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biglentil's Avatar Jul 24, 2020 | 17:29 31
Quote Originally Posted by Austrian Economics View Post
The biggest concern of any central bank is the solvency of the banking system. They really don't care if stocks (or gold) rise steeply in value. Their principal concern is to avoid having the credit system lock up, as it did in 2008 and again in early 2020. They will buy stocks (or more likely ETFs) if they think that by doing so they can avoid solvency problems with large companies and the banks that they borrow from. They won't do it just to see stocks go up.

The end game comes when the central banks have to absorb so much bad debt that they themselves become insolvent (liabilities dwarf assets).
Central banks become insolvent thats a new one. They just need to press Cntr-P. Reply With Quote
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  • Jul 25, 2020 | 09:39 32
    Quote Originally Posted by Austrian Economics View Post
    The biggest concern of any central bank is the solvency of the banking system. They really don't care if stocks (or gold) rise steeply in value. Their principal concern is to avoid having the credit system lock up, as it did in 2008 and again in early 2020. They will buy stocks (or more likely ETFs) if they think that by doing so they can avoid solvency problems with large companies and the banks that they borrow from. They won't do it just to see stocks go up.

    The end game comes when the central banks have to absorb so much bad debt that they themselves become insolvent (liabilities dwarf assets).
    AE agree . . . credit system lock up is like krytonite to superman. But situation now had little comparison to 2008 (IMO). Central banks are already insolvent.

    The currency print button no longer has much affect. And the economy will no longer respond to artificial manipulation of the Fed protecting Wall Street at all cost. This had just widened the income gap at the expense of the middle class.

    2021 may be known more for massive bankruptcies than any successful Fed rescue plan. Fakeconomics at-their-worst and a crash waiting to happen (IMO) . . . . Reply With Quote

  • Jul 25, 2020 | 10:08 33

    A vaccine won't fix this. Reply With Quote
    Jul 25, 2020 | 10:22 34 The gluttony of debt CB's have encouraged the masses to take on since 08, by suppressing rates, is coming home to lay waste. They don't see the insolvencies coming and think it's a liquidity crisis, fixable with more loans. The hoarding earlier this year was a trigger point, the line of thinking has changed among the population, they recognized govt could not protect. Savings rates are going up worldwide. This is not inflationary. Until main street banks start lending en mass this can't happen. Especially if the middle class is unsure of the future, they simply won't borrow. Here's the exulted Tiff telling Canadians to "borrow MOAR". He needs the inflation to deal with the debt govt has taken on. Gold and silver is running on its own here as it is signaling the world is broken and CB's are losing their grip. They look at BOJ and say i'll do what they did, the difference is it's never been attempted on a worldwide scale. Welcome to the utopia of zero productivity before the crash. Then what?


    https://youtu.be/FoasstYYu4Q Reply With Quote

  • biglentil's Avatar Jul 25, 2020 | 10:46 35 Reply With Quote
    Jul 25, 2020 | 22:06 36 Assets and Liabilities , where is this chart from? Reply With Quote
    Jul 26, 2020 | 06:41 37
    Quote Originally Posted by sumdumguy View Post
    Assets and Liabilities , where is this chart from?
    Bank of Canada. Represents total assets and also total liabilities and capital. https://www.bankofcanada.ca/rates/ba...y-formerly-b2/ Reply With Quote
    Jul 26, 2020 | 07:33 38 TY 101. Your chart makes sense to me but it is disconcerting when you see the same pattern - 2020 to 2008. We are heading down the same rabbit hole. 🙈 Get out the printing presses! Reply With Quote
    Jul 26, 2020 | 07:39 39 Next week, reality strikes . . . .

    U.S. 2nd quarter GDP is released. A poll by Marketwarch of economists suggests the American economy shrank by an incredible 33 percent.

    The next worst GDP in history was 62 years ago, in 1958 when the American economy was hit by a 10 percent loss in the 1st quarter.

    This news odda make the stock market rally with more Fed stimulus . . . . Reply With Quote
    Jul 26, 2020 | 09:20 40 This chart of USD cash on hand tells me the FED is readying for something bigger to come. That chart of Bank of Canada is super scary. That looks the wheels fell off and we just don’t realize it yet. I’d say the rabbit hole is more like going off a cliff.

    With the markets disconnected from reality and autumn approaching I’d suspect major fireworks before year end. How can this bounce past October?

    Got guns? Got more guns?

    Reply With Quote
    helmsdale's Avatar Jul 26, 2020 | 14:14 41 The one thing that's hit home for me post '08, is that everything takes far longer than you think. The age old adage goes: "the market can remain irrational far longer than you can remain solvent."

    I feel this likely has considerable room to get far worse long before it starts to correct... If central banks can print $T's to purchase junk bonds and distressed equities, what's to stop governments world wide from demanding they print huge sums for UBI, low income housing, or massive expansions of the public service?

