Talk of dollar devaluation getting stronger by the day.

[a warren]

Re: Talk of dollar devaluation getting stronger by the day.

A critical question in my view is what wins out over what.

In a steel cage death match between banks and government, if it's Argentina, the banks (empowered by the Anglo-American Banksters and their Federale Friends) seem to win. But what if it's those same Banksters going head-to-head with those same Federales? Then who wins? Do the Bankster parasites suck the U.S. Federale host dry, leaving its rotting corpse to a third world existence and moving on? If you've been a parasite on the biggest host in the world, are not all other alternative hosts rather a step down?

What about a steel cage death match between the dollar and treasuries? EJ says, if I understand correctly, that the dollar is devalued by printing as necessary to avoid defaulting treasuries. I'm not betting the farm on that. When inflation exceeds that of Carter years, I suspect that U.S. politicians will be forced to keep a floor under the dollar even if it means slamming treasuries, at least with Volcker like high rates, if not with more onerous conditions tantamount to a partial default. The essential basis of a currency's strength is political, and to some extent, vice versa. The majority of Congress will do whatever they have to do to avoid a guaranteed election loss.

What about a steel cage death match between the major stock indices and treasuries? The S&P 500 roughly doubled (in nominal value) between 1974 and 1981. Does it do that again, from some bottom this year or next, while treasuries get trashed? That's what I'd bet on if I was forced to place my bets today.

What about a favorite topic of this and many forums, that being gold versus (stocks, treasuries, or dollars)? I like what I read of Martin Armstrong's comments on this. Gold is the counterparty to the political power behind currencies. When the power fails, then the currency fails and gold perserveres (if I read Armstrong correctly.) Until then gold would be more volatile, rising in anticipation of the possibility of such a collapse.

The current steel cage death match, in these semi-final rounds, seems to between the dollar and dollar denominated assets (as Finster patiently reminds us now and then.) Many of us right now are figuring that the assets have just won a round, and now its the dollars turn to win a round.

Here's how I would call these upcoming bouts:

1. Late 2008 to early 2009, it was dollar+treasuries up, dollar denominated stocks, corporate bonds and real estate down.
2. We're just now finishing a round where stocks, etc. are winning over the dollar+treasury team.
3. Next round reverses that, sending stocks, etc. to their final (nominal) low, once again firming up the dollar+treasury team.
4. Continuing massive government debt and increasing foreign revulsion to the dollar+treasury team send them down, much weakened. Nominal stocks and other dollar denominated asset classes rise. U.S. citizens complain of a repeat of Carter-like inflation. EJ says "I told you so -- POOM is undeniably here." Even the deflationists admit it (or refuse to discuss it anymore.)
5. U.S. Banksters and U.S. Congress turn on each other -- Banksters lose. We actually start to see congressional hearings, perp-walks of major financial players (not just side shows such as Madoff or Stanford) and substantial reforms.
6. Dollar and Treasuries go head to head -- Treasuries lose. Volcker's treasury rates are exceeded.
7. Foreign reject their remaining treasury holdings with extreme revulsion, further aggrevating inflation and further complicating the governments debt funding.
8. Major war or major domestic tyranny (governments never go gently into the night, and Americans are too soft for the third alternative - the Second American Revolution.)

P.S. - Observe there is no critical role for gold in this prediction. What I think might be a more important insurance measure is to (1) get a good criminal lawyer on retainer, and (2) tattoo his phone number to my hide. Even though I have led one of the most legally clean and low risk lives possible, a real straight arrow, for over sixty years, I expect that corruption and tyranny will rise sharply, in a manner resembling Russia, and should prepare for the day I wake up in a holding cell for no reason apparent to me.

I know a reason. That G W Bush bumper sticker. Quick, go scrape it off!

[ThePythonicCow]

Re: Talk of dollar devaluation getting stronger by the day.

So your points above are correct in every sense, but the Dr. Hudson scenario (and he's been 100% on the ball so far) shows how events can/will be skewed to the banker's advantage.

A critical question in my view is what wins out over what.

In a steel cage death match between banks and government, if it's Argentina, the banks (empowered by the Anglo-American Banksters and their Federale Friends) seem to win. But what if it's those same Banksters going head-to-head with those same Federales? Then who wins? Do the Bankster parasites suck the U.S. Federale host dry, leaving its rotting corpse to a third world existence and moving on? If you've been a parasite on the biggest host in the world, are not all other alternative hosts rather a step down?

