The unemployed won't revolt. Unemployment is seen as an independent stigma as others still have jobs. Hence there isn't going to be like a revolution." He was correct, actually, the unemployed didn't revolt, even if 50 000 construction workers never found work afterwards. So to keep the price of food and clothing "decent" may be the answer. That likely may be handled for instance giving subsidies to large retail chains: again the rich profit and the poor muddle through it.

Yet revising the charter of the Central Banks? I fear this is something that won't happen.

The thing is that the role of the central banks and monetary policy simply isn't understood. This is something that isn't taught in school. History has again and again shown that the delirious accusations of the "speculators" being behind inflation, and not the governments and central banks always prevails. Or then it's the ugly foreigners, perhaps China in this case. The media will go with that story as the media is linked to the government (even here in the West). If the inflation gets ugly, at first what is demanded is that there are money transfers to the poorest of people to help them. Then there will be the demands to ration basic necessities and a public denouncement campaign against "hoarders", "speculators" and the "black market". Ah, the black market speculators...how evil are they!

Above all, when, as correctly points out, the fuel for the future rise of inflation has already been spread earlier, people cannot understand the link. Then when it actually happens, the link to earlier actions is hazy as the economy is so complex, that likely isn't understood.

If possible, tune it out for about ten years and do things that create contentment in your life (while everybody else is going to be running around like their hair's on fire!). — synthesis

Well, running around like their hair's on fire has been the new normal. I've already seen

- a huge banking crisis, real-estate bubble bursting and economic depression in my own country.
- The Tech bubble bursting
- The Great Recession of 2008-2009, real-estate bubble bursting in the US and economic depression
- Covid-19 economic depression ...

And between those crashes, three decades of huge asset inflation where nearly anything you have invested in gained a good profit and a lot of euphoria and silly talk. So that's the World we live in. So why tune out for a decade? Then what on the 11th year?

Perhaps people are a bit melodramatic. If we have a market crash or a currency crisis in the future, it basically would be something similar we already have seen. In the end the reality would be simply 'normal' to us. Just think of before last year describing the start of the 2020's to people and how scary it would feel with a pandemic with lockdowns and even curfews, mobile morgues made from semitrailers and riots reaching a fever pitch with a huge mob breaking into the Capitol. That all would sound very scary, when considering how things were in the middle of the 2010's. In similar fashion a stock-market crash, financial market collapse, banking crisis or currency crisis sounds scary, but in the end it isn't. And after a storm, the sun shines again...

The system works for him. Those that get the money before inflation kicks out are the winners in this World. Notice that there wasn't huge inflation in the 1920's or in Japan prior for the speculative bubble bursting. With perpetual bonds, you don't need to roll over that debt. So fix in on the lowest rates in written history for a million years or more!

As long as the velocity of money doesn't start picking up and there is ample confidence in the currencies, everything is great for the extremely rich. Not that the money printing does anything good for the actual economy, but that isn't important. The monetary policy has brought asset inflation, and that is good for rich people like Soros.

I've been involved in the Dutch existing perpetual bonds actually and my advice was shelved due to COVID because now there's no time to deal with them. Had a major row with the legal department of the ministry of finance for being stupid uncooperative dicks (after my research showed they were giving the wrong advice for 15 years) which played a large role in me changing jobs. Good times! — Benkei

It would be interesting to hear about that major row as this is a very important issue to understand. As the thread's header states, these times economics, financial and monetary policy isn't in the ordinary realm we have been taught they would be.

What I've learned is that this situation where we find us is a very complex one: QE and other forms of money printing haven't caused hyperinflation, but on the other hand the money hasn't gone into the real economy.

This is exactly what was expected when the politicians allowed (viz., were paid off) the most vile members of society (bankers) to print money out of thin air. The fact that they destroyed the entire global economy was as predictable as knowing that the sun is going to rise in the eastern sky in the morning. — synthesis

And more is coming...

George Soros personally has argued the following (last year):

European Commission President Ursula von der Leyen has announced that Europe will need about €1 trillion ($1.1 trillion) to fight the COVID-19 pandemic. This money could be used to establish a European Recovery Fund. But where will the money come from?

