Table On-Topic Summary - 24-Aug-2002
A compilation of this board's financial/economic posts From 40961 to 41011

Post  40961  by  srudek       Reply
pmcw: a few answers.

"Can you explain how the FED has inflated our currency and who has benefited (please be as specific as you can both in name and in sector).

Well, let's see . . . hmmm . . . you and I have certainly made millions off the inflation in the last few years, haven't we? You in stocks, me in real estate. Based on what you've said about how your BIG gains in stocks came from correctly anticipating Greenspan flooding the world of dollar bills, doesn't that make you more of a currency speculator than an investor? Although it may not be polite to say so, MOST of our gains have been due to the Fed lifting wealth out of other peoples' pockets and putting it into ours. It really is ungrateful of me to complain.

But what the heck. After all, who has been hurt? Who could possibly have been hurt? Only endless winners in this game; especially when the world is viewed through funhouse mirrors.

Of course . . . there are those stock market fools who bought your stocks when you sold, and those who bought after you bought on the way up and paid INFLATED prices.

And, if I think about it, I HAVE increased rents on my apartments by 50% in the last 3 years. And I AM asking all my house tenants to move out so I can sell their houses; whether they rent or buy their payment will likely be 50% higher than they were paying me.

But they won't really lose anything REAL. First of all, of course, our pals will just inflate everything more so in a year the new homeowners will have made 100% "profit" on their leveraged purchase which they may extract via another loan to buy a new car or something. A free new car, come to think of it. And the renters? Well, wages and service fees benefit from all the inflation, too. The renters won't REALLY be paying anything more after all. Not in real terms. Not to say the dollar isn't real or anything!

I'm troubled that in 1965 a middle class family got along quite well with ONE working parent but now two are generally required. And that in 1960, the prorated portion of total U.S. debt wasn't something like $110,000 per person and climbing . . . rapidly. I think we used to be a net creditor nation, didn't we? Once we once the largest net creditor? And now we're the largest net debtor? Well, at least we are all still beneficiaries; I sure hope those Japanese don't ever call their loans.

But that would never happen. Could never happen. After all, we're in a new era. Only beneficiaries in this game. And the dancing music will never stop.

Do you really need me to list a myriad ways the Fed -- and its minions and pals -- have the power to inflate currency? The list would never be complete; these folk are creative -- real entrepreneurs! As you know, most of the currency inflation has not been through M1; it's been through credit inflation that couldn't occur without direct and indirect support of the U.S. government. GSEs, stock options, etc. all have their role.

If you don't feel the current currency system is of value, why don't you buy and store commodities? You and everyone else on the planet can do exactly that rather than hold cash. I do respect the point that you do quite a bit to follow your beliefs through your extensive real estate holdings, but you do realize there are additional steps you could take.

Isn't that like telling blacks that if they don't like the way they are treated here that they should just "go back to Africa"?

It is my understanding that Founding Fathers of the U.S. specified that our currency would be backed by gold. Am I mistaken? Was there a constitutional amendment passed to change this when I was out of the room?

Lugging a ton of commodities around doesn't excite me. I think we both also suspect the Central Bankers really HAVE conspired to systematically degrade and devalue gold and silver. But why would they do that? What possible motive could they have for doing that? No, there really isn't too much more I feel I can do; I think productive real estate is a good place to be. What are your suggestions? I'm not a gold bug; I'd just like a currency that can be comprehended by a reasonably intelligent person and is not subject to easy perversion by cons and government bureaucrats.

If I knew of a stable country where currency was backed by gold (or ANY other basis that would limit the ability of government and its minions to steal by deliberate inflation), I would certainly investigate building a business there. I might even consider moving there. It's my understanding, however, (can someone correct me nicely if I'm wrong) that countries are not permitted to back their currency with gold under pain of being ostracized from international trade or worse?

. . .
I personally see the value of a currency tied to a few basic things. First and foremost is the ability of the country to produce goods and services. Second is the country's nature to tend to it's own bank (keep the money supply within a reasonable tolerance of their GDP and productivity growth). Third is probably a subject measure of the country's integrity (corruption siphoning off the top).

