http://www.federalreserve.gov/newsevents/press/monetary/20090318a.htm

Remember this press release when inflation starts. It's not what Obama planned to spend, and it's not what has been spent already.

This is the Fed, printing money...

Here's a link to the Kos diary that linked the press release above.

http://www.dailykos.com/storyonly/2009/3/21/711134/-We-Will-We-Will-Rock-You.-Th e-$$$-Was-Just-Devalued.

I meant to put a question mark on the headliner.

Discuss?

This is scary stuff!

Going to use this thread to post up some currency and TARP ramblings too.

The Deutche Banks exposure ALONE to this mess is 80 percent of Germany's GDP! That's why so much TARP money is going to foreign banks.

http://www.nytimes.com/2009/03/21/business/21bank.html?_r=1&hp

And another 2 trillion.

Some are saying dollars ended up being worth 5 to 15 percent less on this last Wed.

....The main reason I am against commodies futures trading. Commodites which includes basics food/fuel become a defacto floating currency. You may not buy a million bushels of corn or winter wheat or, ten thousand barrels of oil, but you wind up paying for the actions of others trying to pick up profits in excess of interest earnings.

Without currency being tied to government holding of HARD assets, gold/silver, there is a risk of people being held hostage to necessities trading on an equal footing as currency. You saw an increase in food prices as a result of increased ethanol production. much of that was driven notbuy actual use, but rather investors driving up the price. It comes back to earning cash at several levels without adding value and the end user has to pay more for the product reducing the available cash for other needs/wants.

four dollar a gallon gasoline certainly helped derail the economy, and the downside was that once producers got a taste of that level they believe the hundred dollar a barrel price became the standard. Anything less is "undervalued".
Same with Gold. 21.87 was the value for years, then 35.00, then free floating, 100.00 an ounce was a fair price, once it hit 650, and fell way back, 650 became the new "norm" anything less was touted as a buying opportunity. For years we have heard NOW IS THE TIME TO BUY GOLD! well, for many, now IS the time and we see the volitility, over a thousand, back down to eight hundred, now rising again. The misnomer is that the rising price is a hedge against devauled dollars and inflation. The truth is the value is only a paper gain until the time it is sold. Now, if you bought at 800, and sell at 2500, you convert back to unbacked inflated paper dollars. While you will show a net gain in dollars, that gain will be eroded by the increased cost of other tangibles.

Look to the past where you might have earned five dollars a day, but a loaf of bread was a nickel.
The economic growth came when wages outpaced costs. if you could spend time making 7 dollars a day while spending a nickel for the bread, you had an additional two dollars to spend on something else. when bread rose to 8 cents a loaf, but you only made 7 dollars a day, the result was the loaf of bread now took a greater percentage of your earnings.

We entered a cycle where costs of goods increased faster than earnings. (inflation) Increased prices created a demand for two income households to decrease the ratio of cost/income. An unfortunate side effect was the increased wages created a greater demand for products at lower costs resulting in increased imports. those increased imports at lower costs helps cap wages by loss of employment over a broad spectrum ie: manufacturing jobs replaced by service jobs. With a stagnating economy, there is a need to control cost by trimming those service jobs. Though you have a reduction in income, you don't have an equivelent reduction in prices (inflation) With fewer items manufactured here, you have a loss of control on prices. What you see is prices fluctuating daily at the gas pump based on the price of a barrel of oil for that day, increased food prices, not necesarily due to demand, but rather investors setting the price short selling, and sticking someone else with a product which may or may not actually be worth it's price.

The fact is with a WORLD Economy, your cost is not based on what the local supplier can deliver a product for, but rather on what someone far away might be willing to pay to keep their economy growing. So if AMERIOIL was paying ARABOIL 25 dollars a barrel and all was fine until CHINAGAS stepped in and was willing to pay 50 dollars. your price just doubled. When farmer Bill agrees to sell his next wheat crop to AGRI CO for 3 dollars a bushel, your bread price is determined by INDIAWHEAT being willing to pay 8 dollars a bushel. in the interim, farmer Bills wheat was traded a dozen times before actual delivery.

