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Our monetary system is insane


bernorange
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10 hours ago, Rusty Shackelford said:

The Fed Is Planning To Send Money Directly To Americans In The Next Crisis

https://www.zerohedge.com/markets/fed-planning-send-money-directly-americans-next-crisis

This is a great idea.  Filtering stimulus thru companies (who end up just stacking cash on their balance sheets) instead of giving it directly to consumers is the primary reason we haven’t been able to efficiently stimulate the economy over the last 80 years, and why we haven’t seen inflation despite trillions of extra dollars being put into circulation.  
 

At first glance the idea of a 3rd mandate for the Fed to fight racial inequality sounds like a disaster in waiting, but I would be open to listening.  To me the unemployment mandate is in effect fighting racial inequality without igniting vitriol.

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9 hours ago, maninblack said:

It's called a social security number

what is called a social security number?  your credit score?  your social security number assignment from the government is synonymous with FICO's calculations?

giphy.gif

 

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9 hours ago, Snake Diggity said:

This is a great idea.  Filtering stimulus thru companies (who end up just stacking cash on their balance sheets) instead of giving it directly to consumers is the primary reason we haven’t been able to efficiently stimulate the economy over the last 80 years, and why we haven’t seen inflation despite trillions of extra dollars being put into circulation.  
 

At first glance the idea of a 3rd mandate for the Fed to fight racial inequality sounds like a disaster in waiting, but I would be open to listening.  To me the unemployment mandate is in effect fighting racial inequality without igniting vitriol.

Why even have an elected body for government?

Lets just have an appointed body of fiscal experts run things.

Democracy is messy. Best just cut out the middle man.

Amiright?!

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45 minutes ago, Dnaguy said:

Why even have an elected body for government?

Lets just have an appointed body of fiscal experts run things.

Democracy is messy. Best just cut out the middle man.

Amiright?!

Not sure I get your point.  The Fed governors are presidential appointments, as is the chairman, who must be confirmed by the senate.  

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On 8/3/2020 at 4:14 PM, Dnaguy said:

Why even have an elected body for government?

Lets just have an appointed body of fiscal experts run things.

Democracy is messy. Best just cut out the middle man.

Amiright?!

One would hope our elected leaders would do the right thing, but we know that is bullshit. 

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4 hours ago, GRHorn said:

 

in december 1930, an ounce of gold bought 295.28 kWh of electricity.  today, an ounce of gold buys 17,225 kWh of electricity.  a kWh of electricity is worth 1/58th of what it once was. 

Edited by elfenix
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9 hours ago, elfenix said:

in december 1930, an ounce of gold bought 295.28 kWh of electricity.  today, an ounce of gold buys 17,225 kWh of electricity.  a kWh of electricity is worth 1/58th of what it once was. 

 

8 hours ago, elfenix said:

in 1933 an ounce of gold bought 3.58 hours of a professional pilot's time.  today an ounce of gold buys 18.17 hours of a professional pilot's time.  pilots are only worth 19.7% of what they once were. 

What point are you trying to make? Because assuming your statements are true, an ounce of gold not just held it's value over the last 100 years, it increased in value (relative to the goods and services you mentioned).  Menawhile, the US Dollar lost most of it's value relative to the same items.

You might argue that had we continued to use gold as money, this would be evidence of deflation, but not all deflation is bad.  Certainly credit deflation is bad, but this is a different thing. 

Quote

...
Monetary economists distinguish a benign deflation (due to the output of goods growing rapidly while the stock of money grows slowly, as in the 1880–1900 period) from a harmful deflation (due to unanticipated shrinkage in the money stock). The gold standard was a source of mild benign deflation in periods when the output of goods grew faster than the stock of gold. Prices particularly fell for those goods whose production enjoyed great technological improvement (for example oil and steel after 1880). Strong growth of real output, for particular goods or in general, cannot be considered harmful.
...

https://www.cato.org/policy-report/marchapril-2008/good-gold

Most people alive today have only lived with fiat money.  The wisdom of centuries past has been lost on them (bold emphasis is mine):

Quote

...
In order for something to function well as money, it must possess six characteristics. Explain each of the characteristics of money as follows:
- Divisible — Money must be easily divided into small parts so that people can purchase goods and services at any price.
- Portable — Money must be easy to carry.
- Acceptable — Money must be widely accepted as a medium of exchange.
- Scarce — Money must be relatively scarce and hard for people to obtain.
- Durable — Money must be able to withstand the wear and tear of many people using it.
- Stable — Money’s value must remain relatively constant over long periods of time.
...

https://www.philadelphiafed.org/-/media/education/teachers/resources/fed-today/Functions_and_Characteristics_of_Money_Lesson.pdf

The fiat Dollar has failed the stable value pillar.  Should the G8/G20/Davos crowd execute a plan to effect a NWO (replacing the dollar as the world's reserve currency with something else), or the middle east start trading oil for something other than dollars, Americans will have a very rude awakening.

