well here we have the burning question don't we ...what is the difference between money and credit ? and what does reducing interest rates have to do with both.
Does Ben need printing presses ? and are you assuming that a drop in rates is the same as printing money ? ,or is it simply increasing confidence and willingess to release the credit already on hold by making it more attractive to the lenders to do so ? ..borrow at 4.75 short to lend at long 6.75 plus now the curve is being realigned where it should be.
Does Ben need printing presses ? and are you assuming that a drop in rates is the same as printing money ? ,or is it simply increasing confidence and willingess to release the credit already on hold by making it more attractive to the lenders to do so ? ..borrow at 4.75 short to lend at long 6.75 plus now the curve is being realigned where it should be.
fibonelli
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Money as Debt animated video
http://video.google.com/videoplay?docid=-9050474362583451279
http://video.google.com/videoplay?docid=-9050474362583451279
I'll try to explain my view . It's by no means clear that the actual money/debt created by the central bank has increased other than they made some redeemable loans to the market to unclog it just as did the ECB etc .
Indeed if the charts posted above are correct money supply (central bank debt) has been contracting implying a reduction in the amount of leaveraged credit available by regulatory means.
What has increased during this millenium is the amount of leaverage that has been derived from 1$ of money/debt. That is ,the banks (not central) and secondary institutions have been very astute at using bogus theory on risk analysis to find a way to multiply leaverage without additional risk.
This has undoubtedly been in a response to the demand for credit and none demand for money (savings) which was in turn created by interest rates which were too low too long.
What we have seen recently is the outcome of that.
Howver ,that brings us right back to the starting point....what is the difference between money and credit and does Ben need to print money and indeed has he and if so how ?
Indeed if the charts posted above are correct money supply (central bank debt) has been contracting implying a reduction in the amount of leaveraged credit available by regulatory means.
What has increased during this millenium is the amount of leaverage that has been derived from 1$ of money/debt. That is ,the banks (not central) and secondary institutions have been very astute at using bogus theory on risk analysis to find a way to multiply leaverage without additional risk.
This has undoubtedly been in a response to the demand for credit and none demand for money (savings) which was in turn created by interest rates which were too low too long.
What we have seen recently is the outcome of that.
Howver ,that brings us right back to the starting point....what is the difference between money and credit and does Ben need to print money and indeed has he and if so how ?
Atilla
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Excellent article. Very sound and precise. It's very difficult to argue against Faber's analysis as it is pure fact. He has touched on all the fundamental issues facing the US. If anything there are additional factors like an aging popullation, health and pensions but I suppose that falls under social and politics not economics. However, it will compound those money problems.
The difference is not between money and credit but between debtors and creditors imo. This is what should be considered.
The answer is the price (cost) of money which is
real interest rates = nominal interest - inflation (won't mention exchange rates)
Faber's article rocks. One of the best I've read. Ignore it at your peril. IMHO.
fibonelli
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He was on Bloomberg very recently.
Very eloquent.
Jim Rogers has a very similar view to Marc Faber.
catracho
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Well Gold we have moved 80 $, must be lots of buyers left at the breakout level !, NEM broke out..48 looks key level to break through now (any significant pullbaclk from here should be a buy)
Great shout on Newmont
It's off like a rat up a drain pipe as David Buik might have said
It's off like a rat up a drain pipe as David Buik might have said
catracho
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Gold 826 - 54 bucks to go to target
may overshoot target - by a few...then expecting a correction of this recent rally
may overshoot target - by a few...then expecting a correction of this recent rally
catracho
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Gold above 900
Now we are above 900 looks like the bulls an grab all the headlines with a print above 1k !:clap:
Although on the weekly charts we are close to being overbought..
Now we are above 900 looks like the bulls an grab all the headlines with a print above 1k !:clap:
Although on the weekly charts we are close to being overbought..
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catracho
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faro0485
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I was hoping to putting money in Gold and Silver by this end of February, but it didn't come down.
Will gold ($800) and silver ($14) retrace (perhaps after $1k and $23), or is this the final phase of the boom? All the way for 3k gold and $100 silver?
I'm sure no one would enjoy carrying spare cash.
Will gold ($800) and silver ($14) retrace (perhaps after $1k and $23), or is this the final phase of the boom? All the way for 3k gold and $100 silver?
I'm sure no one would enjoy carrying spare cash.
Now we have 1K, what next?
Is 1.5K (or even 2K) a ridiculous target? With the current outlook of (with $ below 100 yen, thanks to Fed's TSLC) the financial markets, it is crazy not to long commodities and short the other asset classes (equities, credit, real estate.. you name it..)....
Is 1.5K (or even 2K) a ridiculous target? With the current outlook of (with $ below 100 yen, thanks to Fed's TSLC) the financial markets, it is crazy not to long commodities and short the other asset classes (equities, credit, real estate.. you name it..)....
