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    Will The Fed Destroy The Dollar?

    The two smartest Fed-watchers we know share their forecasts
    by Adam Taggart

    Friday, January 1, 2021, 2:10 PM

The Federal Reserve’s official target rate of inflation is 2% per year.

Put another way, that means that if the Fed hits its target, the value of today’s dollar will only be worth around a third of its current value in 50 years.

Think that can’t happen? It already has.

Look at the chart below showing the decline in the purchasing power of the US dollar since the creation of the Fed in 1913:

Decline in purchasing power of US dollar

With the Fed now in “extreme easing” mode, having printed up nearly $3 trillion in thin-air money just this year alone, it’s not a stretch to expect the value of the dollar to decline even more precipitously from here than current estimates predict.

So, in a world where the Fed is considered by many to BE the market, backstopping investors and stepping in at a moments notice to prevent losses, what is the Fed most likely to do from here?

To address this, we recorded this excellent “fly on the wall” discussion between Danielle DiMartino Booth and Axel Merk, both of whom have inside access to the people running the Federal Reserve. In this video, they reveal that they share the same sad conclusion that the Fed really doesn’t have a plan to get out of the mess it’s in (a mess of its own creation) and is pretty much just playing for time, trying to delay the inevitable, painful repercussions of its failed policy.

Which is why now, more than ever, is the time to partner with a financial advisor who understands the nature of the risks in play, can craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate:

Anyone interested in scheduling a free consultation and portfolio review with Mike Preston and John Llodra and their team at New Harbor Financial can do so by clicking here.

And if you’re one of the many readers brand new to Peak Prosperity over the past few months, we strongly urge you get your financial situation in order in parallel with your ongoing physical coronavirus preparations.

We recommend you do so in partnership with a professional financial advisor who understands the macro risks to the market that we discuss on this website. If you’ve already got one, great.

But if not, consider talking to the team at New Harbor. We’ve set up this ‘free consultation’ relationship with them to help folks exactly like you.

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29 Comments

  • Fri, Jan 01, 2021 - 2:52pm

    #1
    agitating prop

    agitating prop

    Status: Gold Member

    Joined: May 28 2009

    Posts: 846

    2

    Inflation? Deflationary forces much stronger.

    If minimum wage is raised commensurate to the percentage of dollars created, the inflation will be blistering. But that won't happen.

    If there are massive crop failures due to global weirding  food and beverages will increase but rental prices for homes and apartments will work their way down, as they are based on what the middle and working class can afford--if barely.

    As long as the dollar can retain it's reserve status, it will still be the tallest midget in the room. It's backed by the strongest military in the world. As oil as backing for the dollar recedes, expect sabre rattling to increase.

    A stronger dollar serves two purposes. First, it holds China's power in check. Secondly, if a country is planning to reindustrialize, boot up its domestic manufacturing sector, for domestic consumption, a stronger dollar is required to purchase commodities from elsewhere to make those products at an affordable cost.

    The fed is nothing more than the governing body that oversees capital. All of the nonsense we have seen in the last couple of decades is just indicative of the fed trying to extend credit as a way of offsetting incomes that are stagnant...at best.

    They are not the cause of the problem, they have been the bandaid "solution" to the offshoring of decent jobs.

     

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  • Fri, Jan 01, 2021 - 6:34pm

    #2
    Nate

    Nate

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    Joined: May 05 2009

    Posts: 548

    4

    My Back Pages

    Dylan:

    My existence led by confusion boats
    Mutiny from stern to bow
    Ah, but I was so much older then, I'm younger than that now

    This is a really tough time for folks near retirement.  The brightest value lights (Grant Williams and John Hussman) talk about market valuations.  We get it - 3 sigma.  Plus. Lots of downside and minimal upside.  Got it.

    Money printing on steroids.  Barry Bonds is blushing.

    Dollar is getting shredded.  Got it.  Get out of cash into EXPENSIVE real estate, EXPENSIVE bonds, or EXPENSIVE equities.  Protect yourself.  Got it.

    Wait - farmland, gold and bitcon is how you protect yourself.  Must have been sleeping.  Got it.

    Maybe Tom Petty had it right - stand me up at the gates of hell and I won't back down.

    Free Falling?

     

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  • Sat, Jan 02, 2021 - 12:50am

    Postkey

    Postkey

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    Joined: May 21 2014

    Posts: 3

    1

    Postkey said:

    "Put another way, that means that if the Fed hits its target, the value of today’s dollar will only be worth around a third of its current value in 50 years.

    50 years?

    'We' have ten years?

