Cosmo's latest comment on the Economy.

[Cosmo]

It's been an interesting week... so for the Perberts who have watched Cosmo's gloom and doom the last six months you might find this... ummm... interesting.

The Bank of England has been printing money to buy government bonds in a bid to ward off deflation. The U.S. Federal Reserve is buying assets and the Bank of Japan earlier this month bought corporate bonds from lenders for the first time.

Last Tuesday the Bank of Canada announced that it was prepared to enter unchartered territory and flood the financial system with additional cash by buying up securities in the market though an initiative known as "Quantitative Easing”.

"In many ways, quantitative easing is viewed as the nuclear option for central banks, and one does not lightly banter about the use of nuclear weapons unless there is a very serious intent," said Eric Lascelles, chief economics and rates strategist at TD Securities.

Under quantitative easing, the central bank would buy a variety of assets from market players, including asset-backed securities, government bonds, corporate bonds and, in extreme cases, even stocks.

In his commentary Lascelles summarized succintly what is coming. “In broad terms, quantitative easing means increasing a central bank's balance sheet to provide more liquidity to the financial system by essentially printing money. The objective is to flood more money into the banking system than what is needed to keep the key policy rate low.”

China has also announced similar measures.

As for the US, that process is already well under way.

====================

Everyone's printing money gang.

In the short term it will be an effective strategy. All those newly printed dollars will offset the collapse in asset values and bank balance sheets.

But what comes next?

Well...mark my words and note the date - I predict that not only is the market collapse over... the market is about to take off like a rocket.

And the growing mountain of paper currency is set to trigger the oft-predicted, hyper-inflationary period.

Buckle up gang. I think we are in for a hell of a ride.

 

[Krustee]

====================

Everyone`s printing money gang.

In the short term it will be an effective strategy. All those newly printed dollars will offset the collapse in asset values and bank balance sheets.

But what comes next?

Well...mark my words and note the date - I predict that not only is the market collapse over... the market is about to take off like a rocket.

And the growing mountain of paper currency is set to trigger the oft-predicted, hyper-inflationary period.

Buckle up gang. I think we are in for a hell of a ride.

Golly gee Cosmo...
if what you`re sayin is true then we got`s an even bigger problem...

FSD might have to apologize for his statements in this thread:

So you`re basically just saying screw whatever empirical evidence exists and just blindly believe what Leeb and others say?

GOOD GOD..MAN PLEASE TELL ME THERE`S MORE TO YOUR THEORIES AND PREDICTIONS THAN THAT?

What economic indicators do I need to look at to correlate anything with the movement of gold. Be specific..telling me I need to look at the indicators is basically telling me you don`t even understand what you`re posting.

What indicators would those be?

Your obvious lack of insight is what keeps you from understanding.


I noticed you conveniently chose not to post this from that article:

"Our economy is approaching a key inflection point where rising oil prices finally will bring on inflation. And that will be manna for gold."

We have not seen much inflation yet due to this economy but I can assure you I am preparing for huge inflation in the next 1-2 years.

You, however, can do whatever makes your toes curl.


Here`s the 1 year historical price of gold:

I think you will see it rise when oil rises again.


If you cannot understand why it did not go up over $1100 after reading what I posted above you are truly hopeless.
Ultimately you will believe what you believe regardless of what I or anybody else says.


https://perb.cc/vbulletin/showthread.php?p=864067#post864067

 

[wess]

It's been an interesting week... so for the Perberts who have watched Cosmo's gloom and doom the last six months you might find this... ummm... interesting.

The Bank of England has been printing money to buy government bonds in a bid to ward off deflation. The U.S. Federal Reserve is buying assets and the Bank of Japan earlier this month bought corporate bonds from lenders for the first time.

Last Tuesday the Bank of Canada announced that it was prepared to enter unchartered territory and flood the financial system with additional cash by buying up securities in the market though an initiative known as "Quantitative Easing”.

"In many ways, quantitative easing is viewed as the nuclear option for central banks, and one does not lightly banter about the use of nuclear weapons unless there is a very serious intent," said Eric Lascelles, chief economics and rates strategist at TD Securities.

Under quantitative easing, the central bank would buy a variety of assets from market players, including asset-backed securities, government bonds, corporate bonds and, in extreme cases, even stocks.

In his commentary Lascelles summarized succintly what is coming. “In broad terms, quantitative easing means increasing a central bank's balance sheet to provide more liquidity to the financial system by essentially printing money. The objective is to flood more money into the banking system than what is needed to keep the key policy rate low.”

