Thursday, October 28, 2010

When does the Great Recession turn into the Greater Depression?

From Global Guerrillas, two links:

"Consumer Contraction Now Exceeds the Great Recession."

Run Turkey, Run.

We are, as even some Fed Governors now publically admit, in a “liquidity trap,” where interest rates or trillions in QEII asset purchases may not stimulate borrowing or lending because consumer demand is just not there. Escaping from a liquidity trap may be impossible, much like light trapped in a black hole.


Anonymous said...

It'll be OK.

Just as soon as the government has complete control of the economy and can surveil and run every aspect of our lives and make all of our decisions for us, everything will turn around and be wonderful.

It's never worked that way before, except for the top party members but I keep hearing that it will this time because they are the smart one's we've been waiting for.

Sniff, sniff... Yup, I smell communists!

Anonymous said...

I'm going to give you a little hint as to what a fraud this all is. We'll use the current mortgage mess as an example.

There are approximately 829 Billion fiat notes in circulation or sitting in banks. The estimated current mortgage debt total is somewhere between 13 Trillion and 14 Trillion.

So, let me ask you, if the banks could call in all the mortgage debts right now, what would it be paid back with?

The banks did not loan you anything. They loaned you a black hole. They loaned you ... debt.

"Banks lend by creating credit. They create the means of payment out of nothing" - Ralph M. Hawtrey, Secretary of the British Treasury

"When you or I write a check there must be sufficient funds in out account to cover the check,
but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money." - Putting it simply, Boston Federal Reserve Bank

"Neither paper currency nor deposits have value as commodities, intrinsically, a 'dollar' bill is just a piece of paper. Deposits are merely book entries." — Modern Money Mechanics Workbook, Federal Reserve Bank of Chicago, 1975

Anonymous said...

Interest rates may be rock bottom, but there are other ways – what we call “safe spread” ways –to beat the axe without taking a lot of risk: developing/emerging market debt with higher yields and non-dollar denominations is one way--Bill Gross

PIMCO has announced they will enter the carry trade--borrow domestically at very low rates of interest so as to lend money abroad for a higher rate of return. They also intend to exchange their dollar holdings for non-dollar denominated currencies.

The Fed policy of "quantitative easing" (AKA "inflation") coupled to abnormally low interest rates will provoke capital flight in much the same way that would occur in a hyper-inflationary crack-up boom.

Ben "Big Bankey" Bernanke is about to engineer an international stampede away from the US dollar, threatening its position as the world reserve currency.

This will end badly.