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qman
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Re: Bottom Finally In For Silver? [Re: KauaiOrca]
#21955785 - 07/17/15 11:47 AM (8 years, 6 months ago) |
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KauaiOrca said:
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qman said:
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KauaiOrca said: The Gold/Silver bust cycle is taking another leg down. Global stimulus increasing but gold and silver going down.
Deflation is winning, revenue down in Q2 for SP 500 over -4% YOY. http://www.valuewalk.com/2015/06/sp-500-earnings-revenue-q2/
How's that "stimulus" working? It's not. How the demand for commodities? Weak, oil barely holding $50.
Deflation on what? Food? Health Care? Education? Automobiles? Housing? Rents? Entertainment?
The prices on the stuff that matters continues to go up, up, up.
The Collective Wealth of American is up by HUGE numbers, certainly not spread out the way we'd like it, but it is way, way up over the last 5 years.
"The prices on the stuff that matter continues to go up"
Yet, CPI completely tells a different story. http://data.bls.gov/timeseries/CUUR0000SA0?output_view=pct_12mths
PPI also weak- http://www.zerohedge.com/news/2015-05-14/wholesale-deflation-strikes-us-economy-april-ppi-has-biggest-annual-drop-5-years
If inflation was really moving higher the bond market would let us know, where is the 10 year bond today- 2.34%, that's telling us deflation, not inflation.
CRB commodity index 5 years- crushed- http://www.bloomberg.com/quote/CRY:IND
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KauaiOrca
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Re: Bottom Finally In For Silver? [Re: qman]
#21955852 - 07/17/15 12:07 PM (8 years, 6 months ago) |
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Quote:
qman said:
If inflation was really moving higher the bond market would let us know, where is the 10 year bond today- 2.34%, that's telling us deflation, not inflation.
Excellent point. The global bond markets are so absolutely screwy right now because of central bank efforts that it's hard to get a clear read on them. I don't believe they're market driven at this point and the potential sellers just aren't convinced yet that the FED has the guts to pull the trigger. Gundlach said this week he thinks yields are going lower because the FED won't raise rates …
The blowback from all this intervention is very hard to calculate as we've never seen this kind of global coordinated effort before. Seriously, yields in Spanish and Italian bonds, at times the last two years, have been lower than US bonds. Figure that one out!
-------------------- "The universe is endless, limitless and infinite. Any effort to define it's boundaries is an attempt to overcome ignorance. We are physical, mental and spiritual beings ... there is no beginning and there is no end. There is only memory. Our repeated loss of memory experiences create the illusion of beginnings and ends. Immortality is the ability to retain full memory through all consciousness transformations. Loss of memory is man's greatest curse and, in very real terms, death." -- Ancient Taoist Master
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qman
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Re: Bottom Finally In For Silver? [Re: KauaiOrca]
#21956069 - 07/17/15 01:04 PM (8 years, 6 months ago) |
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Quote:
KauaiOrca said:
Quote:
qman said:
If inflation was really moving higher the bond market would let us know, where is the 10 year bond today- 2.34%, that's telling us deflation, not inflation.
Excellent point. The global bond markets are so absolutely screwy right now because of central bank efforts that it's hard to get a clear read on them. I don't believe they're market driven at this point and the potential sellers just aren't convinced yet that the FED has the guts to pull the trigger. Gundlach said this week he thinks yields are going lower because the FED won't raise rates …
The blowback from all this intervention is very hard to calculate as we've never seen this kind of global coordinated effort before. Seriously, yields in Spanish and Italian bonds, at times the last two years, have been lower than US bonds. Figure that one out!
I've been saying it for a long time, policymakers want a low growth/low inflation environment and that's what they have achieved the past 7 years.
Once debt to GDP goes over 100%, a move higher in interest rates is not a good thing for governments, businesses and consumers. The end result is a economic policy which limits growth and inflation to avoid those higher rates.
The politicians can't go on TV and tell the American people that they can't have real economic growth, so they blame each other for the current predicament.
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KauaiOrca
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Re: Bottom Finally In For Silver? [Re: qman]
#21956080 - 07/17/15 01:08 PM (8 years, 6 months ago) |
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Quote:
qman said:
Quote:
KauaiOrca said:
Quote:
qman said:
If inflation was really moving higher the bond market would let us know, where is the 10 year bond today- 2.34%, that's telling us deflation, not inflation.
