How Realistic is a North American Currency?
By Todd Harrison Jan 28, 2009 7:45 am
Could a seismic currency shift be in our future?
“World, hold on. Instead of messing with our future, open up inside.” --Bob Sinclair
Thomas Jefferson once said “when you reach the end of your rope, tie a knot in it and hang on.” As the global financial system pushes on a string, investors are desperately trying to hold tight.
The New World Order is upon us, full of hope, promise and a fair amount of fear. In our recent discussion regarding the direction of our country, we noted the risks of catering to conventional wisdom and the implications for the U.S. dollar.
The Minyanville mantra is to provide financial news you need to know before you know you need it. That’s a fine line to walk as foresight often flies in the face of mainstream acceptance.
In 2006, it seemed counter-intuitive to forecast a “prolonged socioeconomic malaise entirely more depressing than a recession.”
For years, the notion of an “invisible hand” was conspiracy theory until we learned that The Working Group on Financial Markets was a central policy tool.
And now, as we gaze across our historically significant horizon, we must open our minds to thoughts and ideas that may seem foreign to folks conditioned by the past and stunned by the present.
Currency Crossroads 
As governments take on more risk—as they price assets on behalf of the market and transfer debt from private to public—the common denominator, or release valve, becomes the currency.
If our economic condition is allowed to take medicine in the form of debt destruction, the greenback will appreciate and asset classes, as a whole, will deflate. If we continue to inject drugs that mask symptoms rather than address the disease, the likelihood of a seismic readjustment increases in kind.
The deflationary forces in the marketplace are pervasive and the “other side” of our current equation—hyperinflation—may be years away. Given the magnitude, breadth and pace of the global financial epidemic, however, we must explore each side of the twisted ride. 
Years ago, the Federal Reserve wrote a “solution paper” regarding the need to combat zero bound interest rates. The concern was the flight of capital from the U.S. and an option discussed was a two-tiered currency, one for U.S. citizens and one for foreigners.
Canadian economist Herbert G. Grubel first introduced a potential manifestation of this concept in 1999. The North American Currency—called the “Amero” in select circles—would effectively commingle the Canadian Dollar, U.S. Dollar and Mexico Peso.
No positions in stocks mentioned.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
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2009-01-28 08:52:38
History of the World – Part 2
In matters of the economy the govt can always be counted on to do the easy thing, the wrong thing, and be late doing everything. Usually it is a combo of all three.
Count de Monee, in History of the World – Part 1, is being superseded by Prince de Monee in Part 2. How much Monee he prince is yet to be seen but my guess is enough to mortgage our Great Grandchildren. Fortunately most won't still be alive when the kids look to drive wooden stakes through our hearts. Senators only have to plan ahead for 6 years, the Pres 4 years, and the House members 2 years – the voters have decided to attemp to live well and pass the bills along to future generations (at least as long as the Chinese buy the Prince's I-Owe-Us).
I think that less co-operation between countries will ensue as the global economic crisis worsens. Europe will go back to squabbling while being tied to each other by the Euro – is there anything worse than being tied to somebody you don't like by a short rope? Scarcer jobs being filled by illegal immigrants is not likely to garner goodwill in unemployment lines here. In the race to depreciate currencies faster than the next country, the world is more likely to have more rather than fewer currencies.
Even in a deflationary spiral folks will lose trust in paper money. Losing faith in governments is just the first step. We always hoped those scenarios would take years to develop and we would be dead by then... things are moving rather quickly, eh?
Count de Monee, in History of the World – Part 1, is being superseded by Prince de Monee in Part 2. How much Monee he prince is yet to be seen but my guess is enough to mortgage our Great Grandchildren. Fortunately most won't still be alive when the kids look to drive wooden stakes through our hearts. Senators only have to plan ahead for 6 years, the Pres 4 years, and the House members 2 years – the voters have decided to attemp to live well and pass the bills along to future generations (at least as long as the Chinese buy the Prince's I-Owe-Us).