    “ . . . our best estimate is that the net energy

    33:33 per barrel available for the global

    33:36 economy was about eight percent

    33:38 and that in over the next few years it

    33:42 will go down to zero percent

    33:44 uh best estimate at the moment is that

    33:46 actually the

    33:47 per average barrel of sweet crude

    33:51 uh we had the zero percent around 2022

    33:56 but there are ways and means of

    33:58 extending that so to be on the safe side

    34:00 here on our diagram

    34:02 we say that zero percent is definitely

    34:05 around 2030 . . .

    we

    34:43 need net energy from oil and [if] it goes

    34:46 down to zero

    34:48 uh well we have collapsed not just

    34:50 collapse of the oil industry

    34:52 we have collapsed globally of the global

    34:54 industrial civilization this is what we

    34:56 are looking at at the moment . . . “

    https://www.youtube.com/watch?v=BxinAu8ORxM&feature=emb_logo

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  • Sat, Jan 02, 2021 - 4:38am

    VTGothic

    VTGothic

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    4

    Plan B: Show me the incentive...

    Sorry, @postkey, I'm not buying another "10-years-till-death" prediction. We've been getting those at least every presidential election cycle since the first Earth Day, when I was a college sophomore. The world has ended nigh on a dozen times since I graduated, but we're still here. Garbage in = garbage out. The future ain't a straight-line projection.

    Net oil energy per barrel is not going to zero, although the cost of oil energy is surely going to continue to rise over the long frame, whatever the short-term chop, because it's harder to find and extract, of lower quality out of the spigot, and subject to increasing regulatory costs.

    Yet, the world is not going to reduce energy consumption by much, if at all. More likely we'll continue to increase our demand and use, even if we stabilize or reduce our population. Solar will contribute to net energy production, probably more effectively in the future than it does now, but even so it's not the solution. I'm uncertain where future energy supply will come from but I increasingly think we're going to see the return of nuclear power, provided by the latest technologies (some of which are old, just long sidelined) that all but eliminate radioactive landfills.

    How and where we get our energy will surely transition, but the only way the average person's net energy consumption will decline is if the political class and international cantillionaires go all North Korea on the rest of us and we knuckle under. I don't see that lasting long: the WEF will fail.

    Of course, if the world does end in a decade the rest of the discussion (any discussion) is moot. But in case it doesn't, we might want a plan B. I, for one, would like to see us find our way back to a hard money standard for one over-riding reason: in a hard-money setting inflation-centered economic policy disappears, and the zombie economy is killed quickly while virtuous economic decision-making and consumption behavior is encouraged.

    When the zombie economy is dead, technological advances will promote supply-side deflation. When we live under a supply-side deflationary regime prices go down, and a unit of currency's purchasing power goes up. When units of currency go up in purchasing power year-over-year, people have a natural (animal spirit) inclination to save today rather than spend, because goods are always cheaper tomorrow than today. In turn, that encourages reduced consumption (good for the planet and all life), the inclination to replace the accumulation of "things" with "experiences," and the generation of greater wealth across society due to savings and prudent spending. Greater wealth in turn reduces anxiety about the future, producing less frenetic behavior, and a more peaceful society - which leads to a more peaceful world.

    An inflationary-economy world naturally incentivizes people to buy today before costs go up tomorrow, which leads to wasteful and excessive consumption, faster resource depletion, increased pollution, and ecological destruction. It also causes anxiety about one's ability to survive, let alone thrive, in the future.

    A deflationary-economy world naturally incentivizes people to reduce consumption (which also leads to demands for well-built products that last decades), to reuse perfectly functional tools and equipment, and to recycle to keep today's costs down in favor of stronger purchasing power tomorrow. It also promotes confidence about one's ability to survive and thrive in the future.

    Show me the incentive and I'll show you the behavior. (Charles Munger)

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  • Sat, Jan 02, 2021 - 5:09am

    #5
    VTGothic

    VTGothic

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    6

    End of the story

    Reflections on the conversation:

    1. Well, if the Fed is giving bond traders advance warning of actions, as Danielle DiMartino Booth alleges began in 1987, thus allowing traders to front-run the Fed, that is all that matters. End of story.

    2. Inflation cannot meaningfully be limited to what shows up in purchase prices. That's the end of the train. The engine is more dollars made available to chase the same or fewer goods. Without that front end monetary inflation, there's no price inflation at the caboose end. So pragmatically, inflation is the printing, not the appearance of increased prices.

    Between the engine and the caboose are a number of intervening causes and effects that can influence how consumers experience the effects of money printing. For example, the deflationary impact of things like technological innovation, offshoring, decreased employment opportunities, and increased rates of retirement create spending holes that increasing quantities of dollars have to fill in first, before producing mounds of inflation. The Cantillion Effect, sequestering new dollars in high-value assets (along with those front-run stocks and bonds), delays but likely does not eliminate the inflationary effect on Main Street Jane's daily budget.