What about a steel cage death match between the dollar and treasuries? EJ says, if I understand correctly, that the dollar is devalued by printing as necessary to avoid defaulting treasuries. I'm not betting the farm on that. When inflation exceeds that of Carter years, I suspect that U.S. politicians will be forced to keep a floor under the dollar even if it means slamming treasuries, at least with Volcker like high rates, if not with more onerous conditions tantamount to a partial default. The essential basis of a currency's strength is political, and to some extent, vice versa. The majority of Congress will do whatever they have to do to avoid a guaranteed election loss.

What about a steel cage death match between the major stock indices and treasuries? The S&P 500 roughly doubled (in nominal value) between 1974 and 1981. Does it do that again, from some bottom this year or next, while treasuries get trashed? That's what I'd bet on if I was forced to place my bets today.

What about a favorite topic of this and many forums, that being gold versus (stocks, treasuries, or dollars)? I like what I read of Martin Armstrong's comments on this. Gold is the counterparty to the political power behind currencies. When the power fails, then the currency fails and gold perserveres (if I read Armstrong correctly.) Until then gold would be more volatile, rising in anticipation of the possibility of such a collapse.

The current steel cage death match, in these semi-final rounds, seems to between the dollar and dollar denominated assets (as Finster patiently reminds us now and then.) Many of us right now are figuring that the assets have just won a round, and now its the dollars turn to win a round.

Here's how I would call these upcoming bouts:

1. Late 2008 to early 2009, it was dollar+treasuries up, dollar denominated stocks, corporate bonds and real estate down.
2. We're just now finishing a round where stocks, etc. are winning over the dollar+treasury team.
3. Next round reverses that, sending stocks, etc. to their final (nominal) low, once again firming up the dollar+treasury team.
4. Continuing massive government debt and increasing foreign revulsion to the dollar+treasury team send them down, much weakened. Nominal stocks and other dollar denominated asset classes rise. U.S. citizens complain of a repeat of Carter-like inflation. EJ says "I told you so -- POOM is undeniably here." Even the deflationists admit it (or refuse to discuss it anymore.)
5. U.S. Banksters and U.S. Congress turn on each other -- Banksters lose. We actually start to see congressional hearings, perp-walks of major financial players (not just side shows such as Madoff or Stanford) and substantial reforms.
6. Dollar and Treasuries go head to head -- Treasuries lose. Volcker's treasury rates are exceeded.
7. Foreign reject their remaining treasury holdings with extreme revulsion, further aggrevating inflation and further complicating the governments debt funding.
8. Major war or major domestic tyranny (governments never go gently into the night, and Americans are too soft for the third alternative - the Second American Revolution.)

P.S. - Observe there is no critical role for gold in this prediction. What I think might be a more important insurance measure is to (1) get a good criminal lawyer on retainer, and (2) tattoo his phone number to my hide. Even though I have led one of the most legally clean and low risk lives possible, a real straight arrow, for over sixty years, I expect that corruption and tyranny will rise sharply, in a manner resembling Russia, and should prepare for the day I wake up in a holding cell for no reason apparent to me.

[c1ue]

Re: Talk of dollar devaluation getting stronger by the day.

1. people run up debts that they can't pay back, and while doing so they support the inflation of the housing bubble AND the consumer driven economy, importing from and supporting China
2 debt bubble collapses; people walk away from their debts either willingly or unwillingly.
3 banks become insolvent b/c the debt is not/cannot be paid back, but government prints/borrows to make banks whole
4. banks are incentivized to lend with the now virtually explicit promise that they will always be bail-out should the banks bets (including conusmer loans) default.
5. the public is getting wind, that there is indeed a "reset" of the system going on, slowly, allowing one to default on debt (which ultimately goes on the public ledger), all for the purpose of enabling the same consumer to start buying with debt again. The society is deflating the debt by simply transferring it onto the public balance sheet, and hoping that nobody (U.S. public and U.S creditors) will really care.

The part which I am counting on is what Dr. Hudson has noted in his latest interview: that the banks are specifically counting on existing bad debts and the associated late fees and interest charges to be bought up by the government once the systemic default tipping point is reached.

Given this scenario - why bother with new credit? There's more than enough existing bad credit. The newer the credit extended, the less likely it will be covered by this government/Fed buyback and thus the more likely it will be eroded by incoming inflation.