I propose that the European Union should raise the money needed for the Recovery Fund by selling “perpetual bonds,” on which the principal does not have to be repaid (although they can be repurchased or redeemed at the issuer’s discretion). Authorizing this issue should be the first priority for the forthcoming European Council summit on Thursday.

It would, of course, be unprecedented for the EU to issue perpetual bonds, especially in such a large amount. But other governments have relied on perpetual bonds in the past. The best-known example is Britain, which used consolidated bonds (Consols) to finance the Napoleonic Wars and war bonds to finance World War I. These bond issues were traded in London until 2015, when both were redeemed. In the 1870s, the U.S. Congress authorized the Treasury to issue Consols to consolidate already existing bonds, and they were issued in subsequent years.

The EU is facing a once-in-a-lifetime war against a virus that is threatening not only people’s lives, but also the very survival of the Union. If member states start protecting their national borders against even their fellow EU members, this would destroy the principle of solidarity on which the Union is built.

Instead, Europe needs to resort to extraordinary measures to deal with an extraordinary situation that is hitting all of the EU’s members. This can be done without fear of setting a precedent that could justify issuing common EU debt once normalcy has been restored. Issuing bonds that carried the full faith and credit of the EU would provide a political endorsement of what the European Central Bank has already done: removed practically all the restrictions on its bond purchasing program.

See Opinion: Soros: The EU should issue perpetual bonds to fund the economic recovery from coronavirus

Soros has later argued for perpetual bonds this year on January 18th in the Independent



The only way out, according to Soros. In other words, let the printing machines print!!!

Mortgages last a looooong time though. I'm buying a £270,000 house now that will cost me £367,000. Since houses are still one of the safest investment opportunities out there, it doesn't really make much sense to pay an additional £100,000 for the benefit of investing £228,000 elsewhere. — Kenosha Kid

If you are buying a house to live in yourself, I agree. I did buy my present home with cash too: where you live, it's not an investment, actually. Only in the long term it is an investment for your family as your children or other heirs inherit the home afterwards.

Yet if you put that house or flat for rent, then the debt is understandable: one can easily get an rent that pays for the interest and loan amortization still leaving a profit and you don't need to speculate where the housing prices go. Rents don't collapse in the similar fashion as housing markets , they are extremely rarely in a bubble as every rent is priced every month. Besides, the only true risk is if housing prices are below your buying price and at the same time you cannot pay the interest on your debt. Such an event is actually quite rare and this is the reason why speculative bubbles are so dangerous: otherwise the risks are low and it's the most simple game ever.

That's of course assuming that the goal for the republicans is a return to relative "normalcy", with power switching hands between two parties at regular intervals. — Echarmion

Well, this symbiosis with the DNC has worked for them very well. The last thing the DNC and the GOP want is their duopoly on political power to be broken and a viable third party would emerge.

Another way to read the events is that the GOP not trying to slowly ease out Trumpism, but instead slowly ease out the traditional idea of the conservative, as a way to deal with the ever dwindling number of these kinds of voters. — Echarmion

What is obvious is that there's a power struggle going on inside the GOP. For example, the Lincoln Project didn't cease it's adds once the election is over, but is attacking one side of the GOP.


If it would have been the loss of the Presidency and both houses in Congress, the GOP may have gone as business as usual. But January 6th happened as the final crash with an explosion of the Trump train wreck leaving things so much in shatters, that they do have to think about this shit.

In other words, you can be as masculine as you want as long as your version of masculinity conforms to someone elses version if masculinity. :roll: — Harry Hindu

And not to just someone, but a specific vocal and dominant group that defines what is good or 'toxic' in the World we live today (among other things).

Any reference to anything with "Toxic x" has this special narrative and a distinct ideology behind it. I think it is far better to dissect "toxicity" in this case to something more accurately defined: are you specifically talking about sexual harassment, sexism, misogynism, male chauvinism, homophobia, male priviledge or simply bullying. Those terms open up far more better for people who don't know the toxic masculinity narrative. Besides, referring to toxic masculinity makes one think that the person is referring to that masculinity is toxic.

