Friday, July 01, 2016

PBS On Quantitative Insanity

Column: The monetary bubble to end all bubbles is coming | PBS NewsHour:

We've been over the fantasy of "Quantitative Easing" a few times, but this Yogi Berra quote might help put the issue in common terms.
Yogi Berra famously said he wanted his pizza cut in four slices instead of eight. His “logic” was that he didn’t want to gain weight by eating a lot of slices. However, what matters is not the number of slices, but the total amount consumed.
I use this same "logic" with Fosters 24oz "oil cans". I enjoy Fosters beer and for some reason (conspiracy against me is the reason I believe), it is only available in 24 oz cans. So I like to say that "I've cut the number of cans of beer I drink in HALF!". I can also use the same excuse that "big economies" use -- I'm pretty much twice as big as everyone else, so my beers ought to be as well!

The article is from PBS, so they use "missiles in Afghanistan" as their "government good", but readers of this blog know that it would be FAR better to use "money transferred to voting blocks to buy votes" as the "good" -- over 3/4 of our budget, and those of the Europeans and Japanese as well is the transfer of money from young to old and successful to unsuccessful. The article also doesn't point out that ON TOP of the trillions in printing, all those governments are piling on trillions in debt!
... printing more money does not alter the size the economy; it simply reduces the value of each dollar. The seductive aspect of having the Fed pay for government expenditures is that, unlike taxes, the cost of printing money is invisible. Almost no one is even aware that they have paid for part of a drone strike.
"Fiat currency" -- what we call "money" has no intrinsic value, it is PURELY a "medium of exchange". It's "value" is constantly changing, relative to the price of EVERYTHING. We commonly see gas prices and say "the price of gas went up/down", but in fact it is equally true that the "value of our money relative to gas went up/down".

I've been talking about the "government bubble" for years now, and after a career in IBM I realize to a SMALL DEGREE how long disaster can be staved off in something large. IBM was around a 100 billion dollar a year in revenue company. It takes a long time for something that large to completely die even with horrible mismanagement. The US federal government is around $4T a year, PLUS it has a whole bunch of people here and around the world that would really really like for it not to fail. BUT, even though it is large, it isn't infinite, nor is it "magic".

Governments have two ways to pay for their expenditures. They can take the money from their citizens through fees and taxes. Or they can have the central bank create new money. (Borrowing the money can be thought of as a third way, or it can be viewed as simply deferring the choice between taxing and printing).
Rather boring isn't it? In fact, government is not magic AT ALL! It actually only has ONE way to pay for expenditures -- IT TAKES MONEY FROM IT''S CITIZENS!!!! Taxes are right up front -- the government takes your money. Borrowing takes either your money or your children's money in the future (with interest), printing money lowers the value of every dollar in existence. No magic -- everything the government promises to you is paid for by citizens.

Naturally, the government attempts to hide this any way they can, and they ALWAYS try to tell you that SOMEONE ELSE WILL PAY! ... "the rich, the banks, the corporations, ...". But of course they won't -- the rich, the banks, the corporations HAVE THE POWER. They ARE "The Party" (TP-D) The Clinton foundation alone takes in over $200 million every year! They are the ones primarily benefitting from the giant Ponzi scheme!

"So the ECB program transfers money from European savers to the largest, richest companies in the world. What was the response to the ECB’s bond buying plan? Was there outrage at this transfer of wealth? Did Senators Elizabeth Warren and Bernie Sanders lead “Occupy ECB” marches? No, exactly the opposite happened: Stock markets around the world rallied after the announcement of more European printing."
With Christ, the population was "like sheep who have gone astray", without Christ (religion, culture, values, tradition, family, community, truth, etc), we ARE SHEEP!

It's a bubble, it WILL burst -- the question is not "if, but when". So HEDGE ... have some metals in your portfolio, and maybe a lake place where you can catch catfish off the dock! ;-)
'via Blog this'

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