Quantatative Easing, which is a euphemism for monetizing the debt.
Yeah, that's pretty much it, except I don't think too many people would call QE a euphemism. QE is one form of debt monetization, and debt monetization does have a euphemism: printing money.
And I argue that regardless of my sources, these sources have some points that are true. You can argue otherwise. Let's see the documentation.
Barron's articles are likely to make some legitimate points. Your other sources, especially on YouTube, not so much.
The world is always undergoing changes and one of the main problems in this world is greed.
You may as well say that one of the main problems with the world is people.
However...
Percy writes:
The big losers when inflation begins rising are holders of fixed-rate debt. If you truly believe we're about to enter a sustained inflationary period then borrow as much money at fixed rates as you can because you'll be able to invest it at higher rates and pay off the loans in cheaper dollars. The easiest way to do this is to mortgage your condo, though my guess is that it's already mortgaged to the max, probably at least a couple of mortgages, am I right?
Not even close. I owe nothing...nada...zero on this condo and I intend for it to stay that way. I may have been born at night but not last night!
Apologies for assuming your financial mismanagement was across the board. Should I also assume your condo fees are paid up? How's your credit card debt? Is your vehicle worth less than the loan? Sorry, it's just hard to believe that someone who can be taken in so easily about gold is otherwise spic-n-span financially.
I just Googled the historical annual return for gold, and a lot of sites put it around 10% going back to the 1980's. Other sites say gold has a spotty record as an investment, putting its annualized return at around 3%, though I don't know what time period they're looking at. So I'll do my own calculation using the average annual price from 1979 until 2021 (I was going to start at 1980, but that wouldn't have been fair since gold spiked that year):
Year
Average Price of Gold
1979
$307.01
2021
$1799.13
Oh, gee, what do you know, the annualized return is only 4.3%. Do you know what the price of gold would be now if the annualized return since 1979 were actually 10%? 18,000/oz! If those YouTube guys have been talking about 10% historical returns then since the current price of gold is not $18,000/oz but only $1800/oz, guess what? They're lying! Even if you go back to 1970 and $32/oz the return is only 8.22%.
You said you bought $40,000 in gold in 1993, so let's look at what the annualized return has been since then:
Year
Average Price of Gold
1993
$360.05
2021
$1799.13
The return was 5.92%. Not bad, but beaten badly by the stock market as measured by the Dow which has generated an 8.4% return.
But the original point was about inflation. With inflation the big losers are not consumers, whose wages, at least historically, have tended to keep up with inflation (with a lag), but holders of fixed-rate debt.
quote:The federal government’s interest payments depend largely on interest rates and the amount of debt held by the public. Other factors, such as the rate of inflation and the maturity structure of outstanding securities, also affect interest costs. (For example, long-term bonds generally carry higher interest rates than do short-term bills.) Interest rates are determined by market forces, such as the supply and demand for Treasury securities, and the policies of the Federal Reserve.
This is why the Fed has been checkmated. They cannot afford to raise interest rates, which was the main way that Volcker fought inflation in the late seventies early eighties.
Your excerpt from the definition of net interest from Federal Net Interest Costs: A Primer has nothing to do with the arguments Petrou advanced for why the Fed was checkmated (in essence, hemmed in by circumstances and its own responses to them). I'm not going to waste my time explaining why you're wrong and what the correct understanding is because when I do, when anybody does, you just ignore it and repeat your misunderstandings all over again.
History shows that inflation was only contained through rising interest rates.
quote:Despite historically low-interest rates, this significant interest cost is the result of high levels of debt. This cost could be even worse if interest rates rise. Each one percent rise in the interest rate would increase FY 2021 interest spending by roughly $225 billion at today’s debt levels. Growing debt levels not only add to the likelihood of such increases, but also the cost and risk associated with them.
There's massive irony here. This is one of the very few times you've quoted a source that actually does support your claim (that rising interest rates cause immediate commensurate increases in interest payments on the national debt), so congratulations, but unfortunately you quoted from a webpage that I already noted had one significant error, and you've managed to find another.
I'm going to regret wasting my time explaining this, but anyway...
