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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: THE ANT who wrote (87564)	2/28/2012 11:55:39 AM
From: elmatador	Read Replies (1) \| Respond to of 217781

I am reading. Thanks. I will go to the bottom of it.

To: THE ANT who wrote (87564)	2/29/2012 6:27:52 AM
From: THE ANT	Respond to of 217781

MMT says a country with its own currency can never default unless they choose to.They just print as much as they want.Deflation is not possible as long as you print (choose to spend more money than you collect in taxes).The only limit is inflation.When you create true inflation there is little benefit in printing more (unless like the US you are trying to decrease future pension liabilities in which case you are just shifting money from future liabilities to people working in the here and now----you are also lowering your currency so the US can compete against China and the rest of the world by having their incomes and housing come up to ours without ours going down to theirs) You do not need to tax as you can print.An example--as long as productivity grows 4% you could run government on 4% of GDP and never tax anyone with no inflation.If you spend more than 4% you will create inflation unless you tax to hold down demand.As the world is fighting deflation you can print a lot without causing inflation-look at Japan. In a deflationary world with a rising currency and the incredible ability of capitalism to produce growth/wealth/technology it will be hard to create much inflation in Brazil even with falling ratesIf you think the Real is high now wait until TJ's scenario of the Chinese stopping their printing in 6-14 years.Everything you witnessed happen in Brazil in the last 10 years will happen their and other places in Asia.You see Brazil choose not to print and enjoy the good life now.The Chinese would like to play the game for another 6-14 years to boost their growth by some percentage more a year until then. At that time all commodities will rise greatly in $ in a short period of time, one billion Chinese will increase their consumption like the Brazilians have and the great reset will have arrived

To: THE ANT who wrote (87564)	3/17/2012 2:48:21 AM
From: elmatador	Respond to of 217781

High interest rates as Root cause of inflation: from the official Bank Rate to inflation Changes in the official Bank Rate then affect the whole range of interest rates set by commercial banks, building societies and other financial institutions for their own savers and borrowers. It will influence interest rates charged for overdrafts and mortgages, as well as savings accounts. A change in the official Bank Rate will also tend to affect the price of financial assets such as bonds and shares, and the exchange rate. These changes in financial markets affect consumer and business demand and in turn output. Changes in demand and output then impact on the labour market - employment levels and wage costs - which in turn influence producer and consumer prices. http://www.bankofengland.co.uk/education/Pages/targettwopointzero/inflation/ratesaffectinflation.aspx Now I bring this to the Brazilian situation today. When Brazil’s central bank increases its interest rates, its effects percolates throughout the whole economy (as explained above) causing inflation. Who is got money out of thin air? The depositors who own the money and lend it to those (big taker is government) who do not have money but need it. The Central Bank knows that depositors funneling money from lower interest rates countries, are getting money for nothing and imposes IOF charges. But how about hyper inflation of the 80's and 90's, you may be asking? That was plain printing as root cause of inflation: When Brazil could not have enough depositors to lend it money, it also had higher inflation. Because the money printed effects percolated throughout the whole economy causing hyper inflation. Who is got money out of thin air? Government! A big taker who do not have money but need it. And the economic policy was devised to keep civil servants and state owner enterprises from suffering the effects of the recession.

To: THE ANT who wrote (87564)	3/17/2012 3:15:15 AM
From: elmatador	Read Replies (2) \| Respond to of 217781

Why would the natural effect of low interest rates be a house bubble? Let's look on how asset prices are influenced by the interest rate: Below is what has been the prevalent situation in Brazil: 1) High interest rates discourage investors in putting their money into property and company shares. This lowers the demand for these assets and their price fall. 2) Lowering the interest rates has the opposite effect. Investors find more attractive to put their money into property and company shares. This increases the demand for those asset prices and and their price increase. The above is what the Central Bank trying to do over the next two years in Brazil: You said: Rates will drop and real housing bubble on the way. I'm trying to discern here why this would be the automatic outcome. For that I have to go back to the monetary policy of the US post 2002 and its housing bubble. The FED lent money to commercial banks at low rates expecting it to lend it out to the economy but commercial banks sensed no one was worth the risk. Remember this was the aftermath of Enron, World Com and the tech bubble. Commercial banks took that money and lent to the real estate sector and farmed out the risk using the Credit Default Swaps as the mechanism and the rest his history. I think this was very much particular to the US and for a very much particular time in the country. As you said Brazil passed by that because they were less sophisticated than the developed world financial system. But there is more. In the case orf 2) above, Brazil have got much more asses for money to flow to rather than building and selling houses and reselling it again. Yes, that can be a component. Will work similar to car market. There is a defict of houses and banks would find takers to improve housing conditions. And people would move up to a better place but won't be the only asset for money to flow to.

To: THE ANT who wrote (87564)	3/17/2012 5:18:40 AM
From: elmatador	Respond to of 217781

It is not the economy. It is Economics. The theory! Economic theory varies according to stage of development of a country. To each country, giving its stage of development, a certain economic theory applies. But economics tend to see themselves as scientists. An exact science in which things can be explained mathematically. That is not so. Economists are observes of the society: the inter-relations between government producers and consumers of goods and services and its interrelations. Based on that they can create a theory to explain it. Just as a tool to start asking questions about economics. Brazil after the 60s, had the problem of looking to US and Europe economic theories and that was its downfall. Brazilian economists have a lot to explain in the current environment. They took theories derived from the developed countries stage of development and applied them to Brazil. Developed countries did not need growth. Brazil need to grow by leaps and bounds. Developed countries needed low unemployment, low inflation and stable currencies. Developed countries did not need growth. They needed to cruise along. All economic theories were about how to achieve that. Today what Brazil needs is to violate the rules of the economics game: Reduce government consumption That permits the reduction of interest rates That in its turn reduce the value of the Brazilian Real Which reduces inflation Economy growth accelerate. People don't see the sense of state interference in the economy in countries in the stage of development of Brazil and China. They do not know the theory that substantiate that economic growth.