Very good article. Thanks for the tip.
The incentive for loans has moved from productive ventures that have profits paying the loan service plus a return more than covering the risk to consumption. A loan for consumption by definition consumes wealth as the loan must be serviced from previously retain wealth. An example is a vacation paid via a credit card. This is not to say taking a vacation is bad, rather to point out there are inescapable consequences. The recent employment report that was "so good" supported this contention as about 10% on the new jobs were in wealth building disciplines. Another support for this contention is the rapid growth of public sector debt as percentage of total debt. Government's spend is virtually all consumption and the retained wealth that services the debt is from the tax payer, not the folks on the dole who receive a disproportionate ration of the largesse.
That buildup of debt has also brought forward economic activity as one reason for taking on debt is to pay for a good or service now rather than saving and paying for the same good or service in the future. Incremental to the items discussed in the article, debt is very destructive as the time of slowed economic activity resulting from incurring debt is the concurrent time additional tax revenues are required to service the debt. Less economic activity means less tax revenue leading to more borrowing to service the increasing debt or raising taxes or a combination of both, an economic death spiral. The federal government and local governments are currently borrowing to service debt, fund future liabilities such as pension funds, and provide current services. The governments have entered that death spiral. Sure it is a tough spiral to break, but putting it off only makes it tougher. This country is in dire need of fiscal leadership, something it will probably not get until it is forced on us by the market.
You might be on to something as the share price has tracked the lower Bollinger band for better than a week and over the last 3 or 4 days it has departed, but not so much by share price increasing but follow through on the lower band declining.Moving averages are atrocious and RSI is below 30, usually a value that signals oversold.Fast and slow Sto's are flat lined at very low levels, but that condition can remain for prolonged periods. MACD is suggesting strong sell. All that bad TA suggestion may be saying buy to a contrarian. I continue to hold my position in SSRI and added to another PM position as I believe, as others have said, that this is frustrating to see gold dropping with the global turmoil. It should tun around if not manipulated.
On the manipulation note, in a remark on a blog, a poster said COMEX was actively cashing out contracts for delivery at 25% premium, but I am unable to verify. Anybody have any news on this?
So when is this foolishness going to be reflected in PM and PM stock prices? I keep thinking we should see a secular trend change, but every time it seems just around the corner via TA, a reversal takes place, most likely an orchestrated reversal as rising PM prices will sooth out the Fed's bs. A lot of dollars have been pumped into the economy, the fed being one source, but a much larger source is banks via fractional reserve lending. If we get serious debt defaults in the private sector, dollars will come out of the system very rapidly or the leverage ratio for banks will increase. Probably, it will be a combination of the two, but the later will likely dominate as it takes time for banks to adjust their loan portfolio. We will not see overt documented federal government debt defaults per se as federal lenders are constitutionally protected.
Over at Safehaven punctuation commercial, Micheal Pento has posted an excellent article on this topic that is worth consideration. Central banks buying their government's debt with newly created fiat money, what could possibly go wrong?
When I was a kid, I bought a gallon of gasoline for 19.9 cents. At a low point in the cycle for petroleum products it is roughly ten times that price today. It still costs roughly 20 cents if you buy with two junk silver dimes. It costs a little more than a dollar to by a junk silver dime in bulk. The dime has retained its purchasing power, the fiat has not. Sorry if those facts do not meet your logic requirements, they are just facts.
Since you stated above, " stepping away from the argument(s) defines the win" I assume you mean what you say. I would agree particularly and only if the person making the argument was being genuine. You have refused to answer very direct questions, rather deflect, name call, and accuse a person with a differing view point of " deliberately misinforms(ing) the public." That is not being genuine. You might agree with the positions of Moses, Goldbug, and others, just that you have dug in so deep, you have to defend the indefensible to save face.
One thing is for sure, the content of your posts tells the story of the discussion and who has the done their own thinking and who has not.
No sir, I do not need to understand. My life proceeds just fine without that worthless bit of knowledge.
The gentleman in question is a PhD economist with his own advisory business and teaches two classes at the local university. Please advise the credentials required.
The not in the exact words had to do with discussing the fed and money value over time as taught in school and not that the teachings should be taken to task.
The question was moved to this thread to facilitate your reading the material, sorry for being helpful.
Ic, you do not have an answer so you deflect thinking you are answering a question by asking another question. I am not taking the bait. I wait for your answer.
Sorry, I am not aware of the post you refer to that was not answered. Here is one question directed your way that did not get an answer, only a lot of personal attacks: 'Care to explain what is wrong with the logic in the statement "If it takes more devalued dollars to buy a constant value of goods or services, then logic tells me that each of the devalued dollars has less purchasing power."?'
About that respectful discourse, have a look at the last line of your response, "You are a coward. And a dumb one at that." I have not been disrespectful of you. I have made very pointed comments suggesting you do not read or respectfully consider the posts of others, rather resort to arm waving, accusations, and name calling. I, at this point, do not believe you have an answer and realize your position is indefensible. Rather than admit you need to alter course, you answer with diatribe.
Agree Moses, The lack of direct response is proof they do not have conviction in their posts and that they have not applied rational screening to the garbage they have been fed by anyone who speaks from the democratic socialists agenda. If devalued dollars are not dollars that have diminished purchasing power, then the dollars must have increased or at the very least constant purchasing power. Denial of that basic truth tells me they are following the talking point with irrational non supportable sentiment. They have their right to speak, but that does not extend to my obligation to listen.
