Look at the bright side.. It will collapse faster.

They bought their tickets. They knew what they were getting into. I say let them crash.

them's fightin words..

it is supposed to be inflationary.

I think that unless most people realize that ox-bridge and ivy leaguers are harmful and disingenuous idiots who are best used as fuel for incinerators, we will not change for the better.

Will this comment go to JS-Kit limbo ?

Four Yuan to the buck and massive unemployment makes Chin a restive boy.

I assume he meant that China didn't want their currency to strengthen.

But when he talks about it being better for the Fed to seek "stability the currency", does that mean dollar-vs-consumer goods (i.e. low inflation), dollar-vs-other currencies (trade balance?), dollar-vs-assets (housing &/or stock prices?), or ????

After all, the dollar can't remain stable against everything! In that case no one (in the financial sector at least) would be making any money! Then again, maybe that should be the goal! If we had stability in the currency and profits could only be earned through honest productive work...

BTW, if this stock market rally is supposed to be real, how come the corporate bond funds aren't going along? They were whacked with the stocks last fall, and one would expect them to recover in-line with the stocks...

Or is it that the stock market is only rallying because of bear market dynamics, bailout hype and maybe some print-and-spend inflation fears? So the corporate bonds are therefore not going along?

Hmm...

Why yes, Wisdom Seeker, you've found Wisdom.

stupid question, but i always get relative directional terms backwards, but why would selling dollars "depreciate" the renminbi? wouldn't it actually do the reverse?

Less than 10 posts in and we've hit Godwin.

Fat tails.

Well, that's if you only count the posts that actually posted. Total posts including the eaten ones are prolly in the hundreds!

One thing I've gotten from Mancur Olson's books is that having a government that reliably enforces long-term contracts is essential to having a prosperous first world economy.

The dollar is the most fundamental long-term financial contract we have.

If the government is unwilling to enforce that, one must suspect that we are not in fact a first world economy.

I can't stand the comment system.

Nitey-nite amigos and amigas.

I am going to watch the O-man's news conference tonight.

Also, we may have a tremendous poetic irony on our hands:

Our central government with their seemingly insatiable desire to expand their power seems to be intent on doing it by destroying the single most important source of power they have: The dollar.

One day our congress is going to wake up emasculated and realize that their power lust was the very thing that caused them to lose access to the funding vital to their existence.

The will also learn that they cannot replace credit with force or intimidation because it is precisely the cooperative nature of credit that leads to the economic benefits it provides access to.

As always, though. We have to learn everything the hard way.

Politics obliterates the lessons of history it seems.

goadam - it is disinfaltion that is to avoided.

UK's inflation rate hit 3.7 last month. Ford is raising the UK prices by 3.7%. Wages over the last year in the UK have risen .09%. Tells me thing will get a bit more iffy on the consumer side.

“Remind me again why Obama failed to choose Volcker as Treasury chief? Because he wanted to fail?

Why didn't we choose Volcker as president?

I would've gotten up early to vote for him.

If the dollar depreciates then the Chinese central bank must get the yuan lower, that's what V. is talking about. A race to the bottom to keep exports going. It's beggar thy neighbor on the part of the US government.

Well it is either that or they agree to keep buying all the debt we can print so they can send us tons more lead covered toys.

They have a choice (a) either our currency gets weak and we have to [prepare for the horror] work & make stuff ourselves or (b) they bust their ass to send us kewl stuff and we give them shiny paper.

What is so hard to fathom about the choice? V gets it why not the ROW?

It's not like their home economy will be able to buy all the crap they produce. There's just not enough capital amongst all the peasants.

Plus, on $10/day there aren't many laborers who can sprint the cash for a nice new iPhone.

That doesn't matter - they still face the SAME choice... (1) buy our debt & maintain their peg to send us stuff CHEAP... we get the stuff & they get increasingly worthless paper OR (2) our currency weakens and we have to [again - HORROR] make our own iPhones & other stuff or not buy the crap at all.