    And, of course, there's the perennial problem of how inflation is being measured. I have no use for the CPI, that highly manipulated basket of goods that exists more toward the edges of people's day-to-day living costs than at the center. We experience inflation every week at the grocers, in department stores, and at gas stations; not to forget rent, doctor visits, education (have you looked at the price of a college textbook recently?), and utilities. We buy beef and beans every week, we buy i-phones, computers, and televisions once every 4 or 5 years. The latter don't offset the former in real life.

    3. The Fed will not be able to run inflation hotter than 2% until something structural changes. What they will do meanwhile is keep trying, and that will continue to inflate the Cantillion Effect, further dividing the 1% from the 99%. Meanwhile, the grotesquely mis-focused, overly-politicized official response to Covid has done nothing for containment of the disease while destroying the American middle class that was already being hollowed out by – among other things – that same disastrous Fed money-printing and enabled front-running, aided and abetted by the extended outsourcing of US manufacturing; all for short-term political and economic gains at the expense of long-term society-wide fiscal health and political stability.

    Now, with the election of Biden, MMT is coming (whatever they choose to call it, the smell of stink doesn't change). That means even more printing, more central monetary management, and more poverty and dependency for the American people. Until the pitchforks and torches come out.

    And that looks like it will be the end of the story, as far as I can see right now.

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  • Sat, Jan 02, 2021 - 7:23am

    #6
    brushhog

    brushhog

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    The dollar will be destroyed by design..

    I dont believe in the well-intentioned but misguided view of the fed and the elites. I think they are smart people, smarter than me, and they know damn well the consequences of their actions. They are following an agenda. I follow an agenda, my actions follow thoughts and plans. You do too. Why we would assume that the people controlling the world are hapless simpletons who's actions and consequences are completely detached from their intentions?

    Silly. But thats not the point I want to make. I've been thinking quite abit about our circumstance, the causes, and the possible solutions. I recently read a timeless book that I would recommend to everyone here called "As a Man Thinketh". It was written in 1912 and it influenced and entire school of thought. Its a very small book, little more than a pamphlet and its available free online.

    The point of the author is that your thoughts have power. We become what we think about most and our entire life is a reflection of our thoughts. 'The thought is the seed, the action is the sprout, and the result [ whether sweet or sour ] is the fruit'. What we live with everyday is the consequence of our thinking. So thinking and thoughts have power, most people would agree with that. But there is another side to it, which the author dedicates an entire chapter on...ACTION. Thoughts without action have limited value. Likewise, action without thought is not likely to produce much good. Your thoughts are the seeds, the cultivation and care of those seeds must fall to you. Planting seeds in the ground and simply sitting in the shade all season will produce a poor crop.

    So what I see are a lot of people talking and thinking and precious few taking the seed to soil. Here the black pilled amongst us chime in "Its a waste of time, Im only one person, becoming resilient/self reliant etc wont change the course of the world". The philosophy there is that big circles [ government, nations, collective forces ] control the small circles [ family, community, individual ]. And, therefore, without large collective government over-haul, you are wasting your time.

    These people have developed a coping strategy to justify doing nothing. This is a 100% guaranteed route to complete failure.

    I propose that the aforementioned have got it at least partially backwards....small circles also control big circles. What YOU think and do, influences the world...even the universe. Thought is the seed but it MUST be combined with action. No thought is too small, no action too small to make a difference. Plant a garden. Here thought and action combine to create a powerful effect on your world. Its not just a thing, its a statement, its a movement in a direction the momentum of which will help push everything around you towards a vision.

    The elites understand this power and we even have rumors and some evidence of it drifting into occultism. They certainly understand the power of thought as they go through great lengths to influence thought. If they can put an idea into the collective thats a powerful thing...if they can combine some action with the thought [ like having you physically put on a mask ] that carries the thought, strengthens it, and brings it to fruition. Simply telling you that there is a pandemic isnt enough to produce the effect. Getting you to take action, even symbolic action, brings the thing about.

    They wield tremendous power with these practices, but you have power too. Couple your thoughts with actions. Do not be black pilled, do not allow negative thoughts or doubts to stop you. Create a clear vision for you life and world. Couple the vision with positive action. However small, it is pushing the forces that shape your world in a direction. Dont just think and post and write and talk. Then you are just throwing out seeds and counting on others to act on them.

    Plant a potato. Harvest it. Invite a friend or two over for a meal. You've done more to reverse this course than all the talk you could have done in a month. Now Im off to milk my cow, clean the stall, and move some hay. Happy New Year to everyone and may 2021 be the best year of your life!

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  • Sat, Jan 02, 2021 - 8:24am

    westcoastjan

    westcoastjan

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    Joined: Jun 04 2012

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    7

    Thank you!

    For this wonderful comment which resonated so well, along with the mention of ‘As a Man Thinketh’, which I have downloaded.