I can't argue with you there; I hope you don't think that's the U.S? I'm not smart enough to work out the formula, but it seems some sort of formula based on GDP growth might work. But how would you keep the hyenas from perverting the rules in a thousand different ways for a thousand different "crises"? Human "government" and greed is all too predictable. And, let's face it, humans don't normally compound their intelligence and wisdom by working in social groups. In most cases, the just revert to sheeple.

P.S. You were right, I do enjoy debate. I wish my knowledge of economics and world finance was stronger so I could do a better job. pmcw, sarcasm aside, I think we both hope that our fiat money can be inflated for eternity at 90% every thirty years. Forever and ever. In 30 years, our houses will cost more than $2,000,000. Another 30 years? $20,000,000. Then $200,000,000. Then $2 BILLION. If it can, then we really have created a perpetual motion machine. But if the first 30 years are any evidence at all, that isn't statistically very likely, now is it?

My perception is that we are travelling faster and faster. HAVE to keep expanding the credit base faster and faster, just to keep the lead ballunacy up in the newera. We've only been doing this for thirty years! If we HAVEN'T got a real perpetual motion machine in fiat money inflation, would you suppose the impact crater when the ballunacy falls -- as it MUST, if this isn't the economic equivalent of a perpetual motion machine -- might be almost too big to imagine?

Post  40962  by  optimistic4dollars       Reply
lkorrow (Linda):

This is not about being patriotic if the markets rise. This is just a sucker summer rally. Noticed that everyday the long term puts volume on the DIA outnumber the calls when there is a massive rally. I have been burnt twice but I also made money twice so I am just a bit ahead. I am thinking that this rally will fade come September or may intensify, who knows. Anyway, this bear market is not over yet.

When the third GDP #'s are out, that will be a catalyst. I do not think we will see 10,000 on the Dow again for atleast a year. If we reach there watch out for the bear paw's.

Take care in your trading.

Post  40963  by  Decomposed       OT: Table ON TOPIC SUMMARY Aug 23, 2002
Post  40964  by  maniati       OT: Decomposed: I have a couple of thoughts about

Post  40965  by  Warstud       Reply
Dispute over size of Saudi pull-out from US

By Roula Khalaf in London

Published: August 22 2002

Saudis on Thursday issued conflicting reactions to estimates that up to $200bn (£127bn) in non-government investments had been pulled out of the US in recent months.

While a senior official from the Saudi central bank confirmed the reports, citing economic reasons, a prominent Saudi prince downplayed the scale of withdrawals and said he was maintaining his US holdings.

The senior official at the Saudi Arabian Monetary Agency told Arab News, the English language daily, that the shift of vast sums out of the US had been gradual. Disinvestment was prompted by concerns among investors over the weakening US economy and financial scandals.

But Prince al-Waleed bin Talal, the billionaire Saudi financier and nephew of King Fahd, said in a telephone interview that withdrawals could not have reached massive levels.

"Some people might have withdrawn their money but my information is that it is nothing on that scale [of $200bn]," he said. "Investors would be stupid to liquidate [stocks] in the values of the last two months, when the market was at its lowest point."

The reactions followed an FT report on Wednesday that Saudi investors had pulled up to $200bn out of the US in a signal of deep alienation from America, amid rising tensions between Washington and Riyadh.

Analysts in Riyadh said the conflicting reactions might be due to a lack of precise data and suggested the Saudi royal family was keen to distance itself from any action that might affect the US.

"The royal family has a lot of money invested abroad and they don't want to be seen as fighting America on the economic front, or as people who are driving this situation," said one analyst. "But there can be no doubt that the political sentiment is pushing many investors away from the US."

Saudis appeared in agreement on only one point on Thursday - that not much of the money had found its way back to the kingdom.

Bankers in Riyadh said few domestic banks had seen significant increases in deposits. "The majority of the money was overseas because people didn't want it to be in Saudi Arabia, so they would not bring it back here," said one.

Bishr Bakheet, a financial consultant in Riyadh, said the small Saudi stock market, with a capitalisation of only $70bn, the lack of transparency and the slow pace of economic reforms would keep much of the Saudi money overseas.

