Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: Gary H who wrote (18999)	9/14/2003 6:42:33 PM
From: sea_urchin	Respond to of 81140

Gary > there is a very strong chance that they will work themselves into the same situation that Smoot- Hawley created as below, or something very close to it, if they choose to impose the tariffs. The difference today is that the Fed can legitimately create as much money as it wishes to because all it requires is debt and that the US government is happy to supply. To this end, within the next 12 months, it is anticipated that the Fed will create "out of thin air" one trillion dollars, an amount greater than at any time previously in history. In the 1930s, the USD was "backed" by gold and in order to create sufficient money for the US to buy its way out of recession would have required a massive devaluation of the currency. You, yourself, have already posted an article describing how it was illegal for US citizens to own gold because of the fear that they would benefit enormously from a possible devaluation. The idea of a major devaluation of the USD against gold persists to this day but it is clear that those who believe it do not understand (a) how money creation today differs from those times and (b) how massive it is. I mentioned in my previous post that tariff increases and devaluation are two different means which are used to benefit local production and thereby increase the amount of money in circulation but, as I discuss above, these methods are no longer required. In fact, if the truth be told, the US can, without devaluation of the dollar or any form of "backing", print money for the whole world. It is necessary to understand that the "evil", if one can call it that, is money itself because once it is perceived as being "valuable" then people do not speculate or invest, ie spend, and prefer to save. Thus the economy grinds to a halt and with that comes all the problems of recession/depression. The particular fear is, in fact, inflation due to the creation of an excessive amount of money chasing too few goods, or whatever jargon the economists use. But, as we see from the CRB index of commodity prices, there isn't very much inflation although we do know that "bubbles" exist wherever one cares to look. Anyway, there's certainly no deflation which would be the prime reason for tariffs or devaluation. stockcharts.com[w,a]dallynay[dm][pd200,2]

To: Gary H who wrote (18999)	9/14/2003 9:34:02 PM
From: sea_urchin	Read Replies (1) \| Respond to of 81140

Gary, here are two articles by Marc Faber which address many of the things which we have just been discussing. ameinfo.com ameinfo.com I have to admit that the scenario which he presents is far more gloomy and problematic than the one I envisage. In fact, as you will read, he seriously believes that the USD has no alternative but to devalue significantly. I believe if this were to happen the economic problems which the US faces would be seriously aggravated and not ameliorated.

To: Gary H who wrote (18999)	9/17/2003 3:17:45 PM
From: sea_urchin	Read Replies (3) \| Respond to of 81140

Gary, why the US doesn't give a stuff about its debts. Because it has the world's financial system by the balls. opendemocracy.net >>>....globalisation was triggered by elected politicians, and central bankers, in both the US and the UK. In the post-Vietnam war era, led by Richard Nixon and later Ronald Reagan, these politicians sought ways to avoid making the “structural adjustments” necessary to the American economy if debts incurred by foreign wars were to be repaid by US taxpayers. Rather, these politicians preferred to disband the existing system of paying off debts by exchanging gold, and opening up capital markets, so that the US could borrow to pay off its debts. This new arrangement also allowed them to print the money in which they paid off those debts (unlike poor countries which have to repay debts in foreign currencies like dollars or sterling). British politicians and central bankers were only too happy to act as US intermediaries in the capital markets. Together they constructed a new financial architecture that effectively obliges central banks of both rich and poor countries to lend to the US – by buying US treasury bills (debt). It is US treasury bills that have now effectively become the world’s reserve currency – where once that reserve currency was neutral (gold). It is this international financial system that makes the US administration so arrogant in its refusal to “adjust” its economy by cutting spending and pay its way – as poor, indebted nations are required to do by the International Monetary Fund (IMF). (The IMF’s double standards in its dealings with poor countries on the one hand, and the US on the other, are breathtaking). It is this financial system which makes US financiers so confident that the rest of the world will continue to finance their nation’s extravagant spending binge. In the words of David Goldman, head of debt research at Banc of America Securities: “America is at little risk for the foreseeable future, simply because the world’s capital has nowhere else to go”(Wall Street Journal, 13 August 2003). <<< PS. Other than this, I'm not particularly concerned about what Real World Economic Outlook or Ann Pettifor has to say.