    Comments, such as yours here, are why I come to this site. There is a lot to be learned from this diverse tribe. Some things resonate well, others not so much, but without a doubt I find much to ponder as I travel my life journey. I view comments like this as a gold nugget - valuable and something to stack 😊 After many years here at PP, the stack of meaningful comments & life changing discussions is both large as well as invaluable.

    All the best to the tribe for good health, happiness, and whatever means the most to you in what is certain to be an interesting 2021.

    Jan

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  • Sat, Jan 02, 2021 - 9:12am

    thc0655

    Status: Platinum Member

    Joined: Apr 27 2010

    Posts: 2430

    6

    Brushhog, Stalin would agree with you but he knew most people were passive, nonthinkers

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  • Sat, Jan 02, 2021 - 9:19am

    #9
    wotthecurtains

    wotthecurtains

    Status: Gold Member

    Joined: Feb 27 2020

    Posts: 509

    1

    Avoiding entitlement

    Brushdog's comment (about people not doing anything) made me think of something else.

    A few months ago I read The Subtle Art Of Not Giving A F*CK and while its probably a bit sophomoric for a lot of people here, it made some really good points about entitlement.

     

    Being curious about the world and not listening to people just because they are authorities and being your own person are critical, but there is a fine line between that and slipping into entitlement which is the idea that you somehow get to avoid the discomfort.  You somehow get to just live as you like with no changes because you are special.

    This is something Ive had to confront in myself a few times (and probably should have many more times).   Am I refusing to engage the world in some way because I have principles that the rest of you are too stooopid to understand or am I just being a special snowflake?

     

    All our specific examples are different, but the common element is often entitlement masquerading as some higher purpose.

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  • Sat, Jan 02, 2021 - 9:54am

    000

    Status: Bronze Member

    Joined: Dec 10 2013

    Posts: 374

    1

    000 said:

    if I plant a potato, do "I" also plant a potato? (a quantum-nundrum)

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  • Sat, Jan 02, 2021 - 9:58am

    000

    Status: Bronze Member

    Joined: Dec 10 2013

    Posts: 374

    0

    000 said:

    See the article in the NYTimes about countries in Africa not reporting deaths. See if your analysis can reconcile with that reporting. It's interesting and relevant. I posted it here somewhere.

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  • Sat, Jan 02, 2021 - 11:42am

    MKI

    MKI

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    Posts: 348

    4

    They are following an agenda.

    I dont believe in the well-intentioned but misguided view of the fed and the elites. I think they are smart people, smarter than me, and they know damn well the consequences of their actions. They are following an agenda.

    I'm partial to this view. But there is a 'tragedy of the commons' effect as well. Just because the elite are smart doesn't prevent the reality of the Black Swan in this complex world. And like yelling "fire" in a crowded theater, often any plan people have is often going to end badly.

    The solution for myself is obvious: shadow the behavior of the elites, but keep a reserve for personal security (what folk here like to call resilience). This method has worked fabulously for 50 years, and I don't see it changing anytime soon.

    Where I do diverge from your "elite agenda rules" thesis is the Fed. People talk like the Fed is some sort of omnipotent superplanner. In truth, they are part of a complex worldwide system and egos, terrified of ZIRP, with little to no control over events. The everything bubble seems mostly driven by demographics and index fund growth via excessive trust in the system that didn't exist a generation ago. The only solution is to add more fear and bankruptcies, but if they even start here the whole thing may implode. It's highly unstable, and I believe nobody is in control. But I would like to be wrong.

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  • Sat, Jan 02, 2021 - 12:40pm

    AcadieQuebec

    AcadieQuebec

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    Joined: Feb 25 2020

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    As a Man Thinketh by James Allen (free online)

    Hi,

    for anyone looking to download the book As a Man Thinketh by James Allen,
    I find the book available for free online on this site:
    https://www.gutenberg.org/ebooks/4507
    Book Cover

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  • Sat, Jan 02, 2021 - 2:18pm

    #14
    pat the rat

    pat the rat

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    2

    feds are human

    When a man lively hood is involved he will see whatever his boss at the fed wants him to see. The fed will kill itself because, they are only human.

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  • Sat, Jan 02, 2021 - 4:11pm

    #15
    Redneck Engineer

    Redneck Engineer

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    Joined: Mar 16 2020

    Posts: 162

    8

    Lyn Alden on the Petrodollar

    If you’re looking for a deep dive into the future of the dollar, I highly recommend this lengthy article from Lyn Alden.

     

    https://www.lynalden.com/fraying-petrodollar-system/

     

    “Going forward over the next 3-5 years, I still expect many currencies including the dollar to continue to devalue vs hard assets, and for the dollar to probably be among the weaker major currencies during that timeframe (with occasional counter-rallies against that trend, as is natural).