There is no magic policy fairy that can alter this dilemma - that can somehow keep us all prosperous 'service workers', our dollar strong, our current account deficits high and growing and the ferriners dollar assets safe. Something has to give.

It just blows my mind that neither Americans nor the Chinese get this? I guess it's one of those 'my livelihood depends on me not understanding' kind of things. Oh well - they'll get it soon enough.

Threads Must Die (aka bobn),

Ok, I am going to ask a few simple questions to make my point.

1. How did we get into this mess? Was it not to maintain the status quo?
2. Who benefits the most from our current status quo? Who will lose the most if it changes?
3. Who is running the system? Why are we letting them run it?
4. Has cleverness (as opposed to intelligence) ever lead to any useful innovation? Why have breakthroughs in almost all areas of human endeavour come from system outsiders rather than its high priests?
5. If predicting the future past 5-10 years is essentially worthless, why are we paying people to do it?
6. Given that these 'high priests' have almost always failed to anticipate the future why should we trust them? What makes them special or more infalliable than a drunk chimp?
7. Really, what makes them special- other than being good at jumping through their own hoops?

Lastly- what does IQ measure - cleverness or intelligence? Think about that one!

[6. Given that these 'high priests' have almost always failed to anticipate the future why should we trust them? What makes them special or more infalliable than a drunk chimp?]

You have it all wrong -- The high priests CRAFT the future. They get shitcanned when their work fails to produce the future they describe in advance.

Volcker get credit where none is due. The man is a sham.

It was under Volcker's watch that Owner's Equivalent Rent (OER) was subtituted for actual house prices in the CPI. The housing bubble never would have occured if CPI included house prices as inflation would have been at double digit rates. Much of Volcker's inflation fighting rep came from this sleight of hand.

Beyond that, Volcker paid cash investors > 4% real yields. Talk about welfare. Another something for nothing central banker empty promise, just like housing inflation.

Imo, there has never been a good central banker, except gold.

i did a search and not one N or H word here. not official yet <br/><br/> When Lucifer started talking about incinerating people based on what schools they went to, it twinged my Godwin detector. <br/><br/> I am much more reasonable. I merely want to hang Banksters and De-regulationists.

Lucifer: Ok, I am going to ask a few simple questions to make my point. <br/><br/>If your point is that they are all incoimpetent, entitled mediocrities, I agree. Fire all of them that meet that description, ands maybe a few more just to be sure. Just don't talk about putting people in ovens - very bad karma.

Here is a link to the U.S. Army Survival Manual -- FM 21-76 -- PDF!!

So, Nemo, what are you going to do with all that fame? I think it's time to publish that manifesto.

"inflationary depression "

deflationary

ac - thats why I dived into FAZ today.

.........“Short Sales Rise to Most Since September, NYSE Says (Update2)"

........

.............sure way to commit a suicide.......especially nowadays......remember market always goes against wishful-thinking.......

Curious if, the plan to end all plans, with no need for back-up, is going to BK the FDIC.

Sheila on Kudlow tonight - only say a small bit of it - in essence 'what, me worry?'...

This is a huge regional story (I would suspect)
Page Not Found

EPA put mountaintop mining permit on hold (eg Appalachian coal)

".........without chinese help , US will suffer longer to get out of this century's recession.......they are savior of USofA........"

That is quite an outrageous claim, given the lack of reasoning to support it. Sounds like some wishful thinking.

As long as foreign capital stays in the US, there won't be inflation. They'll just be substituting hard currency for contracting credit, net effect on the side of deflation.

If investor confidence in the US begins to falter, or rather their ability to keep up past flows is reduced, then there most certainly can be inflation. More likely than not it faces the familiar positive feedback loop resulting in effective default. All the remains to be seen is what the next US currency is (exchange $10 to $1, new name, unchanged but with higher prices). That next US currency won't be worth nothing, the US still has great resources, exportable stuff (or the capacity to quickly build those up), and has been a crucial source of demand globally.

