Re: "There is no zombie free lunch"

On Mar 27, 3:59 pm, vello <vellok...@xxxxxx> wrote:
On Mar 27, 12:24 am, ostap_bender_1...@xxxxxxxxxxx wrote:

On Mar 26, 3:11 pm, vello <vellok...@xxxxxx> wrote:

On Mar 26, 11:13 pm, ostap_bender_1...@xxxxxxxxxxx wrote:

On Mar 21, 2:06 am, vello <vellok...@xxxxxx> wrote:

On Mar 21, 7:03 am, Tadas Blinda <tadas.bli...@xxxxxxxx> wrote:

On Mar 20, 8:58 pm, ostap_bender_1...@xxxxxxxxxxx wrote:

On Mar 19, 10:34 am, Pçteris Cedriòð (Peteris Cedrins)
<cedr...@xxxxxxxxx> wrote:
"The financial plans of Barack Obama and Ben Bernanke will drain life
and energy from the rest of the planet, says Krzysztof Rybinski" --

http://www.opendemocracy.net/article/the-zombie-solution

Luckily, the Russian finace ministry, headed by Kudrin, is
ravenously gobbling up more and more of the American bait..
Got ya suckahs!

During all the crisis period dollar had get stronger and stronger.- > Not if the Feds print trillions of new dollars to pay for government
expenditures and debt.

Dollar falls further on Fed move
19 March 2009

The US dollar has fallen further against the euro, a day after posting
its biggest one-day loss against a basket of currencies since at least
1985.

The falls came after the Federal Reserve announced plans to buy $300
billion of US Treasury debt over the next since month, and to boost
purchases of mortgage-backed securities and agency debt in its bid to
rescue the economy.

This raised concerns that an expansion of the Fed's balance sheet
would lead to oversupply of the dollar, triggering the sell off..
Advertisement

This evening, the euro was trading at $1.3705, a two-month high.. The
euro jumped 3.8% on Wednesday for its biggest one-day rise since its
launch in 1999, according to Reuters data. The euro was also worth
94.1p sterling.

Exchange rates do fluctuate a bit, but what "printrun" means we know
from Weimar Germany and late-soviet/early Russian rouble.

So, you two agree with me on this subject, right?-

Oh, Karla, are you able to read? In spring 1992 when Estonian kroon
was introduced, 1 USD was 12,5 kroons. Kroon was defined as 1/8 of
DEM, and USD/DEM rate was always been 1,5.  Today EEK, now tied to
Euro via DEM/Euro rate, is 11,7 kroons per dollar. OK, it's a bit less
then 12,5 20 years ago - but this is just normal fluctuation - in past
years dollar have bees as high as 18 and as low as 10,4 kroons. Now
about "printrun". At the same nice spring morning back in 1992 1 EEK
was 10 RUR. Russia let print presses run and for today 1 EEK = 3000
RUR. A bit different thing?

I now have no idea as to what your point is.

My point is very clear: When the US Treasury starts printing
$trillions to cover its debt and expenses, the dollar will tank (drop)
compared to countries that don't run the printing presses as much and
thus don't dilute their currencies as much.

Exchange rates do fluctuate a bit, but what "printrun" means we know
from Weimar Germany and late-soviet/early Russian rouble.

So, if USA prints $trillions, won't that also cause a large inflation?
Or is USA, unlike Germany and USSR, immune to the laws of economics?

Surely not. IF US will double the number of dollars in the World,
dollar will lost half of it's value.


Actually, the relation is not linear (probably sub-linear, which helps
your argument more than mine), as most financial transactions are non-
cash and dollar turnover rate may also change.


To beat rouble, they have to make
dollars about 3000-4000 times as much as there are dollars today. For
Weimar mark - maybe billion times. But notice IF in my sentence.
You don't need to be a financist to discover printrun in some country
- results are automatic and will appear in days. But to you read
somewhere that Obama is planning to create new money from nothing?


OK, look. USA Govt is already runnng a huge deficit. On top of this,
there plans to "infuse" $2 or $3 trillion dollars in the next few
months to save te financial insiitutions, financial markets, car
industry, and many other equally mismanaged industries; and to
encourage lending and borrowing, etc.

On top of that, Keynesian theory tells us that in the times of a
depression/recession, the Government should pour huge new money into
public projects in order to provide busywork for the unemployed. Thus,
Obama plans to incease spending on such depression-fighting projects
to the tune of maybe another $2 or $3 trillion dollars per year.

On the other hands, Obama ha sworn that he will lower taxes for all
Americans making less than $250 000 per year. The tax increases on the
rest will be small and will not even be paid, as the rich people will
move their money offshore and/or hide their income, exactly the way
almost every Obama's nominee has done with total immunity.

Thus, the gap between expences and revenues will skyrocket even
further, much-much further. So, how can Obama pay for the above-
mentioned new spending items anounting to $4 to $6 trillion?

On top of that, USA's military spending spree over the last 15 years
or so, as well as other frivolous gov't spendings, have created many
$trillions worth of US Treasury bonds, sitting in the hands of
individuals and organisations all over the World, with China alone
owning $trillions. How is the US Treasury going to service this debt
and pay coupons and then principle on maturity?

There are only 2 solutions to all these problems:

1. USA defaults on all its debt, telling the Chinese and everybody
else to wallpaper their toilets with the US T-bills.

2. US Treasury prints lots of new dollars, creating huge inflation,
sinking the value of all dollar-denominated debt (including US
treasuries) in pre-inflation terms, and then easily paying out this
devalued debt with newly printed dollars. Similarly, the domestic
expenditures will be paid with the newly printed dollars. Heck, if you
print enough new money per year, you can abolish all taxes. Inflation
will act as the tax.


I'm
not too deeply in US money sci but what I read is about using real,
existing money to pump it into economy. It may be govt reserves, it
may be loan money - but real money for sure. Sending dollar to the
toilet would end US credibility on this planet  in one day - and for
ever.- Hide quoted text -

- Show quoted text -

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