Excellent point. The global bond markets are so absolutely screwy right now because of central bank efforts that it's hard to get a clear read on them. I don't believe they're market driven at this point and the potential sellers just aren't convinced yet that the FED has the guts to pull the trigger. Gundlach said this week he thinks yields are going lower because the FED won't raise rates …
The blowback from all this intervention is very hard to calculate as we've never seen this kind of global coordinated effort before. Seriously, yields in Spanish and Italian bonds, at times the last two years, have been lower than US bonds. Figure that one out!
I've been saying it for a long time, policymakers want a low growth/low inflation environment and that's what they have achieved the past 7 years.
Once debt to GDP goes over 100%, a move higher in interest rates is not a good thing for governments, businesses and consumers. The end result is a economic policy which limits growth and inflation to avoid those higher rates.
The politicians can't go on TV and tell the American people that they can't have real economic growth, so they blame each other for the current predicament.
I think the dirty little secret is the impact rising interest rates will have on the government payment on the debt. I've seen calculations that even a 1% move higher raises the interest payment for one year as much as 200 billion dollars. The government simply cannot afford for the payment on the debt to go up like that and these low interest rates are masking a huge, huge problem. We will default on our debt payments unless they are restructured if rates are normalized.
-------------------- "The universe is endless, limitless and infinite. Any effort to define it's boundaries is an attempt to overcome ignorance. We are physical, mental and spiritual beings ... there is no beginning and there is no end. There is only memory. Our repeated loss of memory experiences create the illusion of beginnings and ends. Immortality is the ability to retain full memory through all consciousness transformations. Loss of memory is man's greatest curse and, in very real terms, death." -- Ancient Taoist Master
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Stonehenge
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Re: Bottom Finally In For Silver? [Re: KauaiOrca]
#21956147 - 07/17/15 01:21 PM (8 years, 6 months ago) |
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i always get a chuckle out of yellen periodically saying the fed is going to raise rates. Then of course they always decide not to.
-------------------- “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835) Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755
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Ahab McBathsalts
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Re: Bottom Finally In For Silver? [Re: KauaiOrca]
#21956173 - 07/17/15 01:27 PM (8 years, 6 months ago) |
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Incorrect.
Issue the debt at low levels, then balance the budget and prepare for a high inflation / high interest environment so the debt is worth less in future dollars.
Just as 1.02^30 = 1.81 is much less than 1.07^30 = 7.61. It would be 6 times cheaper to let the inflation rate creep up and pay back the debt in inflated dollars. Especially since bond yields and inflation are at a 30 year low, so the cycle changes and the debt issued is worth one 6th of what it was issued at.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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Stonehenge
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Inflation will of course reduce the debt. But then there is the pesky problem of them cashing in our iou's and buying at higher interest rates. We will need a lot of inflation to avoid default so... that is what is in store for us. Cash is no longer king, commodities are better.
i am puzzled same as everyone else at the downward trend of pm's. Rather than assume that after millennia of being in high value the world has turned its back on pm's, i think there is junk going on behind the scenes. There is great need for cash all over the world. i think they are just raising money the best way they know how, especially the countries that can't borrow much like Greece, Venezuela, russia and a number of others. They don't announce it, they want their citizens to think the gold and silver is still in the vaults but its been sold off to china, india and other buyers. USA has probably sold most of its gold too.
What happens when inflation hits and there is no more gold or silver in the vaults to sell cheap? I'm thinking of picking up more silver, but its so damn bulky and heavy.
-------------------- “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835) Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755
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KauaiOrca
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Quote:
Ahab McBathsalts said: Incorrect.
Issue the debt at low levels, then balance the budget and prepare for a high inflation / high interest environment so the debt is worth less in future dollars.
Just as 1.02^30 = 1.81 is much less than 1.07^30 = 7.61. It would be 6 times cheaper to let the inflation rate creep up and pay back the debt in inflated dollars. Especially since bond yields and inflation are at a 30 year low, so the cycle changes and the debt issued is worth one 6th of what it was issued at.
There are some pretty smart people that disagree with you on this, but I'm not going to argue it because I don't want to do the calculations involved. When Bill Gross and Jeff Gundlach both agree that the government can't meet interest payments when rates are normalized, I tend to take them pretty seriously. They know what they're talking about.
-------------------- "The universe is endless, limitless and infinite. Any effort to define it's boundaries is an attempt to overcome ignorance. We are physical, mental and spiritual beings ... there is no beginning and there is no end. There is only memory. Our repeated loss of memory experiences create the illusion of beginnings and ends. Immortality is the ability to retain full memory through all consciousness transformations. Loss of memory is man's greatest curse and, in very real terms, death." -- Ancient Taoist Master
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qman
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Quote:
Ahab McBathsalts said: Incorrect.
