MAJOR blip on the DJI
Topic: Economy, what's left of
WHAT HAPPENED TO THE DOW JONES ON MONDAY?
http://finance.yahoo.com/q/hp?s=%5EDJI+Historical+Prices
--------------------------------------------trading volumes in BOLD-------------
Jul 26, 2011 12,592.12 12,618.11 12,457.25 12,501.30 4,007,050,000 12,501.30
Jul 25, 2011 12,679.72 12,682.97 12,509.58 12,592.80 35,368,908,800 12,592.80
Jul 22, 2011 12,724.71 12,768.31 12,605.59 12,681.16 3,522,830,000
12,681.16
EDIT 28 July : Nothing happened , the actual DOW volume was 4,910,935,365
up a bit, but nothing worth jumping from a window over. Bad data from Yahoo,
[EDIT8/3 ..but Im not going to STAND under any windows either, especially if they go several stories up.]
------------------------------
TEN TIMES PLUS, the normal volumes on ONE DAY.
Cant find any news on the subject. BAIDU apparently had large trade volumes yesterday, but that aint Monday. (flight to Chinese stocks?)
And, Freidman on economics. You MUST get the book Money Mischief by Milton Freidman and STUDY IT. This is not a weekend -read. I've had college level Econ and it gave me a headache, many paragraphs I had to read 4 or 5 times to understand.
This was Copyright 1992-1994, long before the current mess, but there are some extremely interesting take-aways that cannot possibly be biased by present conditions, as not even Friedman is that level a Prophet.
We are, as I suspected, in DEFLATION, NOT INFLATION. The proof was from a shocking corner of the economy. First, a critical statement:
"The recognition that substantial inflation is ALWAYS and EVERYWHERE a MONETARY phenomenon..Why do Governments increase the quantity of money too rapidly" (emphasis added) ibid., p. 193
If deflation or inflationis the question, its GOVERNMENTS fault, and not the Unions, or Arabs/OPEC or other invented boogey-men. Evidences of why Unions et al are not the culprits are given in Chapter Eight.
Inflation (hyper-inflation) and/or deflation are the key question now.
On the angle of "its Governments fault" which is especially obvious considering the crooked goings on now in DC, Id like to offer this twist on the basic Macro Economic equation that relates money to the Economy (this is the REAL economy, not the smoke and mirrors Administration Shadow Economy that the Debt is going to feed, it produces NOTHING and therefore cannot participate in the Free Market economy except to totally fuck up the circular model)
MV = PT
where M= money supply, V = money velocity, P = average prices and T = transactions or an index of all purchases of any type.
Recalling the above about Government being the sole cause of inflation, rearrange the above equation to:
M = PT / V
with Government factors on the left, and private sector macro -economics on the right.
Then realize that all of Obamas "attempts to stimulate the economy" are a DELIBERATE HOAX. Government has nothing to do with the 'right side economy' except to screw it up with irresponsible monetary policy.
Whats the result of moving all factors to the Left Side?
MV / PT = k
I've invented 'k' as a constant, which is unity under Friedmans statement"
"the equation is an identity" p. 39
That, indirectly stated in this book is COMMUNISM and its what Obama is up to, total control of the US economy, and Communism is indirectly and directly linked to hyperinflation:
"There is little doubt that bureaucracy, corruption and bad financial management, which led to the collapse of the money market and a true hyper-inflation, were major factors contrbuting to the defeat of the (Chinese) Nationalists...confiscation (of wealth) The hyperinflation not only helped sweep the Communists into power.Once the warfare was over, the Communists were able to eliminate the hyperinflation and that unquestionably helped cement them in power." p. 180
And thats EXACTLY what Obamas up to..if it smells like a rat, it is a rat... What ELSE is being attempted with apparently printing helicopter drops of money thrown to the winds but an attempt to cause inflation?
But, were actually in deflation:
"Inflation in the range to which we have become accustomed, let alone in the hyperinflationary range, became feasible only after paper money came into wide use. The nominal quantity of paper money can be multiplied indefinetly at a negligible cost; it is necassary only to print higher numbers on the same pieces of paper." p. 190
NOTICE THAT THE US RECENTLY ELIMINATED THE $1000 BILL. Take the reverse of the above statement:
"The nominal quantity of paper money can be divided indefinitely ...by printing LOWER numbers on the same pieces of paper." (my restatement in reverse of the above quote)
They tried to make you believe that eliminating the $1000 was an attempt to reduce counterfeiting. If it actually was, then consider where that goes...
The re-statement indicates that eliminating the 1K bill reduced the quantity of money in the system, thus is deflationatory. If the 1000s were just burned, then both the quantity of face-value is reduced plus the number of paper notes is reduced. If the 1000s were replaced with 100s, then the number of bills in circulation is the same, but with less total monetary value.