Post  40966  by  srudek       Reply
roof: "$13.67 in the year 2001 has the same purchasing power as $1.00 in the year 1933 (enormous loss of purchasing power after the FED)."

And I bet you'd find that nearly all of that deliberate inflation has been since 1972.

Post  40967  by  Decomposed       ot: Daily summary, maniati:
Post  40968  by  Decomposed       ot: blasted RB censorship!

Post  40969  by  Decomposed       Reply
But, srudek, which do you suppose was harder to EARN: $13.67 in 2001, or $1.00 in 1933? My bet would be on the 1933 buck.

Screw the buying power of the dollar. I'm more interested in the buying power of a day's work.

Post  40970  by  ljpit       OT: danking, of course, twas only to tease ;) It's
Post  40971  by  clo       OT: For those of you good folks at Table that have
Post  40972  by  Tampathom       OT: Jewish American terrorist
Post  40973  by  Tampathom       OT: Gen. Zinni Says War With Iraq Is Unwise
Post  40974  by  clo       OT:Tampathom:Jewish American terrorist

Post  40975  by  uponroof       Reply
srudek-excellent post, thank you.

The ever expanding FED con game is always a step ahead of the mark. The speed required to stay ahead is relative to the underlying damage. The backside of the bubble provided ski slope like momentum for speed.


The Trend Towards Higher Inflation

Inflation - a political imperative in the US

"By allowing debts to be repaid in depreciated currency, inflation favours debtors at the expense of creditors. Also, inflation often has the effect of boosting asset prices, thus increasing the collateral that supports existing debts and providing the basis for new debts. A problem inevitably arises, however, because creditors aren't stupid - they don't like to see their real returns dwindle as a result of loans being repaid with depreciated money. They therefore begin to adjust interest rates higher to account for the currency's anticipated loss of purchasing power over the period of the loan..."

pmcw: perhaps the following quote from the link reflects the point you are trying to make with regards to "who has benefited?" By suggesting someone has benefited, you suggest someone else has suffered. Don't look for a current class or specific sector active in the world economic system today. The next generation, our children, will be the ones who ultimately 'suffer'.

The political convenience of the FED's slowly disbursing, inflationary pipeline delays real damage, shifting and disguising the cause and effect for not only revolving elected administrations, but for each subsequent generation in it's entirety....("until of course it gets completely out of control at which point it will become today's problem.")

"...If at some future time the Fed does make full use of the money-creating powers available to it then the power of the Dollar (purchasing power, that is) will plummet. However, a reduction in the Dollar's purchasing power will always be tomorrow's problem until it gets completely out of control, at which point it will become today's problem. Until the depreciating Dollar does become today's problem, that is, until soaring interest rates make it today's problem, there is no reason to expect the US monetary authorities to do anything other than inflate."

Good Luck


Post  40976  by  maldinero       OT: RIYADH (Reuters)Sat Aug 24, 7:48 AM ET

Post  40977  by  uponroof       Reply
Gold Supply/Demand/Derivatives and Loans
I recall a few here at one time or another requesting more indepth information on the above.

The author, Mr. Frank Venoroso, clients included the World Bank, the International Finance Corporation, The Organization of American States.

He has advised the Governments of Bahrain, Brazil, Chile, Ecuador, Korea, Mexico, Peru, Portugal, Thailand, Venezuela and the United Arab Emeritus.

Frank is a graduate from Harvard and has authored many articles on the subjects of international finance.

have a great weekend

Post  40978  by  uponroof       Reply
Pondering Real Estate...
Adam Hamilton's latest

"...Inflation is spawned by the hooligans at the Federal Reserve printing too much paper (or electronic) money, which they have been doing in spades in recent years in a vain and fruitless attempt to stop the normal post-bubble bust process from running its full course. In the last 12 months, the various US money supply measures have exploded up with astounding violence. The absolute year-over-year M1 inflation is 5.2%, MZM 12.7%, M2 7.9%, and M3 7.4%. These numbers are downright frightening in light of historical inflationary precedent!

In an inflationary environment, relatively more money chases after relatively fewer goods, services, and real estate. If the amount of money in circulation is rising faster than available real estate in the areas in which people want to live, residential real estate prices should rise. Realtors use this inflation idea to convince their customers that land prices should perpetually rise because land is scarce.

