A Brief History of the Fed’s Uneasy Peace With the White House · Page 5

Free Fall
Auctions

Specials
Auctions

QuickBuy
Auctions

Newly Added
Auctions

Ending Soon
Auctions

Welcome Guest

Forum Terms & Conditions | My Topics

jeebling
Herf-A-Holic

2 years ago

#81

Here’s the 90 year chart for S&P 500 PE. Looks like it is doing just fine at the moment.

https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart

This is the 5 year chart for S&P 500 vs durable goods. I think the thicker chart isn’t really helpful IRT this conversation…at this point anyway. Looks like a minor correction is in the works. Either an increase in durable goods or a decrease in earnings. All part of the business cycle, I understand. And I suppose, just like any cycle, there will be boom and bust events.

https://www.macrotrends.net/2601/sp-500-vs-durable-goods-chart

jeebling
Herf-A-Holic

2 years ago

#82

Here’s a graph on money supply for anyone who’s curious.

https://tradingeconomics.com/united-states/money-supply-m2

DrMaddVibe
Herf-A-Holic

2 years ago

#83

jeebling wrote:

Shutting down the World's economies due to a plandemic is going to have longer lasting issues. It's not like it's a lawnmower being started up for the 1st time in Spring...yeah, some people need to pay for what they did to create that mess.

jeebling
Herf-A-Holic

2 years ago

#84

I believe you are correct. I think with one little bursting bubble we will start seeing other bubbles popping. Congress and POTUS can’t keep spending the way they do.

“ Federal spending is classified in two basic categories: mandatory and discretionary. About 63 percent of the federal budget is mandatory spending, 30 percent is discretionary spending, and the rest is interest payments on debt.”

https://www.cbpp.org/research/policy-basics-introduction-to-the-federal-budget-process#:~:text=Federal%20spending%20is%20classified%20in%20two%20basic%20categories%3A,rest%20is%20interest%20payments%20on%20debt%20%28see%20chart%29 .

RayR
Herf-A-Holic

2 years ago

#85

Is Joey B's chair of the United States Council of Economic Advisers just DUMB or does he have DIMENTIA like Joe?

White House Econ Chair Can’t Answer Simple Question on Monetary Policy

Michael McKay

Incredible.

Jake Bernstein, President Biden’s Econ Council Chairman can’t answer a basic econ question.

Watch this 2 minute abomination

https://www.lewrockwell.com/lrc-blog/white-house-econ-chair-cant-answer-simple-question-on-monetary-policy/

jeebling
Herf-A-Holic

2 years ago

#86

^That is laughable yet tragic. He is begging the question. He sounds like a drug addict explaining why he needs a hit to get over withdrawal symptoms. Disgraceful. Definitely not what Keynes had in mind. Keynes was something of a deficit hawk and his ideas about government spending are fundamentally misunderstood and misrepresented.

RayR
Herf-A-Holic

2 years ago

#87

jeebling wrote:

Javier Milei when asked, "who was John Maynard Keynes?": replied, "He was a criminal". Javier knows a lot about Keynes.

https://www.lewrockwell.com/political-theatre/javier-milei-on-john-maynard-keynes-he-was-a-criminal/

jeebling
Herf-A-Holic

2 years ago

#88

Javier Milei..I’m a fan

RobertHively
Herf-A-Holic

2 years ago

#89

https://www.goldback.com/new-hampshire-goldback-gallery

Supposedly a new medium of exchange, for people that wont go along with Central Bank Digital Currency (CBDC) after the dollar collapses.

They are aLLegEdlY backed by gold and silver, and are accepted as currency in New Hampshire, Utah, Nevada, Wyoming and South Dakota.

https://www.apmex.com/category/19605/goldbacks

If I didn't live in one of those five states, I'd keep stacking the actual metal though.

Read an article on Zero Hedge that mentioned them.

"Live Free or Die" and stuff.

DrMaddVibe
Herf-A-Holic

2 years ago

#90

This is why you should bother...It's Obama's wet dream of Cloward-Piven come to life!

The Fed is already insolvent. Here’s how we think this plays out

On Tuesday, September 15, 1992, the two most powerful financial officials in the British government held an urgent meeting that night to review their plan for when the markets opened the next morning.

The tone of the meeting must have felt frantic… even desperate… because the value of the British pound had been falling for weeks.

