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PotNoodle

Global Currency And Currency Devaluation

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Very briefly, I saw a new topic on here.

It was written by someone in the Banking Industry.

It disappeared when I attempted to contribute to it.

Freaky.

He suggested that Governments were unable (and were now realising

they were unable to fill the black hole created by the crisis.

He quoted a figure of 200 trillion of uninsurable financial instruments

whose value was diminishing rapidly.

This, he said, was due to the fundamentally flawed supposition

that financial instruments could be "insured".

Lehman Brothers was also shown to be catastrophic.

Has anyone seen this vanisjed topic ?

Why did the topic vanish ?

What is a non fiat currency ?

When will this happen ?

I have also thought that the only way out of the crisis is a Global Currency.

What I had not foreseen was that all currencies would be devalued to

bring back property into line with currency.

Bad news for STR !

This article was crucial to those who have STRd.

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Guest Daddy Bear
Very briefly, I saw a new topic on here.

It was written by someone in the Banking Industry.

It disappeared when I attempted to contribute to it.

Freaky.

He suggested that Governments were unable (and were now realising

they were unable to fill the black hole created by the crisis.

He quoted a figure of 200 trillion of uninsurable financial instruments

whose value was diminishing rapidly.

This, he said, was due to the fundamentally flawed supposition

that financial instruments could be "insured".

Lehman Brothers was also shown to be catastrophic.

Has anyone seen this vanisjed topic ?

Why did the topic vanish ?

What is a non fiat currency ?

When will this happen ?

I have also thought that the only way out of the crisis is a Global Currency.

What I had not foreseen was that all currencies would be devalued to

bring back property into line with currency.

Bad news for STR !

This article was crucial to those who have STRd.

The MODS REMOVED IT TO OFF TOPIC

I have been posting it as replies to other threads until it gets put back !! :ph34r:

I work for a UK retail bank (an actuary - so about a conservative as they come), I can honestly say that the crisis toward the end of 08 really did nearly bring down the whole system. Banks are being "recapitalised" but the efforts haven't worked to date, and it looks very much as if they won't. The difference between this crisis and all the others is the vast degree of leverage involved, and specifically unregulated derivatives positions. There are estimates of outstanding positions of around the 200 trillion mark.

The standard arguements with derivatives used pre-crisis was that the actual outstanding amounts involved pale in comparison to the headline figure because many are hedged and each contract is two sided. The problem of course was that the issue of counter party default risk was completely ignored. In laymans terms, if you have an agreement with an insurer that should your house burns down they pay for it to be rebuilt and the insurer goes out of business (without adequate legislative protection) you are left with the loss of the premium and your house with no chance of recovery. This was the achilles heal of the whole financial system. Lehmans collapse basically brought the whole house of cards down and its been one massive fire fight since. The government can't shovel money fast enough into exponentially deeping holes created by unwinding leverage.

The "quantative easing" also raise the question on whether simple critical assumptions on the way banking operates have actually held true. The fraction in fractional reserve banking has effectively go to zero with either total relaxation or loopholes that have meant that banks could live off the credit markets, expanding credit _themselves_, and driving credit expansion, with central banks backstopping where required. This resulted in explosive asset inflation in a manner which we haven't seen before.

I think the critical issue that some people are missing is that the market is being prevented from self correction. Leverage needs to unwind, and fighting a problem of this scale isn't going to work. This is shown by the market increasing starting to question the credit ratings of goverments. Western governments - not old soviet block nations or south american nations... This whole issue has in fact caused massive debate within the actuarial world, with the whole question of what a risk-free rate is. US/UK Government Bonds in particular used to be considered default free. That assumption is now clearly broken with the visible reactions of the bond markets.

I can honestly say that I think that this will end one of two ways, when those in power realise that the broken system cannot be pieced back together again (which I think has actually already happened). They will effectively accept that they are going to have to effectively default on debt (through extreme inflation rather than true default) and they will write as many cheques as they can before then, or they will establish a new currency and devalue existing currencies across the board. There's a strong chance that that currency will not be a fiat currency. QUOTE (meedge @ Feb 27 2009, 11:20 PM)

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MODs.

With all due respect, this topic is crucial to those of us who have STRd

and are sitting on large sums of invested capital.

