New Currency War starting?

China & Brazil are the only major nations not playing the currency war game:

Why people with wealth they don´t want erroded are sending dollars to Brazil and trying to get past China´s currency controls mainly by offering to build more modern factories or to transfer better technolology. (Buffett got ~15 Billion into China this way and now owns slghtly more of BYD car company.)

 

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US driven curency war hurts Peru too

 

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Yes, the solution is use the gold gram as the global medium of international trade.

In labyrinths hundreds of feet below Geneva nations would simply move gold bars back and forth from their own personal vaults.

This would also protect fiat currencies from deliberate value manipulation by state governments.

 

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Japan takes the lead:

 

How's that hopey changey thing working out for ya? I didn't vote for him. And it still sucks. And as far as ol' Ben, what's he smoking? We are not going to recover any time soon. We/they are trillions of dollars in debt!

 

It’s doing very thank you. Instead of shrinking by nearly 10% as it was when President Obama was sworn into office, the economy has been growing at a steady inflation adjusted 2% for the last 3 years. Instead of losing nearly a million jobs a month and more with each passing month as it was when President Obama was sworn into office, we have been steadily adding between 100k-200k private sector jobs to the economy for the last 3+ years. Millions of jobs have been added to the economy since the “hopey changey” became a reality and President Obama was sworn into office. Unemployment has shrunk from 10+% to 7.6%. The deficit has shrunk (as a percent of GDP) by 50% since The Great Recession ended in 2009 and it continues to shrink. The deficit has not fallen as fast since WWII ended.

Everyone but Republicans think that these are good things. So, I would say the “hopey changey” thing is working quite well for everyone except for you Republicans. I guess you liked it better when the economy was in free-fall and we were losing nearly a million jobs a month and more with each passing month.

 

That last is not shown on any graph I have ever seen. For example.

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Debt/GDP ratio is now 107%
Yes printing more than a trillion thin-air dollars every year for last 4 or 5 years has made economy grow slightly, but at great price for next generation to pay.
The drop in unemployments rate is mainly due to 10,000+ baby boomers retiring each day - not due to healthy economy. Table below gives more honest (Not twisted by clever definitions) facts. The simple facts are:

How can you say the economy is doing very well when number of full time jobs is dropping 1% annually*, and the number of people needing food stamps is growing 69% faster than the population is?

* Not to mention that the purchasing power of wages and salaries is falling even faster as MacJobs replace higher pay factory jobs.

 

There is a difference between deficit and debt. The deficit as a percent of GDP has in fact been reduced by 50% and is falling at the fastest rate since WWII. Total US debt will continue to rise, but so will GDP if we act responsibly and don’t jump on the extreme austerity bandwagon.

We have been down this many times before Billy T. We have not been printing a billion “thin air” dollars every year for the last 5 years. And it has been proven to you on many occasions. I suggest you look at the money supply numbers I have previously provided to you.

That too is hogwash Billy T. Again we have been down this road many times before. People retiring from the work force have no impact on the unemployment rate. The unemployment rate is determined by employment status alone. The employer survey is a survey of employers where employers are asked how many jobs they have added or terminated during the reporting period. Neither survey has anything to do with retirees. Retirement only affects the work force participation rate statistic. And the facts are that employers report they have added new jobs at a rate of 100k-200k per month consistently for the last 3+ years. And employees report more of them are employed today than were in previous months and years. That is the tough reality for you guys.


And as for the table you referenced, I don’t know where you got it. But the data is blatantly wrong.

That is not true either. Purchasing power is measured by the CPI, and it just doesn’t show the nightmare you would like/need it to show. Inflation has been very tame. The tragedy you are trying to paint is just not evidenced by the data.

 

This whole notion of GDP as an indicator of prosperity is the ultimate scam in economics.

Any government can bump up their nation's GDP simply by digging itself into a deeper debt hole.

Luckily for them...most voters dont know the difference between debt and wealth.

 

I agree the Fed`s balance sheet is up slightly less than 3 trillion dollar in the last 5 years; however, I consider ALL the newly created funds, be they credits in banks or Treasury paper sent to China etc. to be "thin-air money as they are obligations on generations yet to come. This thin-air money has been made at more than 1 trillion dollars per year for last five years. It highly immoral behavior of the current generation to improve their material well being by spending "thin-air" money and expecting later generations to pay for their excessive consumption.

Do you really think it makes any difference to the new worker in 2028 that much more of his salary is taken by taxes to pay for "printed paper" (e.g. a 15 year Treasury bond) given to China for the iPods etc. his parent´s consummed and sent the bill to him vs. the expansion of the Fed´s money base with electronic credits created from thin-air in the Fed´s 12 participating banks?