Since the OMarxist Regimes printing of a massive debt has done nothing useful to the macro-economy, I assume one or all the following:
1.) its not going to, because the only effect of Government dabbling in Economics is to affect the money supply, thus, there hasnt been any money printed, else there would be inflation, and there hasnt been except in limited corners like food prices linked more to OIL than money
2.) k in the above equation is = ZERO or some small amount
3.) the inflation of the Govt printing all these trillions has been offset by the deflation of eliminating the $1000.
That welfare money, however, will buy votes towards a COMMUNIST TAKEOVER.
Heres how I get to a fabricated 'money printing that doesnt exist" and "an attempt to seize private assets" that Ive already Blogged about:
" Financing Government spending by increasing the quantity of money is ooften the most politically attractive method...provide "goodies" for their supporters and constituents, without having to propose or vote for new taxes..." p. 207
(Friedman elsewhere in this book states that there has been a de-facto tax increase in the US since Reagan (at least) through INFLATION)
But, no money needs to be printed, because Friedman admits to other methods such as ledger entries (book-keeping entries instead of real money)
"The only other way to finance higher Government spending is by increasing the quantity of money. The US Government can do that by having the US Treasury... sell bonds to the Federal Reserve System, another branch of Government. The Federal Reserve pays for the bonds either with freshly printed Federal Reserve notes (dollars) or by entering on its books a deposit to the credit of the US Treasury." pp 205, 206
PHONEY BALANCE SHEET ENTRIES. Bonds traded for BOOK KEEPING ENTRIES. NOTHING REAL. I say "fraudulent" since nothing real is exchanged, in exchange for REAL DEBT that OMarxist and CONgress are drowing in.
"Higher government spending will not lead to more rapid monetary growth and inflation if the additional spending is finance either by taxes or by borrowing from the Public." p. 205
The Public aint lending. So, the scam, IMO goes- "deflate the currency by eliminating the $1000 note, make wild claims of inflation where there is none, print money to prove it (notice thats stated in reverse, the printing has to come first) make a massive debt which requires Public money to pay down, then, back to the Chinese Communist takeover:
" In a final desperate measure, ...reform of the currency...prices frozen (they are in the US) AND ALL PRIVATE HOLDINGS OF GOLD, SILVER , AND FORIEGN EXCHANGE WERE TO BE SURRENDERED WITHIN THREE MONTHS." p. 180, emphasis added
ARGENTINIAN ASSET SEIZURE.
http://www.benefitscounsel.com/archives/001934.html
"Argentine bond yields soared above 24 per cent before the announcement late yesterday, and the benchmark Merval stock index tumbled 11 per cent. The last time the government sought to tap workers' savings to help finance debt payments was in 2001, just before it stopped servicing $95 billion of obligations."
http://www.business-standard.com/india/storypage.php?autono=338161
AND, more critically:
"Fernandez said yesterday her decision is “in a context where the biggest countries” are taking steps to protect their banks because of the global financial crisis."
THAT'S OBAMA AND CONGRESS' BANK BAILOUT. NOTICE THE DATE - 2008.
Pretend to print money, where none has been printed, pretend its a valid debt, project through deceitful means that debt on the Public (YOU) then STEAL FROM YOU YOUR REAL MONIES TO REPAY A FAKE DEBT.
Its the biggest FINANCIAL CRIME EVER.
When it finally happens and people figure it out, again, I predict nothing left standing in Washington DC except maybe the Washington Monument. No streets, no buildings, no Congress, no White House, no nothing left except smoking holes in the ground.
Think this theft is a coming attempt? It's ALREADY STARTED with HOME SEIZURES. Part of the scam was the Liar Loans and credit card debt. As Ive been saying, now the banks own most of the houses and posess most of the money (since investors fled the markets in 2008 and dumped liquidity on the banks)
Why arent interest rates going up? I missed the prime reason, that inflation increases the Govts debt load as it increases the interest at which loans must be repaid. And as long as such loans are the onyl means of financing Govt expansion, interest rates must be low. Vicious cycle.
Also, with the Banks flush with cash, why would they WANT to raise interest rates? Interest is offered to attract deposits, and if they have no use for all the deposits they have now, whats the point in paying interest on money theyve already got deposited? Thats a fools errand...
Now, onto DEPRESSION:
" One major finding (of some economic research) has to do with severe depressions. There is strong evidence that that a monetary crisis involving a sibstianti decline in the quantity of money is a necessary and SUFFICIENT condition for a major depression." p. 48
Stocks are included in "money" so guess where deflation of all these assets, money, stocks, houses, goes to? Our present and about -to -get -worse -next -year Depression.