     

    While it may or may not continue to be, so far this view has been correct. The dollar index is weaker now than it was in October 2019, but it’s still a process playing out. We had a curveball to the outlook from the pandemic in the first half of 2020 that temporarily spiked the dollar, but that merely added massive volatility to the structural forces playing out, rather than changing their direction.

     

    I don’t have a firm opinion about the next 3-6 months, because there are plenty of solvency issues between now and when things might start normalizing in the spring or summer of 2021, and dollar shorts are getting crowded at the moment, but as we look into late 2021 and into 2022, I remain with a dollar bearish outlook.

     

    Taking my view a step further, evidence shows that the global monetary system as currently structured is gradually re-aligning itself, and this fact will have important ramifications for investments over the long run.

     

    This article explores some of those concepts, ranging from the fraying of the existing petrodollar system (for all of its stakeholders, both for US interests and foreign interests), to central bank digital currencies, to a total restructuring of the global monetary system.

     

    It’s inherently a challenging subject, because for decades there have been many unsophisticated calls for a “dollar collapse” always right around the corner that never materialize.

     

    However, this isn’t one of those calls; it’s a quantitative look at the nearly 50-year history of this current global monetary system as structured since the early 1970’s.”

     

    Among other topics, she covers the root flaw of the fiat petrodollar system, where Triffin’s dilemma requires the country with the global fiat reserve currency to gut its industrial base (offshoring to cheaper locations). Let me repeat: this is not an incidental aspect, but a root requirement of having the “privilege” of the global fiat reserve currency. This means several things, all of which show up in the post-1971 US economic history. Equally, I think it outlines with great certainty the future of global macroeconomics to a narrow range of options, all of which mean: the decline of the global role of the US economy; a declined role of the dollar; a shift to multipolar global politics.

     

    The US is not dead, but the decline from global hyperower is inevitable.

     

    As Alden points out, this goes back to the Bretton Woods system, where we had a pseudo-gold standard. The critical problem:

     

    “The United States began running large fiscal deficits and experiencing mildly rising inflation levels, first for the late 1960s domestic programs, and then for the Vietnam War. The United States began to see its gold reserves shrink, as other countries began to doubt the backing of the dollar and therefore redeem dollars for gold instead of comfortably holding dollars.”

     

    My comment:

     

    In 1971, Nixon put us on a complete fiat system. Had we gone to a complete gold standard instead, and slashed government spending, we wouldn’t have Triffin’s dilemma. Gold, a neutral monetary standard, would be the reserve currency for the world, where all international trade and exchange rates would be negotiated in terms of gold. That would have saved the dollar and America’s industrial base.

    P.S. In the middle of the article, she addresses in passing the US invasion of Iraq. Hussein had started pricing oil in euros rather than dollars - which would have undermined the petrodollar had other nations followed suit. This is the best explanation I've seen for why Iraq was targeted post 9/11.

    P.P.S. She doesn't address this, but the other large factor behind the global currency collapse is the weight of government spending, especially the various forms of welfare. I see the promises of welfare programs as essentially Ponzi schemes, requiring a growing workforce to perpetually throw off funds to support entitlements. As Chris has pointed out in other contexts, a linear system can't perpetually support exponential growth. As with energy consumption, so with bread and circuses. If politically we can't cut these programs, the alternative is to crash the currency, whether intentionally or not, whether fast or slow.

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  • Sat, Jan 02, 2021 - 5:44pm

    njpeterson

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    Joined: Apr 26 2009

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    njpeterson said:

    The value of a dollar is always determined by what that dollar can buy within the nation that issues it.  it is not money printing per se that decreases the value but that the money printed only goes to one class, who can use it to buy up real assets and prevent others from getting those assets.  We can't afford houses anymore, we can't afford land, and now we can't even afford to start a small business.  This is not because of "money printing" it is because that money is going to an elite class whose rentier economics is strangling productive capitalism and extracting every ounce of skin from the general population.  Read anything by Michael Hudson or listen to him explain Rentier Economics here: https://uprootedpalestinians.wordpress.com/2020/12/23/a-hard-look-at-rent-and-rent-seeking-with-michael-hudson-pepe-escobar/  Better include The Deficit Myth by Stephanie Kelton too.

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  • Sun, Jan 03, 2021 - 1:23am

    VTGothic

    VTGothic

    Status: Gold Member

    Joined: Jan 05 2020

    Posts: 616

    6

    I can't disagree more strongly!

    @njpeterson:

    IMO, money printing as practiced these days is in itself the problem, and would be even if it was equally distributed. In fact, it would be a greater problem because those lower on the economic ladder would use more of it on goods and (secondarily) services than those higher on the ladder who don't need more goods and services and therefore park inflationary dollars in high-value assets where their price-distortion effects are greatly muted compared to what it would be if they fully circulated.