So your points above are correct in every sense, but the Dr. Hudson scenario (and he's been 100% on the ball so far) shows how events can/will be skewed to the banker's advantage.

As for the banks being incentivized to lend - I won't believe that until the US also institutes a negative interest policy like Sweden. Certainly the lending statistics don't show any evidence of any incentives to lend - working.

[vinoveri]

Re: Talk of dollar devaluation getting stronger by the day.

Jim,

Some part of the government is kind of trying to induce people to buy more stuff, but the problem is that creation of credit at the individual level means reduction of purchasing power of the debt held already.

Or in simpler terms: the banks already own everything. Any more credit just means free crap for consumers.

And since the bankers own the government...

c1ue, these may all may be true, but I don't think it renders Jim's point of potential reigniting the consumer moot.

Consider what has happened and is continuing to occur:
1. people run up debts that they can't pay back, and while doing so they support the inflation of the housing bubble AND the consumer driven economy, importing from and supporting China
2 debt bubble collapses; people walk away from their debts either willingly or unwillingly.
3 banks become insolvent b/c the debt is not/cannot be paid back, but government prints/borrows to make banks whole
4. banks are incentivized to lend with the now virtually explicit promise that they will always be bail-out should the banks bets (including conusmer loans) default.
5. the public is getting wind, that there is indeed a "reset" of the system going on, slowly, allowing one to default on debt (which ultimately goes on the public ledger), all for the purpose of enabling the same consumer to start buying with debt again. The society is deflating the debt by simply transferring it onto the public balance sheet, and hoping that nobody (U.S. public and U.S creditors) will really care.

Ask the majority of american consumers if they want to get some debt relief and a new increased credit limit at the expense of an additional $20T US debt, and what do you think they will say? Ask the Chinese the same question.

Fairness, rule of law, our children's future etc, you'd think would be front and center concerns, but unfortunately it looks like short-sighted personal gains are the focus of the day and ethic of our generation.

[touchring]

Re: Talk of dollar devaluation getting stronger by the day.

Jim,

I disagree that the US policy is to reignite the consumer.

The US official policy is to 'support the economy', but the US actual policy has been to subsidize the bankers.

All the more confirms that the credit crisis is not over yet.

What China is seeing is no different than what we're seeing: massive subsidies to a small segment of the population. This segment of the population is no more likely to support China's exports than they are to support the overall US economy.

Not totally the same. China's strengthening and pumping free money into state enterprises across the board, not just a specific industry, and especially not just for an industry that does not produce anything concrete in the long run - such as finance.

That's a minor but significant difference.

[c1ue]

Re: Talk of dollar devaluation getting stronger by the day.

So doesn't government action to induce people to buy more freaking stuff on more freaking credit, boost the economy, subsidize the bankers, and continue the debtor on the road to debtor's hell? What's not to like? I don't ask that in a moral sense, but rather in an oligarchal sense.

Jim,

Some part of the government is kind of trying to induce people to buy more stuff, but the problem is that creation of credit at the individual level means reduction of purchasing power of the debt held already.

Or in simpler terms: the banks already own everything. Any more credit just means free crap for consumers.

And since the bankers own the government...

Consider cash for clunkers: 1 or 3 billion bucks vs. the hundreds of billions/trillions spent on banks

This is what Dr. Hudson is referring to when he speaks of the host dying: to the bankers, the American economy is already toast. Time to sauve quie peut - grab what you can and run.

dude, find a less revolting metaphor.

Well, it is rather disgusting but then again, apropos in many ways.

The bankers have found a way into the body of the American economy: via the prybar of money in the interstices of the political system - the controlling center of the United States.

The bankers have used influence in the MSM to brainwash the body of the American people into largely accepting their parasitical practices, and are now injecting the dogma which will convert a previously (ostensibly) democratic and capitalist nation into an oligarchical and socialist one.

Consider the white blob a big extended middle finger to all those crabs who think they are free

[goadam1]

Re: Talk of dollar devaluation getting stronger by the day.

Jim,

I disagree that the US policy is to reignite the consumer.

The US official policy is to 'support the economy', but the US actual policy has been to subsidize the bankers.

What China is seeing is no different than what we're seeing: massive subsidies to a small segment of the population. This segment of the population is no more likely to support China's exports than they are to support the overall US economy.