We're going to go through a period of overdamping, shaking out unnatural international trade distortions. So long as governments try to protect their citizens' jobs — and in doing so, their own — the storm will get worse.

........Blackhalo.......I know it's out rageous.....but the truth is the truth......that's the reality , always hard to swallow though ..........Ummmm..............

Jas, what will you do when US$ is abandoned as reserve currency?! Trade treasuries for local U.S.-made goods? Can't even get condoms now, man.

I am a state senator and have been cloistered in a Legislative session since January 4. Given the evidence that I am seeing, things continue to go to hell all accross the economy. What the hell is going on with the market? I have fellow Senators who don't want to cut anymore spending because the economy "has turned around". I need some of you deep thinkers to give me a few lines to use in debate. Thanks

"The Fed would have to create like 20x that amount and they still couldn't force it in to the economy."

Hmm...I suspect that if the Fed decided to purchase ALL outstanding govi paper, significant inflation would result.

US Imports in February were $160 billion. Annualized, that gives ~ $1.92 trillion which is ~ 13% in a $15T US economy. So even if there was a 40% USD devaluation over a few years, translates to maybe a 5% inflation over a few YEARS which might in effect mean a g.t. 1% per year contribution rate to CPI. This is assuming all that devaluation is passed onto consumers which might not even happen.
So Jas seems to be on the money here. Even a large USD devaluation will not seep into the CPI.

Depends on two other things (1) elasticity and (2) ability to make domestic substitution. If the products exhibit inelastic demand and not easily substituted... then domestics will also raise prices as the imports increase. In such a situation even if only 5% of the product was imported... a 40% devaluation might result in ALL product increasing 40% - at least until the domestics could ramp up production to make up for [and exclude] the higher priced imports. In such a case the domestics would use the imports as 'human shields'.

The thing is though it wouldn't be long and domestics WOULD be ramping up and we'd have fewer FIRE sector workers and more 'thing producers'.

They have plenty of money and could use a lot more roads, airports, etc.

Clean air, clean water, safe food, better health care - the list of possibles just goes on and on.

DIPing to China,
No, you misunderstand. A free market in theory is fine, but they really don't exist. There are players that tried to game the system for their own benefit, and it works for a while. However we are at the time of reconciliation

I'm sure you would empathize with a list of grievances from our modern globalized economy that I could produce which occurred, at least to the extent and pace they did, primarily because the system was gamed into an unstable/unsustainable region.

I'm certainly not to be confused with a neoliberal economist given what I know about the group. I'm kind of an unlabelled guy, with an emphasis on the system rather than the localized data point/plane.

dryfly says:

The thing is though it wouldn't be long and domestics WOULD be ramping up and we'd have fewer FIRE sector workers and more 'thing producers'.
.
I think that's part of the 'backroom' argument to sell this package to Congress, et.al. The economic warfare angle could not possibly have escaped their collective political brains.

Dryfly,

I think they (the Chinese)do get it and don't know how to fix it. What they say publicly and leak privately is for domestic consumption.

"The Chinese chose to buy dollars ? With what did they buy dollars ?"

Chinese goods, of course. They could have gotten U.S. goods in exchange but settled for the dollars.

"In the US, we don't even get a T-Shirt"

You didn't go to the right congressional office then.

China announces it will spend $1 trillion on U.S.-made goods - buys 1 trillion McDonald's cheeseburgers.

This is way too depressing. I'm off to watch musick vids instead.

C

"what is it about this man volker?" Well he did take some VERY unpopular actions that defeated inflation in the late 70's.

For the take your medicine crowd, he is a bit of a folk hero.

Anon: Assume all posts are yours. Thanks for the link to the elite of Yale. Also, the link to the protests by the "rabble".

--
Jas, you talk to much.