Your quote claims that "Each one percent rise in the interest rate would increase FY 2021 interest spending by roughly $225 billion," and that is obviously false. When interest rates rise then payments on interest can only increase if the debt is refinanced. The average maturity period for financial instruments funding the national debt is over five years, so only about 20% of the debt would be refinanced in any given year. If interest rates were to rise by 1% then over the next year only $5.8 trillion of our national debt would be refinanced, and a year from now our annual service of the debt would only have risen by $58 billion, not $225 billion.
Well, what mystifies me is how and why you are so convinced that you have things right.
If you can, answer me a couple of questions to the best of your understanding.
1) Do you believe and/or agree that the purchasing power of your money is decreasing year by year? If not, why? I have seen statistics that essentially say that a 1940 dollar is worth 5 cents in today's money.
When grandma told us that bread only cost a nickel, we can find a bargain loaf for just over a dollar today. The bread is the same size.
Inflation has been defined, among other ways, as too much money chasing too few goods. Note that even as the money supply is increasing, there are growing supply chain shortages.
"A lie can travel half way around the world while the truth is putting on its shoes." ~Mark Twain " *** “…far from science having buried God, not only do the results of science point towards his existence, but the scientific enterprise itself is validated by his existence.”- Dr.John Lennox
“The whole war between the atheist and the theist comes down to this: the atheist believes a 'what' created the universe; the theist believes a 'who' created the universe.” - Criss Jami, Killo
“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.” — Leo Tolstoy, The Kingdom of God is Within You (1894).
Sometimes I think that you liberals could care less about the US Middle Class when you can help the world.
I've told you flat-out that I couldn't care less about the US middle class. If you read my posts it wouldn't just be a vague suspicion.
Our beloved Prime Minister, Justin Trudeau, is constantly telling us that he's "working very hard" to buck up the middle class "and those struggling to join it". I, for one, am not struggling to join the middle class.
Phat writes:
The thing is, the world is connected to the dollar...
That's just a historical artefact. It used to be the pound.
Edited by ringo, : fixed quote
"I call that bold talk for a one-eyed fat man!" -- Lucky Ned Pepper
Well, what mystifies me is how and why you are so convinced that you have things right.
It isn't that I'm so sure I'm right as that I'm able to muster facts and reason in support of what I think true and you're not.
1) Do you believe and/or agree that the purchasing power of your money is decreasing year by year? If not, why? I have seen statistics that essentially say that a 1940 dollar is worth 5 cents in today's money.
Are you seriously asking if I know there's inflation every year (deflation is rare - we had a deflationary year in 2010 after the mortgage security financial collapse). Here's a chart of real wages in constant 2017 dollars, it's the red line. There's inflation every year, and there's wage increases every year. Sometimes wage increases keep up with inflation, sometimes they don't:
No one here thinks inflation doesn't exist. Everyone here thinks your prognostications about the coming inflationary apocalypse are driven by your susceptibility to YouTube snake oil salesmen.
Phat, I was an optician and I made $400 a month salary.
Gas was about a quarter a gallon.
My rent was $90.00 a month and that included all utilities.
Stop thinking in terms of one dimension.
Minimum wage was about a dollar an hour.
Yes inflation happens but so does wage increases.
The problem is the willful ignorance of folk like you and a significant percentage of the US voting population; YOU elect and support people that fuck you. That's not their fault, it's YOUR fault.
Stop believing the Snake Oil Salesmen and actually learn the basics.
In 1969 Hess gas was 29.9¢/gallon, they pumped it for you, checked the oil and tire pressure if you wanted, and gave you a free glass. There was a gas station in Freehold (NJ) that had gas for 25.9¢/gallon.
Things are much better now. Gas is $3.099/gallon, you have to pump it yourself and check your own oil, and good look finding an air pump.
Everyone here thinks your prognostications about the coming inflationary apocalypse are driven by your susceptibility to YouTube snake oil salesmen.
And
jar writes:
Stop believing the Snake Oil Salesmen and actually learn the basics.