China has also announced similar measures.

As for the US, that process is already well under way.

====================

Everyone's printing money gang.

In the short term it will be an effective strategy. All those newly printed dollars will offset the collapse in asset values and bank balance sheets.

But what comes next?

Well...mark my words and note the date - I predict that not only is the market collapse over... the market is about to take off like a rocket.

And the growing mountain of paper currency is set to trigger the oft-predicted, hyper-inflationary period.

Buckle up gang. I think we are in for a hell of a ride.

$1000 bucks an ounce for gold is cheap. Factor in inflation and it should be $5100 The DOW and gold goes 1 to 1 in these times so DOW will go to 5000 and gold will go to 5000.

 

[FunSugarDaddy]

Just out of curiosity

How does all this tie into your theory about house prices collapsing? Are you suggesting they are going to collapse in a hype-inflated environment?

Seems like a somewhat strange prediction.

Basically the central banks are scared silly about the possibilty of systemic deflation taking hold, and yes they are doing everything they can to prevent this from happening. And granted they are trying to walk a very fine line, one that's almost impossible to get exactly right.

It's been an interesting week... so for the Perberts who have watched Cosmo's gloom and doom the last six months you might find this... ummm... interesting.

The Bank of England has been printing money to buy government bonds in a bid to ward off deflation. The U.S. Federal Reserve is buying assets and the Bank of Japan earlier this month bought corporate bonds from lenders for the first time.

Last Tuesday the Bank of Canada announced that it was prepared to enter unchartered territory and flood the financial system with additional cash by buying up securities in the market though an initiative known as "Quantitative Easing”.

"In many ways, quantitative easing is viewed as the nuclear option for central banks, and one does not lightly banter about the use of nuclear weapons unless there is a very serious intent," said Eric Lascelles, chief economics and rates strategist at TD Securities.

Under quantitative easing, the central bank would buy a variety of assets from market players, including asset-backed securities, government bonds, corporate bonds and, in extreme cases, even stocks.

In his commentary Lascelles summarized succintly what is coming. “In broad terms, quantitative easing means increasing a central bank's balance sheet to provide more liquidity to the financial system by essentially printing money. The objective is to flood more money into the banking system than what is needed to keep the key policy rate low.”

China has also announced similar measures.

As for the US, that process is already well under way.

====================

Everyone's printing money gang.

In the short term it will be an effective strategy. All those newly printed dollars will offset the collapse in asset values and bank balance sheets.

But what comes next?

Well...mark my words and note the date - I predict that not only is the market collapse over... the market is about to take off like a rocket.

And the growing mountain of paper currency is set to trigger the oft-predicted, hyper-inflationary period.

Buckle up gang. I think we are in for a hell of a ride.

 

[wess]

How does all this tie into your theory about house prices collapsing? Are you suggesting they are going to collapse in a hype-inflated environment?

Seems like a somewhat strange prediction.

Basically the central banks are scared silly about the possibilty of systemic deflation taking hold, and yes they are doing everything they can to prevent this from happening. And granted they are trying to walk a very fine line, one that's almost impossible to get exactly right.

They are filling debt by printing money but the people will waste any money they can find so all it will do is increase the money supply and drive inflation.

 

[Krustee]

How does all this tie into your theory about house prices collapsing? Are you suggesting they are going to collapse in a hype-inflated environment?

Seems like a somewhat strange prediction.

Basically the central banks are scared silly about the possibilty of systemic deflation taking hold, and yes they are doing everything they can to prevent this from happening. And granted they are trying to walk a very fine line, one that's almost impossible to get exactly right.

Sometimes I swear you have no concept of economics FSD.

The fact is that house prices are down & will continue to go down due to the lack of demand and difficulty in qualifying for loans.

Furthermore, the current rate of job losses is expected to accelerate meaning that there will be further downward pressure on house prices.

So the concept of 30% or more drop in house values should be a given with the current conditions.

Freeze frame that in your mind & let's apply the concept of inflation on it shall we?

Inflation
1. Economics. a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency.

As should be obvious to anyone by now all governments around the world are dumping money in to prop up the failing financial institutions, manufacturing & service sectors of their economies.

All are running the printing presses with fervor to fill the coffers of industry with spendable funds in the hope of saving & creating jobs to kick-start the economic engine.

