[patience]

Thanks Roccman,
I couldn't have explained that, but it describes my experience on TF. Thanks to all for the breadth and depth of insights here. I value it all very highly.

The sequence of things to come has bothered me for a year, not knowing enough to make analysis. I understand perfectly well what a world with depleted energy can be at ground level, which is bad for an old guy. "No place for old Men", etc. The finance world has been much more difficult for me. But given the input here, and common sense about declining energy, I can conclude a few things.

As energy gets more scarce, we poor folks will be priced out of it, and the labor leverage it offers, so low energy means are the place for me to concentrate my efforts. More savings (I don't have much) can profitably go into non-electric shop equipment, and passive solar heating for home and shop. Cisterns for garden watering will help us, and a wood stove I'm developing that converts easily from heating to cooking, as seasons change. There are a lot more such things we can do.

Retaining some form of cash is required, but not a lot, so I'll probably buy some silver soon, to reduce the effects discussed here. For that I'm favoring junk coins.

We will expand our self reliance for medical needs, which takes some money, and is another area we could be priced out of.

Not having much, I tend to look at the problems that I can solve piecemeal, to get the most bang for the buck. Thanks again, to all.

[MC2]

$this->bbcode_second_pass_quote('mkwin', '')$this->bbcode_second_pass_quote('', 'M')k, a 15 per cent increase, if it occurred, would not begin to replace the losses we are incurring in the destruction of money (debt) through the tens of trillions of derivatives (some say hundreds of trillions).

[roccman]

$this->bbcode_second_pass_quote('MC2', ' ')Got a spare couple of trillion to backstop all this? I don't. Ben B. doesn't, and the bet many are taking is that our .gov does. I don't think so, and that's why I'm not inflationist in my orientation. That's why PMs will drop.

[mkwin]

$this->bbcode_second_pass_quote('', 't')hese are still real losses for someone to absorb. Got a spare couple of trillion to backstop all this? I don't. Ben B.

[shortonoil]

mkwin said:

$this->bbcode_second_pass_quote('', 'T')hey are paper losses across a vast array of companies or funds, which simply transfer to the other side of the contract. So one lot of parties will lose but it will just transfer to the other party.

[patience]

Shortonoil,
Please, for us newbs, what happens when all that money gets destroyed? Okay, we got less money, or at least, the investors have less money, banks can't loan if they don't have reserves, and credit disappears. Net result, everybody's broke, as in 1930's? Got that.

How does it resolve? Is this all contingent upon what Central Banks and Govts do? Or, as some say (maybe you), it is too big for them to do anything significant? What odds do you give that our currency will be inflated to destruction trying to save the banks, yet not be enough, so it deflates anyway?

Sorry if I sound stupid. I can almost tell an economic model from a wooden ship model....

[mkwin]

$this->bbcode_second_pass_quote('', 'I')f this were true ABK and MBI would be selling for $100 per share

[Bas]

biggest commodity bust in 50 years, yet so small it's only a correction really; a sign of things to come?

[MC2]

Impeach Bush over this Bear Stearns shit:

http://market-ticker.denninger.net/2008 ... earns.html

[shortonoil]

mkwin said:

$this->bbcode_second_pass_quote('', 'M')aybe I am missing something, but I just cannot see where the capital would go?

[smallpoxgirl]

$this->bbcode_second_pass_quote('shortonoil', '[')b]mkwin said:

$this->bbcode_second_pass_quote('', 'M')aybe I am missing something, but I just cannot see where the capital would go?

[Homesteader]

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('shortonoil', '[')b]mkwin said:

$this->bbcode_second_pass_quote('', 'M')aybe I am missing something, but I just cannot see where the capital would go?

[smallpoxgirl]

$this->bbcode_second_pass_quote('Homesteader', 'I')'ll hazard a guess that it matters because it is like liquidity vs. solvency matters. Especially when the companies involved are the largest banking and investment companies in the country (world?) with millions of customers, municipalities, pension funds, etc. . .

[Homesteader]

Yeah, I do.

[patience]

If I understand it correctly, we are impacted by all this chicanery when the banks who lose this notional money, can no longer loan money out, because the notional money was their reserve backing for loans.

Businesses like the butcher, the baker, and the candlestick maker all are operating on borrowed money. Without being able to conitually "roll" their notes, they can't make payroll, or pay suppliers, and the whole works comes to a grinding halt for lack of credit to lubricate the process until the businesses can collect their due from customers. Businesses are living hand to mouth like J6P, or worse.

Anybody knows more than me and can explain this better, straighten me out here.

[patience]

It's the American Way--you buy low, sell high, collect early, pay late, and do it all on borrowed money. I think the term is "undercapitalized".

[Ludi]

This is a naive question, I'm sure, but, why are all businesses operating on borrowed money?

(I own a business which does not operate on borrowed money)

[patience]

Ludi,
I'm like you, and solvent, but I think the idea is "growth" at any price. That is, anyone that can raise some significant money can borrow many times that amount if he has good credit history and a good business plan. Then, they go into business WAAAY over their heads in debt, attempting to make a gain on the borrowed money (leverage) as well as their own. This all depends on "positive cash flow". It's a Ponzi scheme, and a vast majority of big business is doing it.

[smallpoxgirl]

$this->bbcode_second_pass_quote('patience', 'B')usinesses like the butcher, the baker, and the candlestick maker all are operating on borrowed money. Without being able to conitually "roll" their notes, they can't make payroll, or pay suppliers, and the whole works comes to a grinding halt for lack of credit to lubricate the process until the businesses can collect their due from customers.

[mekrob]

This is another probably dumb question: would any of this even be possible without fiat money? If we had the gold standard or whatever type of standard besides debt, are massive bubbles and implosions possible?

Just a theoretical question