As Dr. Hudson says: we're in the stage where the host is dying and the parasites are laying their eggs in the about to be corpse.

To apply a picture to the statement - the handy dandy Exiledonline:

http://exiledonline.com/parasites-we...t-sea-insects/

[ATTACH]2064[/ATTACH]

This crab is infested with Sacculina carcini, a kind of sea lice.



Not only is that white blob the sexual organ of the parasite - not the crab, but this crab may well have once been a male:

dude, find a less revolting metaphor.

[Jim Nickerson]

Re: Talk of dollar devaluation getting stronger by the day.

Jim,

I disagree that the US policy is to reignite the consumer.

The US official policy is to 'support the economy', but the US actual policy has been to subsidize the bankers.

What China is seeing is no different than what we're seeing: massive subsidies to a small segment of the population. This segment of the population is no more likely to support China's exports than they are to support the overall US economy.

As Dr. Hudson says: we're in the stage where the host is dying and the parasites are laying their eggs in the about to be corpse.

To apply a picture to the statement - the handy dandy Exiledonline:

http://exiledonline.com/parasites-we...t-sea-insects/

[ATTACH]2064[/ATTACH]

This crab is infested with Sacculina carcini, a kind of sea lice.



Not only is that white blob the sexual organ of the parasite - not the crab, but this crab may well have once been a male:

I don't know how fine a point it is, but how does one reignite the consumer vs. "supporting the economy" by subsidizing the bankers?

If the zero interest rates to banks doesn't (at least not yet) push money into the economy, then how about the government incentives to the average man to spend : "Sen. Johnny Isakson, Republican of Georgia (formerly in the real-estate business), continues to introduce legislation to: increase the maximum [home-buyer's] tax credit from $8,000 to $15,000; expand the credit to apply to any buyers, regardless of income or first-time status.

Bottom line: The cash-for-clunkers program has been so successful that we can expect to see expanded positive incentives for targeted consumer spending. The opportunity to extend the expiring first-time home-buyer tax credit would be a huge political win for the Republicans and hardly a Democrat will stand in its way. An expanded and enlarged home-buyer tax credit could well trigger an unexpectedly large boost to housing demand at a time when mortgage rates are still low and pent-up demand is high. It would not only boost first-time buyer demand, but would also jump-start the move-up and retirement-home markets as well.

Housing is the most interest-sensitive sector of the economy and...the traditional transmission mechanism for monetary policy. It could well be an important transmission mechanism for fiscal stimulus through a broadened and extended home-buyers' tax credit. Home-buying also leads to...expenditures like furniture and appliance purchases, painting and other upgrades, and energy-efficiency spending. The positive impact on the overall U.S. economy could be large."[1]

So doesn't government action to induce people to buy more freaking stuff on more freaking credit, boost the economy, subsidize the bankers, and continue the debtor on the road to debtor's hell? What's not to like? I don't ask that in a moral sense, but rather in an oligarchal sense.


[1] http://online.barrons.com/article/market_watch.html

[c1ue]

Re: Talk of dollar devaluation getting stronger by the day.

China has an export economy that has flourished to some unknown degree to me because of the US consumer. The US's fiscal policy seems right now to be to reignite the US consumer, which were it to be successful again as it was in 2002, then who might mostly profit from such restoration of the US consumer? I think China is probably highest on the list.

Jim,

I disagree that the US policy is to reignite the consumer.

The US official policy is to 'support the economy', but the US actual policy has been to subsidize the bankers.

What China is seeing is no different than what we're seeing: massive subsidies to a small segment of the population. This segment of the population is no more likely to support China's exports than they are to support the overall US economy.

As Dr. Hudson says: we're in the stage where the host is dying and the parasites are laying their eggs in the about to be corpse.

To apply a picture to the statement - the handy dandy Exiledonline:

http://exiledonline.com/parasites-we...t-sea-insects/

186sacculinacarcini102.jpg

This crab is infested with Sacculina carcini, a kind of sea lice.

When a Sacculina gets impregnated, it becomes more demanding. To grow its eggs, it needs all the energy it can suck out of its crab host without killing it. And the crab is happy to oblige. It doesn’t get suicidal, and doesn’t try to bash its head on a rock. No, the crab has become the perfect slave, adopting its master’s needs as its own. The more the Sacculina takes, the more subservient the crab becomes, working overtime to feed its little overlords. The crab stops its molting process altogether, meaning that it no longer increases in size. Nor does it regrow lost limbs or claws. The crab just wanders around, haggard and tired, eating to feed the little Sacculinas quickly growing on its belly.