Unfortunately, that’s not the whole story. While real estate professionals constantly bombard us with marketing propaganda claiming that land is scarce and no more is being made, that is a myth. One example why is evident in multi-story buildings. A 10-story structure, for example, has about 10x the usable space as a single story structure, but has the same footprint in raw land terms. Land itself is not scarce, just land in locations where people want to live.

For example, the sparsely-populated state of Montana has about 147,000 square miles of area, or roughly 94m acres. Assuming that only 2/3 of Montana’s land is useable (the rest might be mountains or lakes, or streets in cities), that leaves 63m acres. If the entire US population is 287m people, they could all move to Montana and each live in modest estates of almost 1/4 acre, or 9,500 square feet. If their houses took up 1/3 of their plots, and each had a basement and two aboveground stories, every American could live in Montana in individual 9,500 square feet mini-mansions!..."

Post  40979  by  Arkural       Reply
New U.S. mutual fund to act almost like a hedge fund

Friday August 23, 6:06 pm ET

By Svea Herbst-Bayliss

BOSTON, Aug 23 (Reuters) - Main Street investors can now get a taste of living large -- just like the high rollers of the investment world.

At least that's what veteran fund executive Steve Samson says about his new mutual fund that looks and feels like a hedge fund.

During the market's recent 2-1/2-year slump, hedge funds -- those loosely regulated investment pools long reserved for the wealthy -- beat out most other investment vehicles with huge returns.

"We are not promising the world, but we are promising consistent, absolute positive returns over market cycles," says Samson, principal at Alternative Investment Partners LLC in Chappaqua, New York.

That may sound like music to the ears of investors who lost billions in mutual funds, but heard or read envy-inducing stories about strong hedge fund returns.

But some analysts say: Not so fast.

This fund -- like a string of products that are now trying to woo mutual fund investors with hedge fund-like investment techniques -- might just be too good to be true, they warn.

"It sounds like there is a bit of the bandwagon effect to this fund," Christopher Traulsen, analyst at fund firm Morningstar, said. "It is designed to appeal to people who lost lots of money, but it sounds like a bit of a dangerous combination."

But Samson and Lee Schultheis, who have been partners since rolling out once high-flying Internet funds at Kinetics Asset Management, say they have hit on a new formula.

For as little as $2,500, investors can shop for the Alpha Strategies I Fund at mutual fund supermarkets like Charles Schwab Corp. and get the same returns that used to be available only to the rich who could afford the multimillion-dollar investment minimums demanded by hedge funds.

"This is a revolutionary concept in the mutual fund world," Samson said, adding his fund strives to have all the benefits of a hedge fund and none of the dangers that have tagged the $550 billion industry with a reputation of being risky.

Four hedge fund firms will manage parts of the portfolio, concentrating on picking both stocks and bonds and using techniques like short selling and leverage to buoy performance.


The fund charges investors a fixed 3.99 percent fee, far less than the 1 percent management fee and 20 percent incentive fees most hedge funds charge, but far more than most mutual fund fees. An added bonus is that investors can get their money back at any time, a virtually unheard-of privilege at hedge funds, where assets are often locked up for years.

Meanwhile, the sub-advising hedge funds -- Smith Breeden Associates, Twin Capital Management, Zacks Investment Management and CapitalWorks -- will be paid a fixed portion of the 3.99 percent fee and get the chance to find thousands of new customers. They would not say how they have performed this year, citing laws that prevent hedge funds from advertising.

By the time the fund launches, Samson said he hopes to have as much as $20 million under his belt.

"The market is ripe for this. The average mutual fund is down and while hedge fund performances have not been dazzling, they are still outperforming the market," Samson says.

Smaller pension funds and less affluent clients who demand more transparency than many hedge funds will give are the kind of clients Samson is targeting.

Similarly, hedge funds might be as eager to sign up because their meager returns -- they are flat this year -- have prevented many from earning performance fees. And many want more clients than the 99 that securities laws now allow.

While Samson's new approach is novel, some analysts say it is far too soon to say how the fund will fare. They note the Chase Vista funds he once worked with and the Kinetics funds were not always terribly successful.

