[patientrenter]

This is an emergency! Emergency! CA govt spending may be only 50% more per capita, increased for inflation, than it was 10 years ago.

Ha! It’s so clear that PK doesn’t have a political agenda when he talks economics.

[patientrenter]

This is an emergency! Emergency! CA govt spending may be only 50% more per capita, increased for inflation, than it was 10 years ago.

Ha! It’s so clear that PK doesn’t have a political agenda when he talks economics.

[patientrenter]

This is an emergency! Emergency! CA govt spending may be only 50% more per capita, increased for inflation, than it was 10 years ago.

Ha! It’s so clear that PK doesn’t have a political agenda when he talks economics.

[patientrenter]

This is an emergency! Emergency! CA govt spending may be only 50% more per capita, increased for inflation, than it was 10 years ago.

Ha! It’s so clear that PK doesn’t have a political agenda when he talks economics.

[patientrenter]

[quote=4plexowner]…so how much “quantitative easing” can the Fed perform before we reach the “extremis” state?[/quote]

Quite a bit, 4plex. Before the Fed stepped in earlier this year with direct purchases of Treasuries, the 10T rate was less than 3%. Back in the early 1980’s, that rate was in the mid-teens. That’s a lot of room on just that element alone. Then there’s the exchange rate. A drop of 30% in the dollar would be seen as huge, and would likely halt movement until it was absorbed. Maybe a year, or more. Further movements could then happen, but these things take time. A complete collapse has occurred for only a few countries in the last several decades, and those countries were generally quite a bit less advantaged than the US.

So it is certainly true that we could see a lot of pressures driving down the exchange value of the dollar, but I see no practical chance of its foreign exchange value actually dropping to near-zero, as for Weimar Germany’s Mark.

Just consider if the dollar lost 50% of it’s foreign exchange value tomorrow. We’d have to buy a lot less BMWs and other European goods, and a lot fewer appliances from China. We’d still want nice things, so someone here would make a profit from making substitutes for us. And there are some things we make that other people around the world would love to buy from us at half the price in their own currency. It’s hard for me to see how a 50% devaluation wouldn’t eliminate our trade deficit. So in reality a less than 50% devaluation would get us there. It’s not all about catastrophe, black and white, do or die, all or nothing.

And yes, I have zero faith that US debts will be paid off in full value. Inflation will be engineered to reduce the true value of the debt. But the managers of the Chinese economy knew that 10 years ago. They accepted a likely future writedown of a trillion or two in accumulated savings as a price they would have to pay to go from being an undeveloped country to a global powerhouse full of real industry, educated people, and business knowledge for the future. The increase in the real value of their economy, powered by export growth, far exceeds the losses they will incur from US bad debt.

[patientrenter]

[quote=4plexowner]…so how much “quantitative easing” can the Fed perform before we reach the “extremis” state?[/quote]

Quite a bit, 4plex. Before the Fed stepped in earlier this year with direct purchases of Treasuries, the 10T rate was less than 3%. Back in the early 1980’s, that rate was in the mid-teens. That’s a lot of room on just that element alone. Then there’s the exchange rate. A drop of 30% in the dollar would be seen as huge, and would likely halt movement until it was absorbed. Maybe a year, or more. Further movements could then happen, but these things take time. A complete collapse has occurred for only a few countries in the last several decades, and those countries were generally quite a bit less advantaged than the US.

So it is certainly true that we could see a lot of pressures driving down the exchange value of the dollar, but I see no practical chance of its foreign exchange value actually dropping to near-zero, as for Weimar Germany’s Mark.

Just consider if the dollar lost 50% of it’s foreign exchange value tomorrow. We’d have to buy a lot less BMWs and other European goods, and a lot fewer appliances from China. We’d still want nice things, so someone here would make a profit from making substitutes for us. And there are some things we make that other people around the world would love to buy from us at half the price in their own currency. It’s hard for me to see how a 50% devaluation wouldn’t eliminate our trade deficit. So in reality a less than 50% devaluation would get us there. It’s not all about catastrophe, black and white, do or die, all or nothing.

And yes, I have zero faith that US debts will be paid off in full value. Inflation will be engineered to reduce the true value of the debt. But the managers of the Chinese economy knew that 10 years ago. They accepted a likely future writedown of a trillion or two in accumulated savings as a price they would have to pay to go from being an undeveloped country to a global powerhouse full of real industry, educated people, and business knowledge for the future. The increase in the real value of their economy, powered by export growth, far exceeds the losses they will incur from US bad debt.