    We're long past the point of disciplined fiscal and monetary policy. I'm thinking this gets a WHOLE lot worse... Reply With Quote
    helmsdale's Avatar Jul 26, 2020 | 15:04 42 So long as the "investment", as government expenditures like to be termed these days, accrues greater than 0% then what couldn't be justified these days?

    If $1.3T in debt doesnt matter, then why not $13T or $130T?

    The AB NDP want 2x the teachers, and nearly double the floorspace for the education dept to get class sizes down to 15 max. It's only $1B/yr or so twitter says.

    If debt doesnt matter, why even bother to tax at all?

    This likely sounds absolutely retarded to anyone schooled in economics, but most everything currently being practiced is beyond the pale of my econ schooling as is! There's far more perversion incoming! Reply With Quote
    Jul 27, 2020 | 13:48 43

    We are #1! We are #1! .... Reply With Quote
    helmsdale's Avatar Jul 27, 2020 | 14:19 44
    Quote Originally Posted by macdon02 View Post


    We are #1! We are #1! ....
    🎶Money, money, money, money, money... MONEY!🎶

    Or, 🎶Let the good times roll!🎶 Reply With Quote
    helmsdale's Avatar Jul 27, 2020 | 14:21 45 Anyone have readily available graphs on M1, and M2 for the similar jurisdictions Macdon posted net assets for? Reply With Quote
    helmsdale's Avatar Jul 27, 2020 | 14:22 46 They should be fairly similar shouldn't they? Reply With Quote
    Jul 27, 2020 | 14:37 47
    Quote Originally Posted by helmsdale View Post
    They should be fairly similar shouldn't they?


    This could be total carnage, i have no idea, but look at gold and bitcoin. There's a reason and it's obvious. By my records, there should be a retest at 1362 and possibly 1197. It comes down to who do you trust and which countries can keep their shit together? This will be vicious as the dominoes begin to fall. Reply With Quote
    helmsdale's Avatar Jul 27, 2020 | 16:10 48 I'm guessing that's M2 $US?

    Can you drag that chart back to say 1990? Or even pre 2000 meltdown? Reply With Quote
    helmsdale's Avatar Jul 27, 2020 | 16:14 49 This has been tried numerous times, but only in individual cases which butt up against other countries that keep the supply stable. I have to sit down and game this out, as it appears there is going to be a coordinated global attempt this time. The mob is going to be insatiable! Reply With Quote
    Jul 27, 2020 | 16:27 50 I have to emphasize that central banks don't print money into existence, they borrow it into existence. What we call money originates as a bond. Every bond carries an interest charge. What we typically call cash, i.e. bills, are merely pieces of the bond. But with fiat, there's no way that you can redeem a bond for final payment, i.e. redemption for a commodity such as gold, which would extinguish the debt.

    Without redemption for a commodity, debt grows exponentially as interest compounds. Even at the absurdly low rates we now see, the compounding is still unstoppable.

    It's bad enough that debt must grow exponentially in a fiat system, but as a result of this covid crisis we now have governments of every stripe borrowing exponentially more than was imaginable even five years ago.

    I just saw a TV interview with the mayor of Mississauga cheering on the Ontario government's recent success in lobbying the federal government for billions in aid to municipalities to fill the holes in their budgets. This is, however, not found money. It's simply being added onto Ottawa's already huge debt burden. Reply With Quote
    Jul 27, 2020 | 16:49 51 I like to think of the capital as a chicken. The yield on capital is the egg. Before you can consume an egg, you have to produce a chicken. Right now, we are consuming eggs at a much faster rate than we are producing chickens. Reply With Quote
    Jul 27, 2020 | 17:25 52
    Quote Originally Posted by Austrian Economics View Post
    I like to think of the capital as a chicken. The yield on capital is the egg. Before you can consume an egg, you have to produce a chicken. Right now, we are consuming eggs at a much faster rate than we are producing chickens.
    Too big to FAIL... This is totally political... who decides now?

    No Rational historical reference...

    Like everyone playing a big card or Monopoly game... with rules changing hourly... and certain players having a veto...

    As long as folks keep playing in this big game... it will continue!!!

    Cheers! Reply With Quote
    Jul 27, 2020 | 18:20 53
    Quote Originally Posted by Austrian Economics View Post
    I have to emphasize that central banks don't print money into existence, they borrow it into existence. What we call money originates as a bond. Every bond carries an interest charge. What we typically call cash, i.e. bills, are merely pieces of the bond. But with fiat, there's no way that you can redeem a bond for final payment, i.e. redemption for a commodity such as gold, which would extinguish the debt.

    Without redemption for a commodity, debt grows exponentially as interest compounds. Even at the absurdly low rates we now see, the compounding is still unstoppable.