First of all, not everyone who sells or trades in gold or silver or who writes a book is a snake oil salesman. Sometimes I honestly think that it is you guys who are actually ignorant of what is happening. I recently read a book (or rather listened on Audible) called Collusion: How Central Bankers Rigged the World.
It so happens that Google invited the author to their Talks at Google series to share her perspective. Nobody here will watch this, so I dont know why I am wasting my time...but I will try and clip some significant points that she makes out of the transcript and allow my EvC sages to laugh it all off as more snake oil and more con. The google staff questioned her quite thoroughly on her book and she answered them.
Lets discuss the transcript. I am not convinced that she is simply selling snake oil. She has credentials.
Read the transcript from 35:58-40:00 (roughly) and here the answer to one relevant question from the audience.
Edited by Phat, : added transcript reference
"A lie can travel half way around the world while the truth is putting on its shoes." ~Mark Twain " *** “…far from science having buried God, not only do the results of science point towards his existence, but the scientific enterprise itself is validated by his existence.”- Dr.John Lennox
“The whole war between the atheist and the theist comes down to this: the atheist believes a 'what' created the universe; the theist believes a 'who' created the universe.” - Criss Jami, Killo
“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.” — Leo Tolstoy, The Kingdom of God is Within You (1894).
Phat, I hope you realise that there is a distinction between your claims to have listened to qualified people and those people supporting your assertions.
I will admit that the ideas are controversial. What I don't see is that all of what I listen to is snake oil. I honestly think that the system is broken.
"A lie can travel half way around the world while the truth is putting on its shoes." ~Mark Twain " *** “…far from science having buried God, not only do the results of science point towards his existence, but the scientific enterprise itself is validated by his existence.”- Dr.John Lennox
“The whole war between the atheist and the theist comes down to this: the atheist believes a 'what' created the universe; the theist believes a 'who' created the universe.” - Criss Jami, Killo
“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.” — Leo Tolstoy, The Kingdom of God is Within You (1894).
In my case I see you claim that gold should be rapidly increasing in price, you say it isn’t because the banks are holding the prices down - but the respectable sources you cite suggest that the banks are keeping the price rising.
So it looks to me very much as if the idea that the price of gold should be steeply rising is “snake oil” you’ve been sold, and that the bank’s involvement is just an excuse for why it hasn’t happened. You certainly did not get it from the sources you cited.
Good grief man when are you going to understand the system is not broken it is rigged ... and not in your favor.
Gold/silver/etc as an investment hedge against inflation and other nasty things like complete social collapse, may be prudent in a portfolio of $$$billions but means nothing in the asset base of a Denver grocery clerk no matter how many videos he watches. At this level he is nothing more than a willing fee looking for a dealer.
It has been said before, Phat, but you didn't listen.
If our economy were as bad off as you and your Investments-R-Us sources allege then the big boys would be buying everything ... at a premium ... not selling ... at a premium. So would all the rest of the 1%. But, in this economy, the real one Phat, generating premium fees is still more valuable than the product.
You are the sucker that generates the hucksters fees convinced your investment will shield a few dollars from inflation. And, you're right. It will. If a war starts tomorrow and we get a rapid hyper-inflation, the boogyman you've been sold. If not, well then ... Congratulations. P.T. Barnum's progeny thank you for your business.
Actually, I thought about what you said even before you said it. If Gold and/or silver are going to be worth a lot why on earth aren't the wealthier people than I buying them up as well? Then it occurred to me that some of them probably were.
Even conservative investment advisors recommended that one have 5% of their net worth invested in such commodities. 5% of 5 million dollars is 250,000.00
So yes, you do have a point. What gets me is that the logic that I see you guys fail to see. Never before in history has there been as much monetizing and inflating of our currency as has the US done since 2008.
"A lie can travel half way around the world while the truth is putting on its shoes." ~Mark Twain " *** “…far from science having buried God, not only do the results of science point towards his existence, but the scientific enterprise itself is validated by his existence.”- Dr.John Lennox
“The whole war between the atheist and the theist comes down to this: the atheist believes a 'what' created the universe; the theist believes a 'who' created the universe.” - Criss Jami, Killo
“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.” — Leo Tolstoy, The Kingdom of God is Within You (1894).
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