"It is untried and untested and with 4 percent (management fee), it is expensive, so we'll have to see what happens here," Morningstar's Traulsen said.


...Hi I am a shoe shine boy, my name is Mack......and I wanted to share with you, the latest 'hot' potato to get into.

Post  40980  by  Arkural       Reply
test. link problems. eom

Post  40981  by  Arkural       Reply
Anatomy of a Collapse: ENE

(the missing link)

[[[ a/k/a Anatomy of how WS screws it's clients, one at a time ]]]

Post  40982  by  Arkural       Reply
http:// 208. 149. 108. 6/ pubfiles/enecollapse.pdf

Post  40983  by  maldinero       Reply
Time is no friendly landlord.
Why not simply rent if you don't intend to build equity?
I especially like the last paragraph – perhaps a good option if you're facing imminent death.
Oh well, at least the interest is deductible *;0)

Mortgage applications soar to record; refinancing up
By Sue McAllister
Mercury News

Low mortgage rates spurred a record number of Americans to apply for mortgages last week, and local mortgage brokers say a growing number of recession-weary Silicon Valley residents are refinancing to lower their monthly payments.

Many borrowers are seeking loans to keep their monthly payments at rock bottom, in case they are laid off and need the savings. Now is a good time to be looking: Mortgage rates are hovering near their lowest point in three decades, less than 6.5 percent for a 30-year loan.

``We do have people who are out of work, and we're trying to help them by restructuring their loans,'' said Doug Jones, a broker with Mortgage Magic in San Jose.

The Mortgage Bankers Association of America said Wednesday that its index of mortgage-loan applications rose to a record level of 1127.4 for the week ended Friday. The index measures loan applications for both purchase mortgages and refinancings; it covers about 40 percent of all retail residential mortgages nationwide.

The index broke the previous record of 1066.9, set the week of Aug. 2. The index base value of 100 was set in March 1990.

Nancy Soulé of Pacific Republic Mortgage in San Jose said she and her colleagues find that clients seem to fall into two groups these days.

The first group, she said, is ``people employed in tech that are concerned about their job stability and are going for very low payments.'' These borrowers are requesting hybrid adjustable-rate loans, loans with a ``negative amortization'' feature, or one of the newly popular loans that allow interest-only payments for a few years.

``They want to keep their payments down low because they know they have to weather several more months of uncertainty,'' Soulé said.

The other group of borrowers are those in stable financial shape who are refinancing 30-year term loans to those with 15-year terms. Depending on the borrowers' situation, they might be able to make that shift without much or any increase in monthly payments.

Laura Castaneda just made such a switch, refinancing the mortgage on her San Jose condo from 7.625 percent on a 30-year loan to 5.75 on a 15-year loan.

``With rates being so low I thought it'd be nice to have a lower payment,'' said Castaneda, 39, a compliance officer at Valley Credit Union, where she also got her loan. ``But once I started looking at my whole investment portfolio . . . I determined it would be best to shorten the term rather than lessen the payment.''

For those who want the lowest-possible monthly payments, brokers say these are good options: hybrid adjustable-rate mortgages, interest-only loans and negative amortization loans.

With hybrid adjustable-rate mortgages, borrowers might have a fixed rate of 5.5 percent for the first five years, for example, and then the rate would adjust yearly thereafter for another 25 years. This loan is known as a ``5/1''. The length of the fixed rate period varies.

Interest-only loans also are becoming popular. The borrower pays only the accrued interest for several years, without chipping away at the principal. It's best for people who expect their home values to hold up and who expect to sell well before paying off the loan.

On a 30-year loan of $300,000 at 6.5 percent, the monthly payment of principal and interest would be about $1,896. Paying interest only would make the monthly bill $1,625, a savings of $271.

``It's important they understand it's not just free money. . . . They need to put that money to work executing their financial plan,'' said Doug Perry of Countrywide Home Loans.

He said people should ``realize there are other financing options out there which could provide lower payment options while still allowing principal reduction.''

Some borrowers might be better off getting a hybrid ARM and opening a home equity line of credit to draw on if need be -- another popular option with Silicon Valley's layoff-wary homeowners.