Both have exactly the same adverse impact on him - higher taxes and lower benefits than his parent’s had. Both are examples of this generation living beyond their means on credit by spending "thin-air" money and expecting the next generation to pay the bill.

Please tell some data in the table which you think is false. The sources is Australian and given in this post: http://www.sciforums.com/showthread...e-worse-news&p=3058605&viewfull=1#post3058605 along with more data showing how sick the US economy is, including a graph of the "demographic time bomb" where in addition to all the bills this generation is sending to the next, there is also the problem of many less workers trying to support the retired demographic bulge called now "the baby boomers" - Only by great devaluation of the dollar can these two debt burdens be paid. You may not recognize the great immorality this generation has done to that generation, but they sure will as their dollars lose value, their taxes soar and their government benefits decline or simply are not paid.

Your text I have made bold is totally false. CPI does not measure purchasing power of salaries. It measure how the cost of good and services is changing. That is but one factor of two in the determination of the purchasing power of your salary. With CPI = 2% it is of such little importance compared to the main factor, your nominal salary, that I did not even mention it; but I sure did speak of the big factor. I said if average Joe American has lost his high paying factory job and now has a BigMacJob with say 48% lower nominal salary (or no job at all for far too many) then his purchasing power is only 50% of what it was (48+2= 50% cut in purchasing power).

 

The Fed’s balance sheet is not the money supply. There is a difference. Additionally, the age of the currency in circulation is of little economic importance. What is of importance is the total money supply . . . the total amount of money in the system. And the data just does not comport with your claim that the Fed has been printing a trillion new dollars every year for the last 5 years.

Two, what is immoral is to give our children an economy and body politic that is no longer capable of providing the lifestyle to which they have become accustom.

Did it make a difference to me when I became saddled with the debts of my forefathers, the public debt I inherited from them? No, not really. Sure it was a bit of a pain, but it was the right thing to do. And I received a lot of benefits in exchange for that debt. I inherited a growing economy, not an economy that was without trouble, but an economy that was capable of growth and was in fact growing. I inherited a stable government and a society that did provide some degree of security.

No what I said was correct. The CPI (Consumer Price Index) is the measure of purchasing power. The fact that it doesn’t tell the story you want to tell is not my problem. I think you are confusing median family income with purchasing power. They are two different concepts. While it is true that for the last few years the median family income has fallen; the last few years does not a trend make, after all we just went through a very severe economic insult (i.e. The Great Recession) and that kind of impact is expected.

And as I have told you before, there are much bigger things at stake here than just public debt. The public debt can be managed. We have had much higher levels of public debt in the past and we fixed it. We raised taxes. And there is no good reason why we should not use the same remedy this time around. Our public debt problem is solvable if we act rationally to solve it. The solutions being offered by our Republican friends are not rational; they are drama for the drama kings and queens in the Republican entertainment industry.

It is more important that we provide our children with an economy that is capable of providing for their needs, that gives them the same or a better lifestyle than what we have enjoyed. Your fixation on debt to the exclusion of all else is troubling. Excessive debt is not the source of all evil. It is the result of it.

 

You are "ducking and weaving" I did not claim: "...the Fed has been printing a trillion new dollars every year for the last 5 years. " I said:

and later made it quite clear that I understood that the Fed made a little less than 3 trillion of new "thin-air" money.
I agree what is ultimately important is the total money supply, but you bring this up, when not related to what I said, is just more ducking and weaving.

My point, clearly made, even with examples like a 15 year Treasury bond printed on paper or the Fed´s telling participating banks to credit its account etc. were "assets" made from thin-air and the associated debt, unpayable in fact without great dollar devaluation, was being sent immorally to the next generation so the current generation could live way beyond its means.

I do agree that it is not always immoral to send part of the bill to the next generation, if the borrowed funds are used to pay for infrastructure (or other things) they will benefit from. Things like Hover Dam, new airports, highways, smart grids, better education facilities, etc. But it is immoral if used for current consumption. - Things like fashion imports from Asia, Vacations in Europe on cheap credit loans, dinners out in expensive restaurants, etc. that leave no benefit to the next generation.

 

No, there is no ducking and weaving on my part. I first have to have something to duck. The bottom line here Billy T. is that you claims of untoward monetary expansion, the Fed printing a trillion dollars a year for the last 5 years is just not true and it is not supported in the data.

And as I have repeatedly quite clearly said, what is important is that we leave the next generation with the ability to have an equal or better life style than what we have enjoyed. Your focusing on debt to the exclusion of all else is myopic at best.

