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Even The Communists Have Worked It Out-

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I really like this quote from the Chinese- it manages to summarise the ongoing futility of the current money printing orgy with a zen like precision and brevity;

"It is not that there is no money, but the money has been put in the wrong place."

:lol::lol::lol:

The joke is that they have arrived at the same point as the west by taking the exact opposite route- no austerity for them- they went for the full keynesian monty- massive stimulus spending on an epic scale.

But the outcome was more or less the same- no real economic growth as the money involved was just as poorly allocated as Bernankes billions.

Another quote from the article;

"China Joins The Broken "Keynesian Multiplier" Club" is precisely what Xinhua is lamenting: unprecedented credit formation and yet little of it trickling down to economic growth, hence a "broken Keynesian multiplier."

The article suggests that the Chinese are intending to let the their banksters swing in the wind rather than bail them out- just as Uncle Ben seems to be heading in the same direction- coincidence?

Or is the reality that without the Chinese the Fed would have ended up the only game in town and bit too exposed?

Read the rest here;

http://www.zerohedge.com/news/2013-06-23/chinas-mea-culpa-it-not-there-no-money-money-has-been-put-wrong-place

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The article suggests that the Chinese are intending to let the their banksters swing in the wind rather than bail them out- just as Uncle Ben seems to be heading in the same direction- coincidence?

Yes. The position seems to be toward putting a stop to the crazier speculation. Got to have some consequences. I'd bet a lot of the Chinese stimulus of recent years, has gone into UK property. It'd be nice to think some of them are leveraged with it, as the crackdown begins. They'd have to begin selling, maybe.

China's central bank faced down the country's cash-hungry banks on Friday, letting interest rates again spike to extraordinary levels of some 25 percent for some banks as it stepped up the pressure to contain rampant informal lending.Comments from Xinhua confirm analysts' suspicions that the central bank's funding squeeze is aimed at reducing non-bank lending, or shadow banking, which has boomed in recent years.

The cash crunch engineered by the central bank was intended as a warning to over-extended banks but has also fed fears that a miscalculation could trigger a full-blown crisis.

http://www.reuters.com/article/2013/06/23/us-china-economy-xinhua-idUSBRE95M01Z20130623

The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity. -John F. Kennedy

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zen like precision and brevity;

What is the money that is no-money?

The article suggests that the Chinese are intending to let the their banksters swing in the wind rather than bail them out- just as Uncle Ben seems to be heading in the same direction- coincidence?

I suspect they have fired a warning shot across the bow. I expect their bankers will call their bluff just as ours did. Will they fold too?

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Don't think Keynes ever advocated money printing, just public sector deficits to compensate for private investment failure.

However capitalism is broken as the private sector is now hooked on stimulus, and the price mechanism with regard to assets is now broken.

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I really like this quote from the Chinese- it manages to summarise the ongoing futility of the current money printing orgy with a zen like precision and brevity;

The joke is that they have arrived at the same point as the west by taking the exact opposite route- no austerity for them- they went for the full keynesian monty- massive stimulus spending on an epic scale.

But the outcome was more or less the same- no real economic growth as the money involved was just as poorly allocated as Bernankes billions.

Another quote from the article;

This is what would happen when government is allowed to spend a lot of money that it doens't have (either through borrowing or printing) - the fund got badly misallocated.

Even Mervy knows that to direct 'stimulus' at the right things is very hard to do and that is why 8 out of 10 times massive government spending will lead to most of us worse off (except the few who intercepted the spending stream).

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Don't think Keynes ever advocated money printing, just public sector deficits to compensate for private investment failure.

However capitalism is broken as the private sector is now hooked on stimulus, and the price mechanism with regard to assets is now broken.

Bear in mind: Public sector deficits used to 'do' things.. roads, bridges, houses, and other infrastructure. Which would effectively create new national capital which could be used by the private sector. Plus a lot of the money goes on employing people who would otherwise be claiming benefits anyway, and people with jobs spend money in the private sector..

Problem is, we've had very little of this kind of investment/stimulus. Instead, there has been an effort to make credit cheap and unlimited whilst restraining general wages and doing nothing about mass unemployment. Result: Financial sector and asset prices bloated to the point of insanity, real economy flatlining.

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If the system is corrupt it's not going to end up in the right places. It hardly takes a genius to work that out.

You would have thought given the massive failures in the past China experienced with printing money they might be ahead of the West on this.

Fountain of Fortune: Money and Monetary Policy in China, 1000-1700 I believe it's covered in this book which was referenced in another although I've not been able to find a reasonable priced copy.

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What is the money that is no-money?

snip

money is quite rare...credit however, is very very common..

you need the rare thing to settle credit, yet they both spend outside the banking system as if they are the same.

thus, where you have bankers buying and selling credit and declaring assets, you end up with a load of assets which they declare are valuable, yet, like credit, dont actually exist and cant produce anything at all, other than new loans....each and every one needing higher and higher velocity of the rare element......cash.

If you beleive what the CBS are saying, low rates are there to ensure the velocity of cash is increased....limits and savers can go hang.