With all this money being pushed into this failing economy & most economic scholars having no idea if it will take hold, you have to wonder, what is going to happen?

Let's say the economy recovers, employment rises, people start buying again & then what? (which I highly doubt)

Or the money just disappears into the black hole that we have created & leaves everyone wondering what to do next.
Well, they just print more money - & keep feeding the beast.
Because they don't know what else to do.

This causes the value of that money to plummet & we see inflation hit.

But because they have so much money spread around the only thing that is plentiful is - money.

Oil prices rise

Gold spikes

Interest rates rise

We see -

Hyper-inflation!


What effect does that have on house prices?

Nothing!

House prices inflate relative to everything else due to the low value of the dollar.

 

[FunSugarDaddy]

Finally a decent response..

Hey now we're getting somewhere, a response I can address.

Good job.

You don't expect agreement on economic issues do you? Even Economists disagree on many of these issues.

Look, everything you've said is plausible and it is one scenario that could unfold. But here's a question for you. If the markets and people who specialize in understanding these issues far better than you and I thought they were going to unfold in the manner you and Cosmo believe, why wouldn't long term bond rates reflect this? To the best of my knowledge long term bond rates, which take into account expected future inflation rates, remain extremely low? Why?

Sometimes I swear you have no concept of economics FSD.

The fact is that house prices are down & will continue to go down due to the lack of demand and difficulty in qualifying for loans.

Furthermore, the current rate of job losses is expected to accelerate meaning that there will be further downward pressure on house prices.

So the concept of 30% or more drop in house values should be a given with the current conditions.

Freeze frame that in your mind & let's apply the concept of inflation on it shall we?



As should be obvious to anyone by now all governments around the world are dumping money in to prop up the failing financial institutions, manufacturing & service sectors of their economies.

All are running the printing presses with fervor to fill the coffers of industry with spendable funds in the hope of saving & creating jobs to kick-start the economic engine.

With all this money being pushed into this failing economy & most economic scholars having no idea if it will take hold, you have to wonder, what is going to happen?

Let's say the economy recovers, employment rises, people start buying again & then what? (which I highly doubt)

Or the money just disappears into the black hole that we have created & leaves everyone wondering what to do next.
Well, they just print more money - & keep feeding the beast.
Because they don't know what else to do.

This causes the value of that money to plummet & we see inflation hit.

But because they have so much money spread around the only thing that is plentiful is - money.

Oil prices rise

Gold spikes

Interest rates rise

We see -

Hyper-inflation!


What effect does that have on house prices?

Nothing!

House prices inflate relative to everything else due to the low value of the dollar.

 

[kodiak_bear3]

US like Argentina?

The USA is facing a $11 trillion debt and all Americans together have accumulated $14 trillion of personal debt and in 2008 they have seen:

• $11 trillion decline in house market values (that is ~78$ of their GDP);
• $10 trillion decline in stock market values (that is ~71% of thier GDP);

Suppose that you are a family of 4 and you make $140,000 (your GDP) a year and you own your house with a mortgage of $110,000 (federal debt) and you have debit with credit cards for $140,000 (personal loans).
In the last 12 months your house loses $110,000 in value because of the real estate market crash and your RRSP loses $100,000 value because of the stock market crash.
Would you file for bankruptcy?

 

[FunSugarDaddy]

The USA is facing a $11 trillion debt and all Americans together have accumulated $14 trillion of personal debt and in 2008 they have seen:

• $11 trillion decline in house market values (that is ~78$ of their GDP);
• $10 trillion decline in stock market values (that is ~71% of thier GDP);

Suppose that you are a family of 4 and you make $140,000 (your GDP) a year and you own your house with a mortgage of $110,000 (federal debt) and you have debit with credit cards for $140,000 (personal loans).
In the last 12 months your house loses $110,000 in value because of the real estate market crash and your RRSP loses $100,000 value because of the stock market crash.
Would you file for bankruptcy?

The answer to your last question is absolutely not. Depending on a couple of assumptions, I'd estimate you'd still have a net worth of approximately 400K +/- 50K if you make the following assumptions

1. House went down 30% so 110k / 30% = 366K

2. 401K was balanced and therefore went down 20% 100k/20% = 500K

So initial net worth was 366K + 500K = 866K less debt of 250 = 616K

After the crash, house value is 70% of 366 = 256k

401K is 80% of 500K = 400K

revised net worth 256K (house) + 400K (401K) = 656K less debt of 250 = 406K

(ignoring tax obligations on the withdrawal of the 401K)

 

[mclovin76]

this depression is not going to hit people who have money that hard imean if you got a mil and you lose half oh well you still make money of the 500 but if your tight month to month with high mortgage, wich is the over 35 % of people then ya they will lose thier house as well as jobs. Now if you lose your job how long can you make it? this is a question one has to ask themselves.