Issue the debt at low levels, then balance the budget and prepare for a high inflation / high interest environment so the debt is worth less in future dollars.
Just as 1.02^30 = 1.81 is much less than 1.07^30 = 7.61. It would be 6 times cheaper to let the inflation rate creep up and pay back the debt in inflated dollars. Especially since bond yields and inflation are at a 30 year low, so the cycle changes and the debt issued is worth one 6th of what it was issued at.
"balance the budget"
Not likely.
"high inflation"
From what, currency devaluation? Not likely. To inflate the debt away you need to bring the work back home, there's NO incentive to do so today.
The people in power love the "strong" dollar and weak Yuan/3rd world currency for high profit margins.
What's better than paying someone in China $1 per hour and then selling the product all over the globe for big $$? They're not going to throw that away without a fight.
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Ahab McBathsalts
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Re: Bottom Finally In For Silver? [Re: KauaiOrca]
#21956236 - 07/17/15 01:42 PM (8 years, 6 months ago) |
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Got a link for Gross saying any such thing?
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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KauaiOrca
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Quote:
Ahab McBathsalts said: Got a link for Gross saying any such thing?
I trade futures and currencies so listen to CNBC a lot. Gross and Gundlach and others are on there every week. This is a topic frequently discussed. Given that we payed 430 Billion on it last year as a nation, it's a pretty big deal.
-------------------- "The universe is endless, limitless and infinite. Any effort to define it's boundaries is an attempt to overcome ignorance. We are physical, mental and spiritual beings ... there is no beginning and there is no end. There is only memory. Our repeated loss of memory experiences create the illusion of beginnings and ends. Immortality is the ability to retain full memory through all consciousness transformations. Loss of memory is man's greatest curse and, in very real terms, death." -- Ancient Taoist Master
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KauaiOrca
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Re: Bottom Finally In For Silver? [Re: KauaiOrca]
#21956265 - 07/17/15 01:49 PM (8 years, 6 months ago) |
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Gold hit a 5 year low today. Dollar continues to strengthen. Go figure.
-------------------- "The universe is endless, limitless and infinite. Any effort to define it's boundaries is an attempt to overcome ignorance. We are physical, mental and spiritual beings ... there is no beginning and there is no end. There is only memory. Our repeated loss of memory experiences create the illusion of beginnings and ends. Immortality is the ability to retain full memory through all consciousness transformations. Loss of memory is man's greatest curse and, in very real terms, death." -- Ancient Taoist Master
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Ahab McBathsalts
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Re: Bottom Finally In For Silver? [Re: qman]
#21956266 - 07/17/15 01:49 PM (8 years, 6 months ago) |
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Quote:
qman said:
Quote:
Ahab McBathsalts said: Incorrect.
Issue the debt at low levels, then balance the budget and prepare for a high inflation / high interest environment so the debt is worth less in future dollars.
Just as 1.02^30 = 1.81 is much less than 1.07^30 = 7.61. It would be 6 times cheaper to let the inflation rate creep up and pay back the debt in inflated dollars. Especially since bond yields and inflation are at a 30 year low, so the cycle changes and the debt issued is worth one 6th of what it was issued at.
"balance the budget"
Not likely.
"high inflation"
From what, currency devaluation? Not likely. To inflate the debt away you need to bring the work back home, there's NO incentive to do so today.
The people in power love the "strong" dollar and weak Yuan/3rd world currency for high profit margins.
What's better than paying someone in China $1 per hour and then selling the product all over the globe for big $$? They're not going to throw that away without a fight.
If Bill could do it, why not Hilary?
I can't make sense of that second part though. So many unrelated ideas. Increases in productivity while screwing the working class wages is the way inflation will continue to work. More corporate profits into the hands of shareholders with a focus on trickle down economics that clearly has never worked.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
Edited by Ahab McBathsalts (07/17/15 01:54 PM)
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Ahab McBathsalts
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Re: Bottom Finally In For Silver? [Re: KauaiOrca]
#21956276 - 07/17/15 01:52 PM (8 years, 6 months ago) |
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If you listen to CNBC I got a feeling you aren't making a lot of money in your trades. 
Still, you have to have a lot of respect for Gross. There was a thing bloomberg put out a while ago that said he was paid more than the top 10 athletes in the world, combined in salary and endorsements.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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KauaiOrca
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Quote:
Ahab McBathsalts said: If you listen to CNBC I got a feeling you aren't making a lot of money in your trades. 
Still, you have to have a lot of respect for Gross. There was a thing bloomberg put out a while ago that said he was paid more than the top 10 athletes in the world, combined in salary and endorsements.
