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Dave's 2A Blog
Tuesday, 16 February 2010
The Liquidity Trap -Trap
Now Playing: around with a theory
Topic: Economy, what's left of

 A thought has occurred to me, related to this mornings reading at Forex:

http://www.qnetexchange.org/The-Liquidity-Problem.html

 " Reserves are generally defined to include total governmental holdings of gold, convertible foreign currencies, Special Drawing Rights, and net reserve positions in the International Monetary Fund. "

The "liquidity trap" is the concept, and now FACT, that liquidity is missing and the conditions for it's generation (escape from the trap) are missing and both are from the same cause, thus, an inescapable trap. Catch -22

And now -problem-squared:

Not only is there a liquidity trap (U.S. economy) and not only is it inescapable as Hamou teaches (not examining whether his positions are correct or not, its a theory) but SOBamas Simulus (sarcastic rendition of "stimulus") truly just that - simulated. He/they have produced no 'working capital.'

  What were looking at in SOBamas Simulated financial rescue is far worse than infinitely illogical (it didn't work the last time, proving insanity to try again) its infinitely FRAUDULENT.

Follow the Yellow Brick Road:

1.) the economy crashes, more exactly, banks lost huge sums of money on various risky investments such as betting on horses that werent in the race. This leaves a large hole in their reserves. Take something out, there's a hole left, simple logic. They want the hole filled with OPM.

2.) They made bets on something non-existant and must pay it off in something tangible. Money? Seashells? They sure CANNOT fill it with credit because credit does not exist. All credit is is the negative transfer of wealth.

3.)  Along comes SOBama and Timmy G. and "create a couple trillion dollars in liquidity" to throw into the bankers gaping maws (or pick another orifice). It does the predicted NO GOOD. Nothing happens. Is this because of the liquidity trap? Maybe not, since if you give me $1T, Im NO LONGER INSOLVENT. If Im insolvent and you give me credit, where am I?

To take no action is an action, but the result is also nothing. If Im broke, giving me credit does nothing but make me BROKER, because I now owe INTEREST.

Did anyone see SOBama and the Federal Reserve PRINTING $1T in PAPER MONEY? There wouldn't be any trees left if they printed that much paper. The largest US currency denomination is the $100 bill. How many trainloads of them are in $1T? Answer - ALL of them. How much LABOR would be required to distribute (loan) it?

  Just for fun, find out the capacity of the F.R. to print money and calculate how long it would take to print a "T."

No one printed anything- it was all a smoke and mirrors based ledger entry.

  But in an odd way, an intelligent risk, loan nothing towards an infinitely large risk, a guaranteed loss. The result is "no loss". But also, no positive effect, which is precisely what we've seen.

 And now, for something completely different- the largest financial scam in history- SOBama and Timmy are running their own Ponzi scheme. They are making Madoff look like a rookie.

SOB/Timmy G. loan nothing but a ledger entry(ies) to banks (oh, wait- a ledger requires paper, silly me), who do nothing with it- heck, they can't afford to put Management time towards it at a ROI of almost zero, the PAYROLL will eat them up. The first is evidenced by the second. They all claim that the money (which never existed, there was no paper, gold etc.) was somehow 'absorbed by the system' and now they have to "drain it from money market funds."

Ah-ha! The worlds largest fraud ever with the Donation of Pepin in second place. Now, they steal something tangible from the markets to, in pretense, fill an imaginary hole with non-existing funds and the net is theft of, oh, say $1T from some nebulous entity known as "money market fund" to replenish the loss, which was not a loss in the first place as it was never tangible to lose.

  But wait - who or what is "money market fund" to be raided for some non-threatening, P.C. - sounding action like 'drain?' If something is 'drained,' then there must BE something there TO DRAIN. Something tangible or, in financial terms, some real liquidity.

  Problem is that if the "drainers" don't own the tangibles and are not also the "drain-ees", SOMEONES GETTING SCREWED OVER BIG TIME, and worse if those someones are none of the parties above.

 Thats probably YOU. I got out of any money market linked account.

Create a crisis. Cause a debt, loan out something non-existent, wait a short time till the media cycle and Public forget what happened then call in an imaginary debt paid back in real funds.

Thats how I see an entry in the economic play-book, let's see if they run with it. 

Apologies ahead of time, just found this little jewel and its irresistable as it is absolutely correct: 


Posted by Dave at 9:21 AM PST
Updated: Tuesday, 16 February 2010 11:02 AM PST

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