 

[FunSugarDaddy]

this depression is not going to hit people who have money that hard imean if you got a mil and you lose half oh well you still make money of the 500 but if your tight month to month with high mortgage, wich is the over 35 % of people then ya they will lose thier house as well as jobs. Now if you lose your job how long can you make it? this is a question one has to ask themselves.

Yes that is the major concern with the rise in unemployment. It's basically a cycle spinning downwards. No credit, equals no loans, no loans equals no purchases, no purchases, equals no jobs. Repeat.

 

[kodiak_bear3]

China 'worried' about US Treasury holdings

China's premier didn't say it in so many words, but the implied warning to Washington was blunt: Don't devalue the dollar through reckless spending. Premier Wen Jiabao's message is unlikely to be misunderstood at the White House. It is counting on Beijing to help pay for its stimulus package by buying U.S. bonds. China already is Washington's biggest foreign creditor, with an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets.

Read full article here

This is unprecedented! The Chinese are telling the USA what to do in their internal economic policy.
What will happen if they stop buying US bonds?

 

[FunSugarDaddy]

This is unprecedented! The Chinese are telling the USA what to do in their internal economic policy.
What will happen if they stop buying US bonds?

I heard this second hand this morning on BNN. Kind of reminded me of what happened in the 50's when the French and Britain were going to help Israel take over the Suez Canal. The US threatened not to renew Britain's loans and Britain capitulated, it was the changing of the guard in terms of world power.

Face it the US is in a downward spiral, in terms of it's world influence. The only debate is the speed in which it is loosing influence.

 

[wess]

Hey now we're getting somewhere, a response I can address.

Good job.

You don't expect agreement on economic issues do you? Even Economists disagree on many of these issues.

Look, everything you've said is plausible and it is one scenario that could unfold. But here's a question for you. If the markets and people who specialize in understanding these issues far better than you and I thought they were going to unfold in the manner you and Cosmo believe, why wouldn't long term bond rates reflect this? To the best of my knowledge long term bond rates, which take into account expected future inflation rates, remain extremely low? Why?

People are storing there money in bonds for a while. Do you really think somebody will hold a bond for 30 years to collect a 3% coupon ?

There might be a run on bonds similar to a raun on a bank and then gold will shoot up.

 

[wess]

Yes that is the major concern with the rise in unemployment. It's basically a cycle spinning downwards. No credit, equals no loans, no loans equals no purchases, no purchases, equals no jobs. Repeat.

That is true if your in a phony economy with a trade deficit, like the US.

 

[wess]

I heard this second hand this morning on BNN. Kind of reminded me of what happened in the 50's when the French and Britain were going to help Israel take over the Suez Canal. The US threatened not to renew Britain's loans and Britain capitulated, it was the changing of the guard in terms of world power.

Face it the US is in a downward spiral, in terms of it's world influence. The only debate is the speed in which it is loosing influence.

The US has 8100 tons of gold, China has 600 tons of gold. Maybe China will ask for some gold in return instead of there principal.

 

[FunSugarDaddy]

People are storing there money in bonds for a while. Do you really think somebody will hold a bond for 30 years to collect a 3% coupon ?

There might be a run on bonds similar to a raun on a bank and then gold will shoot up.

So you're saying what? there's going to be a bond crash. So let's see what we have on this thread.

A housing crash, a bond crash, and hyper-inflation in a high employment environment and gold shooting up anything else? Is the end of the world also in your sites?

What's the time frame for all this? I want to make sure I have time to enjoy myself.

 

[wess]

So you're saying what? there's going to be a bond crash. So let's see what we have on this thread.

A housing crash, a bond crash, and hyper-inflation in a high employment environment and gold shooting up anything else? Is the end of the world also in your sites?

What's the time frame for all this? I want to make sure I have time to enjoy myself.

The US bond market is a ponzi scheme basically. It could crash. Buy some gold just incase it really does happen. I just bought some. This is what it cost me.

2 oz $993 per coin total $1986

$50 comission

Total in US $2036

Canadian $ sub total $2672.25

5% GST $133.61

Grand total for 2 oz $2805.86