When does wokeness become toxic? :smirk:

How the GOP manages to wiggle out of the influence of Trump is obvious.

Let the media and the democrats attack Greene, let Cheney and the other ten Republicans in the House that went for impeachment simply be and see if Kinziger gets support. Now it ought to be crystal clear what a disaster Trump was, but his voters are their supporters. At least in a way. Avoid at all costs the party fracturing. Trump simply hasn't got the leadership and organizational abilities to create a new party. And the ban from Twitter shows just how totally inept this guy is to reach his followers when his smartphone is "taken away".

As time goes, the democrats will go to excesses in their disdain and simply start to annoy all Republicans. Likely the voters in general will be disappointed at the Biden administration, if Covid-19 doesn't go away and the economy stays as bad as it is. At that time people like Liz Cheney and Kinziger can start themselves calling that enough is enough and we will, hopefully, have normal mid-terms.

In short, the GOP can take example from the Democrats on how to deal with their annoying but eager and important supporters called the "progressives" or "democratic socialists". The DNC never kicks these buffoons out, but gives them enough crumbs that they stay in the party and here Bernie tows the party line extremely well. Bernie gets the young and the radicals all excited, but always tows the party line. The GOP handled the tea-party crowd extremely well in a similar manner. The Trump crowd is different and problematic (to say the least), but still quite malleable.

Mr Executive Order... I guess this has become a tradition in US politics, first days repealing the former presidents decisions, if that President came from the other party.

Executive actions taken during the first 12 days. Executive orders (red), Presidential Memos(blue), Proclamations(grey):

Seems like the GOP isn't in the mood to kick people out: both Liz and the Q-anon woman didn't get punished from their own party.

Oh yeah, avoiding paying all that mortgage interest is super dumb. — Pfhorrest

Well, interest rates are the lowest ever, like in thousands of years low. And creating mortrages is the most normal thing any bank will do.

If you think the risks of investing elsewhere are too high, you're probably better off buying real estate. Or you can spread your risk by putting money into both. — Benkei

Buying real estate isn't a hedge against stocks or other capital investments. In a credit crunch or a collapse of a speculative boom boths stocks and housing prices come crashing down. Yet do notice that it's a rather rare event: I've just seen one housing crash in my lifetime of investing, but several stock market downfalls.

Index funds likely inadvertently make the stock market even more volatile and pushing some stocks to very high prices, when you take into account that few stocks actually make a huge proportion of the index.

Never before has the S&P 500 been as top-heavy as it is now.

The five largest companies by market capitalization (Apple, Microsoft, Amazon, Facebook and Alphabet) comprise more than 22% of the index. Those five companies have as much influence on benchmark performance as the bottom 363 companies combined.

It's not totally out of the question that those five stocks could/would go down and what now has been the engine for the stellar performance of index fund reverses and then it's a slaughter with index stocks while old time mutual fund managers would beat the index. That kind of transition could possibly happen. When if ever, who knows that.

Just notice how the flows into funds have changed:

In recent years, index funds have been steadily catching up with their actively managed competitors. In 2015, for example, active equity funds enjoyed £15.3bn of inflows, compared to £1.8bn for index trackers, a ratio of almost 9:1. In 2018, index trackers already saw larger inflows than active funds, but so far in 2019, active funds have shed £2.6bn, while trackers have absorbed over £2.9bn of inflows.

And this has just continued:

Yes.

Wonder if he gets a cell mate with tuberculosis or/and Covid-19.

What do you mean? — The Opposite

We had a President from 1956 to 1982 and only when totally incapacitated of old age did he retire. He won four terms in free elections and one extension of a term (the third). And wasn't a dictator, no demonstrations against him, no secret police hounding dissidents. Of course, he (a centrist btw) was the main man of the Soviet Union and a good friends with the Soviet leadership. Yes, he was the embodiment of Finlandization. He died in 1986 at the age of 86.

Some politicians argued that he should run for the sixth Presidential term. Afterwards my country opted for two-term limits. Whopee!


Yes, Finns are a bit different. Saatana!