Well there are two things here, personal debt and public debt. Personal debt begins anew with each new generation as humans at this point in time have very finite lifetimes. Public debt does not suffer from the constraints imposed on life by the frailties of the human body. As for personal debt, from a macroeconomic point of view, as long as the debtors have the ability to repay the debt it matters little what they use the debt for as the debt ends with the end of their life or bankruptcy. Public debt never needs to end as states are not constrained by the frailties of the human body. What is important about public debt is that the state has the ability to make good on its debt obligations. And states have considerable powers to make good on their ability to service their debt, powers that the individual does not have.

As I said before, what is important is that we leave our children with a healthy government and a healthy economy. If we give our children a wrecked economy and a government in chaos, the debt really doesn’t matter.

 

Nor is than what I said. You are putting words in my mouth to make a strawman you can knock down. - that is ducking and weaving - not commenting on what I actually said about a trillion thin-air dolars having been created annually for last 4 or 5 years, which was:

This my only mention of "trillion dollars for 4 or 5 years."

I did not even mention the Fed. All your replies such as comments relating to "Fed´s balance sheet not being the money supply" "What is important is the total money supply" and even "We have not been printing a billion “thin air” dollars every year for the last 5 years.... I suggest you look at the money supply numbers I have previously provided to you." are ducking and weaving diversions as I did not mention:

(1)Fed´s balance sheet
(2)money supply
(3)total money (in circulation?)

My still unrefuted claim is about US´s rate of production of "thin-air" money during last 4 or 5 years. (And its immoral screwing of next generation.)

You seem to want to limit "thin-air money" to the Fed´s production of it, even though I said production of new Tresuray Bonds, even given an example of a 15 year one, are Thin-Air money, with exactly the same consequences for future genertations new Fed thin-air money. - I.e. both make their taxes greater and their govenment provided services less than their parents had. (And add to the unusual heavy burden they already have in trying to support the retired baby boomer bulge.)

Sadly this is the first time US history when most young people (typically a very optimistic group) think they will be worse off than their parents were.

In post 32 you said: "The CPI (Consumer Price Index) is the measure of purchasing power."
That is true if speaking of what a $100 will buy, but not if speaking of what the average Joe American´s salary will buy as many Joes have lost their high paying jobs and if thay have an new one the pay is much less. That what the salary will buy is what I obviously and specifically spoke of, so you are to some extent still ducking and weaving here too by only speaking of the minor ~2% CPI factor and ignoring the major factor that determines one´s purchasing power. I even gave the example of a "Joe" whose Mac Job now pays 48% less than his former factory job. Noting his purchasing power was cut in half. (48+2 = 50% reduction in buying power)

Again: Dont´put words in my mouth as strawmen to destroy - speak to my point instead, which is: Creation of ~1 trillion of thin-air money for 4 or 5 years is the road to disaster for the next generation and immoral as is being used mainly for {often imported} consumption goods so that the current generation can live way beyond their means. Perhaps you don´t think the US has been living on credit and debt transfers to the next generation "way beyound their means?"

I´m still waiting for you to tell at least one substantial error in the table from my Australian source - Saying its "data is blatantly wrong" implies more than one error (data is the plural), but at least give one to support you claim. Take a good look at this table; it is not a sign of a healthy economy.
(LF = Labor Force; FT = Full Time; PT = Part Time; SNAP = Supplemental Nutritional Assistance Program, aka “food stamps”)

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Population up by 12.019 million in last five years yet, 20.3 million more Americans have joined the queue for food stamps. Over the same period Labor force participation is up a modest 2.2 million. Those dropping out of the labor force rose by 9.8 million. Full time jobs shrank by 5.2 million.
How can you say the economy is doing very well when number of full time jobs is dropping 1% annually*, and the number of people needing food stamps is growing 69% faster than the population is?

* Not to mention that the purchasing power of wages and salaries is falling even faster as MacJobs replace higher pay factory jobs.

 

So you Carcano, know economics better than legions of economists, and only you are able to detect the scam? I see.

Perhaps you should tell that to Greece and Cyprus. I don’t know why the greatest financial minds in Europe have been banging their heads and the global economy against the wall trying to solve their economic problems when they could just go deeper into debt.

But you do, so we can all rest safe at night.

 

I am not going to repeat myself ad nauseum. I am not a fan of Ground Hog Day. Your claims about the Fed are wrong. There is no indication that the Fed has been irresponsible in its management of the money supply. The money supply is not the Fed’s balance sheet. And it is the money supply that the Fed is responsible for managing. AND THE MONEY SUPPLY IS THE ONLY THING THAT IS RELEAVANT.