CNBC does a pretty good job of scoring interviews with really key people. No one takes their trading suggestions seriously. But if you want to hear interviews with guys like Gundlach, FED board members and Central bank spokespeople live, CNBC is a good source for that.
-------------------- "The universe is endless, limitless and infinite. Any effort to define it's boundaries is an attempt to overcome ignorance. We are physical, mental and spiritual beings ... there is no beginning and there is no end. There is only memory. Our repeated loss of memory experiences create the illusion of beginnings and ends. Immortality is the ability to retain full memory through all consciousness transformations. Loss of memory is man's greatest curse and, in very real terms, death." -- Ancient Taoist Master
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qman
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Quote:
Ahab McBathsalts said:
Quote:
qman said:
Quote:
Ahab McBathsalts said: Incorrect.
Issue the debt at low levels, then balance the budget and prepare for a high inflation / high interest environment so the debt is worth less in future dollars.
Just as 1.02^30 = 1.81 is much less than 1.07^30 = 7.61. It would be 6 times cheaper to let the inflation rate creep up and pay back the debt in inflated dollars. Especially since bond yields and inflation are at a 30 year low, so the cycle changes and the debt issued is worth one 6th of what it was issued at.
"balance the budget"
Not likely.
"high inflation"
From what, currency devaluation? Not likely. To inflate the debt away you need to bring the work back home, there's NO incentive to do so today.
The people in power love the "strong" dollar and weak Yuan/3rd world currency for high profit margins.
What's better than paying someone in China $1 per hour and then selling the product all over the globe for big $$? They're not going to throw that away without a fight.
If Bill could do it, why not Hilary?
I can't make sense of that second part though. So many unrelated ideas. Increases in productivity while screwing the working class wages is the way inflation will continue to work. More corporate profits into the hands of shareholders with a focus on trickle down economics that clearly has never worked.
I'm interested in HOW you think the debt gets inflated away? Where does the "inflation" come from that has tax revenues soaring higher relative to spending?
It's very easy to say "inflate the debt away", but how? We have globalization which is extremely deflationary in nature for all developed economies, Japan can't do it.
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KauaiOrca
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Re: Bottom Finally In For Silver? [Re: qman]
#21956317 - 07/17/15 02:00 PM (8 years, 6 months ago) |
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Quote:
qman said:
I'm interested in HOW you think the debt gets inflated away? Where does the "inflation" come from that has tax revenues soaring higher relative to spending?
It's very easy to say "inflate the debt away", but how? We have globalization which is extremely deflationary in nature for all developed economies, Japan can't do it.
LOL … yeah, a lot easier said than done, that's for sure.
-------------------- "The universe is endless, limitless and infinite. Any effort to define it's boundaries is an attempt to overcome ignorance. We are physical, mental and spiritual beings ... there is no beginning and there is no end. There is only memory. Our repeated loss of memory experiences create the illusion of beginnings and ends. Immortality is the ability to retain full memory through all consciousness transformations. Loss of memory is man's greatest curse and, in very real terms, death." -- Ancient Taoist Master
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qman
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Re: Bottom Finally In For Silver? [Re: qman]
#21956318 - 07/17/15 02:00 PM (8 years, 6 months ago) |
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Bill also got a massive surge in tax revenue from capital gains (stock market bubble), that's a one time deal that's not likely to be repeated.
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Ahab McBathsalts
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Re: Bottom Finally In For Silver? [Re: qman]
#21956356 - 07/17/15 02:09 PM (8 years, 6 months ago) |
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http://www.economist.com/blogs/buttonwood/2011/06/escaping-debt-crisis
This summarizes my arguments and was written by a far better writer.
Sustained low interest rates will eventually cause inflation as productivity rises.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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qman
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Quote:
Ahab McBathsalts said: http://www.economist.com/blogs/buttonwood/2011/06/escaping-debt-crisis
This summarizes my arguments and was written by a far better writer.
Sustained low interest rates will eventually cause inflation as productivity rises.
The article only addresses the issues IF inflation were to materialize, NOT how it would. Since the it was written over 4 years ago, we can see that it never happened.
"Sustained low interest rates will eventually cause inflation"
Why? Banks have NOT extended credit into the general economy for 7 years now, that's not likely to change, we have a structural demand problem, not supply. You can't have inflation if demand is weak like it is all over the globe.
Japan has had near 0-1% interest rates for over 20 years now, still no growth. The old line of thinking was low interest rates = strong growth and inflation, that model is broken and all it takes to prove that fact is the past 7 years in the US, UK, EU, and Japan.
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