Investors and speculators were rapidly losing confidence in the UK government, mostly due to the ridiculous “Exchange Rate Mechanism” (ERM) which essentially pegged most European currencies to the German Deutschemark.

Rational investors viewed the ERM as an almost comical impossibility.

Germany’s economy was light years ahead of everyone else. Germany had vastly higher productivity, far greater savings, low inflation, high growth, and much more responsible monetary policy.

So, to even pretend that a country like Italy or even Britain could fix its exchange rate to the Deutschemark, i.e. to essentially mirror Germany’s economic performance– was a total joke.

Britain joined the Exchange Rate Mechanism in October 1990. Prime Minister Margaret Thatcher had spent years trying to keep Britain out of the ERM, viewing it as giving up national sovereignty.

But Thatcher was about to retire. And the new batch of leaders insisted that pegging Britain’s economy to Germany was the way forward.

Their experiment didn’t even last two years. By the summer of 1992, inflation in Britain was more than 3x German’s. Plus, Britain had a major budget deficit.

Financial speculators correctly recognized, given the massive disconnect between the British and German economies, that Britain would not be able to maintain its fixed exchange rate with the Deutschemark.

So, traders began short selling the British pound, i.e. betting that the value of the pound would fall because the British government would devalue its currency.

The sell-off reached a crisis on September 15th, when the head of Germany’s central bank suggested to the Wall Street Journal that weaker countries (like Britain) would have to devalue their currencies.

That’s what led the British Chancellor of the Exchequer and head of the Bank of England– the two most powerful policymakers in British government finance– to meet that evening.

They knew that the German central bank’s comments would encourage even more traders to dump the British pound. So, the two men pledged to do ‘whatever it takes’ to defend the pound and defeat the speculators.

It didn’t work.

The following morning on September 16th, the Bank of England did everything it could. They raised interest rates, they bought back pounds, they bought government bonds, they made all sorts of outlandish promises.

But speculators didn’t believe any of it. They could see the numbers, and they knew that the Bank of England simply didn’t have the financial resources to maintain such an unrealistic exchange rate.

One of those speculators was George Soros, who famously bet $10 billion against the British pound… far exceeding the Bank of England’s financial resources.

By the end of that day, the British central bank had exhausted its capital and was essentially bankrupt. The British government had to bail them out to the tune of 3 billion pounds, and then announce that they were formally leaving the ERM– proving the speculators right.

This is an important story to understand, because it’s likely that something similar may happen to the Federal Reserve and US dollar over the next several years.

The Federal Reserve is already insolvent.

According to its most recent annual financial statements, the Fed has just $51 billion in equity, versus a whopping $948 billion in mark-to-market losses. This means the Fed is insolvent by roughly $900 billion.

This is a big problem. Remember that the Fed is still a bank, i.e. it has financial obligations, liabilities, and depositors that it needs to pay.

For example, commercial banks like JP Morgan and Bank of America have deposited a total of $3.4 trillion of their customers’ money, i.e. YOUR money, with the Fed. And the Treasury Department holds another $700 billion deposit at the Fed.

The Fed owes money to foreign governments. They owe trillions of dollars from repurchase agreements to banks and businesses across the global financial system.

So, yeah, the insolvency of the Federal Reserve is a pretty big deal. Yet, at least for now, no one is saying a word about it.

But just like the Bank of England in 1992, sooner or later, someone is finally going to say something… and do something… about the Fed’s insolvency.

There’s a good chance that means betting against the dollar… just like speculators bet against the pound three decades ago. And that would ultimately reduce the value of the dollar, increase inflation, and trigger a new ‘Bretton Woods’ agreement in which the US dollar is no longer the world’s reserve currency.

George Soros became known as “The Man Who Broke the Bank of England”. (Though given his malign proclivity to fund progressive activists, he is known by several other names in my household, none of them reverent.)

Within the next several years there could be some Chinese or Russian financier who becomes known as “The Man Who Broke the Fed”.

This isn’t sensational. The Fed is already insolvent by $900+ billion, according to its own financial statements. Social Security is insolvent. The US government is insolvent by tens of trillions… and they further anticipate the national debt to grow by $20 trillion over the next decade.

These are facts, not fantasies.

And this is why it makes so much sense to hedge these risks by owning real assets which are scarce, valuable, and uncorrelated to the US dollar.

