[MacG]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('JustWatch', 'I')’ll talk at ya later!

[mmasters]

Sure there could be a run on the banks, as in it's possible, but not likely. The perception is that's a thing of the past. Add to that money is practically all electronic these days. If people really want their money then they can go wait in long lines at the bank where they will slowly get their cash out. They will have the armored truck show up and the people with cash accompanied by armed officers willwalk past everyone in the line and go into the bank. There is no need for alarm everything is ok. The fresh money has arrived to serve our needs! lol

Anyways I would have chosen no on the poll option.

When our current convoluted network of fiat currencies go belly up it will be replaced by a world fiat. Anyone who opposes it will probably be taken out either figeratively or literally.

[JustWatch]

Twilight and Masters and Concerned,
Great points and explanations!!! You saved my typing finger’s a lot of work! It’s all easy as pie once it’s understood, isn’t it? I think you’d agree. You all seem very intelligent! Maybe some others will read and get a clue!
Cheers and have a great day!

mmasters,
I didn’t put the answer “No” on the list only because I made a mistake and hit “submit” when I meant to hit “review.” I couldn’t change it. If I had to pick between yes or no, I’d pick No as well. I think you’re probably right.

And for another person who shall remain nameless, I won’t be wasting my time reading any more of your drivel and utterly nonsensical junk, as you are on Ignore! Congratulations! You made the very top spot on my list as Numero Uno!
Cheers!

MacG, are you inplying that you wish to be runner-up #2? I’ll give you the benefit of the doubt for now, but of course that will be very easy for me to provide if given reason! No charge!

[billg]

$this->bbcode_second_pass_quote('', '[')b]Failed Fiat Monetary System Heading for Rampant Inflation Nov 26, 2008 - 05:11 PM By: Clive_Maund:

Paulson's favorite song: "I wish it could be Christmas every day" - well it can be thanks to the Fiat money system. So the trough is about to be refilled, this time with even more feed - $800 billion to be precise. Thanks to the Fiat money system this extra liquidity can simply be created out of thin air, all it takes is a few keystrokes. The cost could be passed on to the taxpayer via higher taxes, but they might balk at this so it's better to stealthily get them to pay for it by diluting the purchasing power of their money.

Better still though is to print up more Treasuries and sell them to stupid foreigners who up until now have had an insatiable appetite for them - could it be that they get a secret kick out of supporting the US consumer society at the expense of their own people?

Unfortunately, however, it would seem that foreigners are slowly wising up, perhaps due to being fleeced spectacularly by Wall St's conspiracy with rating agencies to peddle them garbage mortgage investments and vast tranches of derivatives that will end up being marked to market at a nice tidy 0. So their masochistic desire to support the debt-wracked United States may be waning. This being so it is important to "strike while the iron is hot" and soak them for all they are worth while the dollar is still strong, because once the forced liquidation driving the dollar spike has exhausted itself, and it may have just done so, the dollar is likely to plummet which should be a real disincentive to potential foreign bond buyers. Even this is not an insurmountable problem though as if foreigners' remaining brain cells start to function and they desist from buying Treasuries, then the Fed can monetize them and pass the entire bill on to the US taxpayer via rampant inflation. It's not as though there's going to be a revolution over it.

It's 2008, not 1870 when if the government tried to rip off the public in this manner, they would have found themselves hanging from lamp posts outside their offices. After years of comfy living, television and eating adulterated food and riding around everywhere in automobiles, the American public generally speaking have been effectively neutered, and don't have the stomach to confront the government directly. So the government can and will do just what it likes - and that is manufacture as much money as it takes to dig themselves out of the hole, which as the amount required is fantastic, means that the average Joe in the US, including Joe the Plumber, will have to gird himself for inflation morphing into hyperinflation.

Contrary to what many may think Bernanke and Paulson could actually to be considered to be acting with admirable restraint, for a Fiat money system admits of a universe of possibilities. This is because as a system that is not burdened with the tiresome limitations associated with a gold standard or indeed with any fiscal restraints whatsover, there is really no need for the government to be small-minded, as it could perhaps be accused of being up to now, by being selective about what companies and organisations and projects it supports with public money, as it can simply create whatever money it requires for whatever purpose.

So why stop with bailing out favored banks, AIG, Citigroup, Wall St generally and the big 3 automakers? - why not put a floor under the housing market by having "so far down and no further" floor prices for different categories of property? why not stand ready to bail out any company large or small that is threatened with going out of business, pay for health care and pensions for all, eliminate unemployment by repairing the entire infrastructure of the country, and of course sluice vast funds into the stockmarket to drive it up. Just create more and more bonds and monetize them. Anything is possible in a Fiat system.

So you see it can be Christmas everyday, contrary to what the song says. Sure people are going to have to pay more for the things they want, alot more, but isn't this a price worth paying to keep things humming along? It worked for Robert Mugabe in Zimbabwe who is still in power, did it not?