Two, you keep confusing purchasing power with income. And this has already been discussed.

Three, you want one error in your chart? The population of the US is 315 million people not the not 244,848 cited in your chart or even 244 million.

http://en.wikipedia.org/wiki/Demographics_of_the_United_States

 

You force me to repeat myself ad nauseum.
My post claiming 1 trillion in thin air money issued annually for last 4 or 5 years did not mention any of these strawmen you have created to knock down - not:
(1) the Fed
(2) the Fed´s balance sheet
(3) the money supply

See what I actually said/ spoke of in repost of post 28 at end of this post. Stop with diversion, ducking and weaving.

No I´m not confused I have clearly and several times now said the purchasing power of your salary has two factors. The least important one, the CPI you admit, but ignore the dominate one, you salary, by insisting the CPI determines you purchasing power. Three times now I have illustrated that with the worker´s whose new MacJob only pays a salary of 48% what is lost factory job did, with CPI= 2% he has lost 50% of his purchasing power - You continue to dodge the main factor effect - more duck and weave.

The table ONLY concerns people old enough to be in one of the categories (over 16, I think) so yes its "population" column is less than the total US population. I think even the BLS does EXACTLY the same thing when they calculate the work force participation rate as a fraction of the "population". I.e. less than 16 year olds are not part of the BLS "population" either. Try again to find a couple of "blatant errors"

Please comment (valid or not) on what I actually said and stop putting words in my mouth about the Fed, the money supply etc. or other diversionary ducking and weaving tricks

 

No I don’t force you. Two, the Fed, the Fed’s balance sheet and the money supply are not straw man arguments.

You made the following statement;

Originally Posted by Billy T
Yes printing more than a trillion thin-air dollars every year for last 4 or 5 years has made economy grow slightly, but at great price for next generation to pay.

And it is simply untrue. The Fed has not been printing a trillion of thin air dollars every year for the last 5 years. And you replied with;

Originally Posted by Billy T
I agree the Fed`s balance sheet is up slightly less than 3 trillion dollar in the last 5 years;

You brought up the Fed’s balance sheet, not me. I did mention the money supply in order to refute your insinuation that the Fed had been printing, “creating a trillion thin-air dollars every year for the 4 or 5 years”. If the Fed had printed that much money, it would show up in the money supply numbers. And it doesn’t. The money supply is not consistent with your claims about Fed actions. That is not a straw man that is a fact.

This discussion began with your claims about purchasing power. You claimed purchasing power had shrunk with the insulation that it was the result of the Fed’s monetary policy. I pointed other the differences between purchasing power and income. Purchasing power loss has been quite modest. Income since the recession has been down for the last few years. But that is to be expected, we just went through an almost Great Depression 2.0. The modest decline in median income we have seen over the course of the last few years has been very modest. If the Fed had not acted as fast or as aggressively as it did, that modest decline in median income would not have been so modest.

As previously pointed out your table is riddled with errors and it is from a dubious source. It was sourced from a money management firm’s web site. That is probably why you have not revealed the source for that chart. The purveyors of that web site are selling a product. They are not selling the truth. Where is your proof that they are only counting everyone over 16 years of age only in the population column? Your chart has a column for the total work force (employed + unemployed which excludes those under 16 years of age) and a column for population. So why would they have a column for the work force and a column for the population which excludes those under 16? It doesn’t make any sense Billy T. Individuals younger than 16 are not included in the work force numbers but they are included in the population numbers. The numbers still don’t add up.

If you point is that SNAP benefits have skyrocketed in recent years? I will concede that. But there is a reason, we just went through the biggest and most severe and prolonged recession since the Great Depression. That does not a trend make. It doesn’t mean we are all doomed. It is a normal and expected response and a good response to a severe economic insult.

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In 2009, SNAP grew by more than 50%, in the following year it grew by 28% and in the year after that it grew by about 10% and last year it was up by just less than 4%. SNAP benefits are going down, not up. The dramatic increase in the program was clearly due to The Great Recession.

 

I never said the Fed was printing trillions of thin air dollars for the last five years. That is just another set of words you have stuffed in my mouth as a strawman you could knock down. I said:

 

Former Reagan budget director David Stockman has come out with a new book that falls squarely in BillyT's camp on the future of the US economy.

A GDP supported by money printing can only end in crisis.

http://www.youtube.com/watch?v=FyDCauRk1lQ

http://www.youtube.com/watch?v=Zi1g_PmtQHA