    It's bad enough that debt must grow exponentially in a fiat system, but as a result of this covid crisis we now have governments of every stripe borrowing exponentially more than was imaginable even five years ago.

    I just saw a TV interview with the mayor of Mississauga cheering on the Ontario government's recent success in lobbying the federal government for billions in aid to municipalities to fill the holes in their budgets. This is, however, not found money. It's simply being added onto Ottawa's already huge debt burden.
    Liberal way of thinking
    No idea on wealth creation, just play with Monopoly money Reply With Quote
    biglentil's Avatar Jul 27, 2020 | 18:45 54
    Quote Originally Posted by Austrian Economics View Post
    I have to emphasize that central banks don't print money into existence, they borrow it into existence. What we call money originates as a bond. Every bond carries an interest charge. What we typically call cash, i.e. bills, are merely pieces of the bond. But with fiat, there's no way that you can redeem a bond for final payment, i.e. redemption for a commodity such as gold, which would extinguish the debt.

    Without redemption for a commodity, debt grows exponentially as interest compounds. Even at the absurdly low rates we now see, the compounding is still unstoppable.

    It's bad enough that debt must grow exponentially in a fiat system, but as a result of this covid crisis we now have governments of every stripe borrowing exponentially more than was imaginable even five years ago.

    I just saw a TV interview with the mayor of Mississauga cheering on the Ontario government's recent success in lobbying the federal government for billions in aid to municipalities to fill the holes in their budgets. This is, however, not found money. It's simply being added onto Ottawa's already huge debt burden.
    Don't quite follow. Central banks like the fed print treasuries. They sell the treasuries into the market and offer a nominal interest rate on said treasuries. However the market for treasuries has dried up so the fed buys the treasuries back from the secondary market for a premium in cash. Its a roundabout way of monetizing debt as it is technically illegal to do so directly. That is why central banks balance sheets are growing and they count what was once their liability as their asset. Central banks expanding their balance sheets = central banks monetizing the debt. Also don't confuse central banks as being a government entity they are not. Reply With Quote
    Jul 27, 2020 | 19:06 55 https://www.pscp.tv/w/1ynJOqPBaeXKR?s=09

    The timing on this is impeccable, regarding gold and dollar Reply With Quote
    Jul 27, 2020 | 19:38 56
    Quote Originally Posted by biglentil View Post
    Don't quite follow. Central banks like the fed print treasuries. They sell the treasuries into the market and offer a nominal interest rate on said treasuries. However the market for treasuries has dried up so the fed buys the treasuries back from the secondary market for a premium in cash. Its a roundabout way of monetizing debt as it is technically illegal to do so directly. That is why central banks balance sheets are growing and they count what was once their liability as their asset. Central banks expanding their balance sheets = central banks monetizing the debt. Also don't confuse central banks as being a government entity they are not.
    I think it's more accurate to say that anyone wishing to acquire capital on the capital markets issues a bond and then offers it up to potential investors. The investor who buys the bond does so in order to earn a yield over the term of the bond. The issuer of a bond could be a private entity or a government. The buyer, these days, is often the central bank which intervenes in the capital markets to try to force interest rates down. Absent their intervention, interest rates would skyrocket given governments' appetite for capital which they consume in ever greater amounts.

    Once it gets to the point where debt service becomes a problem is when the system really begins to collapse. This can happen for governments but a seismic event could find a trigger in the heavily indebted private sector too. I don't think this is too far away.

    To call this printing doesn't describe the process accurately. The printing concept glosses over the problem with exponential debt growth due to the inability of fiat currency to ever be redeemed. Reply With Quote
    Jul 27, 2020 | 20:47 57 Treasuries are issued by the government's Treasury Department

    https://www.thebalance.com/what-are-...-bonds-3305609 Reply With Quote
    ajl
    Jul 27, 2020 | 21:33 58
    Quote Originally Posted by macdon02 View Post


    We are #1! We are #1! ....
    Your chart explains how canuckistan, a place with no real economy has a first world lifestyle. We were the best at print and inflate for decades. What is currently produced here that is of use? If only a tax audit was useful. Reply With Quote
    Jul 27, 2020 | 21:49 59 Gold off $40 from tonight's high. Look out below if 1926 doesn't hold.
    Last edited by macdon02; Jul 27, 2020 at 21:52.
    Reply With Quote
    Jul 28, 2020 | 02:03 60 Governments that print money to pay off debt create economic ruin. Fed desperation is now the last gas attempt to protect Wall Street, that is now showing major cracks . . . .

    And it has sparked civil unrest across many U.S. cities. Income disparity continues to widen thanks to Fed policy. The USD is now under heavy pressure and for good reason. The dollar is now at-risk of losing its global reserve status.

    This deck-of-cards has already fallen over (IMO). Reply With Quote