A borrower with a negative amortization loan has the option of paying a minimum monthly payment that is less than an interest-only payment, but the loan principal will increase. A homeowner could end up owing more than originally borrowed.

The negative amortization loan can be a good option for those who want to conserve cash, said Jones, but it's important for the borrower to know the risks.


Post  40984  by  maldinero       Reply
roof – That would be: minus sidewalks, roads, parks,firehouses, schools, stores, hospitals, farms, power plants, water storage, drainage, waste disposal or public services of any kind.

[If the entire US population is 287m people, they could all move to Montana and each live in modest estates of almost 1/4 acre, or 9,500 square feet. If their houses took up 1/3 of their plots, and each had a basement and two aboveground stories, every American could live in Montana in individual 9,500 square feet mini-mansions!]

Post  40985  by  maniati       Reply
sr, Decomp: First of all, I have to wonder about that source on inflation, who said that the Fed came into existence in 1933. No, the Federal Reserve system was established in 1913.

Second, Decomposed has a good point about the value of a day's work. To that end, I would point out something else that also happened in 1913 - the passage of the 16th Amendment, which provided for a federal income tax. That sure put a big dent in take-home pay.

Post  40986  by  maniati       Reply
OT!! Decomposed: Martha never looked as good as she does in those handcuffs. Very slimming. I might even be getting faintly aroused. Nah....I think it's just gas.

!! :-)

Post  40987  by  uponroof       Reply

My mistake. I eroneously posted the date of FED inception at 1933 (mental block problems between 13 and 33!) Thanks for correcting.

Good point about income tax.

"...In 1913, when the income tax was imposed, Congressional spending accounted for less than 2% of the nation's total output. Today it accounts for almost 20% (and state and local spending account for up to 20% more). This is largely why America's rate of economic growth remains one-half of what it was 30 years ago..."

Post  40988  by  StockmanI7       OT: Clo, Jewish American terrorist and Muslim Amer

Post  40989  by  pmcw       Reply
sr, I can see, from your perspective, as to why you are so intensely alarmed. There is certainly cause for concern and I have expressed exactly that in the past; particularly as it applies to credit expansion. However, I feel there is a distinction between the level of my concern and your apparent outright alarm. Possibly, my significantly subdued state is the result of the research I've completed on the topic.

I will gladly share what I've learned and substantiate my position with cold hard facts that are readily available to us all. However, since you've used some sweeping generalities, I first need to get a better grip on your position and points of reference. So, again, let me ask a few questions to clarify your post before I respond.

1) Your post leads me to assume you feel real estate has ten bagged during the last thirty years. Can you back up this ascertain with national data or are you focused on specific areas within the US?

2) Are you saying that the general standard of living has gone down during the last thirty years or that more hours of work are required to receive the same net utility?

3) Are you saying that inflation has lead to the need for moms to enter the work-force just for the family to stay even?

4) You said the Fed "flooded the world with dollar bills". How and by what measure can we see this flood?

I do want to focus on the last thirty years mostly because my data only goes back to 1959. However, I would like to know as to when you feel this merry-go-round ride started and what you feel were the very first affects.

Take your time and, if you can, please avoid the sarcastic tone; it detracts from your otherwise sound credibility.

Regards, pmcw

Post  40990  by  maniati       Reply
maldinero: Negative Amortization Loans....

Thank you for that most illuminating article. That does, indeed, answer the question that is on everyone's mind: "What does an economy do once everyone has maxed out their ability to incur debt?"

It turns out the answer is..."negative amortization loans!"

Here, Mr. Consumer, take even more money, and we'll give you a deferment on the interest, kind of like when you went to grad school and got a forbearance on your undergrad loans. But, remember, we're capitalizing that accrued interest, so...don't forget to start paying that loan some point.

Where do the banks get all that wonderful money to give away? Well, we all know the answer to that, don't we!

This just goes to show why everyone should understand history. The reason why the money supply has "exploded" over the past year, to quote another recent post, is that the Fed is trying to keep the economy out of recession. But, since the Fed already had the flood gates open (during the 90's), it now has to open them an extra-large amount. In other words, to understand why the money supply is where it is now, you have to understand what was happening during the 90's.

