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.

Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (26066)	1/5/2010 1:49:52 PM
From: Real Man	4 Recommendations Read Replies (1) \| Respond to of 71452

It is happening. The public opinion remarkably shifted, toward WS being "the crooks", the most despised profession in the society. However, the transition from an artificial market governed by trading in a huge mountain of quant contracts of mind-boggling complexity to a free market with price discovery that is driven by investors will not be easy. I am sure it will happen eventually, but I am less sure the reforms can be implemented smoothly. The problem is that the free market wants to deal with this enormous derivative Ponzi scheme like it dealt with all huge Ponzi schemes in the past, via an extremely painful meltdown. The folks at the top are just as clueless about the whole thing as we are, which is why they fixed the way they did, with the known liquidity fix (to deal with it later). They had to do something, and that was all they could really do to stop the meltdown from happening now, feed the Ponzi. No wonder there is no price discovery now, and the market is once again disconnected from economic fundamentals.

To: ggersh who wrote (26066)	1/5/2010 9:50:06 PM
From: Real Man	2 Recommendations Read Replies (1) \| Respond to of 71452

Objectively speaking, chances of a good outcome from all this are grim. They traded futures on tulips during Dutch tulip mania From John Law to John Maynard Keynes by Steve H. Hanke "Richard Cantillon (1680/90?-1734)—a great economic theorist, financier and advocate of specie-backed money—succeeded in making two fortunes from Law's Mississippi System. The first was made on the rising market for Mississippi Company shares. Cantillon's second fortune was made on exchange-rate speculation. Cantillon spotted a fatal flaw in Law's strategy: the increase in the issue of banknotes unbacked by specie that were required to put a floor under the Mississippi shares at 9,000 livres per share. Accordingly, Cantillon concluded that the monetization of Mississippi shares would result in a surge in the money supply and a sharp fall in the value of the livre against the pound sterling. In consequence, Cantillon took a large speculative position against the French currency—an action that made him a fortune and caused Law to expel him from France. This brings us back to the present and the Law-Keynes linkage. As ever-larger stimulus packages and intervention strategies are contemplated, it might be worth reflecting on the fate of John Law's Mississippi System." cato.org