Edited by Bloo Loo

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Don't think Keynes ever advocated money printing, just public sector deficits to compensate for private investment failure.

However capitalism is broken as the private sector is now hooked on stimulus, and the price mechanism with regard to assets is now broken.

Keynes actually said that printing money, putting it into bottles and burying it would stimulate the economy if people were allowed to dig it up again. He was a crack pot. Keynes theory was nothing more than a justification for massive state intervention. Pretty sure he decided the outcome he wanted then tailored a 'theory' to fit.

The so called multiplier is a made up number. It was pointed out early on that taking money out of the economy then putting it back in again would not actually add anything. So the Keynesians invented a multiplier. There is no basis for it, other than they need it to justify their garbage. They just made it up. So they tell us when the state wastes money on anything at all, from burying bottles of money to random vanity projects, this increases growth by some random made up number multiplied by the amount of growth that would happen if people produced stuff that was actually wanted.

The argument that state spending is somehow creative is simply wrong. If you believe the state should spend more money on the NHS or pensions or whatever you may be able to justify that on its own merits. That's fine. But you should not make the argument that we need the state to build roads to nowhere and such to stimulate the economy.

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Keynes actually said that printing money, putting it into bottles and burying it would stimulate the economy if people were allowed to dig it up again. He was a crack pot. Keynes theory was nothing more than a justification for massive state intervention. Pretty sure he decided the outcome he wanted then tailored a 'theory' to fit.

The so called multiplier is a made up number. It was pointed out early on that taking money out of the economy then putting it back in again would not actually add anything. So the Keynesians invented a multiplier. There is no basis for it, other than they need it to justify their garbage. They just made it up. So they tell us when the state wastes money on anything at all, from burying bottles of money to random vanity projects, this increases growth by some random made up number multiplied by the amount of growth that would happen if people produced stuff that was actually wanted.

The argument that state spending is somehow creative is simply wrong. If you believe the state should spend more money on the NHS or pensions or whatever you may be able to justify that on its own merits. That's fine. But you should not make the argument that we need the state to build roads to nowhere and such to stimulate the economy.

the state earns nothing...taxpayers have to do that....therefore ALL the spending the government does comes from any wealth the taxpayers generate.

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If you beleive what the CBS are saying, low rates are there to ensure the velocity of cash is increased....limits and savers can go hang.

Well Cyprus showed if a bank goes bust, savers may hang higher. Return of capital then becoming more important than return on capital...

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Well Cyprus showed if a bank goes bust, savers may hang higher. Return of capital then becoming more important than return on capital...

a busted bank should have been closed THE DAY its balance sheet turned negative.

That way the safety nets would only be paying out a small amount.

It seems though that from the US example, banks were encouraged either through lies or slackness on the regulators part to continue trading, so when they finally really couldnt go on, the FDIC was paying out billions.

Of course, officially, they WERE closed the day they went insolvent....Mark to model valuations being the major cause of the subsequent reality check on the real position.

Hence, the scramble to maintain asset prices....ie, trying to cover up reality with liquidity.

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All the money has go e to a small elite to become shockingly and obscenely rich. Human Nature.

As RK has been alluding in other threads we are seeing peoples in some countries - Brazil, Turkey, etc - wake up to this. No wonder so much of this money is piling into London as the people with the cash know that Brits will just bend over whereas people in their own countries will perhaps oneday form lynching mobs.

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a busted bank should have been closed THE DAY its balance sheet turned negative.

That way the safety nets would only be paying out a small amount.

It seems though that from the US example, banks were encouraged either through lies or slackness on the regulators part to continue trading, so when they finally really couldnt go on, the FDIC was paying out billions.

Of course, officially, they WERE closed the day they went insolvent....Mark to model valuations being the major cause of the subsequent reality check on the real position.

Hence, the scramble to maintain asset prices....ie, trying to cover up reality with liquidity.

And so if the Bond yields spike a little bit more than the Fed / Boe should be closed ?

Edited by easy2012

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Bear in mind: Public sector deficits used to 'do' things.. roads, bridges, houses, and other infrastructure. Which would effectively create new national capital which could be used by the private sector. Plus a lot of the money goes on employing people who would otherwise be claiming benefits anyway, and people with jobs spend money in the private sector..

Problem is, we've had very little of this kind of investment/stimulus. Instead, there has been an effort to make credit cheap and unlimited whilst restraining general wages and doing nothing about mass unemployment. Result: Financial sector and asset prices bloated to the point of insanity, real economy flatlining.

Does this mean we can finally agree that the government is no good at investing money?

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The argument that state spending is somehow creative is simply wrong. If you believe the state should spend more money on the NHS or pensions or whatever you may be able to justify that on its own merits. That's fine. But you should not make the argument that we need the state to build roads to nowhere and such to stimulate the economy.

http://en.wikipedia.org/wiki/Military_invention

And posted on a system of communication developed by non creative types funded by govt (taxpayers).

The private sector is littered with examples of waste, just like the govt sector.