It would be easy to blame the Fed for its recent increases in the money supply, but that misses the point. Blame the Fed instead for what it was doing during the 90's.

But, more importantly, blame the other banks, not just the central bank. Whose idea was it to offer negative amortization loans? Now, there's a dumb idea, if there ever was one. Some banks (not all) are just too reckless with money. This is what economists call a "moral hazard"; it results from the fact that the banks expect to get bailed out if anything goes wrong.

Here's an interesting fact: when you compare the failure rate of banks to the failure rate of non-bank businesses, banks had comparatively fewer failures before the advent of deposit insurance.

BTW, check this out: Y2K = Star Trek:TNG final episode.

The final episode presents a temporal paradox, in which the Captain, in attempting to investigate a problem, actually ends up being the cause of the problem.

Well, in 1999, Captain Greenspan pumped up the money supply to head off a Y2K problem. Well, guess what? We're going to have a Y2K problem, anyway, only instead of happening in 2000, it's happening in 2001, 2002, 2003.... And the cause of it is (in part)...when Capt. AG pumped up the money supply in '99 to head off the Y2K problem. Now, is that rich, or what?

Admittedly, I have taken some liberties with both story lines, but the comparison was too good to pass up. :-)

Post  40991  by  maniati       Reply
Roof: That's understandable. For example, I mentioned in my last post about the bank failure rate pre- and post-FDIC. Well, the FDIC was established in '33. And the Securities Act was passed in '33, also.

Post  40992  by  pmcw       Reply
careful decomp, You're getting fairly close to the core concept of value storage. BTW, inflation has been slightly kinder than what some would like to represent - the correct number for the 1933/2001 comparison is $13.55 not $13.67. However, you might want to look at anyone selecting 1933 with a jaundice eye anyway. How about starting with the year the S&P500 was started (1926) or the year of the great crash (1929)? In either case the number drops to below $10.50. Regards, pmcw

Post  40993  by  lkorrow       Reply
Thanks optimistic, I think this is a leg up on the way down too. Five year Dow chart shows it clearly. Whether things remain in-channel remain to be seen. 10000 would be over a 2000 point rise. I'm cautiously optimistic! :-)

I'm trying to be careful, this is the first year I'm down (etrade not 401k) due to a couple of mistakes. Slowly regaining turf. 3Q GDP #'s could put a damper on things, probably flat to up a little, I would think.

Post  40994  by  Tampathom       OT: Jewish American Terrorist.
Post  40995  by  Tampathom       OT: How interesting...Raging Bull will censor the
Post  40996  by  clo       OT:Tampathom, A Fanatic is a Fanatic!
Post  40997  by  clo       OT:Tampathom, "Raghead" the reason may b

Post  40998  by  pmcw       Reply
The Value of Gold??????????

By reasonable estimates, there is roughly $300B in gold (at today's price) held in all of the world's central banks. By my estimate, there is about $2.4T in currency printed and in circulation. This is based on the current exchange rate to the US$. Therefore, the current ratio of currency to gold is about 8:1.

Here's the question:

How much currency value do we need to burn or how much does the price of gold need to be raised to balance this equation? The implication is that gold would have to move to $2,400 per ounce.

Now, once you get past this, tell me how much gold is held in the US Central Bank. According to the M1, there is roughly $550B in US currency.

Regards, pmcw

Post  40999  by  lkorrow       Reply
Some useful research materials from CIO Magazine (8/22 newsletter):

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Post  41000  by  ttalknet2       Reply
pmcw: Gold held by the US Treasury amounts to 261.5 million ounces. The Federal Reserve Bank holds 13.4 million of those ounces.

Updated July 15, 2002:

Pledges to the IMF and Special Drawing Rights (SDRs) confuse things. Anyway, $2400/oz gold sounds about right for a free market price. Using your figure of $550B in US currency, I came up with $2100/oz.

While cruising the message boards I saw someone say "Gold isn't going up, the dollar is going down!!!" That might sound pretty funny, but it seems to me a comment on the general misunderstanding of money.

Then again, maybe I'm dense because it seems all too simple to me...

