Another mid-game SEC rule change

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21

[quote]Is it realy true that the lenders will stop playing if the US
keeps printing money[/quote]

Lending to whom? No really, if the United States prints money it is bad for two kinds of lenders:

  1. Those who lend to the US (government debt obligations are in surprise surprise US dollars.) In other words, it is akin to the United States saying to everyone who own United States debt that the ‘debt’ has now been lowered by ‘X%’ where X is the amount monetary printing inflated the dollar.

  2. Those who lend debt in the United States, or anywhere whereupon the debt is rated in dollars. For the exact same reason as the above.

To put it another way. If you gave your friend $1 to buy coke and then, later, your friend gave you $1 back which bought 1/2 as much coke… would you feel fully repaid? The lenders certainly dont!

History has shown the direct result of high inflation is very high interest rates.

I wouldn’t call myself authoritative. I don’t, after all, have a PH.D in economics. But I’d wouldn’t mind in the least if you quoted me. =)

I have long said that real change will wait until enough Baby Boomers keel over from old age. Though I also blame, in part, all the pro-capitalist anti-communist propaganda we fed ourselves during the cold war. It has horribly distorted our world view and ability to think clearly about economics.

–

Steve

22

"To put it another way. If you gave your friend $1 to buy coke and
then, later, your friend gave you $1 back which bought 1/2 as much
coke… would you feel fully repaid? The lenders certainly dont!"

But that is exactly what is already happening - US importers buy foreign goods with money they borrowed (from overseas lenders) in the first place and then pay back with more borrowed money which is worth less because they printed more and they keep the goods (not my original thought but can’t find source).

Agree about us boomers.

If money is a promise then it isn’t being kept is it?

I always resented the attention I’ve had to give to money. Now find myself giving more and more attention to the dammed thing.

 

And could it be both that money is finite but the number of steps to it’s end is infinite?

23

hi xflies sorry to disappoint you i did say i was a quaker.

someone i know was killed on a sailboat this year off the coast of

s america by pirates. if he had used his flare gun he might still be sailing on top of the deep blue sea instaed of resting on the bottom i have taken long sailing trips and if you go

into foriegn ports you have to declare your weapons it is a big hassle so many sailors simply have a number of flare guns.

in the 60’s and 70’s when we were having these very same discussions it always came down to yeah we can have our own water we can grow our own food and we can heat with wood and we can survive. but that all was dependent on the social fabric to remain intact. an eventuality which i am not willing to accept at the moment . i have no idea where you are or who you are but there exists the very real possibility of this entire country coming unglued. witness new orleans. when the bloods and the crips exit the cities in search of food and water then intellectual discomfort suddenly becomes irrelevant.

this country was founded on the use of guns. in my opinion we are at the most incredible time and have the awesome opportunity to take it back and some out there will take up arms. some will need to defend themselves. i have a daughter who i love and who lives alone and has been stalked. i gave her the flare gun advice.

i appreciate the financial advice this site provides it is invaluable but i think the long emergency we are entering is rapidly changing the paradigm. kuntsler does not paint a very pretty picture and when confronted with the threat of some one doing physical harm to you or one of your loved ones just what are you going to do? i suggest you stay informed as to when bubba is gonna come to your house. as for crawling skin i always use aloe vera.

i hope this clarifies things for you

24

steve i agree with both you and ben. the american people are not stupid they are ignorant. that is the result of many factors, the education system being a major reason. of course the time issue is huge both parents working , kids mortgage- for those that are still paying them. of course the only media that even comes close is coast to coast some talk radio and lou dobbs but the rest is just stuck in an old and useless paradigm. i just spent the day with a friend and turned him on to the money masters. he was blown away. he is going to show it to his parents who are retired and scared of not having enough to live on. they have worked hard played by the rules and lost 100k when a local bank went down. so i see my job as getting the information out to as many people as i can. i always remember that the revolution in this country was not a popular war and it was not an overwhelming majority.

so i think if we keep putting it out there we just might reach a critical mass to make a change. we have an incredible tool in the internet. i also think if we act from a place of love and the courage of our convictions well …no tellin where we might end up

thanks to all of you.

25

Anyone who twice bashes "NRA folk" in one run-on paragraph calling for objectivity would be on thin ice as far as credibility is concerned. I am one of those you are so quick to judge without knowledge as are a number of my friends and associates. I would bet my bank account you could spend a week with these people and not fit any one of them into the mold you have in your mind and have so ubiquitously applied to all of us. It is a sad fact that many who call for objectivity should really be looking in the mirror as they make their call.

26

Ron Paul’s bill in the House to fix the system is HR2755. Read it here:

http://thomas.loc.gov/home/gpoxmlc110/h2755_ih.xml

27

Steve, I think you are incorrect to say that money is a symbolic representation of a promise.

A promise to pay is actually credit, or its flipside, debt. Money is the commodity with which the promise is redeemed, being why banknotes used to be redeemable in gold.

Many commodities have been money in days gone by; gold, silver, tea, rum, salt, cigarettes, cattle,… The now irredeemable promises to pay (currency and electronic credits), past off as money is why debt levels are increasing exponentially and must eventually be liquidated, or hyperinflated away, then liquidated.