I criticized Reagan for not paying for the cold war and not first demanding the $3 in cuts for every tax dollar increase, Bush 41 for breaking 'his read my lips, no new taxes' pledge, Clinton for accounting gimmicks to balance the budget that made him look politically good and his characterizations of terrorists activities as police actions, Bush 43 for his unfunded wars and unfunded prescription drug benefit, and now Obama for about everything he has done, and has not done for that matter. For all the positions I know why I held the position because I did my own evaluation as most rational people would do. Each citizen of the country informed by an unbiased press and expressing opinion as a clearly identified editorial needs to do the same. Unfortunately what we have now is an indoctrinated, not educated, voting public cheer leading with talking points as the cheers. Sanders stating that global warming was the root cause for the Paris attacks? the depths of stupidity are amazing and swallowed hook line and sinker by their loyal non thinking supporters.
Not in the exact words, but I have discussed it with an investment adviser who also teaches and he said I had a very good point.
Complete ignoring the simple request for an explanation is proof positive you cannot answer and must resort to insinuation that you have no way of supporting. Care to explain what is wrong with the logic in the statement "If it takes more devalued dollars to buy a constant value of goods or services, then logic tells me that each of the devalued dollars has less purchasing power."?
Not sure if you saw my post on the other thread looking for a response Ic, it is reposted here for your consideration.
Ic298h, could you please elaborate on " the advantages of using fiat money is taught at every university throughout the world and is used by many central banks thought the world" is an honest teaching when not a single fiat currency has stood the test of time and current fiat currencies are consistently loosing value? If one quality of money is store of value, then I do not understand how the dollar consistently looses purchasing power or how with honest conviction the federal reserve could restate their goal for stable prices to be 2% inflation"
It is not an attempt to reduce my misdeed from a lie to ignorance, it is an honest question. If it takes more devalued dollars to buy a constant value of goods or services, then logic tells me that each of the devalued dollars has less purchasing power.
dhb39399, could you please explain the difference between devaluation and lost purchasing power?
I was just playing around with some numbers wrt the value of a dollar when the fed was created and the present. I have seen several estimates, but they seem to center on the dollar having lost 95% to 98% of its purchasing power during the feds stable prices mandate. To maintain a $100 1913 dollars purchasing power, it takes an interest rate of about 3.9% compounded annually to stay even. It actually is more as taxes are paid on interest income. I can't wait for the fiat money supporters to indicate how this is a small price to pay for "economic stability" or any of the other faux benefits of fiat.
The dollar is not a store of wealth and thus not money. It does well as a currency for exchange of goods and services if you over look the aspects of reporting large transactions to the federal government (one of those freedoms lost). It does very well as a stealth wealth transfer tool from the folks that labor or otherwise earn wealth to those connected.
Price of gold is certainly a major driver, but have a look at what happened to TAHO on reporting last week. It is up 11% on an earnings missing analysts estimates but making the revenue estimates. The earnings numbers are a make if the one time adjustments are added back. It is a suggestion we are near the bottom for precious metals and PM stocks I believe. Another positive observation is that the days the market tanks, the PM stocks are not drug down nearly as much as just a short time back. Yesterday, Dow and SnP were down 1+% and HUI was up. I think I will add a bit Monday if the price does not spike on the tragic news from Paris.
SilverCrest Metals Inc. is the new Company created from the merger of SilverCrest Mines and First Majestic Silver Corp. SilverCrest Metals will be listed on the TSX Venture Exchange with the Symbol SIL. For information regarding the merger please see below.
Taken from their web site
I agree, but the cost to manipulate is getting more expensive and less effective. The more expensive will not slow the money printing fed but less effective may turn out to be ineffective no matter how much money they throw at it.
I think you have fed action prognosis correct, but I believe the action or inaction if you will, is exactly wrong. ZIRP is causing the inappropriate allocation of capitol, taking away income from people who have saved their wealth and foolishly store it in fiat currency, and they are postponing the day of reckoning only making it worse when it comes. It would be better to let the market exercise its price discovery mechanism on interest rates and let the free market sort out the winners and losers. One big loser would be government at all levels trying to service their debt with more realistic interest rates.
There are several examples along the lines of Smoot-Hawley, but one long lasting very damaging was the Merchant Marine act of 1920 or Jones Act which required US flagged ships to transport goods and people between US ports. To be US flagged meant the ship had to be US built with US sourced materials and crewed with at least 75% US citizens. The ship building industry now with a locked in customer based raised prices to noncompetitive and unsustainable levels, shipping companies could charge higher prices for coastwise (between US ports) transport and foreign competition was all but excluded. Limited choices via protectionism is a recipe for stifled economic activity and it goes on today.
Davis Bacon Act of 1931 required government to pay prevailing wage on it contracts. This was a protectionist measure to prevent southern labor from moving north and working for lower wages, preventing labor arbitrage or true free market price discovery. The final result still in effect today is that instead of government getting the most for taxpayer dollars on public projects, the taxpayer is getting the least for his money.
These are good examples of government fixing a problem of their own making only to make matters worse for the taxpayer citizen.