Deflation is winning

[34f3f3f]

[quote=kewp]The way I am seeing it, we are screwed, but everyone else is screwed worse.

Yup. Or so I hope.

America has everything it needs to be self-sufficient. We have natural resources, an abundance of food and the best *human* resources on the planet.

We can afford to sit this thing out. Gonna suck for those whom have never known hard times.[/quote]

Now let me see if I have got this right. Self sufficient, but dependent on China buying its debt. Highly subsidized farming, now geared more to producing biofuels. Gas guzzling cars that nobody wants to buy, and dependence on foreign oil. Best human resources on the planet …? I presume you are referring to the ones that got us into this pickle in the first place. Be careful what you wish for.

[Fearful]

[quote=kewp]
But there’s the catch, why would they want to dump a currency that is gaining purchasing power against everything else? [/quote]
They might well be inclined to bias against adding more of a currency that has recently gained purchasing power.

No one will fully divest their foreign exchange reserves of dollars. Doing so, particularly when they hold nearly two trillion dollars, would devalue the remainder of the holdings; not even the largest market is that liquid.

They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.

[Fearful]

[quote=kewp]
But there’s the catch, why would they want to dump a currency that is gaining purchasing power against everything else? [/quote]
They might well be inclined to bias against adding more of a currency that has recently gained purchasing power.

No one will fully divest their foreign exchange reserves of dollars. Doing so, particularly when they hold nearly two trillion dollars, would devalue the remainder of the holdings; not even the largest market is that liquid.

They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.

[Fearful]

[quote=kewp]
But there’s the catch, why would they want to dump a currency that is gaining purchasing power against everything else? [/quote]
They might well be inclined to bias against adding more of a currency that has recently gained purchasing power.

No one will fully divest their foreign exchange reserves of dollars. Doing so, particularly when they hold nearly two trillion dollars, would devalue the remainder of the holdings; not even the largest market is that liquid.

They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.

[Fearful]

[quote=kewp]
But there’s the catch, why would they want to dump a currency that is gaining purchasing power against everything else? [/quote]
They might well be inclined to bias against adding more of a currency that has recently gained purchasing power.

No one will fully divest their foreign exchange reserves of dollars. Doing so, particularly when they hold nearly two trillion dollars, would devalue the remainder of the holdings; not even the largest market is that liquid.

They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.

[Fearful]

[quote=kewp]
But there’s the catch, why would they want to dump a currency that is gaining purchasing power against everything else? [/quote]
They might well be inclined to bias against adding more of a currency that has recently gained purchasing power.

No one will fully divest their foreign exchange reserves of dollars. Doing so, particularly when they hold nearly two trillion dollars, would devalue the remainder of the holdings; not even the largest market is that liquid.

They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.

[kewp]

[quote=Fearful]
They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.[/quote]

I think it would be a good thing to have a basket of currencies function as the ‘reserve’.

Would keep us all honest.

[kewp]

[quote=Fearful]
They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.[/quote]

I think it would be a good thing to have a basket of currencies function as the ‘reserve’.

Would keep us all honest.

[kewp]

[quote=Fearful]
They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.[/quote]

I think it would be a good thing to have a basket of currencies function as the ‘reserve’.

Would keep us all honest.

[kewp]

[quote=Fearful]
They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.[/quote]

I think it would be a good thing to have a basket of currencies function as the ‘reserve’.

Would keep us all honest.

[kewp]

[quote=Fearful]
They might do it solely for purposes of diversification. A trade-weighted or GDP weighted currency basket would hold only about a quarter in dollars.[/quote]

I think it would be a good thing to have a basket of currencies function as the ‘reserve’.

Would keep us all honest.

[barnaby33]

kewp, what I wrote was:

This shrinks the money supply in two ways, one fundamental, one technical. Fundamentally when debt is paid in a fiat system, money is destroyed and the pool of available money shrinks. This isn’t normally a problem as lenders are constantly making new money via loans. That isn’t happening right now. Technically, people are trying to acquire dollars and they are in shorter supply (because of demand for them) they become a commodity unto themselves and respond to that scarcity.

I was going to disagree with you but you are correct. Its not paying back the debt that is deflationary, its the chilling of further lending caused by default that is. thanks.

[barnaby33]

kewp, what I wrote was:

This shrinks the money supply in two ways, one fundamental, one technical. Fundamentally when debt is paid in a fiat system, money is destroyed and the pool of available money shrinks. This isn’t normally a problem as lenders are constantly making new money via loans. That isn’t happening right now. Technically, people are trying to acquire dollars and they are in shorter supply (because of demand for them) they become a commodity unto themselves and respond to that scarcity.

I was going to disagree with you but you are correct. Its not paying back the debt that is deflationary, its the chilling of further lending caused by default that is. thanks.

[barnaby33]

kewp, what I wrote was:

This shrinks the money supply in two ways, one fundamental, one technical. Fundamentally when debt is paid in a fiat system, money is destroyed and the pool of available money shrinks. This isn’t normally a problem as lenders are constantly making new money via loans. That isn’t happening right now. Technically, people are trying to acquire dollars and they are in shorter supply (because of demand for them) they become a commodity unto themselves and respond to that scarcity.

I was going to disagree with you but you are correct. Its not paying back the debt that is deflationary, its the chilling of further lending caused by default that is. thanks.

[barnaby33]

kewp, what I wrote was:

This shrinks the money supply in two ways, one fundamental, one technical. Fundamentally when debt is paid in a fiat system, money is destroyed and the pool of available money shrinks. This isn’t normally a problem as lenders are constantly making new money via loans. That isn’t happening right now. Technically, people are trying to acquire dollars and they are in shorter supply (because of demand for them) they become a commodity unto themselves and respond to that scarcity.

I was going to disagree with you but you are correct. Its not paying back the debt that is deflationary, its the chilling of further lending caused by default that is. thanks.

[Author]

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