    The fact that the baseless printing is mostly parked in the upper echelons exacerbates the inequality problem but isn't the cause of our economic woes. Kelton is an economic moron, her academic accolades not withstanding. (IMO, they document academic idiocy over-against the practical wisdom of people who run the businesses and work in the industries that provide her privileged lifestyle.)

    MMT is the problem. QE is just proto-MMT. Any printing of currency over and above what is needed to reflect the increasing production of an economy causes inflation. This is so basic it's embarrassing to have to repeat. The point of a dollar is to reflect the real-world work of a particular person; a real human being. It reflects a human being's time invested in adding to the common wealth; money stores that labor and time investment so that the worker can trade her productive sweat for goods at a later date. As soon as more dollars are printed than properly reflect that core relationship of money to labor, the work of the worker is debased, counterfeited, stolen by whomever gets access to those untethered dollars.

    Money = stored time. Money is preserved life energy. Kelton and company don't understand that, don't respect it. So, consciously or unintentionally, they steal people's lives by over-printing. They cheapen the productive sweat people put into labor by dilution, ultimately making that effort worthless to the worker - which reduces those persons to the level of slaves.

    MMT is evil dressed in fine intellectual clothing, advocated by a grifter class that benefits from its promotion at the expense of the many who end up with no choice but to work for less than the real market value of their effort. Or revolt.

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  • Sun, Jan 03, 2021 - 5:10am

    #18
    macro2682

    macro2682

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    Joined: Sep 03 2009

    Posts: 388

    5

    Are we ready to talk about Bitcoin again?

    I’m amazed at how long the Fed has allowed BTC to run.  If they keep it up, BTC and the Fed might be like Uber and the Taxi Drivers Union. It might already be too late for them to squash BTC without an uproar.  There are some big money managers and 0.01%-ers that are making meaningful allocations.

    BTC has been steeling gold’s lunch.  Is it possible that the Fed is happy about that?  Remember, the Fed wants gold to be cheap (perhaps so they can keep acquiring more).

    I don’t know what’s going on, but I think we should be talking more about BTC.

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  • Sun, Jan 03, 2021 - 5:19am

    #19

    sand_puppy

    Status: Platinum Member

    Joined: Apr 13 2011

    Posts: 2758

    5

    BTC at $34,000 this morning

    Passing $30,000 was so..... well..... yesterday.

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  • Sun, Jan 03, 2021 - 6:42am

    macro2682

    macro2682

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    Posts: 388

    1

    BTC and deflation...

    Stupid question... When someone converts $100 to BTC, where does that $100 go?

    is BTC helping to eat up the dollars being printed?

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  • Sun, Jan 03, 2021 - 6:42am

    macro2682

    macro2682

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    Posts: 388

    1

    macro2682 said:

    is BTC deflationary?

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  • Sun, Jan 03, 2021 - 7:31am

    #22

    JAG

    Status: Platinum Member

    Joined: Oct 26 2008

    Posts: 758

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    macro2682

    Stupid question... When someone converts $100 to BTC, where does that $100 go?

    It goes to the guy (or gal) who sold you the bitcoin.

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  • Sun, Jan 03, 2021 - 7:46am

    macro2682

    macro2682

    Status: Gold Member

    Joined: Sep 03 2009

    Posts: 388

    0

    I realize that...

    I realize that, but the question is whether it goes into circulation as an actual currency, or whether it just sits in a pile stashed away. Obviously you can use BTC to make purchases, but nobody who owns BTC wants to part with it when it’s going up so fast. Historically, inflation is a way to get people to spend money, since their money will be worth less in the future. Bitcoin is the opposite, it makes people reluctant to spend, because it is designed to be worth more in the future. Bitcoin is deflationary. When I take $100 of spendable money, and use it to buy Bitcoin, that $100 essentially ceases to exist until/unless BTC starts crashing. Then a wave of money comes rushing back. I think a super spike in Bitcoin will act to pull the tide out before the tsunami of inflation.

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  • Sun, Jan 03, 2021 - 6:00pm

    agitating prop

    agitating prop

    Status: Gold Member

    Joined: May 28 2009

    Posts: 846

    1

    Bitcoin is the new gold

    So true. Bitcoin is like gold in the thirties, and we all know what happened then. The government wants inflation to stimulate spending on real goods in the real world.

