Obama with more power than Bush 2008-01-30 1:26 p.m.
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Who said that? I like it. It's a good quip.
I was a bit amazed by how Obama was saying in his speech about all these things that the Americans need to build, you know, railroads, roads, bridges and all the like. Maybe oil refineries would be a good idea too!
Anyway, one might wonder where is the money for all this stuff and of course it will all be printed money. Why weren't all these things built during the boom when there was actually some money? It's not the time to build them now - America is broke (and so is the UK of course!)
However, I suppose you can never underestimate how the ruthless ruling class can pull some "magic" rabbit out of the hat.
I pondered to my Dad last night and wondered if the bear market in everything might have been finished (the deleveraging, the "deflation") and we might be infor the inflation soon. I said to him that last year everyone was expecting the crisis to be postponed until after the election so that the Republicans might win. The opposite happened. The whole thing went completely tits up just before the election and the republicans got shafted.
Now the newly elected Obama seems to have a huge store of goodwill and euphoria over his victory. Bush gone, everyone is happy. Race equality, the era of slavery finally put to rest, eveyone is happy, so they think. (Wicked thought: Maybe Equality = slavery for everybody!)
Maybe the elite stuck Bush with the worst of the crisis.
Anyway, now Bush "Shrub" is gone, Obama has so much goodwill right now that he could take far more emergency actions and powers than Bush ever could, before the angry public took to the streets, couldn't he? That is superb for the elite, don't you think? Obama is a gift for them. During the first Great Depression, Roosevelt (FDR) nicked all the gold, nobody cared, devalued the dollar, nobody cared, took USA into WW2, nobody minded; they loved him, gave him 4 terms!
Friday 30 January 2009
Wednesday 14 January 2009
Did we have Hyperinflation already?
Hyperdeflation scenario:
Could we get hyper-deflation of the $500 Trillion derivatives pyramid - a total and instantaneous deleveraging? This could all happen in a single day or even a single hour and no-one will be able to get out of the way. It could come like a thief in the night.
Hyperinflation scenario:
However, if the Fed succeeds in stopping this process or event, it will mean that they will have committed hyperinflation to cover all these potential failures, having possibly had to underwrite or monetise all several hundred trillion of derivatives transactions. Taking $500 Trillion as an estimate of derivatives' notional value, that would mean a 40x increase in money supply (M3 being about $13T - and US GDP being about the same). That's 4000% inflation guaranteed then, if the Fed succeeds."
Now, considering the above, have we already had the hyperinflation that may on the web have been discussing as being in the future?
1) Firstly, we have had a 100-fold increase in prices in the last 90 years, since the inception of the Federal Reserve and the first ending of the Gold Standard in 1914.
2) Secondly, we have had hyperinflation in the notional value of derivatives transactions at a far higher rate than that of the traditional measures of money supply M1, M2 M3, MZM, TMS, Adjusted Monetary Base, etc.
It seems to me that the measures of traditional money supply are becoming irrelevant as the leverage increases and the derivatives streak ahead of all measures of savings, cash and GDP.
Taking $500 Trillion as total notional derivatives value, that is 40 times the US money supply, 40x the US GDP and 10x the world GDP. Would a 2.5% wipeout in derivatives notional value wipe out the US GDP? I don't know!
It would be fascinating to see the figures from the Bank of International Settlements (BIS) http://www.bis.org/ for derivatives transactions notional value for year end 2008, to see if they decreased in the second half of 2008 as they should have done with this present 'deleveraging' - or if they actually increased.
Try this link http://www.bis.org/statistics/derstats.htm and download Table 19: Amounts outstanding of over-the-counter (OTC) derivatives by risk category and instrument, i.e. http://www.bis.org/statistics/otcder/dt1920a.pdf.
As of June 2008, notional value outstanding of Over the Counter (OTC) derivatives was 683,725,000,000,000 (683 trillion) and the Gross Market Value of these was 20,353,000,000,000 ('only' 20 trillion). That presumably excludes all derivatives traded on exchanges, since these are just the OTC figures! What do these figures really mean?
Could we get hyper-deflation of the $500 Trillion derivatives pyramid - a total and instantaneous deleveraging? This could all happen in a single day or even a single hour and no-one will be able to get out of the way. It could come like a thief in the night.
Hyperinflation scenario:
However, if the Fed succeeds in stopping this process or event, it will mean that they will have committed hyperinflation to cover all these potential failures, having possibly had to underwrite or monetise all several hundred trillion of derivatives transactions. Taking $500 Trillion as an estimate of derivatives' notional value, that would mean a 40x increase in money supply (M3 being about $13T - and US GDP being about the same). That's 4000% inflation guaranteed then, if the Fed succeeds."
Now, considering the above, have we already had the hyperinflation that may on the web have been discussing as being in the future?
1) Firstly, we have had a 100-fold increase in prices in the last 90 years, since the inception of the Federal Reserve and the first ending of the Gold Standard in 1914.
2) Secondly, we have had hyperinflation in the notional value of derivatives transactions at a far higher rate than that of the traditional measures of money supply M1, M2 M3, MZM, TMS, Adjusted Monetary Base, etc.
It seems to me that the measures of traditional money supply are becoming irrelevant as the leverage increases and the derivatives streak ahead of all measures of savings, cash and GDP.