We went off the gold standard in 1933, and paper currency was not redeemable for silver after the mid 60s. It's all catching up. So despite the fact that many people hold United States Curreny that states PAYABLE to the bearer on demand one dollar silver. those bills, while still LEGAL TENDER at their face value will NEVER be redeemed by the government for one dollar in silver coin despite the fact that the U.S. government currently issues a 90 percent silver coin with the stated value of one dollar. This coin is sold by the government at a profit in excess of current silve valuations.

This simple action means that the govenment wwill not honor past obligations and the current currency is only valued based on the perceived strength and faith in the economy of the United States. That strength and faith is weakened with every "STIMULUS DOLLAR" PRINTED. The unrecovered costs of the IRAQ debacle futher weaked the currency.

The goal is to avoid the world dictating the terms of our economy. That may already be unavoidable.

You have it wrong in the last bit.

If the stimulus dollars are used to build things of value, the strength and faith is improved. We literally are worth more!

This is the right thing to do.

If dollars are printed and thrown directly into banks, I don't know what the hell that means! It sure as heck doesn't add to the pool of value, and my faith isn't bolstered.

You should be very worried about the FED 3 trillion that probably devalued our dollar by 5 to 15 percent.

The spending Obama wants to do on stimulus HAS TO HAPPEN. There is no other way to pay down the debt. If we pay it down with dollars backed by something, the value, faith bit works out.

....You have it wrong in the last bit....

(but you forgot to add that the rest was brilliant except for the spelling errors) 9:-D <- new hairdo

When I said stimulus dollars I meant ALL of them. The return on building things of value has to include the cost of the "DEAD" dollars thrown at the banking system...

and I AM worried about that 3 trill...... it's why I mentioned the futures traders and gold buyers.... Those actions are inflationary as well
You can't eat gold, and there would be no difference in having to pay an ounce of gold for a loaf of bread, or 2500 paper dollars ala 1920s Germany.... and we know what that hyper inflation brought about. (yes I know german currency from the 20s had many more zeroes on it... A million mark note from the 20s has no value in Germany today. A dollar bill from the 1800s printed here can still be spent as a dollar (if you can get the clerk to accept it as being real)

It's all going to boil down to how many dollars will everyday items cost, and will most of us have an ability to aquire enough of those dollars.

....You have it wrong in the last bit....

(but you forgot to add that the rest was brilliant except for the spelling errors) 9:-D <- new hairdo

When I said stimulus dollars I meant ALL of them. The return on building things of value has to include the cost of the "DEAD" dollars thrown at the banking system...

and I AM worried about that 3 trill...... it's why I mentioned the futures traders and gold buyers.... Those actions are inflationary as well
You can't eat gold, and there would be no difference in having to pay an ounce of gold for a loaf of bread, or 2500 paper dollars ala 1920s Germany.... and we know what that hyper inflation brought about. (yes I know german currency from the 20s had many more zeroes on it... A million mark note from the 20s has no value in Germany today. A dollar bill from the 1800s printed here can still be spent as a dollar (if you can get the clerk to accept it as being real)

It's all going to boil down to how many dollars will everyday items cost, and will most of us have an ability to aquire enough of those dollars.

Dead dollars in the banks.

Yeah, I agree there. I'm seriously growing concerned about that aspect of it.

When exactly is a loss a freaking loss?

We need to be spending like no other, building value, not covering these credit default swaps.

Here's another thing too. A lot of clowns bet against AIG. So, their position has no real downside. If AIG stays afloat, they just are out their premiums. No worries. If it sinks, they cash in big!

And they have NO SKIN in the game. They don't have actual ownership of the assets in question!!

It's those bets that have the Fed pumping dollars into the black hole we used to know as the financial system.

We are literally being blackmailed!

Going forward, should we come out of this in a sane position, too big to fail needs to mean too big to exist! That and requiring anyone speculating (er... gambling) in this way, needs to have some ownership so the losses land on them, not somebody else.

Both parties are at fault for that.

Damn supply siders have really screwed the pooch.

What we have here is a case of corporations getting away with a financial coup! The more I learn, the more anti-big corporate I become. We need to put some teeth in the anti-trust laws, seperate investments, banks and insurance like we used to do, and break up too big to fail every time.

Corporate politics are preventing that, and they run deep. Obama isn't standing up to that yet.

Not sure if he can right now actually. Nobody wants to get JFK'd.