It would be more accurate to say that a promise is a symbolic representation of money.

28

Hi dbajba

Whoever said that to you was no free market fundamentalist - anybody who thinks that the Federal Reserve is part of a free market system is an ignoramus.

The Federal Reserve is a bunch of government appointed hacks who have the hubris to think that they can out-think the collective decisions of hundreds of millions of decision-makers.

They think that they - a set of political bootlickers - can set the optimal short term price of money once every six weeks or so, in a bid to ‘fine tune’ the economy.

What absolute madness!

As I wrote WAY back in 1997 (when people were starting to get all Chicken Little about Y2K, and that hack Mr Magoo Greenspan was starting to flood the system with credit): anyone who has ever studied monetary economics knows that monetary policy is at best a blunt instrument: a chainsaw, if you will.

Anybody who thinks they can do micro-surgery with a chainsaw is delusional, and is best avoided.

Without tooting my own horn too much, I wrote that two years after topping my masters class in Monetary Eco (and three years after being joint dux of my graduating Honours class). As a result of backing my analysis with my own capital, I retired at 37 and now live in Central France, from which vantage point I watch the nuttery unfold and take potshots at the Tycoon’s Whores in Congress from time to time.

 

Cheers

 

 

GT

France

GT’s Market Rant

29

Joe,

Already we’ve seen the traffic on Chris’ site grow and it tends to spike on particularly noteworthy newsdays. Getting the message out right now person to person and hope that they’ll go to Chris’ site is the best I can do right now. I look forward to having Chapter 20 finished and having DVDs available. In the meantime I need to research marketing to better understand how to encourage people to "take the red pills" (re: the movie The Matrix).

In fact - perhaps "The Red Pills" is what should be on the cover of the DVD and be otherwise blank to heighten the mystery (except for the website in small print)?

James

30

[quote]A promise to pay is actually credit, or its flipside, debt. Money is
the commodity with which the promise is redeemed, being why banknotes
used to be redeemable in gold.[/quote]

Both are promises. Money arose as ancient traders found the barter system cumbersome and carrying large amounts of wares too and fro difficult. As such, they created ‘clay coins’ which were basically IOU slips that could be redeemed at a later point for the ‘commodity’ they represented. These coins were later made gold and silver (to control counterfeiting) and became representative of any and all commodities. Money, however, was still only a promise, redeemable at any time, for a physical good. Money, in and of itself, has no use.

In a sense, debt and money are closely related. Bank issued debt, in a sense, creates an entirely new fiat money system.

–

Steve

31

And who will "purchase" these toxic securities after "the market starts to grow again"?

How can any growth occur given the very high probability of a global oil production peak?

Who would have real money in five years to make any sizable asset purchase - China? Russia? Saudi Arabia?

Congress and the President are delivering American’s children into the next Civil War.

32

Better yet, let’s nationalize the Federal Reserve. Confiscate every dollar of the Federal Reserve and its 12 member banks, and immediately make it the property of the US Government and American taxpayers.

That’s one "industry" that should be nationalized!

 

 

 

33

:wink:

34

I found this on the Dailypaul.com-Forum, where the Ron Paul Fans write:

http://www.dailypaul.com/node/65803

This is huge, folks, and it is hidden in a small, seemingly innocuous paragraph buried within this bill:

http://www.govtrack.us/sp…

Section 203 of the Financial Services Regulatory Relief Act of 2006 (12 U.S.C. 461 note) is amended by striking ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.

I wonder if this is the real meat of the bill. What is it referring to in the Financial Services Regulatory Relief Act of 2006?

http://www.govtrack.us/co…

SEC. 202. INCREASED FLEXIBILITY FOR THE FEDERAL RESERVE BOARD TO ESTABLISH RESERVE REQUIREMENTS.

Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(2)(A)) is amended–
(1) in clause (i), by striking the ratio of 3 per centum' and inserting a ratio of not greater than 3 percent (and which may be zero)‘; and
(2) in clause (ii), by striking and not less than 8 per centum,' and inserting (and which may be zero),’.

SEC. 203. EFFECTIVE DATE.

The amendments made by this title shall take effect October 1, 2011.

Here is the original bill to which this is referring:

http://www.federalreserve…

  1. Reserve requirements.

A. Each depository institution shall maintain reserves against its transaction accounts as the Board may prescribe by regulation solely for the purpose of implementing monetary policy–

i. in the ratio of 3 per centum for that portion of its total transaction accounts of $25,000,000 or less, subject to subparagraph (C); and*

ii. in the ratio of 12 per centum, or in such other ratio as the Board may prescribe not greater than 14 per centum and not less than 8 per centum, for that portion of its total transaction accounts in excess of $25,000,000, subject to subparagraph (C).

This was pointed out yesterday on Daily Kos, so I decided to look it up myself to confirm. Yes, this is legitimate. They are trying to free up the ability for the Federal Reserve to create credit with absolutely no limits.

They are removing the reserve ratio altogether. Consider that this bill has already been passed (and no one noticed) and was supposed to be enacted in 2011. This was the original timetable. That has been bumped up now. This is why the press and the leaders are so desperate to get this bill passed – their entire plan is at stake.

