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  1. #1
    Babylon Candle Venom's Avatar
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    Default Fed announces that it will resort to printing money: the collapse has begun...

    Fed in Bond-Buying Binge to Spur Growth - WSJ.com


    the headline for that article should read: US creates a trillion dollars out of thin air.

    1. Our debt has been financed by the savings of other countries for the past 25 years.
    2. Our need for debt financing has finally surpassed world savings.
    3. Now we are just printing money.

    I have a question.

    The Fed either:

    a) has never heard of the weimar republic
    b) is actually TRYING to monetarize our debt.
    c) actually believes they can keep the "make-believe-wealth" party going by encouraging more spending not backed by savings.

    Out of respect for their intelligence, I'm not even going to consider "a".
    If the answer is "b", we'd be wiping out debt at the cost of becoming a 3rd world country.
    If the answer is "c", they are actively discouraging people from saving (via inflation). While debt can be used to create wealth via new production, only savings can fix a balance sheet irrespective of production. In other words, I don't see what option "c" really does that benefits anyone in the long run.

  2. #2
    mountain surfing nomadic's Avatar
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    well, the difference is that the dollar is still seen as the world standard for currency.

    until the dollar drops in status to say something like... the peso or the ruble, its not that uber bad.

  3. #3
    Habitual Fi LineStepper JocktheMotie's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    well, the difference is that the dollar is still seen as the world standard for currency.

    until the dollar drops in status to say something like... the peso or the ruble, its not that uber bad.

    Doing this is exactly what would cause that to happen though. It creates inflation fears, and gold has gone up like 6% today. This is the step that eventually could lead to the dollar losing its status if things don't improve.



  4. #4
    mountain surfing nomadic's Avatar
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    ^ yeah, it would if the euro & pound didn't lose status as well, lose more status than the dollar... lolz

    its the yen that shines. but either way, i'd imagine most of those bondholders getting their cash back, will just end up buying bonds again anyways. we need lower interest rates to get the housing bottom in shape.

  5. #5
    Nerd King Usurper Edgar's Avatar
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    Quote Originally Posted by JocktheMotie View Post
    Doing this is exactly what would cause that to happen though. It creates inflation fears, and gold has gone up like 6% today. This is the step that eventually could lead to the dollar losing its status if things don't improve.
    Well, the thing is, there isn't really a contender for the dollar's dominance.
    The first runner ups - Euro, Pound Sterling, Yen, have their own lot to deal with right now, and they are not doing any better.

    But in all likelihood, we will have to take a giant bite of an inflation shit sandwich, assuming the world doesn't slip into depression.

    In any case, I am fairly well positioned. I don't have many savings for the inflation to eat away at, and if society collapses, I still remember my Marine Corps training.

    Bring it on, bitches.
    Listen to me, baby, you got to understand, you're old enough to learn the makings of a man.

  6. #6
    Nerd King Usurper Edgar's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    its the yen that shines.
    Not much of a news reader are you?

    Japanese finance minister said Japan's economy hasn't been in this much trouble since WW2.
    Listen to me, baby, you got to understand, you're old enough to learn the makings of a man.

  7. #7
    mountain surfing nomadic's Avatar
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    Quote Originally Posted by Edgar View Post
    Not much of a news reader are you?

    Japanese finance minister said Japan's economy hasn't been in this much trouble since WW2.

    im speaking relative to the other countries of course.

  8. #8
    Nerd King Usurper Edgar's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    im speaking relative to the other countries of course.
    I believe their GDP took a 17% dive last quarter.

    Nothing to brag about.
    Listen to me, baby, you got to understand, you're old enough to learn the makings of a man.

  9. #9
    mountain surfing nomadic's Avatar
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    Quote Originally Posted by Edgar View Post
    I believe their GDP took a 17% dive last quarter.

    Nothing to brag about.
    edgar, i hope u realize how much patience it takes to respond to you. =)

    just look at yen/usd yen/euro yen/sterling charts from the past 6 months.

    the currency markets are a 4 trillion dollar a day market btw. they overwhelm anything you say.

  10. #10
    Nerd King Usurper Edgar's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    edgar, i hope u realize how much patience it takes to respond to you. =)

    just look at yen/usd yen/euro yen/sterling charts from the past 6 months.

    the currency markets are a 4 trillion dollar a day market btw. they overwhelm anything you say.
    Nothing overwhelms the word of The Mighty Edgar.

    Now if you don't mind, I am going to hop into my Civic and spend some mighty greenbacks in the Target's bargain section in order to stimulate the American economy.
    Listen to me, baby, you got to understand, you're old enough to learn the makings of a man.

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