[patientrenter]

[quote=4plexowner]…so how much “quantitative easing” can the Fed perform before we reach the “extremis” state?[/quote]

Quite a bit, 4plex. Before the Fed stepped in earlier this year with direct purchases of Treasuries, the 10T rate was less than 3%. Back in the early 1980’s, that rate was in the mid-teens. That’s a lot of room on just that element alone. Then there’s the exchange rate. A drop of 30% in the dollar would be seen as huge, and would likely halt movement until it was absorbed. Maybe a year, or more. Further movements could then happen, but these things take time. A complete collapse has occurred for only a few countries in the last several decades, and those countries were generally quite a bit less advantaged than the US.

So it is certainly true that we could see a lot of pressures driving down the exchange value of the dollar, but I see no practical chance of its foreign exchange value actually dropping to near-zero, as for Weimar Germany’s Mark.

Just consider if the dollar lost 50% of it’s foreign exchange value tomorrow. We’d have to buy a lot less BMWs and other European goods, and a lot fewer appliances from China. We’d still want nice things, so someone here would make a profit from making substitutes for us. And there are some things we make that other people around the world would love to buy from us at half the price in their own currency. It’s hard for me to see how a 50% devaluation wouldn’t eliminate our trade deficit. So in reality a less than 50% devaluation would get us there. It’s not all about catastrophe, black and white, do or die, all or nothing.

And yes, I have zero faith that US debts will be paid off in full value. Inflation will be engineered to reduce the true value of the debt. But the managers of the Chinese economy knew that 10 years ago. They accepted a likely future writedown of a trillion or two in accumulated savings as a price they would have to pay to go from being an undeveloped country to a global powerhouse full of real industry, educated people, and business knowledge for the future. The increase in the real value of their economy, powered by export growth, far exceeds the losses they will incur from US bad debt.

[patientrenter]

[quote=4plexowner]…so how much “quantitative easing” can the Fed perform before we reach the “extremis” state?[/quote]

Quite a bit, 4plex. Before the Fed stepped in earlier this year with direct purchases of Treasuries, the 10T rate was less than 3%. Back in the early 1980’s, that rate was in the mid-teens. That’s a lot of room on just that element alone. Then there’s the exchange rate. A drop of 30% in the dollar would be seen as huge, and would likely halt movement until it was absorbed. Maybe a year, or more. Further movements could then happen, but these things take time. A complete collapse has occurred for only a few countries in the last several decades, and those countries were generally quite a bit less advantaged than the US.

So it is certainly true that we could see a lot of pressures driving down the exchange value of the dollar, but I see no practical chance of its foreign exchange value actually dropping to near-zero, as for Weimar Germany’s Mark.

Just consider if the dollar lost 50% of it’s foreign exchange value tomorrow. We’d have to buy a lot less BMWs and other European goods, and a lot fewer appliances from China. We’d still want nice things, so someone here would make a profit from making substitutes for us. And there are some things we make that other people around the world would love to buy from us at half the price in their own currency. It’s hard for me to see how a 50% devaluation wouldn’t eliminate our trade deficit. So in reality a less than 50% devaluation would get us there. It’s not all about catastrophe, black and white, do or die, all or nothing.

And yes, I have zero faith that US debts will be paid off in full value. Inflation will be engineered to reduce the true value of the debt. But the managers of the Chinese economy knew that 10 years ago. They accepted a likely future writedown of a trillion or two in accumulated savings as a price they would have to pay to go from being an undeveloped country to a global powerhouse full of real industry, educated people, and business knowledge for the future. The increase in the real value of their economy, powered by export growth, far exceeds the losses they will incur from US bad debt.

[patientrenter]

[quote=4plexowner]…so how much “quantitative easing” can the Fed perform before we reach the “extremis” state?[/quote]

Quite a bit, 4plex. Before the Fed stepped in earlier this year with direct purchases of Treasuries, the 10T rate was less than 3%. Back in the early 1980’s, that rate was in the mid-teens. That’s a lot of room on just that element alone. Then there’s the exchange rate. A drop of 30% in the dollar would be seen as huge, and would likely halt movement until it was absorbed. Maybe a year, or more. Further movements could then happen, but these things take time. A complete collapse has occurred for only a few countries in the last several decades, and those countries were generally quite a bit less advantaged than the US.

So it is certainly true that we could see a lot of pressures driving down the exchange value of the dollar, but I see no practical chance of its foreign exchange value actually dropping to near-zero, as for Weimar Germany’s Mark.