And a clear link between the RATE of deflation and depression is given. How much" is to be determined, IMO, if its not already happened. After all, what ELSE can happen except price-level deflation when people who are unemployed and suffering from markey jitters either have no money to spend, or are unwilling to spend it? Prices MUST go down.
Chinas big deflation linked to ag failure:
"..export of silver produced a decline in Chinas stock of money that spread the deflation from internationally taded goods to the general price level. ... depressed economic conditions..largely a consequency of the montary deflation...Estimates of gross domestic product indicate thet real income in China fell ...primarily because of bad agricultural harvests.." p . 182
And today, news of bad harvests in the US due to floods/droughts. Replace "silver" with "OIL". General prices are down mainly due to unemployment and real estate devaluation, and not a little.
If OIL isnt the basis for the fiat -Dollar, what IS?
This also appears to relate to today:
"The rapid growth in output (housing, for example) and in financial activities (run up in the stock markets to 2008 almost to 14,000 to the dollar, odd *14000,41) in both countries led to a greater demand for real money balances per unit of output (a decline in velocity). p. 198
Isnt V approaching zero now? Whos spending? Its sure not business investment, or ventures, or housing. Arent "real money balances" up significantly" Yes, they are parked in BANKS right now.
M = PT / V, with V approaching zero, product PT must climb, but isnt. If the Right side is climbing, the left must also to attempt to maintain unity. so, they supposedly print money to throw to the winds. But, as expected, it does nothing for the overall economy, because M is purely a Government FICTION. Yes, the Government printing money to pay some IRS employee (to steal from you) to pay his mortgage in Virginia does a LITTLE good for him, but nothing for the overall private sector macro-economy as it is CIRCULAR (one transaction affects the entire cyclical chain) and this "sideways" infusion of money CAME FROM NO PRODUCTIVE SOURCE. Government didnt manufacture anything that resulted in a profit from which to pay this employee.
Since product P-T is not rising, then M isnt either, showing the "printing of money" does not exist.
And foolish cries about a return to the Gold Standard. That train wreck is a main topic in Money Mischief:
" No permanent measure of value can be said to exist in any nation while the circulating medium consists of two metals (gold and silver bi-metallic standard) because they are constantly subject to vary in value..." p. 152
Same with a single metal standard, no system based on a commodity can be stable as the commodity has two values then:
1.) currency value
2.) commodity value (what the gold or silver, for example, is worth to industry)
"The price decline of the 1870's t...affected silver as well as other commodities (unavoidable if the money is a commodity also). By 1876, the dollar price of silver was lower than the official legal price." p. 115
"...once the Resumption Act documented the wide spread opposition to paper money and the equally wide spread belief in a specie standard (silver) as the natural order, the populists turned to silve as a vehicle for achieving INFLATION."
Its not silver now, think, now, what commodities could take its place...???? Think "ARAB."
OIL is the new gold standard. Whats the difference what the paper money is based on, oil, gold, silver or cow turds, as long as society at large values it, and for DAMN sure, theres more value in oil than gold, because everyone uses it.
" "France... was forced off that standard (bi-metallic standard, 1803) ...Germany disposed of large amounts of silver, simultaneously putting upward pressure on the price of gold and downward pressure on the price of silver (Frances money). The combination made it impossible for France to continue the price ratio of 15.5:1." (theres a pretense now that some mystical, historical 16:1 gold/silver ratio is in effect) p. 110
This shows not only inherent instability of a metallic standard, not only a macro-economic failure, but a world wide action as well. When prices (values) of commodity money swing, the coinage can be melted down for sale as a commodity, and there goes any illusion of a stable currency.
"If resumption..silver would have become the cheap metal whenever the gold-silver ratio rose appreciably above 16:1, ... producers of silver would have found it advantageous to bring their siver to the mint rather than selling on the market, and owners of gold coins would have found it advantageous to melt their coins down and sell the gold on the (commodity) market rather than using it as coins..." pp 59, 60
That does not make for stability.
The obvious problem with gold is that its too valuable to use as currency, an ounce coin now is $ 1600 and try to get change for that at the grocery. This leads to paper currency linked to gold or silver, but the only improvement is fractionalisation, not stabilization (its easier to break a $100 paper bill into $10s as paper as a commodity is worth almost nothing by itself, no one hoards "paper")
Those are just a few excerps from Money Mischief and how I believe they relate to todays events. My idea is to stay in cash and hope that an utter collapse that leads to outright seizure of bank assets doesnt happen.
What's the alternative? To be in some tangible asset. Then why, so the Government can seize THAT TOO? Buy land? Hell, miss one tax payment and the Govt owns it.