We not only need to oppose this "Rescue" bill, we need to further repeal the "Financial Services Regulatory Relief Act of 2006".

Spread the word about the depths of the evil contained in this bill.

35

Hi, I’m pretty new to scanning the markets so forgive my ignorance but could someone please explain why it is that yesterday the S&P, DOW and Nasdaq all went up slightly with oil prices rising and gold declining. Then today the complete reverse happens S&P, DOW, Nasdaq going down, oil down and gold up. Same with the day before yesterday…

Is this pattern occurring for a reason? if so, why? cheers guys/gals

36

http://finance.senate.gov/sitepages/leg/LEG%202008/093008%20Leg%20Text%20of%20the%20Emergency%20Economic%20Stabilization%20Act%20of%202008.pdf

37

In my opinion, it was day trading and speculation. Just look at the timeline:

Monday - Bailout defeated -> Dow drops record amount.

Tuesday before opening of markets - Bush anounces to the World bailout is still alive. This was a trader’s "dream come true" -> Dow climbs by record amount.

Wednesday - Bailout still not worked out -> Hangover and dow drops again.

Look at the Wikipedia articles on the Great Depression. The graphs are steeper, but the behaviour is very similar. After every huge loss there was a large gain, but overall never climbing back to the previous level.

I also love all the attemps during the Depression at market manipulation by the large investors (Rockfeller, etc.) - They made a few moves at buying stocks above market value. The only difference was that they were doing it openly, to to display confidence in the markets and hopefully spread that confidence around (obviously didn’t work).

The central banks and international governments are making similar moves. But this time quietly, so there is an appearance of genuine free market confidence - Unfortunately with just as fruitless results…

Never mind the fact that under normal circunstances I’m pretty sure that would be illegal.

 

 

38

If the gov’ts primary goal is to kick start the free market price discovery mechanism by offering out bids and they get outbid by others, does this Bill force the gov’t to paying up for securities? If not, then is there a possibility that this bailout works more like a backstop and that the gov’t won’t need to buy $700B worth of securities and instead much of it will go to foreign investors, private equity and any hedge fund that’s still alive? And even if the gov’t buys back securities, I wonder how long it will take for them to burn through $700B… there should be plenty of time to make money in the markets if you don’t have your blinders on. If the gov’t ends up buying $600B, then the alarm bells will ring again.

39

First let me start by saying the "rescue" American "buy in" will pass…as we all know. I may be buying calls on dow spiders before the end of the day today…the senate passing may create a wave i want to ride until friday or monday…???

Re: FDIC increase—WHO CARES!!! If/When the banking system fails they couldn’t cover $1,000 per depositor…so why not increase to $250K to create illusion of confidence. My goodness if Wamu went fdic they could barley cover those deposits.

Can you say dow 13K by Jan. 09 or Dow 15K by May 09…I know its almost unthinkable…but what they are fabricating WILL WORK to some degree and for a LIMITED period…as Chris has said the party on wall street goes on…and…we MAY be ready to see the PARTY of all PARTIES…we all know where the DOW "SHOULD" be…that we are in a serious recession NOW…but nothing NORMAL seems to matter.

Chris–Unsolicited advice–with all due respect–if I may—

First-you are a most trusted and honest economic commentator…!

When you opened this "forum" I could only have flash backs of ALL the garbage I have seen on messgae boards…I am SURE your intentions were/are nothing but positive-----for the greater good etc etc etc…

However–I guess I have a few thoughts…

1—when you give everyone access to YOUR web site forum…your entire vision…intellegence–direction etc etc gets diluted…to a degree and as you may have seen…and only the beginning ( message board comment earlier ) this is ONLY the beginning—more nuts--------jackasssssss–and CHallengers to come…

2—I want Chris Martenson focusing on — the several reports out today…the indicators…the charts…the world economy…analyzing data…checking history and applying it to todays circumstances…finishing chapter 20…not spending time to the " I don’t agree with you" "answer this challenge" or "I dont understand" whiner ( when you’ve signed up for 3 days ( unpaid–thank you ) you may not totally understand–look listen—evaluate etc etc …your NOT going to be 100% correct…you and I both know that…

3—Im finding ChrisMarteson.com…a lot less of Chris Martenson than I would like and I lot more of what I don’t want or need…

 

Thanks for all your hard work and giudence Chris!!!

JDB

 

 

 

 

 

 

 

40

I never meant to be offensive in my previous posts about objectivity but I was affected by posts from others on your site. I would rather much hear more from Chris and less from others (including myself Foot in mouth) … I would like to hear your thoughts on both sides of issues, and more of what you would do. I already know you are not for any type of bailout plan but assuming it goes through, what would you do if you were on that bailout committee? Personally, I would commit to always providing a 2 sided market once I was able to buy some assets. If the goal is to enhance price discovery, then a 1 sided market is no good. Start by buying some assets, drop your bids, no one else comes to bid, stay until u get hit, then lower it… no one wants to sell? Start offering some… 2 sided markets and a commitment to liquity creates confidence and even more liquidity… but enough of my opinions, I’d like to hear yours.