If today $1.00 purchases 1/300th of an ounce of gold, and next year it purchases 1/600th of an ounce, that's a huge loss in value of the dollar.

But if gold does move up from $300/oz to $600/oz, I doubt this would cause a $1.00 widget to cost $2.00. Not immediately anyway. What do you think? Am I daft?

Post  41001  by  abveldeh       Reply
Gold trend up 12.5% near term

(Voluntary Disclosure: Position- Long)

Post  41002  by  Warstud       Reply
Bill Gates Ups Six Flags Passive Stake To 10.2% Vs 8.6%


04:44 PM DJ Gates/Six Flags -2: Beneficially Owns 9.5M Shares >PKS

WASHINGTON (Dow Jones)--Microsoft Corp. (MSFT) Chairman Bill Gates increased his passive stake in Six Flags Inc. (PKS) to 10.2%, according to an amended Schedule 13G filed Friday with the Securities and Exchange Commission.

Gates beneficially owns 9.5 million common shares.

On Aug. 1, Gates reported an 8.6% stake, with beneficial ownership of 8 million common shares.

A Schedule 13G denotes a passive investment stake in a company. Filers aren't required to provide a reason for any changes in stake, and aren't required to detail any transactions.

Six Flags, Oklahoma City, is an amusement park operator.

-By Ben Siegel, Dow Jones Newswires; 202-628-7689

Post  41003  by  pmcw       Reply
tt, Thanks for the figures. I'm comforted to see that the US ratio is fairly close to what I ball-parked for a world ratio. My guess at world currency was just that, a SWAG at best.

I think it is clear that the "increase" in the US$ price of gold YTD can be easily explained by the drop of the dollar against the EURO and YEN. What amazes me is that all the gold hype has had such a minimal affect.

I'm more curious as to what some of the gold pundits have to say about my original question than I am to ponder what might happen to the purchasing power of the dollar if gold were to increase to over $2K/oz.

Regards, pmcw

Post  41004  by  jeffbas       Reply
pmcw, I would argue inflation has been even less. When I started working in the 1960's my large, data intensive company had a big room with one RCA computer operating on vacuum tubes for big time computing power (ha, ha!) - with small time computing power provided by an IBM 1620 punch card computer or by beginners like me with mechanical Friden's. I'd bet anything the change from then to now, in power and cost, has not been properly reflected in inflation statistics. Advances in health care is probably another example.

In sum, I believe there are a lot of things where $10 today gets you a lot more than $1 fifty years ago - in fact, where one cent today gets you more - and it has not been properly reflected in the statistics..

Post  41005  by  jbennett53       Reply
Hi clo, Interesting post. I would ask how one determines the meaning of wrong? You say it doesn't matter what the cause? Some here think that there are causes which demand crushing total victory over the other side and that their cause is just. The "other" side feels the same. Who determines the right or wrong in this situation? Did you know that the total world expenditures this year for "defense" will come close to 900 billion? Imagine the good that could be done with all that money but I guess whoever has the most and best guns is in the right? Good luck!

Post  41006  by  clo       OT:jbennett: A fanatic, in my opinion, is a person

Post  41007  by  abveldeh       Reply
Tampathom suppose you all know kensey from ClearStation

He pulled up some interesting charts without comment

How can you expect peace.

BTW the world budget for weapons was 958 billion Dollars for last year.

The more war and conflicts the more $$$$$ for certain people. And less for the taxpayer of course. But there is still a great mayority who get dragged into the hype of fear.

I call that demagogy.

Post  41008  by  Tampathom       OT: No, I'd not seen those. Interesting maps...
Post  41009  by  pmcw       OT: Your comment about the money made in the mili

Post  41010  by  Tampathom       Reply
When you ask yourself why we give so many billions to Israel year after year, you might remember how much of that comes back to U.S. arms manufacturers. The single positive point, IMO, is that it lowers the per unit cost of like equipment for U.S. forces...a benefit of arms transfers. You can bet that General Dynamics, Boeing, McDonald Douglas, Bell Helicopter, Raytheon, etc. lobby long and hard for those funds to continue...

You might find this site interesting:

Post  41011  by  clo       OT: Drowning Freedom in Oil