I think that less co-operation between countries will ensue as the global economic crisis worsens. Europe will go back to squabbling while being tied to each other by the Euro – is there anything worse than being tied to somebody you don't like by a short rope? Scarcer jobs being filled by illegal immigrants is not likely to garner goodwill in unemployment lines here. In the race to depreciate currencies faster than the next country, the world is more likely to have more rather than fewer currencies.
Even in a deflationary spiral folks will lose trust in paper money. Losing faith in governments is just the first step. We always hoped those scenarios would take years to develop and we would be dead by then... things are moving rather quickly, eh?
2009-01-28 10:05:08
Relative to what?
What will the dollar depreciate against? Isn't Europe in even worse shape? Don't the Asian exporters need weak currencies to stimulate exports? Hasn't the entire shadow banking system been vaporized? Do you really think a few trillion in government spending can fill that void?
2009-01-28 10:13:15
History of the World – Part 2
It doesn't matter whether folks lose trust in paper money! The central banking elite crammed it down their throats, and the folks keep paying the central plannners to s*** on their US Constitution. Now, the Obama administration intends to implement an ancient form of slavery in the homeland. This mandatory "service" for 18-25 yr olds will purportedly "train" them to contribute to the new world order. May almighty fat gov reign forever!
2009-01-28 10:20:11
History of the World - Part 2
Yes, indeed. It matters only to the extent that the voters could change it. Time for that kind of change is running out. Perhaps the next election will be the tipping point.
As you point out, once 51% of the trough is occupied by pigs the situation becomes hopeless.
Could explain why gold is making another run -- can't fool all of the people all of the time.
As you point out, once 51% of the trough is occupied by pigs the situation becomes hopeless.
Could explain why gold is making another run -- can't fool all of the people all of the time.
2009-01-28 10:57:44
Relative to what?
well, gold and silver for 2.
Actually the history of the 2nd half of the 19th C is a fascinating study in currency adjustments, and from that historical perspective, Todd's article is spot on and extrement prescient. Check out wiki articles on the panics of 1873 & 1893. THe railroad bubble collapsed which led to bank failures and major currency issues.
Actually the history of the 2nd half of the 19th C is a fascinating study in currency adjustments, and from that historical perspective, Todd's article is spot on and extrement prescient. Check out wiki articles on the panics of 1873 & 1893. THe railroad bubble collapsed which led to bank failures and major currency issues.
2009-01-28 11:06:52
"it makes intuitive sense"
"The ability to combine Canadian natural resources, American ingenuity and cheap Mexican labor would allow North America to better compete on a global stage."
American ingenuity???
I realize you had to come up with something for us to contribute but how long would it take for the Canadians and Mexicans to figure out that they can import their own ASIAN ingenuity?
Whatever ingenuity the American population once had has long since succumbed to laziness, apathy and arrogance. If you think Americans are fat on the outside just imagine what the plaque infested arteries of our hearts and brains look like! After three+ decades of over-eating, over-medicating and having telelvision and mainstream 'culture' raise out kids just how many fully functioning brain cells do you really think are out there?
No, all America has left to offer is our military...and maybe porn.
We are rotting to death from the inside out. I would like to believe there is still time to turn this around but given our unwillingness to confront the truth that hope is dwindling fast.
The era of the rest of the world working and sacrificing and suffering to produce goods for us to consume (on credit) is fast coming to an end and if we don't awaken soon from our consumption induced stupor it isn't going to be pretty.
2009-01-28 11:14:38
prescient stuff
so the sudden currency disruption would probably be a warning tremor?
what side of the 'wishbone' world would the AMERO promote?
starting to sound more 1984-esque. we've always been at war with oceana!
2009-01-28 11:19:01
Local Currencies
ala GREAT BARRINGTON, Massachusetts could get a real boost in popularity if they were backed by gold and / or silver.