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  • Mon, Jan 04, 2021 - 1:10am

    #25
    planfortomorrow

    planfortomorrow

    Status: Member

    Joined: Dec 28 2017

    Posts: 2

    2

    planfortomorrow said:

    If I'm right and the world starts parsing jobs in favor of robots and Ai's then tell me where in hell is Inflation ever again in the World Economy. The age old question: "who is going to buy anything"? We aren't even planning the inevitable in how the world will look in 5, 10 years. I know this, when McDonalds starts putting in those sexy bots in then all other fast food giants will follow suit or their business model is obsolete the first day the robots are put in place at McDonalds (as an example). McDonalds wins and everyone else better bust ass or they will lose a huge advantage by being 2nd, third...! McDonalds will begin a labors exodus that will start from the bottom and deplete all labor the fix themselves robots can do to replace them. That means all workers are now a ward of the State. This will be the business model of every company's forever and the day. You think the pandemic caused a devastating employment problem then you just wait because literally over night the robots are taking over. Frankly, I don't know what's taking so long. We are all replaceable in every job but a few in the entire work force, no question about this. Got to have a CEO but my point is that the robots are so good that no one is safe from getting their walking papers.

    True wealth is going to be your intrinsic value, your skills and labors after you meet the absolute physical needs of where you will live and manage everything you need and don't spend money on because you are producing it yourself. So true wealth is no debt, make your own food, and managing your protein so you get more of what you have by making more baby animals and culling the herd as you need it. Water is a must so a couple of sources is necessary. You must have a fireplace that will be your heat source of tomorrow in place and a stove that cooks using wood left on the woods floor and then you better have about 10 acres of wood to  manage and that means planting fast growing trees that are dense enough for a good burning stove. I have lots of Oaks, a great hardwood that grows very slowly so I will plant lots of Maples and then let them seed themselves. All that labor is done by the trees themselves and maples grow very fast relative to other species. Still, I'm going to purchase another stand of trees while it's cheap too and just have it in reserves. I will do nothing to harm the deer, rabbits, squires from still sticking around as I move from different areas to another stand and not change their habitat too much. Seldom do I even go into the woods but to hunt. First as scout then as hunter. While there I will notice the trees that are dying and plan at some point to get them out, process them and then split them. All a chore for the future when days are shorter and time after we get everything in the freezers and pantry. I can easily cut and stack a couple of cords a day watching my son's do the work. They are beasts and enjoy that I sit and admire their work. That's them being respectful and we have worked together many years together and they want to lesson their Mothers and Fathers load. That's what family's do but it isn't expected so it makes it better to be gifted their time.

    No inflation at all with me supplying the foods I need and better yet, making more of the food I need for those I'm in charge of by asking for their help so I can , we can, make more of what we need just for the return of some form of skills that I can't do like anything they can do that I don't have enough time for myself and there are many folks who will gladly help if they know they have a part of their food source covered for sometime in the future.

    Everything goes if the US goes so in the end we as a world will figure all this shit out or literally many millions will be left to die like the wild game we see on every freeway, just let nature have its pound of flesh for another non survivor.

    To be very clear, I have no clue what the world will look like or how we will survive into the next century so I only dream of what I can do. I'm only trying to manage things using the least of my land and resources to get the job done, and I can only do so much. If you want my help you will have to help me that's just logical. I'm not looking to do what Chris is doing because I know he and Evie are shouldering a heavy load. I believe they are terrific people who see the future and they want to help, if for strength in numbers. I don't want any of that, I just don't, I base my comments on watching them too and I don't know if they will ever have enough time in a day to do what they want. I don't think they realize what getting older means. Sure, I can do what I could in my 50's but it's much slower and naps are dreamed of a couple of hours after getting up from the last one! It's just true and every year is diminishing returns so you will automate as much as you can, no questions about that. Personally, I don't have the time or inclination to build their grand plan and the person who follows me here at "The Roost" is already known and I know he and his wife don't want that either so I plan for the next care takers and possibly his brother at some point. I built what I consider is a big Cabin (2500 sq.ft.) or are building it, so I set it up to run as a two family home with the center set up for family things but bedrooms and baths with a hexagon all season porch as their quiet area. There's is room to expand as well so that will be theirs to decide. I also should have enough left for them to handle taxes and some other expenses so they have the time to figure out where the world is headed and will have time to consider what to do next. My son's have been taught to build homes, use their resources to their advantage, They are both very good marksmen and can do whatever is necessary to manage a small farm. This is all I can due and it's all in place but our home. Next Thanksgiving we will be in.

    You will all get to see that I haven't bullshitted one word come this time next year, and Chris will know I was dead serious about why he started his site in the first place and it will be a compliment to him that so much of what we talked about here has been in place at The Roost. I'll do this to show he effected one person and if I can do that as well, effect one person then I hope they live near me.

    I just don't want to talk about this shit no more. I'm not burnt out either, the truth is I've never been more excited or happy because we are there, we got enough time to do it right and I'm so happy, Barb is so happy as well.

    I swear I will only focus on making the homestead viable and successful and be mindful that as much as I can I am going to stuff the pantries and the freezers and be certain to rotate so that I get the best healthy foods I can. If I have too much then I'm sure I can move the excess to where it is needed in barter for something I will need. I don't think robots can work a garden just yet. Sure, timers are robots of sorts and I like the idea that I can set and go knowing the grow lights will turn on, the heat is maintained in my greenhouse so that when I go out into it in mid January I can get to work planting seeds for Spring and gathering up some fresh vegetables on my return to the house.