With the countdown to Christmas underway, many increasingly festive readers will surely be interested to read the lyrics of I wish it could be Christmas everyday and perhaps get the video in http://www.youtube.com going and sing along. By Clive Maund CliveMaund.com

[dissident]

The current stimulus amounts are small compared to the size of the US economy and Paulson et al. are hoping that the world continues to sterilize the inflationary impact of these injections.

They are trying to take inflation into account, otherwise there would have been an $8 TRILLION buyout. But to me it looks like they are overestimating the desire of the world to absorb these pieces of paper.

[billg]

Dissident: Clive was only referring to the latest $800 billion.

$this->bbcode_second_pass_quote('', '[')b]Government bailout hits $8.5 trillion
Kathleen Pender
Wednesday, November 26, 2008

The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News. That sum represents almost 60 percent of the nation's estimated gross domestic product.

Given the unprecedented size and complexity of these programs and the fact that many have never been tried before, it's impossible to predict how much they will cost taxpayers. The final cost won't be known for many years.

The money has been committed to a wide array of programs, including loans and loan guarantees, asset purchases, equity investments in financial companies, tax breaks for banks, help for struggling homeowners and a currency stabilization fund.

Most of the money, about $5.5 trillion, comes from the Federal Reserve, which as an independent entity does not need congressional approval to lend money to banks or, in "unusual and exigent circumstances," to other financial institutions.

To stimulate lending, the Fed said on Tuesday it will purchase up to $600 billion in mortgage debt issued or backed by Fannie Mae, Freddie Mac and government housing agencies. It also will lend up to $200 billion to holders of securities backed by consumer and small-business loans. All but $20 billion of that $800 billion represents new commitments, a Fed spokeswoman said.

About $1.1 trillion of the $8.5 trillion is coming from the Treasury Department, including $700 billion approved by Congress in dramatic fashion under the Troubled Asset Relief Program.

The rest of the commitments are coming from the Federal Deposit Insurance Corp. and the Federal Housing Administration.

Only about $3.2 trillion of the $8.5 trillion has been tapped so far, according to Bloomberg. Some of it might never be.

Relatively little of the money represents direct outlays of cash with no strings attached, such as the $168 billion in stimulus checks mailed last spring.

[ReverseEngineer]

Hyper Inflation or currency collapse, what's the difference? The monetary sytem worldwide is toast either way. You cannot set any value on anything, and there cannot be a carry trade across currencies without some benchmark upon which to base it, so if the dollar fails, so do all the currencies based on the dollar. Is there any currency or country that doesn't trade on the same markets that would be immune to a dollar collapse? The Yen will prosper here? What?

When the dollar doesn't buy anything anymore, some other form of currency will have to come about. Until that time, barter is all you have. Its not the end of the world, just the end of the dollar.

Reverse Engineer

[Zardoz]

Bailout: Pay now, worry later

$this->bbcode_second_pass_quote('', 'W')ith its decision last week to pump an additional $1 trillion into the financial crisis, the government eliminated any doubt that the nation is on a wartime footing in the battle to shore up the economy. The strategy now -- and in the coming Obama administration -- is essentially the win-at-any-cost approach previously adopted only to wage a major war.

And that means no hesitation in pledging to spend previously almost unimaginable sums of money and running up federal budget deficits on a scale not seen since World War II.

Indeed, analysts warn that the nation's next financial crisis could come from the staggering cost of battling the current one.

Just last week, new initiatives added $600 billion to lower mortgage rates, $200 billion to stimulate consumer loans and nearly $300 billion to steady Citigroup, the banking conglomerate. That pushed the potential long-term cost of the government's varied economic rescue initiatives, including direct loans and loan guarantees, to an estimated total of $8.5 trillion -- half of the entire economic output of the U.S. this year.

Nor has the cash register stopped ringing. President-elect Barack Obama and congressional Democrats are expected to enact a stimulus package of $500 billion to $700 billion soon after he takes office in January.

The spending already has had a dramatic effect on the federal budget deficit, which soared to a record $455 billion last year and began the 2009 fiscal year with an amazing $237-billion deficit for October alone. Analysts say next year's budget deficit could easily bust the $1-trillion barrier...

...Once the financial crisis eases, higher interest rates and soaring inflation will be risks. If they materialize, they could dramatically increase the government's borrowing costs to meet its annual debt payments. For consumers, borrowing could become more expensive even as the price of everyday items rise, holding back economic growth.

"We could have a super sub-prime crisis associated with the meltdown of the federal government," warned David Walker, president of the Peter G. Peterson Foundation and former head of the Government Accountability Office.

But even deficit hawks such as Walker acknowledge that the immediate crisis is priority No. 1. Just as with World War II, the government can worry about paying the bills once the enemy is defeated.

"You just throw everything you have at the problem to try to fix it as quickly as you can," said David Stowell, a finance professor at Northwestern University's Kellogg School of Management. "We're mortgaging our future to a certain extent, but we're trying to do things that give us a future."