Once can imagine perhaps an entire State, not just a town, that issues such a currency.... Gresham would be clapping in his grave.
Much better than stamps issued by San Marino --- money that has an intrinsic value... what a concept!!
How about Texas Star Bucks???
Once can imagine perhaps an entire State, not just a town, that issues such a currency.... Gresham would be clapping in his grave.
Much better than stamps issued by San Marino --- money that has an intrinsic value... what a concept!!
How about Texas Star Bucks???
2009-01-28 11:22:26
Bone through the flesh
I agree 100% with you, Todd on the possibity of a "non-linear"/dis-continuous or what I call a "compound fracture" for the US dollar. How can any prudent person NOT have some Gold, no matter their inflation/deflation opinion? Gold could double or triple virtually overnight, and in retrospect it would appear to have been inevitable and an easy call to make.
Americans will NOT permit the Govt. to seize their Gold as they did in the '30's; the legitimacy of that Govt. is now irreversibly tainted and no one will now believe that the Gold seizure would be for the "greater good".
Americans will NOT permit the Govt. to seize their Gold as they did in the '30's; the legitimacy of that Govt. is now irreversibly tainted and no one will now believe that the Gold seizure would be for the "greater good".
2009-01-28 11:54:18
and then what?
Toddo,
Yes, every option seems to be on the table.. and your article is stirring some emotions!
Getting beyond this, (and folks, the Euro seemingly had an uneventful peaceful beginning) what would a NA currency mean for assets, metals, the dollar, and equities.
Would it be as seamless as the Euro? Then again USD is the reserve currency so I'm sure the implication would be a bit different.
Yes, every option seems to be on the table.. and your article is stirring some emotions!
Getting beyond this, (and folks, the Euro seemingly had an uneventful peaceful beginning) what would a NA currency mean for assets, metals, the dollar, and equities.
Would it be as seamless as the Euro? Then again USD is the reserve currency so I'm sure the implication would be a bit different.
2009-01-28 12:25:26
Relative to what?
Those would be the only two. But over the long-run gold tracks inflation, period. Dunno, the odds for deflation seem much higher to me given that the biggest credit bubble in the history of the world just burst.
2009-01-28 13:03:10
Bone through the flesh
FDR is revered today even though he collected gold from private citizens and kept us in the Depression until WWII (it appears that his mistakes plus the Japanese ones will be repeated). The govt would quote FDR and say the precident has already been set by the great one. To think otherwise is wishful thinking.
Hoarding gold will be another way of identifying traitors to the common cause. Governments "collect" gold, individuals hoard it.
Hoarding gold will be another way of identifying traitors to the common cause. Governments "collect" gold, individuals hoard it.
2009-01-28 13:04:41
Decoupling supply and demand
The Chairman of Duke energy was on CNBC this morning saying that the stimulus bill would allow them to "decouple" supply and demand, meaning it will allow them to increase electricity rates for consumers regardless of their consumption.
He went on to say that consumers would eventually receive the benefit of their reduced consumption when their money was used on "clean energy" technologies to reduce costs. Right!
I see no sign that government or industry is trying to regain trust or respect the rights of the individual or investors, whether it be their property or common shares of stock or the value of their dollar. Government and industry are in collusion to further enslave the average citizen.
Why not create an Amero? Why not confiscate IRA and 401K investments or severely restrict withdrawls or increase taxes on them? After all, it's for the "good of the nation". 1984 all over again...shudder...
2009-01-28 13:11:24
Relative to what?
That's the beauty of gold -- it can't be printed (inflated). Obviously during world crises a fear factor adds to the price of gold. Most people other than coin collectors own gold for crises situations as it doesn't pay interest or dividends and storage / insurance costs must be paid.
On the other hand, saving dollars at 0% interest is not very attractive - and most people with money know inflation is coming.
On the other hand, saving dollars at 0% interest is not very attractive - and most people with money know inflation is coming.
