Of all the reasons we hear for our economic problems worldwide, there is one key factor I never see addressed: definition. People are terribly confused because even the people who are right are so extremely sloppy with definitions that their readers are bewildered. Those who are "in the know" generally translate on the fly, so they can "get it." But the vast majority of readers, say of Pater Tenebrarum, really have no idea what he is saying, or worse, take what he says at face value, To wit:
1. gold is money
2. currency is warehouse receipts for gold in a bank.
3. credit is a loan against gold in a bank.
4. fiat currency is credit against nothing in a bank.
So if you take part of #4 and part of #1, and drop the chain of definition, you get a shorthand "unrestrained fiat money." So we end up with uninitiated people assuming from this that "money" as in "unrestrained fiat money" is as good as gold, and the initiated knowing it is not. Even the initiated sometimes get confused, and in a way that Mish Shedlock has, in yeoman effort, clarified.
The bogeyman of inflation will not automatically happen with printing currency, electronic or otherwise. Inflation will not happen unless all that funny money is spent into the economy. The only entity doing so right now is government, and we will pay in time for that, O, how we will pay, but the really big run-up of funny currency is sitting on the balance sheets of countless USA corporations, unspent. No one is spending for the simple reason big business knows he who goes first will be slaughtered worst. There is nothing but crap to invest in, and if you offer to spend money, absolute crap will come forward. How about some nice Highrise buildings? How about some woefully o overpriced land? How about another dotcom that will never see a profit? No, the people sitting on credit are awaiting a renaissance that will never come, because we cannot have it without falling prices, and as Tenebrarum is pointing out, correctly, our political regime is dependent on the banks, and their ability to create credit out of nothing.
USA can only turn-around by a profound re-ordering of our economic system. Ain't gonna happen. Especially when the conversation cannot even begin, for lack of definition of terms.You'll know the economy is recovering when housing prices fall 60-80%, commercial real estate as well, gas goes down to $15 a barrel, food is cheap, etc. We'll see that after the extreme pain of the crack-up when QE ultimately fails. The longer it is delayed, the worse it is for all of us.
Update: No sooner than I posted this the Nikkei goes down 8%. Let's hope this is a beginning of a massive price drop all along the economies on everything we buy.
Feel free to forward this by email to three of your friends.
The banking cartel relies on the fiat money system remaining intact; the legal privilege of fractional reserve banking provides it with what is an essentially fraudulent profit center unparalleled by any other in the world (fraudulent in terms of traditional legal principles, but not in terms of the current law of course). Not surprisingly, ever since the completely unrestrained fiat money system became operational in the early 1970s, the financial sector's share of corporate profits has inexorably risen and finally eclipsed all other sectors of the economy.
Now Tenebrarum knows well what money it. Today it is gold and silver, as it has been for most of the history of mankind. In WWII, it was money, and you could tell because when Allied businessmen sat down in Zurich to settle up on what Allied businessmen had sold to Nazi businessmen, the Nazis were obliged to pay cash (gold and silver), because the allied businessmen were not extending credit to the Nazis. Cash only. (Or coin, which Lapin suggests is from the Hebrew "chan" and and made it to China as chen and Japan as kane.)
So when Tenebrarum says "unrestrained fiat money" that is shorthand for
2. currency is warehouse receipts for gold in a bank.
3. credit is a loan against gold in a bank.
4. fiat currency is credit against nothing in a bank.
So if you take part of #4 and part of #1, and drop the chain of definition, you get a shorthand "unrestrained fiat money." So we end up with uninitiated people assuming from this that "money" as in "unrestrained fiat money" is as good as gold, and the initiated knowing it is not. Even the initiated sometimes get confused, and in a way that Mish Shedlock has, in yeoman effort, clarified.
The bogeyman of inflation will not automatically happen with printing currency, electronic or otherwise. Inflation will not happen unless all that funny money is spent into the economy. The only entity doing so right now is government, and we will pay in time for that, O, how we will pay, but the really big run-up of funny currency is sitting on the balance sheets of countless USA corporations, unspent. No one is spending for the simple reason big business knows he who goes first will be slaughtered worst. There is nothing but crap to invest in, and if you offer to spend money, absolute crap will come forward. How about some nice Highrise buildings? How about some woefully o overpriced land? How about another dotcom that will never see a profit? No, the people sitting on credit are awaiting a renaissance that will never come, because we cannot have it without falling prices, and as Tenebrarum is pointing out, correctly, our political regime is dependent on the banks, and their ability to create credit out of nothing.
USA can only turn-around by a profound re-ordering of our economic system. Ain't gonna happen. Especially when the conversation cannot even begin, for lack of definition of terms.You'll know the economy is recovering when housing prices fall 60-80%, commercial real estate as well, gas goes down to $15 a barrel, food is cheap, etc. We'll see that after the extreme pain of the crack-up when QE ultimately fails. The longer it is delayed, the worse it is for all of us.
Update: No sooner than I posted this the Nikkei goes down 8%. Let's hope this is a beginning of a massive price drop all along the economies on everything we buy.
2 comments:
Mish has mentioned the huge drop in gold and silver but not, i think, that it is paper silver & gold that is dropping. A friend who deals in gold and silver told me that for every physical oz there are 100 paper ozs. Paper dropping means thing are getting real - he also said nobody is selling the real stuff.
christina
Luxury in demand: High-end brands find a growing customer base:
"Makers of high-end products have emerged from the global recession stronger than before ..."
http://www.washingtontimes.com/news/2013/may/28/luxury-in-demand/
I actually feel optimistic about the US economy, especially since I'm a start-up small business entrepreneur competing on design offering new specialty products targeting rich customers.
Post a Comment