Please leave it on the main Forum.

Please.

PN

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What is a non fiat currency ?

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And I will keep replying to it and bumping any thread to which it is posted.

Me too.

PN

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Guest Daddy Bear
What is a non fiat currency ?

FIAT means backed by nothing (NOn Fiat is backed up with something of worth - rather then a promise)

From Wikipedia, the free encyclopedia

Jump to: navigation, search

Fiat currency (fiat money) is money that exists because an authority or custom declares it to be money. (From the Latin fiat, which means "let it be done"). It achieves value because a government says it can be used to pay debt or buy goods and services and because people trust that the currency will be reasonably stable.[1] Fiat money is a subset of credit money (money backed by promise to pay in goods or services controlled by the creditor) in which a government, often through a central bank or reserve bank, is the major creditor backing the currenc

y. Edited by Daddy Bear

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I work for a UK retail bank (an actuary - so about a conservative as they come), I can honestly say that the crisis toward the end of 08 really did nearly bring down the whole system. Banks are being "recapitalised" but the efforts haven't worked to date, and it looks very much as if they won't. The difference between this crisis and all the others is the vast degree of leverage involved, and specifically unregulated derivatives positions. There are estimates of outstanding positions of around the 200 trillion mark.

The standard arguements with derivatives used pre-crisis was that the actual outstanding amounts involved pale in comparison to the headline figure because many are hedged and each contract is two sided. The problem of course was that the issue of counter party default risk was completely ignored. In laymans terms, if you have an agreement with an insurer that should your house burns down they pay for it to be rebuilt and the insurer goes out of business (without adequate legislative protection) you are left with the loss of the premium and your house with no chance of recovery. This was the achilles heal of the whole financial system. Lehmans collapse basically brought the whole house of cards down and its been one massive fire fight since. The government can't shovel money fast enough into exponentially deeping holes created by unwinding leverage.

The "quantative easing" also raise the question on whether simple critical assumptions on the way banking operates have actually held true. The fraction in fractional reserve banking has effectively go to zero with either total relaxation or loopholes that have meant that banks could live off the credit markets, expanding credit _themselves_, and driving credit expansion, with central banks backstopping where required. This resulted in explosive asset inflation in a manner which we haven't seen before.

I think the critical issue that some people are missing is that the market is being prevented from self correction. Leverage needs to unwind, and fighting a problem of this scale isn't going to work. This is shown by the market increasing starting to question the credit ratings of goverments. Western governments - not old soviet block nations or south american nations... This whole issue has in fact caused massive debate within the actuarial world, with the whole question of what a risk-free rate is. US/UK Government Bonds in particular used to be considered default free. That assumption is now clearly broken with the visible reactions of the bond markets.

I can honestly say that I think that this will end one of two ways, when those in power realise that the broken system cannot be pieced back together again (which I think has actually already happened). They will effectively accept that they are going to have to effectively default on debt (through extreme inflation rather than true default) and they will write as many cheques as they can before then, or they will establish a new currency and devalue existing currencies across the board. There's a strong chance that that currency will not be a fiat currency. QUOTE (meedge @ Feb 27 2009, 11:20 PM)

Returning to the above quoted post - I'd be interested to hear Noel's comments on the claim re derivatives......

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Guest Daddy Bear
FIAT means backed by nothing (NOn Fiat is backed up with something of worth - rather then a promise)

y.

For the record.

My previous posts show I STR'd in Sept 2007.

I hold the proceeds in CASH in Norhtern Rock earning 6.35%

I am 100% in Cash :blink:

I just like to consider 'all' side of the coin (did you see what I did there? :P )

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Guest Daddy Bear
So would I. And I'd be rather more inclined to listen to Noel's view than Daddy Bear's.

Me too :P

I've just lucked out on all my judgement calls since 1997.

Don't know how I do it :lol::lol:

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So would I. And I'd be rather more inclined to listen to Noel's view than Daddy Bear's.

They are not Daddy Bear's views, although I daresay he agrees with them. If you check it out you will see that he says: QUOTE (meedge @ Feb 27 2009, 11:20 PM)

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Guest Daddy Bear
They are not Daddy Bear's views, although I daresay he agrees with them. If you check it out you will see that he says: QUOTE (meedge @ Feb 27 2009, 11:20 PM)

Actually I don't fully agree with hthem.