2009-01-28 13:59:10
and then what?
Funny...but I can't understand WHY the Canadians (who have done a remarkable job of bringing their country back from the economic brink & therefore have understanding of what is involved) should support such a regional currency! Canada actually produces products of value--oil & gas, minerals, etc., etc. By contrast, Mexico & US have nothing of value to contribute. The Amero would come into existence because of the reserve currency (US$) collapse. (All fiat currencies inevitably collapse...the illuminati planned for the inevitable, once they got away with establishment of a US central bank). I can only hope that the US "WAR ON DRUGS" & plans to institute a new standing army don't mean that US & Mexican governmental corruption will increase to the point at which their contributions become illegal drug profits.
2009-01-28 16:28:14
Amero, eh?
Nah, Canadians won't want to be linked to the USD. Too much debt weighing on it.
But, everyone, grab a Molson's, watch a hockey game and relax!
But, everyone, grab a Molson's, watch a hockey game and relax!
2009-01-28 17:03:40
Relative to what?
"Most people with money know that inflation is coming." Agree to disagree. We've got more supply than we know what to do with (manufacturing capacity, labor). And absent supply shortages, higher prices require higher demand. But where will demand come from? U.S. households have neither the need nor ability to level up further. Baby Boomers will have to massively increase their savings rates to prepare for retirement. Government spending? A drop in the bucket compared to the secular changes in household spending patterns we're only beginning to see.
2009-01-28 17:04:34
The Amero, A to F, (maybe there are more)
A) Got worthless US dollars? Hear that China, better trade in your dollars for Ameros, and we set the exchange rate.
B) Mexico has 1/3 the population of the US, and plenty of resources, (except oil), including arable land, irrigation water, and labor. The immigration problem is the reverse of what Conservatives claim, it always was, it always will be. We took Texas, and we're pushing South.
C) Message to Mexican Narco-Traffikers. Forget the war on terror, we are coming for you, with the blessings of your government and your people.
D) Canada, quit selling your oil to China.
E) Can we back the Amero with gold? Maybe, just leave it in the ground, and transfer it to the balance sheet.
F) Did George Bush actually get something right?
B) Mexico has 1/3 the population of the US, and plenty of resources, (except oil), including arable land, irrigation water, and labor. The immigration problem is the reverse of what Conservatives claim, it always was, it always will be. We took Texas, and we're pushing South.
C) Message to Mexican Narco-Traffikers. Forget the war on terror, we are coming for you, with the blessings of your government and your people.
D) Canada, quit selling your oil to China.
E) Can we back the Amero with gold? Maybe, just leave it in the ground, and transfer it to the balance sheet.
F) Did George Bush actually get something right?
2009-01-28 17:24:38
Relative to what?
Nathan, one thing I'd like to point out is that hyperinflation is not generally demand based, so you're econ. model does not apply. It is almost always a result of excess government borrowing. At some point, the government cannot pay its expenses, so it debases its currency.
2009-01-28 17:47:55
and then what?
The euro is not so seamless... cracks are showing. Most illustrative of that is the widening spread between Greek and German sovereign debt - though there are others. (regrettably, everything I know about the internals of the euro is ripped straight from "The Economist". So, don't ask me.)
2009-01-28 23:05:32
san dimas high school football rocks.
thanks for all the excellent banter. the MV mission is to provoke thought, not shape it. it's fair to say this stirred some neurons. :)
all around, sincerely--thank you.
toddo
all around, sincerely--thank you.
toddo
2009-01-29 08:34:05
Relative to what?
The govt is intent on devaluing the dollar - interest rates at 0% and printing tons of money will follow. If the govt is successful in printing enough money to stimulate the economy (they will for sure try - without limits). the value of the dollar will go down, import prices will rise, and other countries will be less inclined to buy our debt.