Taking $500 Trillion as total notional derivatives value, that is 40 times the US money supply, 40x the US GDP and 10x the world GDP. Would a 2.5% wipeout in derivatives notional value wipe out the US GDP? I don't know!
It would be fascinating to see the figures from the Bank of International Settlements (BIS) http://www.bis.org/ for derivatives transactions notional value for year end 2008, to see if they decreased in the second half of 2008 as they should have done with this present 'deleveraging' - or if they actually increased.
Try this link http://www.bis.org/statistics/derstats.htm and download Table 19: Amounts outstanding of over-the-counter (OTC) derivatives by risk category and instrument, i.e. http://www.bis.org/statistics/otcder/dt1920a.pdf.
As of June 2008, notional value outstanding of Over the Counter (OTC) derivatives was 683,725,000,000,000 (683 trillion) and the Gross Market Value of these was 20,353,000,000,000 ('only' 20 trillion). That presumably excludes all derivatives traded on exchanges, since these are just the OTC figures! What do these figures really mean?
Forecasts for 2009.
Well, not much happened since I last posted here. Apart from the near total collapse of the entire Western world's banking system and the near fulfillment of 'The Fall of Babylon' from Chapter 18 of the Book of Revelation in the Holy Bible.
Apart from that, pretty uneventful, then.
Everything that happened was predicted long ago on such talk radio shows as http://www.financialsense.com/, http://www.kereport.con/ and http://www.goldseek.com/ and by Peter Warburton's 1999 book 'Debt & Delusion', aptly subtitled ' Central Bank Follies that Threaten Economic Disaster'. Now all the things that were talked about by these much ignored Austrian school economists have come to fruition and appear on the mainsteam news almost every day. Though of course no-one there would give the predictors of the crisis any credit for their astute observations of the credit excesses of the last decade and the likely consequences.
We have gone from the danger of hyperinflation in early 2008 to the danger of hyperdeflation in late 2008. The Federal Reserve has underwritten about 8 Trillion US$ of non-performing 'assets' in the USA, though that is peanuts compared to the several hundred trillion US$ of derivative contracts outstanding.
With most of the world's investment money in US Treasury bonds and yields and Fed interest rates at or near zero, with a seemingly confortable gap since the last major bank failure, we are now almost perfectly set up for:
1) A collapse in the Credit Default Swap derivative market - a collapse of credit insurance.
2) The collapse of a massive banking institution that was deemed 'too big to fail'.
3) Total systemic banking failure and a halt in world trade along the lines of 'The Fall of Babylon' described in Revelation Chapter 18.
4) The default of the USA and many other countries on their sovereign debt leading to a collapse in public services due to unprecedented government debts and a catastrophic fall in tax revenues.
The above can be summarised as hyper-deflation of the derivatives pyramid - a total and instantaneous deleveraging. See next post.
This could all happen in a single day or even a single hour and no-one will be able to get out of the way. It will come like a thief in the night.
However, if the Fed succeds in stopping this process or event, it will mean that they will have committed hyperinflation to cover all these potential failures, having possibly had to underwrite or monetise all several hundred trillion of derivatives transactions.
Taking $500 Trillion as an estimate of derivatives' notional value, that would mean a 40x increase in money supply (M3 being about $13T - and US GDP being about the same). 4000% inflation guaranteed then, if the Fed succeeds.
So, be prepared, if that is possible.
Apart from that, pretty uneventful, then.
Everything that happened was predicted long ago on such talk radio shows as http://www.financialsense.com/, http://www.kereport.con/ and http://www.goldseek.com/ and by Peter Warburton's 1999 book 'Debt & Delusion', aptly subtitled ' Central Bank Follies that Threaten Economic Disaster'. Now all the things that were talked about by these much ignored Austrian school economists have come to fruition and appear on the mainsteam news almost every day. Though of course no-one there would give the predictors of the crisis any credit for their astute observations of the credit excesses of the last decade and the likely consequences.
We have gone from the danger of hyperinflation in early 2008 to the danger of hyperdeflation in late 2008. The Federal Reserve has underwritten about 8 Trillion US$ of non-performing 'assets' in the USA, though that is peanuts compared to the several hundred trillion US$ of derivative contracts outstanding.
With most of the world's investment money in US Treasury bonds and yields and Fed interest rates at or near zero, with a seemingly confortable gap since the last major bank failure, we are now almost perfectly set up for:
1) A collapse in the Credit Default Swap derivative market - a collapse of credit insurance.
2) The collapse of a massive banking institution that was deemed 'too big to fail'.
3) Total systemic banking failure and a halt in world trade along the lines of 'The Fall of Babylon' described in Revelation Chapter 18.
4) The default of the USA and many other countries on their sovereign debt leading to a collapse in public services due to unprecedented government debts and a catastrophic fall in tax revenues.
The above can be summarised as hyper-deflation of the derivatives pyramid - a total and instantaneous deleveraging. See next post.
This could all happen in a single day or even a single hour and no-one will be able to get out of the way. It will come like a thief in the night.
However, if the Fed succeds in stopping this process or event, it will mean that they will have committed hyperinflation to cover all these potential failures, having possibly had to underwrite or monetise all several hundred trillion of derivatives transactions.
Taking $500 Trillion as an estimate of derivatives' notional value, that would mean a 40x increase in money supply (M3 being about $13T - and US GDP being about the same). 4000% inflation guaranteed then, if the Fed succeeds.
So, be prepared, if that is possible.
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