I am just interested in more eloquent and intelligent posters view then my own.

I like to attain as much info as possible on every side before making my own call.

It's worked so far.

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Actually I don't fully agree with hthem.

I am just interested in more eloquent and intelligent posters view then my own.

I like to attain as much info as possible on every side before making my own call.

It's worked so far.

My apologies - I didn't mean to put words in your mouth.

Thanks for clearing that up.

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They are not Daddy Bear's views, although I daresay he agrees with them. If you check it out you will see that he says: QUOTE (meedge @ Feb 27 2009, 11:20 PM)

Fair enough, although my post stands for Daddy Bear's views in general at the moment. He might continue to be lucky on his judgement calls, and I'm not saying he's wrong. But his posts have taken on a prolific and doom laden quality lately which makes me wonder what the agenda is.

No offence intended DB, but you have been rather busy lately ;)

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The post quoted by the OP I find very interesting and from a respectable source apparently.

Let's assume that the next step for developed economies is to instigate global debt default through inflationary measures - let's say for example 0% interest rates, quantitative easing, trillions of dollars of stimulation funds.

What practical things can HPC readers do to adequately protect themselves from this inflation tsunami that is almost inevitably coming. Not including buying the G-word.

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Guest Daddy Bear
Fair enough, although my post stands for Daddy Bear's views in general at the moment. He might continue to be lucky on his judgement calls, and I'm not saying he's wrong. But his posts have taken on a prolific and doom laden quality lately which makes me wonder what the agenda is.

No offence intended DB, but you have been rather busy lately ;)

Maybe so. (I've got to lighten up on this - no offence taken)

To clarify I am actually 70 : 30 (Deflation : Inflation) outcome at present.

I am 100% in Cash and will remain to be so until I feel the time is right to "flee to assets" :P

My problem as I said the other day is " I may lose my shirt on buying a house...but if I stay in Cash I may lose my wardrobe"

It's not just about % risk its about OUTCOME........and the downside that goes with it.

DB

Edited by Daddy Bear

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Why does my house burn down when the insurer goes bust.

Isn't Russia a lot higher risk than western governments, In reverse of what the post says.

I think the point was that while both the house and the insurance company existed everything is fine. If the insurance company disappears or becomes awkward that is a serious issue.

Prior to Lehman brothers disappearing all the CDOs could be consolidated because all parties existed and you could simply combine x pieces of paper and write them off. The fear is that instead of a circular path for the money to go round as once once the case there is now large troll in the middle who instead of passing it on will keep a hold of it.

What practical things can HPC readers do to adequately protect themselves from this inflation tsunami that is almost inevitably coming. Not including buying the G-word.

EDM was suggesting the RPI +1% based National Savings. I think that is probably as safe as you can get in the current market.

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They were discussing it on Bloomberg Germany last night (I just caught the end). One guy was arguing that USD/EUR would be merged in next few years (didn't catch his reasoning), other guy (from Barclays Capital) that a new gold-backed (or some sort of asset-backed, e.g. platinum, gold, oil, whatever) currency was likely.

This week Bloomberg, next week BBC ?

Pent

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Why does my house burn down when the insurer goes bust.

Isn't Russia a lot higher risk than western governments, In reverse of what the post says.

I didn't read it that way.

I assumed the poster was making some sort of exclamatory comparison along the lines of; hey, we're not talking about the usual defaulters - Latin American countries, Russia etc - we know they have a history of default; no, we're talking about western governments..........

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I didn't read it that way.

I assumed the poster was making some sort of exclamatory comparison along the lines of; hey, we're not talking about the usual defaulters - Latin American countries, Russia etc - we know they have a history of default; no, we're talking about western governments..........

The problem is not that the typical defaulting government is reaching problem levels (i.e. borrowing with no intent or ability to repair the loan) but the steady (have always paid) governments are close to ending up in a situation where they can't pay it back.

Its one thing for your typical backstreet double glazing company to go bankrupt and restart with a name variation the following day (its half expected as he's done it before), its another thing for M&S to be anywhere near doing the same thing.

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  • 317 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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