Food and energy are in short supply relative to the world population and consumption. Prices on turbo nose hair trimmers will continue to drop but I expect food and energy prices to be bid up in the near future. And the presses will roll on.
Food and energy are in short supply relative to the world population and consumption. Prices on turbo nose hair trimmers will continue to drop but I expect food and energy prices to be bid up in the near future. And the presses will roll on.
2009-01-29 09:22:22
Relative to what?
We've got tons of oil sitting in tankers. And we we've got tons of natural gas now that we've figured out how to get it out of shale relatively cheaply. Food prices? With oil cheap the demand for corn ethanol and, with it, corn, fertilizer, and acreage, has plummetted. But again I reiterate - as much as we have an incentive to debase our currency, doesn't virtually every other country have the same incentive? Further, the government can inject all the money it wants into banks, but if the banks don't lend it, consumers won't borrow it, and the velocity of money drops precipitously, how does the money find its way into the economy?
2009-01-29 09:47:01
Relative to what?
Of course - the industrialized countries are in a race to devalue their curriencies... that is what will exacerbate the problem. Will the grand champion in the race be the biggest winner or the biggest loser?
Shale oil breaks even around 90 bucks / barrel as I recall, so the price could double from where it is now and nobody would be selling shale oil. The govt will likely squander billions on alternative sources of energy - the distortion of the market by mandated ethanol will look small by comparison. However corn prices are still way above where they were before ethanol mandates and carry over supplies are below where they were.
Where will our citizens spend their money that is being printed? Not on the cars that Detroit will be required to build with their bail-outs.
We digress - the subject of this discussion was an Amero or not. I think we will see less co-operation among countries as the hardships worse - and more not fewer curriencies (how long can the Euro survive?).
Shale oil breaks even around 90 bucks / barrel as I recall, so the price could double from where it is now and nobody would be selling shale oil. The govt will likely squander billions on alternative sources of energy - the distortion of the market by mandated ethanol will look small by comparison. However corn prices are still way above where they were before ethanol mandates and carry over supplies are below where they were.
Where will our citizens spend their money that is being printed? Not on the cars that Detroit will be required to build with their bail-outs.
We digress - the subject of this discussion was an Amero or not. I think we will see less co-operation among countries as the hardships worse - and more not fewer curriencies (how long can the Euro survive?).
2009-01-29 10:11:51
Relative to what?
Not shale oil, natural gas from shale. No, I think we're on topic if the point was that a collapsing dollar would somehow lead to the Amero. I contend the dollar will not collapse, because it has nothing - besides gold - to collapse against. But even gold will be a lousy investment in a massively deflationary environment. Further, anyone who knows anything about America's history would know we're way too proud a nation to get rid of the dollar and link up with Canadians and Mexicans. What would that accomplish anyway? The natural instinct in a crisis is isolationism not "lets be friends with everyone and intertwine our economies further!". And any politician desiring another term will appeal to those instincts (thus, there is a great danger or protectionism). But I agree about the Euro. If you want to talk probabilities, I'd be betting on a Euro breakup before the ridiculous notion of the Amero.
2009-01-29 10:55:18
Relative to what?
Seems we agree on about everything. Except my belief that the govt can print more money than the country can produce goods / services (esp with their hobbling of free enterprise). It is only a matter of time.
2009-01-29 11:08:04
Relative to what?
Right on. David Rosenberg of Merrill Lynch, nicely sums up (and greatly expands upon) my deflation argument. What say ye of this?
https://www.gpcresearch.ml.wallst.com/common/emaillink/pdf.asp?SSS_20E89F090409B81E37D8B7177FAE1685&pdf=pdf/Some_inconvenient_truths.pdf
https://www.gpcresearch.ml.wallst.com/common/emaillink/pdf.asp?SSS_20E89F090409B81E37D8B7177FAE1685&pdf=pdf/Some_inconvenient_truths.pdf
2009-01-29 11:15:45
Relative to what?
Can't open the link.. not sure why.