Own gold? Chinas seizure of gold and silver proves thats not a safe bet.
Own lesser valued, non titled/deeded property? Communist Cuba proves that unreliable, as a Cuban refugee told me. He applied to the Cuban Government (good ol promise them prosperity Obama, I mean- Castro- I mean, whats the diff?) to leave to come to the US and the Government said "sure you can leave-if ALL YOUR ASSETS ARE IN PLACE A YEAR FROM NOW WITHOUT SPENDING ANYTHING." They itemized all his posessions DOWN TO THE TOASTER. If hed spent anything (bartered the TOASTER) for money to survive, hed been denied Exit.
He told me that the only way he survived was friends in the Military.
As I see it, theres another Dow Jones drop coming next Spring. Jobs arent getting any better, its obvious to have food, water, necessary posessions (I just bought new tires for both vehicles, for example, not only were the old ones worn out, but to get them now...) anticipating inflation or supply shortages. I extremely doubt the Government, drunk on spending trillions, cares about my tires, except to inflate the price and make out on taxes. Theres a limit to what assets can be practically seized in the US if for no other reason than the large area of the Nation. Bank accounts, deeded/titled property, all fair and EASY game. Argentina proves how "secure your retirement account it" - havent they STOLEN SOCIAL SECURITY FORM YOU?
A house and land? They are already stealing those from you (maybe not "you" in the singular sense, but plural) through the housing crisis. Dont their banker buddies already have more houses than they have any idea what to do with? What happens to your land (and house which is more or less immovable, but it can accidentally burn to the ground...) when the money is useless and the land taxes come due? The Government OWNS ALL LAND THEN because you legally did not pay the taxes, and I doubt your local Tax laws consider what happens during a currency collapse.
Their best effort will be to continue to steal you blind "under the radar" but that only works until something tips this economy, in a Liquidity Trap, one way or the other:
" The neoclassical economists asserted that, even in a liquidity trap, expansive monetary policy could still stimulate the economy via the direct effects of increased money stocks on aggregate demand. This was essentially the hope of the Bank of Japan in the 1990s, when it embarked upon quantitative easing. Similarly it was the hope of the central banks of the United States and Europe in 2008–2009, with their foray into quantitative easing. These policy initiatives tried to stimulate the economy through methods other than the reduction of short-term interest rates."
http://en.wikipedia.org/wiki/Liquidity_trap
It didnt work in Japan, and its not working here, no matter how much money they drop from helicopters, its going into DEBT HOLES, not buying goods and services. The further effect, IMO, of the current Trap is that throwing money at poor debtors only causes them to pay debt with it, which does nothing for the economy (since the lenders dont need any more money) and those not in debt have money and would probably only SAVE that dropped money, again, resulting in no economic activity.
WHEN (not if) they stop "printing money" and the "M" - left side of the equation grinds to a halt, then the money supply might be greatly reduced and deflation increased. On a stagnant (dead) economy, what would the difference be? if so, I want to be in CASH as prices drop and I can, as Hamou told me, "pick up peoples assets in the street..."
Since Id trust OMarxist and his banker buddies to steal it, Id recommend the Bank of Mason...
EDIT- lest you think I jest about someone burning their house down in foreclosure:
http://hosted.ap.org/dynamic/stories/U/US_FORECLOSURE_PAPERS_ARSON_FIRE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-07-27-12-15-24
EDIT: "Growth slows across much of the economy"
"WASHINGTON (AP) -- The economy worsened in much of the country earlier this summer, hampered by high unemployment, weak home sales and signs of a slowdown in manufacturing."
http://finance.yahoo.com/news/Fed-survey-Growth-slows-apf-1208654941.html?x=0&mwp_success=NONJS_POST_SUCCESS#mwpphu-post-form
BUT NOTHING ABOUT THE DEFICIT FIGURING INTO THE ECONOMY.
Simple, the economic engine could give a damn less what Washington does, it doesnt enter into the economic equation.
And like I said above, "stimulus" is being thrown down DEBT HOLES doing no economic good:
Debt in America: The Most Indebted States
"Residents of California and Hawaii are the most indebted individuals in America, but they’re also among a group that are making the most progress in paying down the amount they owe, according to a MoneyWatch analysis of state-by-state debt statistics."
http://xfinity.comcast.net/slideshow/finance-mostindebtedstates/california/%27%20rel=%27nofollow/
Thats what they SHOULD do, but no one can pretend that this money spent will do any economic good for the present or future, its spent on PAST ECONOMIC ACTIVITY.
Posted by Dave
at 11:10 AM PDT
Updated: Wednesday, 3 August 2011 9:34 AM PDT