I don't know what a fair price is though given Gamestop was been trading between $4-$15 for the past few years and now it's "crashed" to $86 or so now. — BitconnectCarlos

For starters, the P/E ratio would be a good indicator. Or if the company is near bankruptcy in a dead end business sector or not. :roll:

I think any investor guide gives you the basics for normal investing, which is very good to understand.

I would give one advice: understand where just now the economy is in the business cycle. One good or bad company and it's stock price still goes with the flow of the market, hence this is a crucial question.

A very good thing to know now is what is referred with the Minsky moment. Once you understand that, then go and invest.

Buying $GME isn't so much about making profit - I don't have any price targets or stop losses with my gamestop buy - At the end of the day, what's wrong with a bunch of retail investors coming together and deciding to help out a struggling company? I've been a Gamestop customer plenty of times. If certain hedge funds who were ultra-short Gamestop feel a little pain then that's not my problem. Hedge funds already have enormous advantages over the average retail investor.

I also only threw like 1% of my portfolio at this so it's not like failure is the end of the world. — BitconnectCarlos

Talk about animal spirits. Philosophical animal spirits, I would say. Stock investment as a recreation.

I would take this as an obvious indicator that the market is overpriced, overtly excessive, out of touch, ready for a collapse.

When people wait in lines to buy stocks, that's the traditional indicator of an impending market crash. I don't know where to put this on the scale...

Decreasing my stock portfolio.

One good indicator is the stock market compared to GDP:

Refilling the swamp is easy. — NOS4A2

Refilling? Oh you think that someone drained the swamp? Lol.

In any case I did pick up some AMC and GME today and I'm fully preparing to get utterly wrecked. — BitconnectCarlos

Can I ask why?

I think it would require an enormous amount of coordination in order for the rise in precious metal prices over the last week to be a result of a proportional change in retail investor spending patterns caused by a media management strategy by hedge funds- I think it's better explained by investors panicking that the stock market is going to crash and hedging against it. — fdrake

Precious metals are at best in the long term a somewhat good hedge, but basically the spot prices are are controlled with paper. Hence if the market makers cannot deliver the actual metal, they can simply give back cash.

Yet as we saw with negative oil prices, nearly everything if not everything has been made a vehicle for speculation.

But what else could we assume when the owners of the US Central Bank are the speculating Wall Street banks themselves.

I think it's better explained by investors panicking that the stock market is going to crash and hedging against it. — fdrake

Well, A crash could be something that could happen.

Likely at first that would have an deflationary effect...everything going down against the currency, before the trusty plunge-protection-team comes to the rescue of the banks.

HIV/AIDS doesn't spread like a flu, and the only one obviously different is the Spanish Flu.

Let's remember the comparison, the one argument made many times at the outbreak of this pandemic:

Most years, the US death toll from the flu is closer to 34,000 to 43,000. Globally, the World Health Organization (WHO) estimates that the flu kills 290,000 to 650,000 people per year.

That we weren't prepared is nothing short of criminal. — Isaac

Think of it from another viewpoint: We had SARS, MERS, swine flu and an Ebola outbreak. And those were contained, even if Ebola caused much death in West Africa and did spread to the US. What I remember, a lot of people were making the alarms about them too.

I remember that the view was that it was "only a matter of time" that we would get a pandemic that wouldn't be so easy to contain. You can read dozens of articles and many documentaries that were done prior to Covid-19 warning about what could happen.

Good old Radio Free Europe. :up:

I think it's just actually that 20 years is far too much of one leader in one country...if the people aren't Finns, I might add. Putin simply couldn't retire with Dmitri Medvedev taking the helm after him. At least that would have kept the thin veil, or rather facade, of democracy in Russia. Now there isn't any.

Until now, the first and last Russian leader to peacefully retire:

Well, my father knew well the Hong Kong flu of 1968-1969, but he is a virologist. Otherwise it wasn't on the radar of people when thinking of the 1960's.

Prior to Covid-19 history books hardly ever mentioned the flu pandemic when talking about the tumultuous year of 1968. These prior diseases fell into the category of "nasty flus". The last pandemic that history books or school books mentioned was the Spanish flu.