[patience]

Trying to understand this. Where did the Fed get $2.1 T they gave out so far? I don't think it was just lying around in a boxcar someplace up until they needed it recently. So, is this just fantasy money they got from their imagination? Or did it really exist somewhere? I suppose it was "lent into existence" like the money that banks loan that they don't have, against some other borrower's loan payments they hope to get someday (haven't yet-maybe never will get) which is called an "asset" on their books, huh? If this is true, then it is ALL just promises-to-pay, that in today's world aren't worth a heckuva lot, right?

So, then the dollar (and all other fiat currencies) are just worth something because somebody said so, and others believed him. The first one to blink loses everything then, right? As in Iceland.

[Tyler_JC]

$this->bbcode_second_pass_quote('ReverseEngineer', 'H')yper Inflation or currency collapse, what's the difference? The monetary sytem worldwide is toast either way. You cannot set any value on anything, and there cannot be a carry trade across currencies without some benchmark upon which to base it, so if the dollar fails, so do all the currencies based on the dollar. Is there any currency or country that doesn't trade on the same markets that would be immune to a dollar collapse? The Yen will prosper here? What?

When the dollar doesn't buy anything anymore, some other form of currency will have to come about. Until that time, barter is all you have. Its not the end of the world, just the end of the dollar.

Reverse Engineer

[billg]

$this->bbcode_second_pass_quote('Zardoz', '[')url=http://www.latimes.com/news/printedition/front/la-fi-pricetag30-2008nov30,0,7501177.story]Bailout: Pay now, worry later[/url]

$this->bbcode_second_pass_quote('', '.')..Once the financial crisis eases, higher interest rates and soaring inflation will be risks.

[ReverseEngineer]

$this->bbcode_second_pass_quote('Tyler_JC', '
')Currency markets are all about relative value. A currency moves up or down relative to another currency.

If the dollar falls in value, the relative value of other currencies will rise.

[DaleFromCalgary]

"So, then the dollar (and all other fiat currencies) are just worth something because somebody said so, and others believed him."

In actual practice, fiat currencies are accepted because the government requires them for payment of taxes and other government fees. That is the only reason anyone accepts a fiat currency. In 1936, the Social Credit government of Alberta tried to reflate the depressed economy by issuing its own currency, the Prosperity Certificate. However, the Socreds would not accept the certificates as payment for taxes, and the certificates were driven from the marketplace in a couple of months. This was what gave the Socreds the label of being the "funny money" people.

The collapse of the American dollar would not drive down other currencies. They, and the price of oil, would soar. Oil would go to $200 a barrel in US dollars but an American would be also paying $3 for a chocolate bar as inflation kicks in.

For now and the near future at least, American dollars will still be a world currency. If the American government doesn't compensate the Chinese and Saudis for the toxic paper they bought, then they will stop buying dollar-denominated investments.

[patience]

Dale,

Right. Fiat = decree. Which works inside any given country, but is subject to the rules of the marketplace with respect to other countries. Once the US dilutes the dollar enough to beggar those who are buying our bonds, they don't want any more dollar denominated bonds, which will be deteriorating in terms of THEIR money.

[skeptik]

$this->bbcode_second_pass_quote('patience', 'T')rying to understand this. Where did the Fed get $2.1 T they gave out so far?

[patience]

Maybe they can keep this stuff all in the form of guarantees that don't have to be paid, promises to bail out whomever, and other means to kick it down the road a while. How long before they actually have to cough up the money? If it can be spread out for long enough, banks are supposed to "earn their way out of it", I read someplace, but that would take ages considering the size of their losses. Meanwhile, the US lives like Japan in the "lost decade", with money tied up in zombie banks that don't have money free to loan, while the maxxed out US consumers can't buy because they are in debt and can't get more credit. Lovely.

[dissident]

The US government had already spent $1.1 trillion before the last $700 billion stimulus. So now it is adding another $800 billion for a total of $2.6 trillion spread out over what will probably be two years taking the latest one into account. If Paulson truly did not care about inflationary consequences he would have overseen an injection much, much larger than $1.3 trillion per year.

[patience]

dissident,

Yeah, I noticed that they just floated some sort of $25 Bil loan to Citgroup, but didn't try to take on the whole 9 yards to bail out. It sounded like they are being a bit more careful with the money. But they keep rolling small banks into medium sized ones, and medium sized banks into big ones to avoid having to liquidate anybody. Sooner or later, they gotta deal with all the toxic stuff they collected into a few big ones. Looks like Citi is the first one of those. Now what do they do?

I know, they have a lot of tricks I can't imagine, but the bucks stop somewhere don't they?

[nobodypanic]

$this->bbcode_second_pass_quote('Zardoz', ' ')In other words: Damned if we do, and damned if we don't. We're screwed.

[Micki]

$this->bbcode_second_pass_quote('dissident', 'T')he current stimulus amounts are small compared to the size of the US economy and Paulson et al. are hoping that the world continues to sterilize the inflationary impact of these injections.

They are trying to take inflation into account, otherwise there would have been an $8 TRILLION buyout. But to me it looks like they are overestimating the desire of the world to absorb these pieces of paper.