I pulled most of my cash out of MLPFS last year after I went to cash, except for gold mining stocks. Long term CDs at 5% was a good move. I didn't think Merrill would survive as they seemed to be taking their own advice.
If it hadn't been for BofA they would have been toast. I still wouldn't put $ on their advice, but they are now BofA's problem.
I pulled most of my cash out of MLPFS last year after I went to cash, except for gold mining stocks. Long term CDs at 5% was a good move. I didn't think Merrill would survive as they seemed to be taking their own advice.
If it hadn't been for BofA they would have been toast. I still wouldn't put $ on their advice, but they are now BofA's problem.
2009-01-29 11:58:24
Relative to what?
Don't know why the link wouldn't work. Just Google: "David Rosenberg Some Inconvenient Truths". The first result should be the report.
2009-01-30 08:34:42
Relative to what?
Good article -- don't disagree with anything he said.
Inflation - a sudden and unwarranted expansion of the money supply. Of course the govt has fostered the now commonly accepted definition as unwarranted increases in the price of goods and services -- so greedy businessmen are seen as the root cause.
Of course inflation is not accompanied by a sudden and unwarranted decrease of goods and services so it is clearly not an issue of the supply side from the private sector.
Devaluation of the dollar is being accomplished through Fed interest rates near 0% and running of the printing presses (this has only just begun). Can the govt print more money than the debt that is being destroyed -- you bet! Or at least, I bet.
We already have too much stuff that we don't need.... houses, turbo nose hair trimmers, etc. We do need to eat however and consumables must be continually replenished. Hence most of the newly printed money will be spent on consumables -- and will be the first things to be bid up pricewise.
The bill in Congress will do little to stimulate the economy and will fail in that regard. More printing of money will follow, followed by even more. Viola - inflation!
Inflation - a sudden and unwarranted expansion of the money supply. Of course the govt has fostered the now commonly accepted definition as unwarranted increases in the price of goods and services -- so greedy businessmen are seen as the root cause.
Of course inflation is not accompanied by a sudden and unwarranted decrease of goods and services so it is clearly not an issue of the supply side from the private sector.
Devaluation of the dollar is being accomplished through Fed interest rates near 0% and running of the printing presses (this has only just begun). Can the govt print more money than the debt that is being destroyed -- you bet! Or at least, I bet.
We already have too much stuff that we don't need.... houses, turbo nose hair trimmers, etc. We do need to eat however and consumables must be continually replenished. Hence most of the newly printed money will be spent on consumables -- and will be the first things to be bid up pricewise.
The bill in Congress will do little to stimulate the economy and will fail in that regard. More printing of money will follow, followed by even more. Viola - inflation!
2009-01-30 09:17:56
Relative to what?
They will have to print tens of trillions. Further, they'll have to somehow get it into households' hands. That's the problem. If they print $30 trillion in hard currency but leave it in a football stadium where nobody can touch it, prices will be unaffected. Similarly, they can inject all the money they want into banks but if the banks don't lend it (merely use it to repair their balance sheets) and consumers don't borrow it (because they're already leveraged to the hilt) then the money never finds its way into the economy. And while we will continue to buy the necessities like food and consumables, we have plenty of excess capacity there as well...particularly as the emerging market consumers will now be cutting back on their meat consumption.
2009-01-30 10:11:38
Relative to what?
Of course they will. If 10 trillion of debt is destroyed they will have to print 30 trillion because they will have put most of it in the wrong hands. When there is still a problem, they will print 30 trillion more. Once the country is awash in dollar bills banks will be happy to lend it, give it away instead of toasters, and burn it in their fireplaces.
Most of the money spent so far has been used to keep the same problem managers in charge of the problem institutions.
By the time that plays out prices will begin to rise rapidly. The problem will be the inflated money supply. Ink is cheaper and more commonly available than sense and fortitude.
Most of the money spent so far has been used to keep the same problem managers in charge of the problem institutions.