Gold is a great example. And as we’ve argued before, even though it’s already near its all-time high, we believe it can go much higher from here.

More on that soon.

https://www.zerohedge.com/news/2024-05-22/fed-already-insolvent-heres-how-we-think-plays-out

Xi...Putin...The Supreme Leader...Soros...or a mix of all of them will take great delight picking apart America and bankrupting it.

So, lets pay for MORE college loans, fund nations that chant death to us, keep the borders wide open, More Leftist Green New Deal crap and while we're at it dump more 100's of billions into that neonazi haven called Ukraine!

Edited by user 2 years ago | Reason: Not specified

Abrignac
Herf-A-Holic

2 years ago

#91

The problem with gold being used as currency is its speculative value as well as its weight along with the extra bulk required to facilitate transactions.

Suppose someone were to seek to purchase a bushel of corn. The average bushel of corn weighs 56 pounds. Today the spot price for such is around 21 cents per pound so the corn itself is worth about $11.76. For sake of argument the person buying the corn brings their own empty bushel so the don’t have to pay for packaging.

So how do we facilitate the exchange of gold for the corn? At the moment, gold is trading for $2,361.66 per Troy ounce. So how much does $11.56 worth of gold weigh? That would be .00497955 of a Troy Ounce. So a pretty accurate scale will be needed to weigh out gold dust. Probably gonna need some type of spectrum analysis tool as well to make sure the gold dust is .99999% pure gold otherwise it’s not worth $2,361.66 per Troy ounce.

Seems a bit involved for simple transactions. There has to be a better way. Not sure the goldbacks are the answer since they only considered legal tender in a few states. Other than in those states they are worthless in terms of normal commerce.

I’m thinking, though not perfect, our current monetary system which is accepted in all 50 states and mostly worldwide is the best thing going until an alternative that accomplishes what cash does today with the same relative ease is implemented.

RayR
Herf-A-Holic

2 years ago

#92

Argg... You don't necessarily need physical gold or silver to make a transaction, Like in the olden days, paper money was 100% backed by gold and was guaranteed redeemable for gold coin at a bank if the bearer requested it. (that was before the horrible FDR stole the peoples gold)
That was intended to keep the system honest.

You want to talk about speculative? The only reason precious metal prices fluctuate is their value is being measured in fiat dollars.
Gold and silver will appear to climb as they have been because Federal Reserve Notes are continually losing purchasing power.

HockeyDad
Herf-A-Holic

2 years ago

#93

We don’t have the gold to put the dollar back on the gold standard! Maybe if gold went to $50k an ounce.

The dollar is backed by the full faith of the US military.

RayR
Herf-A-Holic

2 years ago

#94

We don’t have the gold to put the dollar back on the gold standard! Maybe if gold went to $50k an ounce.

The dollar is backed by the full faith of the US military.

HockeyDad wrote:

Considering that central banks have been buying up and hoarding precious metals like gold with their fiat money, they must be seeing that the writing is on the wall. No fiat monetary system has ever survived in history.

That's where legal tender laws come into play,, the dollar is backed by the full faith and guns of the regime because they fear the peasants might just get fed up and choose real money instead.

RobertHively
Herf-A-Holic

2 years ago

#95

Abrignac wrote:

About 11 or 12 grams of silver would pay for a bushel of corn based on todays spot price.

https://www.monarchpreciousmetals.com/1-gram-999-fine-silver-round-monarch-salmon-fish/

Around here I might be able to get by with trading a fifth of whiskey for 3 bushels of corn. One never knows.

But yeah, like you, I'm going to trade with dollars while I can.

If they get by with the CBDC/Social Credit Score system I truly will drop out of society, completely.

Speyside2
Herf-A-Holic

2 years ago

#96

If it all falls apart, I think a barter system would be effective. Currency in any form would have no value.

jeebling
Herf-A-Holic

2 years ago

#97

I think you’re correct, Spey. Especially if it doesn’t completely fall apart. As long as there was an economy limping along with the damaged system the bartering economy would have the opportunity to flourish. People would quickly learn the value of precious metals and how to trade them. Precious metal brokerages would have the opportunity to accept deposits and people could trade paper on their accounts. You could buy a used car from your neighbor with a check, more or less, that would transfer the value of spot price from one account to another. That’s a very simple way of explaining a complex system but I think you can fill in the blank spots.

Users browsing this topic

Important Information: