4 ms·

It’s only virtuous until the money runs out. Then we will see far worse poverty than ever would have been. When the US prints money we steal from every person

It’s only virtuous until the money runs out. Then we will see far worse poverty than ever would have been. When the US prints money we steal from every person in the world who uses a Dollar backed currency. I’m not sure how much longer they will tolerate this. They’re already not buying our bonds…

wonderwonder 5y ago
Honestly I think they will continue to tolerate it as there is not really much of an alternative. The world needs a unit of exchange, if it is not the dollar then what would it be? Maybe eventually something like BTC / ETH serves as the unit of exchange and is then converted back into the countries native currency?
- rolobio 5y ago
  I think the BRICS system is likely. But we will have to wait and see!
- bawana 5y ago
  China is producing their state owned e-yuan. They are rolling it now and in 2 years that will be the currency most transactions they do will require. 200 million has already been issued as a pilot. When e-yuan becomes the de facto reserve currency of trade, the dollar will suffer thge same tragedy as iceland. The US will need to take out loans from the IMF, from China, from other nations in ASIA to buy e-yuan. China will pay us back in the dollars they have but will demand e-yuan for anything we want to buy from them. Now the Fed is enjoying its last hurrah. Printing money like its going out of style (which in fact it is) (Actually the Treasury prints the money but they wouldnt print unless the Fed issued bills and bonds to sell.) When austerity hits home, the rich and privileged classes will have a new 'news bite' with which to beat the 'lazy unemployed'. Helicopter money will disappear. Austerity measures will include wage and price controls (like Nixon did in 1970s), sky high interest rates. And a booming underground economy as Americans learn to dodge taxes like the Greeks do. We will become like England. They were the host state to Arab oil money. We will see China buying up valuable parts of the US simply because we will have nothing else they want. Dont fool yourself, their weapons have reached parity withours. Their chip industry is at most 5 years behind ours. Their ML is at parity with 'ours' -facebook, google. OTOH, facebook and google might just move to china for the free-er capitalism they will have.
  - stx 5y ago
    > Austerity measures will include wage and price controls (like Nixon did in 1970s), sky high interest rates. ^This is my biggest concern. Thus far real estate has been my favorite investment. I assume though if interest rates go up peoples buying power and hence prices will go down. If I liquidate my investments I will owe taxes and I fear inflation will eat up the cash value. Buy e-yuan? Leave the USA?
    - onlyrealcuzzo 5y ago
      The Yen isn't a reserve currency, and it's had 0% interest rates for ~30 years. Why can't the dollar be the same?
  - wonderwonder 5y ago
    I think that in that case the US would just move manufacturing back on shore. It would result in a massive investment boom in the US and the us government would likely print money and provide very low interest loans to fund it. Would result in massive jobs program. I think China would fall in that case as they are massively reliant on the US manufacturing everything there.
  - bawana 5y ago
    To whomever downvoted this comment: Half the worlds transactions are now conducted in currencies other than the US dollar. The world has cottoned to the idea that we are inflating their economies by printing dollars.
chii 5y ago
> They’re already not buying our bonds… really? Given that US treasury bonds have some of the lowest yield, it means that it must be currently being bought up (which pushes yield down). Bonds from countries like argentina have yields at around 47% - because nobody would buy them otherwise as they are hugely risky. See http://www.worldgovernmentbonds.com/country/argentina/ http://www.worldgovernmentbonds.com/country/argentina/
- rolobio 5y ago
  About 40% of our debt is owned by the Federal Reserve. That number is increasing every year. China has been dumping our bonds as fast as they can. Our bonds are cheap because we can offload them onto the Fed.
  - MR4D 5y ago
    According to the US Treasury, the Chinese are not dumping bonds at all. [0] [1] Side-note: The Chinese have to own treasuries because the US buys so much stuff from them. If they hurt the US currency relative to their own, then Chinese goods would become more expensive for Americans, and the US would buy less. That would not be good for an economy like China's that has a trade surplus with the US in the range of hundreds of billions of dollars per year. [2] [0] - https://ticdata.treasury.gov/Publish/mfh.txt https://ticdata.treasury.gov/Publish/mfh.txt [1] - https://www.bloomberg.com/news/articles/2021-04-15/china-s-holdings-of-u-s-treasuries-hit-highest-since-july-2019 https://www.bloomberg.com/news/articles/2021-04-15/china-s-h... [2] - https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china https://ustr.gov/countries-regions/china-mongolia-taiwan/peo...
  - throw0101a 5y ago
    > About 40% of our debt is owned by the Federal Reserve. AFAICT: * US federal debt held by Fed Reserve Banks: $5.6T * US debt held by foreign and international investors: 7T * Debt held by private private investors: 17T See, which while having a "2018" URL, has an up-to-date embedded graph: * https://fredblog.stlouisfed.org/2018/04/whos-buying-treasuries/ https://fredblog.stlouisfed.org/2018/04/whos-buying-treasuri... 17+7+5.6=29.6. 5.6/29.6 = 19%. > That number is increasing every year. It was rising up to 2014, then held fairly steady between 2014 and 2018, and then started decreasing until the drama of 2020 kicked in: * https://fred.stlouisfed.org/series/TREAST https://fred.stlouisfed.org/series/TREAST
throw0101a 5y ago
> When the US prints money The vast majority of money that is created in modern credit-based economies is via bank loans, not central banks. Cullen Roche the very informative paper "Understanding the Modern Monetary System" ten years ago, and it's still relevant: > In many market based systems such as the USA, the money supply is essentially privatized and controlled by private banks that compete to create loans which create deposits (money). Contrary to popular opinion, governments in such a system do not directly control the money supply nor do they create most of the money. * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 * https://rationalreminder.ca/podcast/132 https://rationalreminder.ca/podcast/132 * https://www.youtube.com/watch?v=uZi4QE_EfCw https://www.youtube.com/watch?v=uZi4QE_EfCw This is especially true in places where reserve requirement no longer exist, e.g., Canada got rid of them in the 1990s.
- vdqtp3 5y ago
  The US Dollar M1 money supply increased by 66.5% and M2 by 25.4% between Dec 2019 and Dec 2020 [0]. I'd give you more current data, but the Fed stopped reporting the overall changes and M2 in general in early 2021. The ostensible reasons for that depend on how tight your tinfoil hat is, but plenty of money is created by the Fed, and that number hit trillions in the last 18 months. 0: https://www.federalreserve.gov/releases/h6/20210128/ https://www.federalreserve.gov/releases/h6/20210128/
  - onlyrealcuzzo 5y ago
    The Fed is still reporting M3: https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S It's "only" up 31.76% since Fed 2020 / before they started messing around. It was already regularly increasing by ~7% per year - so you'd expect close to a ~10% difference. So we've got about ~20% more M3 than you would otherwise expect. If they're trying to cover up data, they're doing a bad job.
    - vdqtp3 5y ago
      Thanks for the info. I had been referring to the Fed's weekly releases, which didn't include that. I went to look into why, and found "Since 2006, M3 is no longer tracked by the Federal Reserve. ... However, the Federal Reserve Bank of St. Louis and some other sources still publish M3 figures for economic data purposes" Regardless, 7% is already ridiculous, and over 20% beyond that is absurd.

wonderwonder 5y ago

Honestly I think they will continue to tolerate it as there is not really much of an alternative. The world needs a unit of exchange, if it is not the dollar then what would it be? Maybe eventually something like BTC / ETH serves as the unit of exchange and is then converted back into the countries native currency?

rolobio 5y ago
I think the BRICS system is likely. But we will have to wait and see!
bawana 5y ago
China is producing their state owned e-yuan. They are rolling it now and in 2 years that will be the currency most transactions they do will require. 200 million has already been issued as a pilot. When e-yuan becomes the de facto reserve currency of trade, the dollar will suffer thge same tragedy as iceland. The US will need to take out loans from the IMF, from China, from other nations in ASIA to buy e-yuan. China will pay us back in the dollars they have but will demand e-yuan for anything we want to buy from them. Now the Fed is enjoying its last hurrah. Printing money like its going out of style (which in fact it is) (Actually the Treasury prints the money but they wouldnt print unless the Fed issued bills and bonds to sell.) When austerity hits home, the rich and privileged classes will have a new 'news bite' with which to beat the 'lazy unemployed'. Helicopter money will disappear. Austerity measures will include wage and price controls (like Nixon did in 1970s), sky high interest rates. And a booming underground economy as Americans learn to dodge taxes like the Greeks do. We will become like England. They were the host state to Arab oil money. We will see China buying up valuable parts of the US simply because we will have nothing else they want. Dont fool yourself, their weapons have reached parity withours. Their chip industry is at most 5 years behind ours. Their ML is at parity with 'ours' -facebook, google. OTOH, facebook and google might just move to china for the free-er capitalism they will have.
- stx 5y ago
  > Austerity measures will include wage and price controls (like Nixon did in 1970s), sky high interest rates. ^This is my biggest concern. Thus far real estate has been my favorite investment. I assume though if interest rates go up peoples buying power and hence prices will go down. If I liquidate my investments I will owe taxes and I fear inflation will eat up the cash value. Buy e-yuan? Leave the USA?
  - onlyrealcuzzo 5y ago
    The Yen isn't a reserve currency, and it's had 0% interest rates for ~30 years. Why can't the dollar be the same?
- wonderwonder 5y ago
  I think that in that case the US would just move manufacturing back on shore. It would result in a massive investment boom in the US and the us government would likely print money and provide very low interest loans to fund it. Would result in massive jobs program. I think China would fall in that case as they are massively reliant on the US manufacturing everything there.
- bawana 5y ago
  To whomever downvoted this comment: Half the worlds transactions are now conducted in currencies other than the US dollar. The world has cottoned to the idea that we are inflating their economies by printing dollars.

chii 5y ago

> They’re already not buying our bonds… really? Given that US treasury bonds have some of the lowest yield, it means that it must be currently being bought up (which pushes yield down). Bonds from countries like argentina have yields at around 47% - because nobody would buy them otherwise as they are hugely risky. See http://www.worldgovernmentbonds.com/country/argentina/ http://www.worldgovernmentbonds.com/country/argentina/

rolobio 5y ago
About 40% of our debt is owned by the Federal Reserve. That number is increasing every year. China has been dumping our bonds as fast as they can. Our bonds are cheap because we can offload them onto the Fed.
- MR4D 5y ago
  According to the US Treasury, the Chinese are not dumping bonds at all. [0] [1] Side-note: The Chinese have to own treasuries because the US buys so much stuff from them. If they hurt the US currency relative to their own, then Chinese goods would become more expensive for Americans, and the US would buy less. That would not be good for an economy like China's that has a trade surplus with the US in the range of hundreds of billions of dollars per year. [2] [0] - https://ticdata.treasury.gov/Publish/mfh.txt https://ticdata.treasury.gov/Publish/mfh.txt [1] - https://www.bloomberg.com/news/articles/2021-04-15/china-s-holdings-of-u-s-treasuries-hit-highest-since-july-2019 https://www.bloomberg.com/news/articles/2021-04-15/china-s-h... [2] - https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china https://ustr.gov/countries-regions/china-mongolia-taiwan/peo...
- throw0101a 5y ago
  > About 40% of our debt is owned by the Federal Reserve. AFAICT: * US federal debt held by Fed Reserve Banks: $5.6T * US debt held by foreign and international investors: 7T * Debt held by private private investors: 17T See, which while having a "2018" URL, has an up-to-date embedded graph: * https://fredblog.stlouisfed.org/2018/04/whos-buying-treasuries/ https://fredblog.stlouisfed.org/2018/04/whos-buying-treasuri... 17+7+5.6=29.6. 5.6/29.6 = 19%. > That number is increasing every year. It was rising up to 2014, then held fairly steady between 2014 and 2018, and then started decreasing until the drama of 2020 kicked in: * https://fred.stlouisfed.org/series/TREAST https://fred.stlouisfed.org/series/TREAST

throw0101a 5y ago

> When the US prints money The vast majority of money that is created in modern credit-based economies is via bank loans, not central banks. Cullen Roche the very informative paper "Understanding the Modern Monetary System" ten years ago, and it's still relevant: > In many market based systems such as the USA, the money supply is essentially privatized and controlled by private banks that compete to create loans which create deposits (money). Contrary to popular opinion, governments in such a system do not directly control the money supply nor do they create most of the money. * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 * https://rationalreminder.ca/podcast/132 https://rationalreminder.ca/podcast/132 * https://www.youtube.com/watch?v=uZi4QE_EfCw https://www.youtube.com/watch?v=uZi4QE_EfCw This is especially true in places where reserve requirement no longer exist, e.g., Canada got rid of them in the 1990s.

vdqtp3 5y ago
The US Dollar M1 money supply increased by 66.5% and M2 by 25.4% between Dec 2019 and Dec 2020 [0]. I'd give you more current data, but the Fed stopped reporting the overall changes and M2 in general in early 2021. The ostensible reasons for that depend on how tight your tinfoil hat is, but plenty of money is created by the Fed, and that number hit trillions in the last 18 months. 0: https://www.federalreserve.gov/releases/h6/20210128/ https://www.federalreserve.gov/releases/h6/20210128/
- onlyrealcuzzo 5y ago
  The Fed is still reporting M3: https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S It's "only" up 31.76% since Fed 2020 / before they started messing around. It was already regularly increasing by ~7% per year - so you'd expect close to a ~10% difference. So we've got about ~20% more M3 than you would otherwise expect. If they're trying to cover up data, they're doing a bad job.
  - vdqtp3 5y ago
    Thanks for the info. I had been referring to the Fed's weekly releases, which didn't include that. I went to look into why, and found "Since 2006, M3 is no longer tracked by the Federal Reserve. ... However, the Federal Reserve Bank of St. Louis and some other sources still publish M3 figures for economic data purposes" Regardless, 7% is already ridiculous, and over 20% beyond that is absurd.