By the time that plays out prices will begin to rise rapidly. The problem will be the inflated money supply. Ink is cheaper and more commonly available than sense and fortitude.
2009-01-30 10:31:39
Relative to what?
"When there is still a problem, they will print 30 trillion more." The "problem" you speak of, presumably, is the money still not making it into households' hands for the reasons I outlined above. Thus, if there's still a "problem", there's still deflation. But how about this: name me one time in world history when the bursting of an enormous credit bubble ultimately led to inflation. Did the Japanese not absolutely flood their economy and banks with spending and liquidity? Have they had inflation? Did the Swedes, when they nationalized their banks after their own credit bubble, suffer from inflation?
2009-01-30 11:23:28
Relative to what?
Your definition of inflation is rising prices. We are having two different arguments going.
Japan didn't have the same set of problems... they didn't need to get the money in the hands of the people (they had huge personal savings by comparison and low unemployment rates), they just tried to save their institutions.
Japan is very conservative. Our govt is becoming socialist. Which one is inclined to print money by the megaton?
Japan didn't have the same set of problems... they didn't need to get the money in the hands of the people (they had huge personal savings by comparison and low unemployment rates), they just tried to save their institutions.
Japan is very conservative. Our govt is becoming socialist. Which one is inclined to print money by the megaton?
2009-01-30 11:41:48
Relative to what?
Actually I'd say Japan's corporations 1990 = U.S. consumers 2009. I think that's about the closest comparison there is. And Japanese govt. spending throughout the 1990s was absolutely massive - yet still no inflation. No, we're not "socialist" or becoming socialist. This isn't a black and white issue. The U.S. economy has had degrees of socialism almost since it was founded. But, hey, the Swedes are pretty socialist - where's their inflation?
2009-01-30 11:48:46
Relative to what?
Stagflation wasn't considered to be possible until it happened in the US.
I'd say we are headed towards Depflation. We can argue forever or wait and watch. In the meantime I'll stay in cash and gold until the S&P reaches 600.
Maybe goldbugs are all nuts -- I wasn't one even in Carter's reign but last year it seemed to me that O will be a lot worse than C. and was converted. Before it is over nobody will want paper.
I'd say we are headed towards Depflation. We can argue forever or wait and watch. In the meantime I'll stay in cash and gold until the S&P reaches 600.
Maybe goldbugs are all nuts -- I wasn't one even in Carter's reign but last year it seemed to me that O will be a lot worse than C. and was converted. Before it is over nobody will want paper.
2009-01-30 11:59:54
PS
Hot from Bloomberg this morning:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1OKSJofs8hk
Of course there may be an explanation other than a sudden unwarranted expansion of the money suppy.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1OKSJofs8hk
Of course there may be an explanation other than a sudden unwarranted expansion of the money suppy.
2009-01-30 12:01:10
Relative to what?
Alright, let's wait and see. Minyanville's one my favorite sites - So I'm sure I'll see you around and we can debate something else:)
2009-02-28 03:21:21
No increase in printing...
Some posters comments seem to reflect the belief that actual paper dollars are being printed at a higher rate. The Treasury recently denied this, no? If it is not happening, then it is not happening.
2009-03-24 17:46:46
No increase in printing...
Paper money doesn't matter. What matters is the perception of the money supply vs. actual value available to fill the demands for exchange.
When someone promises to make payments for the next 30 years, they promise to take resources out of the ground or out of their life in the future in order to enjoy something now. If the resources aren't available at the rate of borrowed money, then we have a failure of the currency, regardless of how much is printed or how many promises the government makes by putting a gun to our children's heads.
When someone promises to make payments for the next 30 years, they promise to take resources out of the ground or out of their life in the future in order to enjoy something now. If the resources aren't available at the rate of borrowed money, then we have a failure of the currency, regardless of how much is printed or how many promises the government makes by putting a gun to our children's heads.
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