 

Edited by bernorange
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What point are you trying to make?

you might as well pick any arbitrary commodity and compare it to gold, rather than a dollar.  and then, it turns out, her observation becomes bullshit.  gold might be an investment vehicle (a shit one at that - in order to avoid the risk of the whole financial system collapsing and people only being willing to take gold, for the period from 1934 to today you'd have given up on $650,000 worth of gains compared to putting $100 in the S&P 500.  yay?).  it is certainly a useful industrial and aesthetic metal, but it's a fucking shitty currency.  the stock is too limited and controlled by exogenous factors - how much was mined, how much sunk to the bottom of the sea, how much was used making computer processors and space probes.  i'd rather have my currency's value set by demand for just the currency part of it and not have to compete with nvidia's need to produce AI processors. 

let's just look at the price of gold.  do we really think the dollar has lost nearly of its value in the last year? (note: i really hate graphs that don't start with 0)

2020-08-08-15-05-38.png

 

 

Menawhile, the US Dollar lost most of it's value relative to the same items.

has it though?  a kWh produced and delivered today is far more reliably delivered, far safer for the employees of the electric co and fuel producers, and much cleaner for the environment than the one produced in 1933.  the end product, though very similar, isn't quite the same.  are safety, reliability and cleanliness valuable?

how about other goods?  the nominal price of a mustang is 10x what it was 40 years ago, but 40 years ago there wasn't a mustang that did 0-60 in 5.3 seconds that would run problem free for the next 5 or 7 years (or maybe more!) while getting 30+ mpg highway and not kill you in the event of a collision.  are those things valuable?  

23 years ago i bought a computer for $2,000 and it weighed 20 pounds, needed a 30 lb monitor, had to be plugged in all the time, and showed only pixelated titties one frame every 30 seconds as the images downloaded.  now for a quarter that or less i can buy a computer that fits in my pocket and can not only show titties in HD in real time but also could record titties in 4k.  all without wires! 

and sure, the dollar has lost value compared to some things like eggs, butter, and pasta.  but those are now 3 or 4 times the price they were 85 years ago.  that's not the rapid descent into valuelessness that the tweeter implies. 

 

 

 

 

 

 

 

Edited by elfenix
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5 hours ago, Rusty Shackelford said:

If you were making an honest comparison between the stock market and gold, the chart would be 1971 - present (for obvious reasons)

1b9778e89d8e609c6290a8747d120791.jpg

i was using the comparison invited by the twit, but ok.  a $100 investment in gold in late 1971 at a price of $42.50 would today be worth $4,863.53 today.  a $100 investment in the s&p 500 on january 2, 1972 (or whenever the first trading day was) would today be worth $12,189.44 cents.

Edited by elfenix
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On 8/9/2020 at 1:04 AM, elfenix said:

i was using the comparison invited by the twit, but ok.  a $100 investment in gold in late 1971 at a price of $42.50 would today be worth $4,863.53 today.  a $100 investment in the s&p 500 on january 2, 1972 (or whenever the first trading day was) would today be worth $12,189.44 cents.

That's way off, according to the data provided here

https://www.macrotrends.net/charts/stock-indexes

https://www.macrotrends.net/charts/precious-metals

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On 8/8/2020 at 3:30 PM, elfenix said:

you might as well pick any arbitrary commodity and compare it to gold, rather than a dollar.  and then, it turns out, her observation becomes bullshit.  gold might be an investment vehicle ... but it's a fucking shitty currency.  the stock is too limited and controlled by exogenous factors ... i'd rather have my currency's value set by demand ...

let's just look at the price of gold.  do we really think the dollar has lost nearly of its value in the last year? ...  and sure, the dollar has lost value compared to some things .... that's not the rapid descent into valuelessness that the tweeter implies. 

