The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: Real Man who wrote (35211)	2/13/2011 7:57:27 PM
From: ggersh	Read Replies (1) of 71475

So here we are, none the wiser, just following what the banks need. Plenty of assets, no liabilities -g-ng- Definitely an apropo analogy in regards to the spoo's -ng- By 1719, the bank had issued 1.2 billion of livres of paper notes. Not to worry because the Mississippi company had a market value of 4.8 billion livres. So if one looked at the balance sheet, there were a lot more assets than liabilities. But this was clearly nonsense. The only reason that the share price was so high was that investors were able to buy the shares with credit, and on margin. The true value of the company was virtually negligible; the early colonists mostly died. Similarly, many people argued that high levels of consumer debt in the 1990s and 2000s were nothing to worry about, given the high level of asset prices on the private sector balance sheet. But credit growth since the adoption of fiat money in the early 1970s has helped to push up asset prices at a rate much faster than that of nominal GDP. Houses, like shares in Law's company, were bought with borrowed money, sometimes indeed with no deposit; not even Law went that far.

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