My son had as homework in history a question if he has experienced a historical event. He immediately answered the Covid-19 pandemic and, as a 12-year old, was happy that he had experience something really historic in his lifetime.

Nothing to argue about there.

A pandemic with number of deaths in the top ten in all of history and with the lockdowns, political turmoil and the economy depression, this is surely something for the history books.

You would want that? :wink: Those who rule make the decisions.

If people don't know much about economics, here is one of the best simple explanations of what is happening from Ray Dalio, founder of one of the largest hedge-funds. It isn't the economics taught in schools, but captures the present system quite well. At start the video starts from the very basics, but later goes to quite complicated issues like the effect of deleveraging. Dalio explains the system objectively and without sounding like a doomsday prophet (as many permabear commentators do). If people have 30 minutes to spare, worth wile watching.

Following the recent COVID-related drastic increase of America's sovereign debt, there are the newest neoliberal strategies: no austerity (so far), helicopter money instead, and even more dramatic political change. It looks like elites do not care about the debt anymore. (Biden even has proposed an additional 1.9 trillion $ of 'COVID' relief.) Neither debtors nor creditors think of re-paying or reimbursing of debts. With zero interest rates, the accelerating virtualization and dematerialization of money will continue to be the engine and source of the neoliberal financial system's power. It looks like the neoliberal corporate power 'outside' the state will resonate with the power of the state itself. — Number2018

Deficits don't matter. Now it's just official.

The Federal Reserve can buy the debt.. .as it has and now is the largest single owner of the debt. Naturally it all can be paid with a keystroke, hence the debts surely can be repaid. The US cannot default on it's own currency.

And with the new gospel is MMT, there isn't any danger with this as a) inflation becomes a problem in full employment, b) the government can control demand-pull inflation, basically the normal thing what happens to prices when demand is larger than supply and c) the whole thing doesn't affect the private sector and it's issuing of bonds. That's the line.

We all believe in the perpetual dominance of King Dollar, right? Nothing to shake that confidence here...

Why are you all still talking about Trump?

:roll:

How it has possibly gotten to this point is beyond me. — synthesis

I think that when the US basically defaulted on the Bretton Woods system, the people deciding it genuinely thought that it would be a temporary move, that the World wouldn't accept the USD having the status that it had. But nobody didn't want to rock the boat, so the US could get away with it. For the Saudi's opting to take the fiat Dollars was a smart decision: decades later the US did arrive to defend them from their neighbor in the North, who had captured Kuwait and with it had the largest oil reserves...for some months.

I also think that the Saudis, the Japanese and finally now the Chinese have been happy to use those dollars to buy assets in the US, hence the system has gone on. And of course American politicians, even having the hilarious hypocrite theater of "raising the debt ceiling" every once in a while, naturally will exploit the situation where they can recklessly spend without no limit.

(They still have those trillion plus, but now the largest owner of US debt is the Federal Reserve:)

It is rumored that the BoE never paid off their original debt from 1696. Wouldn't doubt it. — synthesis

Technically the debts are paid back. For example, the UK paid it's last debts from WW2 back to Canada and the US in 2006. From that time:

(BBC News, 29th December 2006) Britain will settle its World War II debts to the US and Canada when it pays two final instalments before the close of 2006, the Treasury has said. The payments of $83.25m (£42.5m) to the US and US$22.7m (£11.6m) to Canada are the last of 50 instalments since 1950.

The amount paid back is nearly double that loaned in 1945 and 1946. "This week we finally honour in full our commitments to the US and Canada for the support they gave us 60 years ago," said Treasury Minister Ed Balls. "It was vital support which helped Britain defeat Nazi Germany and secure peace and prosperity in the post-war period. We honour our commitments to them now as they honoured their commitments to us all those years ago," he added.

The last payments will be made on Friday, the final working day of the year.

The market price of a stock in no way changes the capital of a company and therefore has no effect on its solvency. — Benkei

Well, if the market cap of the company is collateral for any debt, it might be an issue. (I think mentioned this already)

Anyway,

This whole Gamestop event just shows that we are living quite similar times as in the 1920's. Then too speculators could gang up on stocks (and I'm talking of both the hedge funds and others) as there isn't much anymore of the New Deal era limitations/regulations in force.