 

On 8/9/2020 at 1:04 AM, elfenix said:

i was using the comparison invited by the twit, but ok.  a $100 investment in gold in late 1971 at a price of $42.50 would today be worth $4,863.53 today.  a $100 investment in the s&p 500 on january 2, 1972 (or whenever the first trading day was) would today be worth $12,189.44 cents.

I didn't author the tweet in question, but I suspect the reason gold was singled out for comparison is precisely because of it's history as money.  It is highlighting the failure of fiat money (the current dollar) to maintain a stable value over a long period of time.  Her observation doesn't "become bullshit" if you observe that the dollar has lost value against other things too.  That simply reinforces the point that inflation has eroded the value of the dollar over the last century (or 86 years).  I'm not sure why you think her observation on the loss of value of the dollar since 1934 is so radical.  There are plenty of inflation calculators available on the web will will show you the same thing.   This one from the BLS shows $100 in January 2020 has the same buying power as $5.12 in January 1934:

https://www.bls.gov/data/inflation_calculator.htm

The dollar has lost most (ie. at least 95%) of it's value since 1934.  Inflation and the "inflation tax" are baked into cake.

The only value fiat money provides over sound (hard/gold) money is the freedom for governments to spend beyond their means.  At least, until creditors lose faith in them.  We haven't seen that downside here in the USA yet.  Most Americans likely believe it will never happen.  I think we are getting much closer to that event horizon. 

Edited by bernorange
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23 minutes ago, elfenix said:

there's these things called dividends

True, but also management fees, expense ratios, trade commissions, etc that offset the dividend yield somewhat.

 

Anyway the point is that the dollar has lost it's purchasing power immensely, and the relative rise of gold and stocks priced in USD prove the point.

Edited by Rusty Shackelford
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3 hours ago, bernorange said:

I'm not sure why you think her observation on the loss of value of the dollar since 1934 is so radical.  There are plenty of inflation calculators available on the web will will show you the same thing.   This one from the BLS shows $100 in January 2020 has the same buying power as $5.12 in January 1934:

https://www.bls.gov/data/inflation_calculator.htm

hey that's just an order of magnitude different!

3 hours ago, bernorange said:

The only value fiat money provides over sound (hard/gold) money is the freedom for governments to spend beyond their means.  At least, until creditors lose faith in them.  We haven't seen that downside here in the USA yet.  Most Americans likely believe it will never happen.  I think we are getting much closer to that event horizon. 

don't spend beyond your means types have been predicting that the nation would be bankrupted and sold to its foreign creditors for 3 centuries and it has yet to happen.  creditors don't want the collapse of society.  they don't even want no inflation.  they just want predictability.  and the fiat dollar has given that to them in relative spades. 

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Past performance is not indicative of future returns. It's usually a good idea to at least be aware of your assumptions and biases.  When I started talking about the dangers to the Dollar's global reserve currency throne ten years ago or so, I was more or less a lone voice in the wilderness.   Now Goldman Sachs, the Council on Foreign Relations and possibly the World Economic Forum (hosts of Davos - depending upon how you read between the lines) are publicly questioning or outright advocating the dethroning the dollar.  These are groups with real influence and power.

 

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We've had an actual case of currency collapse right next door, more than once, but probably the most dramatic when the peso went  from about 22/dollar to 3000 or so, back in the big hair 80s.

We now pause for atmosphere:

Seems like anything solid you could have bought with your pesos would have been the thing to do.  Stocks bonds gold beanie babies, you don't know what might win, invest that bumwipe in something.

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  • 5 months later...

For a board that claims to be concerned with all the injustices in our country, the fact that this thread drops off the board for 5 months is just retarded. I saw this NYT oped and thought of this thread. 
 

I think we probably get to UBI relatively soon and the poor end up fighting for increases in their crumbs while asset prices prices balloon until something real happens.

By 2030 the world of global finance is going to be a very different place. 

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40 minutes ago, CowboyFred said:

Nice of you to come back to the cloak room after dotard is gone.  I’m sure your posts will be just as informative as they were before you left for a few months.

Trust me, I have no interest In discussing politics here.
 

The monetary policy of our country is something that concerns people no matter which political party they prefer. I’ll only be posting here or the funny tweet page. 
 

 

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