Just consider if the dollar lost 50% of it’s foreign exchange value tomorrow. We’d have to buy a lot less BMWs and other European goods, and a lot fewer appliances from China. We’d still want nice things, so someone here would make a profit from making substitutes for us. And there are some things we make that other people around the world would love to buy from us at half the price in their own currency. It’s hard for me to see how a 50% devaluation wouldn’t eliminate our trade deficit. So in reality a less than 50% devaluation would get us there. It’s not all about catastrophe, black and white, do or die, all or nothing.

And yes, I have zero faith that US debts will be paid off in full value. Inflation will be engineered to reduce the true value of the debt. But the managers of the Chinese economy knew that 10 years ago. They accepted a likely future writedown of a trillion or two in accumulated savings as a price they would have to pay to go from being an undeveloped country to a global powerhouse full of real industry, educated people, and business knowledge for the future. The increase in the real value of their economy, powered by export growth, far exceeds the losses they will incur from US bad debt.

[patientrenter]

[quote=NeetaT] There is nothing wrong with this investment. It is a user friendly form of hard-money lending. They lend at 15%-20% to people who have collateral worth 125% of the loan and pay the investor 12%. I did this for one year with a firm located in the US. It was scary at first, but it turned out well. Maybe I was playing roulette and didn’t know it.
[/quote]

NeetaT, you scare me. You are risk-averse, but do things like this. It seems you are only comfortable taking high levels of risk when:

1. The promised rewards are high – high enough that common sense tells us there has to be high risk

2. The actual risks are concealed from you

I sure hope you don’t end up losing most of your money one day.

[patientrenter]

[quote=NeetaT] There is nothing wrong with this investment. It is a user friendly form of hard-money lending. They lend at 15%-20% to people who have collateral worth 125% of the loan and pay the investor 12%. I did this for one year with a firm located in the US. It was scary at first, but it turned out well. Maybe I was playing roulette and didn’t know it.
[/quote]

NeetaT, you scare me. You are risk-averse, but do things like this. It seems you are only comfortable taking high levels of risk when:

1. The promised rewards are high – high enough that common sense tells us there has to be high risk

2. The actual risks are concealed from you

I sure hope you don’t end up losing most of your money one day.

[patientrenter]

[quote=NeetaT] There is nothing wrong with this investment. It is a user friendly form of hard-money lending. They lend at 15%-20% to people who have collateral worth 125% of the loan and pay the investor 12%. I did this for one year with a firm located in the US. It was scary at first, but it turned out well. Maybe I was playing roulette and didn’t know it.
[/quote]

NeetaT, you scare me. You are risk-averse, but do things like this. It seems you are only comfortable taking high levels of risk when:

1. The promised rewards are high – high enough that common sense tells us there has to be high risk

2. The actual risks are concealed from you

I sure hope you don’t end up losing most of your money one day.

[patientrenter]

[quote=NeetaT] There is nothing wrong with this investment. It is a user friendly form of hard-money lending. They lend at 15%-20% to people who have collateral worth 125% of the loan and pay the investor 12%. I did this for one year with a firm located in the US. It was scary at first, but it turned out well. Maybe I was playing roulette and didn’t know it.
[/quote]

NeetaT, you scare me. You are risk-averse, but do things like this. It seems you are only comfortable taking high levels of risk when:

1. The promised rewards are high – high enough that common sense tells us there has to be high risk

2. The actual risks are concealed from you

I sure hope you don’t end up losing most of your money one day.

[patientrenter]

[quote=NeetaT] There is nothing wrong with this investment. It is a user friendly form of hard-money lending. They lend at 15%-20% to people who have collateral worth 125% of the loan and pay the investor 12%. I did this for one year with a firm located in the US. It was scary at first, but it turned out well. Maybe I was playing roulette and didn’t know it.
[/quote]

NeetaT, you scare me. You are risk-averse, but do things like this. It seems you are only comfortable taking high levels of risk when:

1. The promised rewards are high – high enough that common sense tells us there has to be high risk

2. The actual risks are concealed from you

I sure hope you don’t end up losing most of your money one day.

[patientrenter]

Depends on purpose:

1. For daily purchases in Europe, I use cash withdrawals from European ATMs, using my US ATM card, supported by my low-fee credit union.

2. For larger deposits, I use Everbank. They have various demand and CD accounts for a few foreign currencies. US dollar-equivalent principal is insured by our own FDIC.

3. For large transactions, such as hedging my overall savings against future dollar devaluation against the euro (and to the extent that I chose to use the euro instead of the yen as a stable value currency), I use the CME futures contracts. There are lots of brokers, but I use Interactivebrokers. I know it’s a futures contract, but you can use it to effectively convert dollars to euro in a pretty efficient and convenient and reversible way.

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