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    • Tue, Mar 05, 2013 - 07:45pm

      #2
      doug green

      doug green

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      I got at least part of the

    I got at least part of the answer reading a Daniel Amerman article a few minutes ago.  Through inflation, presumably prices and wages will increase, while the terms of existing debt remain constant (i.e. US borrows debt very cheaply from the fed, which is the money creation leading to the inflation).  The wage increase will lead to higher taxes, which leads to higher tax receipts and hence money to the gubment to pay off its low rate loans. 

    • Fri, Sep 21, 2012 - 12:10pm

      #7
      doug green

      doug green

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      Yes, but at some point high

    Yes, but at some point high dollar credit items will go up in nominal terms even as they experience asset price deflation.  Like in the 70’s, house prices rose, but at a rate lower than inflation because higher inflation led to higher interest rates, which had a depressing impact on housing than otherwise.  Looks like we’re in a stagflationary environment again, only this time we can’t jack interest rates up to nearly 20% to quell the inflation because debt service payments would consume all of the tax revenues.

    • Thu, Sep 20, 2012 - 01:53pm

      #4
      doug green

      doug green

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      How about a velocity pickup

    How about a velocity pickup when, in response to growing debt and monetization thereof, foreigners (and US citizens) either dump, or let their treasury holdings mature and spend the dollars here in the US?  As people lose faith in the value of the dollar, they will spend them faster to secure real goods before prices increase further, which will feed on itself and increase price inflation.

    Other points to make are that 1) QE3 is UNsterilized, so will cause price inflation, and 2) the fed has been questioned about lowering the interest it pays on excess reserves, which would force banks to lend money to make money, which would inject more cash into the sytem and cause price inflation that way.  BOTH OF THESE TWO POINTS ASSUME THAT VELOCITY WILL NOT DECREASE AT THE SAME RATE OR MORE THAN MONEY CREATION.

    Seems to me that with real incomes falling, velocity cannot decrease much more because people need to spend money on necessities regardless of fear of the economy and fed.

    Bottom line, loss of faith in the dollar leads to people spending it for real goods as quickly as possible, which feeds on itself and causes price inflation.  Coupled with money supply increase, the effects could be powerful.  BTW, even in a high unemployment situation, there will be demand for wage increases at some point as prices rise.  We had pay increases during the stagflationary 70’s early 80’s though unemployment was high. 

    • Mon, Sep 17, 2012 - 04:47pm

      #9
      doug green

      doug green

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      50 cents under spot for a

    50 cents under spot for a 1,000 ounce bar.  If it was Silver Eagles I was selling, I imagine I would have gotten spot or a little more maybe.  At the time they said they had a lot of supply coming in and hence the below spot payment.  As far as I know they always say that when you sell and when you buy there is little supply.  I don’t know…

    • Wed, Sep 12, 2012 - 04:17pm

      #5
      doug green

      doug green

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      I wonder who to sell to as

    I wonder who to sell to as well.  I wouldn’t feel very comfortable sending a place hundreds of coins.  What if they said the actual number is far less than you sent them?  Is this a risk?

    I know when I sold my 1,000 ounce bar of silver to a local coin dealer, they gave me less than spot and charged me $.50 over spot when I first bought a few years prior.

    • Tue, Sep 04, 2012 - 04:59pm

      #4
      doug green

      doug green

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      I do not subscribe to his

    I do not subscribe to his Wealth Advisor.

    I agree with you that Graham does not rule it out, and that it will eventually come, especially since someone needs to buy our treasuries and China is cutting back.  I find very interesting recent criticisms of Graham, saying that QE is ongoing via dollar swaps, etc. and that Graham’s view of “No QE3” is just semantics.  Jim Rogers just said that the fed is doing stealth QE.  Given the flack it gt over the past few QEs, and also the information finally FORCED out using FOIA that the fed spent $16 trillion in bailouts during the financial crisis, I wouldn’t doubt it for a second.  So the bottom line is whether an official QE3 is announced or not may not matter because QE is ongoing in stealth mode.  IDK, maybe this is why the stock market is so high right now???

    • Thu, Aug 30, 2012 - 05:38pm

      #4
      doug green

      doug green

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      What he says makes absolute

    What he says makes absolute sense to me.  I have a low interest rate loan that I won’t pay off.  I respectfully disagree with saferite.  Stealing is when you take something from someone, like the fed when it inflates, it takes purchasing power from people.  Interest rates on loans are set (theoretically) so they fully reflect risk of rising or falling.  One side wins, the other loses.  That’s not stealing.  Gambling, maybe, but not stealing.  Besides, it is a person’s DUTY to protect themselves and their family’s wellbeing.

    I have only read Daniel’s articles, but have not ordered his material, yet at least.  He seems to think the gubment will raise taxes on gold and silver.  Maybe it will, maybe not but I have some.  As he does a great job of explaining, the stock market will not shelter you from inflation even when it goes up.

    • Thu, Aug 30, 2012 - 05:38pm

      #5
      doug green

      doug green

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      What he says makes absolute

    What he says makes absolute sense to me.  I have a low interest rate loan that I won’t pay off.  I respectfully disagree with saferite.  Stealing is when you take something from someone, like the fed when it inflates, it takes purchasing power from people.  Interest rates on loans are set (theoretically) so they fully reflect risk of rising or falling.  One side wins, the other loses.  That’s not stealing.  Gambling, maybe, but not stealing.  Besides, it is a person’s DUTY to protect themselves and their family’s wellbeing.

    I have only read Daniel’s articles, but have not ordered his material, yet at least.  He seems to think the gubment will raise taxes on gold and silver.  Maybe it will, maybe not but I have some.  As he does a great job of explaining, the stock market will not shelter you from inflation even when it goes up.

    • Fri, Aug 24, 2012 - 02:38pm

      #2
      doug green

      doug green

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      BTW, Graham pointed out

    BTW, Graham pointed out public statements made by Bernanke about the limitations of the fed buying treasuries, specifically Ben noting that if the fed bought too many treasuries and agency bonds, it wouldn’t be good for the markets.  Graham thinks this goes to the issue of banks needing treasuries to make trades against, but to be clear, Graham has said many times in the past that the fed would initiate QE3 if there is a crisis.

    Clearly, the fed could simply buy new treaury issuances, which would be a quick buy/sell of banks as these treasurires are issued.  Without QE3, seems to me the stock market will get HAMMERED.  Stocks are pricing in QE3 at least to some extent, and clearly cannot be pricing in the fiscall cliff actually happening. 

     

     

     

    • Wed, Aug 22, 2012 - 08:15pm

      #4
      doug green

      doug green

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      tictac1,I do tend to make

    tictac1,

    I do tend to make the mistake that everyone is voicing their honest opinion.  Clearly, those who have a vested interest in the status quo tend to push the traditional even if they know things are different now.   Thanks for reminding me. 

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