Not only is that white blob the sexual organ of the parasite - not the crab, but this crab may well have once been a male:

The Sacculina is so thoroughly in control, it has the power to turn male crabs into females—and that it does. Tweaking a man crab’s hormonal mix, the parasite widens its host’s abdomen to make it more feminine and better equipped to carry its young. When the eggs start popping out, it convinces the male that they are chicks—pregnant chicks—and that the eggs they carry contain little crablings. And so these poor suckers climb on rocks and bob up and down to help the little parasite zygotes break free and float away in safety, which is what female crabs do with their young.

[Jim Nickerson]

Re: Talk of dollar devaluation getting stronger by the day.

Very true statement.

But the political reason might be to teach the Democrat party a lesson in 2010 so that Obama will be more amenable to China's demands for American fiscal prudence.

China has an export economy that has flourished to some unknown degree to me because of the US consumer. The US's fiscal policy seems right now to be to reignite the US consumer, which were it to be successful again as it was in 2002, then who might mostly profit from such restoration of the US consumer? I think China is probably highest on the list.

[c1ue]

Re: Talk of dollar devaluation getting stronger by the day.

if the chinese deliberately and dramatically pull the plug, it will be for some very important political reason, as an economic attack on the u.sf. economically, their best interest is to tiptoe away, using their dollar hoard to buy assets or as long as possible. to pull the plug is to throw away their ability to use their dollars to buy things of value.

Very true statement.

But the political reason might be to teach the Democrat party a lesson in 2010 so that Obama will be more amenable to China's demands for American fiscal prudence.

[jk]

Re: Talk of dollar devaluation getting stronger by the day.

We can't call the day, because no one, including Barack Obama knows when the Chinese will stop supporting dollar debt. The Chinese are known to do crazy things like what happened to Rio Tinto.

One thing that I do know, the Chinese hate it when they see something like the following - soon they will show the world who is boss.

if the chinese deliberately and dramatically pull the plug, it will be for some very important political reason, as an economic attack on the u.sf. economically, their best interest is to tiptoe away, using their dollar hoard to buy assets or as long as possible. to pull the plug is to throw away their ability to use their dollars to buy things of value.

[touchring]

Re: Talk of dollar devaluation getting stronger by the day.

Cow that was to happen on the 26th - Let's see what day is it now?

Could happen but I don't think anyone can call the day jmo. Btw I'm starting to get into the "tin-foil-hat" stuff. hee-hee

We can't call the day, because no one, including Barack Obama knows when the Chinese will stop supporting dollar debt. The Chinese are known to do crazy things like what happened to Rio Tinto.

One thing that I do know, the Chinese hate it when they see something like the following - soon they will show the world who is boss.

Ben Bernanke - We Saved the World from Disaster.
- 21 Aug 2009

[rabot10]

Re: Talk of dollar devaluation getting stronger by the day.

Are these rehashes of the old rumors that projected a date right about now, or are these new rumors?

Unsubstantiated allegations of unsubstantiated rehashes of tin-foil-hat rumors ... wow :rolleyes:!

Cow that was to happen on the 26th - Let's see what day is it now?

Could happen but I don't think anyone can call the day jmo. Btw I'm starting to get into the "tin-foil-hat" stuff. hee-hee

[D-Mack]

Re: Talk of dollar devaluation getting stronger by the day.

I haven't heard talk

Ashmore head of research warns of devaluation

Developed world currencies and state debt are on the verge of a historic devaluation as emerging market governments sell out of the asset classes, according to Ashmore Investment Management.


Jerome Booth, head of research at the emerging markets specialist, described global monetary reform as "the most important part of the credit crunch" and suggested shifting emerging market reserves would terminate "a failed trade" by moving away from dollars in particular.


"A lot of people believe the dollar will be OK," he said. "That's a fiction."
He described the strengthening of the dollar after the collapse of Lehman Brothers as a "flight to liability", not a flight to quality, as market participants struggled to pay down their debts.


He drew a parallel with the UK's entry into the first world war. Sterling then strengthened as a reserve currency after sterling debt issuers rushed to deleverage, in spite of the fact the UK was a combatant.


http://www.ftadviser.com/InvestmentA...evaluation.jsp