And that this kind of issue gets so much focus tells again tells about these times...

Well, to say it is a tax is actually is one easy way to understand it, yet the phenomenon is actually far more complex. Who actually benefits isn't so easy to understand as with taxes. How it is measured also raises a bit of doubts as it is a highly politicized indicator, just like unemployment, and is tended to be represented to be far better than in reality by statistical methods.

Even if one isn't an investor, it's actually important to understand the possible perils in this economic situation and that things aren't going to go the way as before as we are in quite new territory. How deflation and a possible crack up boom will turn out is something we may see.

The FEDs 2% inflation target is like saying that we wish to confiscate all of your wealth...eventually (which is exactly what they have been doing for the last century). — synthesis

If inflation really would be 2% you get a return on your investment of over 2% + the interest paid on the debt, then you are the winner in this system. The positive effect of gearing works wonders. Yet with the lowest interest rates in known history of mankind ought to make people think where this all is going.

The powers at be have been thinking of an answer, and as dubbed in Davos, it's "The Great Reset" The term the Great Recet isn't invented by the critics, it's really the phrasing used for example by an IMF manager here (just to take one example).

One idea would be to float Special Drawing Rights (SDR) as a cryptocurrency, if trust in the present fiat-system is shaken. Of course the SDR's are made of a basket of current fiat-currencies, but anyway. Those in power through the present monetary system would stay in power through a new system.



They're not leaving the crisis to waste.

There hasn't been real economic growth in this country since the 60's. It's mostly debt, counterfeiting, and statistical gymnastics designed to make the majority think that what they are seeing with their own eyes is a phantasm. — synthesis

Well, you had a politician, Richard Nixon, declaring money isn't what it had used to be for thousands of years...and that was planned just for a temporary time.

Perhaps the debate should be just how stupid the idea of deflating/devaluing everyone to prosperity is. The real issue here is who gets the money first. Inflation is great only for those who buy an asset that doesn't devalue in price or can use the money before it loses value, but for savers it's a problem. An economy needs savings too.

In the Nordic countries (we are talking the era from the 50's to the 90's) usually it went like this: The export industry noticed that they had problems to compete in the global market. Hence they drove the market to devaluate the currency to gain an pricing advantage in their goods. Great, good times again! Unfortunately this made later also the imported resources more costly and finally the trade unions noticed that wages hadn't kept up with the prices and demanded higher wages. After costly strikes the employers were ready to raise wages and the situation was at the same as it was in the first place.

Then something changes: thanks to the deregulation of the financial sector the speculative bubble got so big that this model didn't work anymore. Low interest rates didn't cause inflation. Why?

Because once the bubble burst the banks simply didn't lend the money, which was poured into them. And by the 90's the labour movement wasn't anymore what it had been earlier. In the US the situation was even worse as there hardly is a labour movement to negotiate about the wages. Yet the money had to go somewhere and where it went was into asset inflation: to the stockmarket, to real estate again. Yet without the increase in wages etc. the influx of money didn't find it's way to the real economy. The system serves those who are rich, not the poor. Hence now we have a situation where the real economy and the financial realm are living in totally different worlds. Or it seems so.

Yet I don't think that this can go on perpetually. Sooner or later there is a system crisis. And likely now it's sooner than later.

(why do we think that perpetual inflation is good?

2008 was simply an interruption in the flow of money that caused all kinds of reciprocal havoc. Nothing that couldn't be fixed by pouring trillions into the system. — synthesis

And after trillions come quadrillions and quintillions. Do people think the future Elon Musk/Jeff Bezos is so much richer when he is a quadrillionaire and the US deficits are counted in quintillions of dollars?

There has not been an economic crisis since the recession of the early 90's (and even that one was semi-bailed). I am talking about a proper depression (people jumping off of buildings, etc.). — synthesis

Forgetting the 2008 Financial Crisis and the recession? (Ah yes, I do see the small blip of the 1990's recession)

Guess last year the GDP growth was something like -3,5% in the US.