    Love you all but for 50 years this conversation has been going on and billions of people more later and we are still talking about it. All I can truly say is it is what is is, in the present and for a year or two and then you review, which is all we've done here for the last 12 years. Nothing has changed even after spending many trillions of dollars seemingly over night. None of it has shown inflation yet but, I bet everyone here thought Gold would be somewhere North of $10k now and it isn't. Not even close but,,,some day...? Everything will happen some day, you can bet on that but for the near term I will have put in place my battle plan and I will be ahead of the game and that is my focus and it won't take me all day to do it either. We still will have time for ourselves. The thing is, everything we do we have a love of doing so isn't a labor at all, it's an accomplishment that makes sleep easy and time together an experience and life itself a wonder. I cannot express enough how Barb and I have become better friends, lovers of just being in each others space and we have managed so much and have done it willfully. The hard work is truly done so it really becomes, how much more do we want to do. I just want to walk around and do the jobs that need to be done, each and every day and then if I need a bigger compost pile that is better organized then I'll get to work on that in my spare time.

    Be who you want to be, whatever that is because I'm sure you have worked it out within your life's living standard. You have to account for the basics, of course but do it your way and then you have what you want. Later is when you'll decide what more you want to accomplish and when you do just do it. It doesn't need to be perfect just structurally sound and blend with your surrounding. Have fun. In saying this, I have to built on strong foundations, every wall level and everything in balance. I must be warm so blown in insulation is a must and it helps seal out the bugs and critters. It must be cedar for the same reason plus I love cedar and how it smells and doesn't rot. Plus cedar turns a nice color as it ages that for and ex decorator/painter is quite beautiful. I never, ever treat or stain cedar, the why is because as the Sun cooks it it releases tannins that reject whatever finished you put on it so looks God awful a year or two later. It is frankly an abomination. Trust me.

    This is just how we flow but again, make everything structurally sound. You have to do it, so do it well as you can and do it one time.

    I align a lot with the teaching of Charles H Smith as well, I find him sensible as hell and so a hat tip to all his efforts to educate me/us on this site, his site "of two minds" and through his books. My goal is to have every book he has written and I have a real nice Mr. T collection right now. I will maintain all his books and purchase them as they come out as a library of future reading and wisdom going forward. He will be featured prominently in my library I will build myself in our cabin. Not to mention what Chris and Adam have produced for us along with my super starts, Matt Simmon's (twilight in the dessert}, Jim Kingsdale, Jim Rodgers, and many others. Jim Rogers is probably my hero for explaining what I must become if commodities was to be my game and he alone taught me the patience required for this. Hussman is frankly genius's,  many good Folks that get it.

    Peace BOB

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  • Mon, Jan 04, 2021 - 5:13am

    #26
    novostr

    novostr

    Status: Member

    Joined: Jan 04 2021

    Posts: 1

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    novostr said:

    dollar's now worth almost nothing, is there still anything left from it's purchasing power to be destroyed ?

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  • Tue, Jan 05, 2021 - 7:08am

    #27
    Penguin Will

    Penguin Will

    Status: Member

    Joined: Aug 20 2019

    Posts: 86

    1

    Penguin Will said:

    ~Penguin Will emits an evil smile and picks up a spoon~

    You want the opinion of an out of touch mountain boy/engineer?

    The Bitcoin, hard currency, and MMT aficionados are all wrong. Fiat was a great idea when the real economy was expanding. Hard currency strangles a growing economy. But what do you do when the real economy is actually contracting? Currency quantity needs to match true REAL economic growth and we don't even know how to measure that accurately. Let alone have the wisdom to match it with currency growth that balances the needs of production, employment, long term value. We aren't that smart. AND when you have a growing population at the same time as a shrinking real economy? Many nations face this exact situation...

    There is no answer to this problem that is clean and neat. There is no "Do _____ and everything will turn out great!" rabbit to pull out of the hat we hold. The best we can do is remain flexible and muddle through. Hobbits are great at this but we, regrettably, are not.

    Will

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  • Tue, Jan 05, 2021 - 7:51am

    brushhog

    brushhog

    Status: Gold Member

    Joined: Oct 06 2015

    Posts: 499

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    Its a dangerous business Mr Penguin

    .....going out your door. You step into the road and if you dont keep your feet, there is no telling where you might be swept off to.

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  • Wed, Jan 06, 2021 - 3:39pm

    #29
    springbank1

    springbank1

    Status: Member

    Joined: Feb 15 2012

    Posts: 17

    1

    Great interview!!!

    Well done Taggart!  This is a good one..

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