The reason why roads to nowhere get built is vanity that just by building the road it will somehow encourage people to drive to nowhere.

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http://en.wikipedia.org/wiki/Military_invention

And posted on a system of communication developed by non creative types funded by govt (taxpayers).

The private sector is littered with examples of waste, just like the govt sector.

The reason why roads to nowhere get built is vanity that just by building the road it will somehow encourage people to drive to nowhere.

Ha, that does remind me of driving miles out of the way in Death Valley to see the rock shaped like a mushroom. They didn't mention it was also actual size :(

In fact I ahve driven roads to nowhere i the US quite often..

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And so if the Bond yields spike a little bit more than the Fed / Boe should be closed ?

why not?

course, Gidiot will have to bail them out by handing back the "profits" he took earlier this year.

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Keynes actually said that printing money, putting it into bottles and burying it would stimulate the economy if people were allowed to dig it up again. He was a crack pot. Keynes theory was nothing more than a justification for massive state intervention. Pretty sure he decided the outcome he wanted then tailored a 'theory' to fit.

The so called multiplier is a made up number. It was pointed out early on that taking money out of the economy then putting it back in again would not actually add anything. So the Keynesians invented a multiplier. There is no basis for it, other than they need it to justify their garbage. They just made it up. So they tell us when the state wastes money on anything at all, from burying bottles of money to random vanity projects, this increases growth by some random made up number multiplied by the amount of growth that would happen if people produced stuff that was actually wanted.

The argument that state spending is somehow creative is simply wrong. If you believe the state should spend more money on the NHS or pensions or whatever you may be able to justify that on its own merits. That's fine. But you should not make the argument that we need the state to build roads to nowhere and such to stimulate the economy.

Oh boy.... I suggest you go read an economics text book some time it'll do you wonders.

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the state earns nothing...taxpayers have to do that....therefore ALL the spending the government does comes from any wealth the taxpayers generate.

Wrong. Because governments expenditure is based on taxation you appear to think there is no wealth creation occurring. Where the money comes from is irrelevant.

For example if the gov charged for the use of roads on a pay to use basis rather than via general taxation would the road system suddenly change from non-wealth to wealth? What if we did that then changed back to a general taxation route for paying for them, would they suddenly be non-wealth? In either case the roads would still exist. It should also be obvious that they are "wealth" in whatever way they are paid for.

The idea that because something is owned and run by the state it is not wealth creating is right-wing nutjob nonsense. Whether something is wealth creating or not does not depend on how it is paid or ownership, but whether it meets one of societies needs. Thus creation of paper assets by banks solely for gambling purposes is not wealth creating, while the state overseeing a road network is wealth creating.

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Wrong. Because governments expenditure is based on taxation you appear to think there is no wealth creation occurring. Where the money comes from is irrelevant.

For example if the gov charged for the use of roads on a pay to use basis rather than via general taxation would the road system suddenly change from non-wealth to wealth? What if we did that then changed back to a general taxation route for paying for them, would they suddenly be non-wealth? In either case the roads would still exist. It should also be obvious that they are "wealth" in whatever way they are paid for.

The idea that because something is owned and run by the state it is not wealth creating is right-wing nutjob nonsense. Whether something is wealth creating or not does not depend on how it is paid or ownership, but whether it meets one of societies needs. Thus creation of paper assets by banks solely for gambling purposes is not wealth creating, while the state overseeing a road network is wealth creating.

a road in itself creates no wealth.

indeed, the people that get to use it, paid for it...out of the wealth they generated.

true, it may help some other wealth creators create wealth, but it didnt need government to spend a penny on it...that was a policy decision. some are correct, many many are not.

Go to any new estate, and you will see the infrastructure is NOT provided by the state...

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Does this mean we can finally agree that the government is no good at investing money?

Your ability to post this observation is the result of the state investment that led to the development of the internet- so it sort of disproves itself.

The mess China is in is the result of bad choices by the state- the mess we are in is the result of bad choices by the private banking sector- so both are equally capable of miss allocating capital on an epic scale.

In both cases the fault lay in the incentives created by the system- In China the local officials were incentivised to invest in large scale infrastructure-even when there was no demand for it or income stream to pay for it- in the west the bankers were incentivised to fund, package and sell on as many loans as they could- even when they ran out of credit worthy borrowers.

So the issue is not public or private- it's how the incentive structure impacts on the choices made by those doing the investing.

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a road in itself creates no wealth.

indeed, the people that get to use it, paid for it...out of the wealth they generated.

true, it may help some other wealth creators create wealth, but it didnt need government to spend a penny on it...that was a policy decision. some are correct, many many are not.

Go to any new estate, and you will see the infrastructure is NOT provided by the state...

No a road is itself wealth. Try to get from A to B without using a road and tell me roads do not improve your quality of life.

It does also facilitate further wealth creation.

As for whether it needed government to spend money on it - this links into landed monopolies, efficiencies of tolls vs payment by taxes etc. Too much for me to go into and explain here.

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double post.

light touch regulation

spend spend spend

Golden Prudential rules ignored.

Id say thay government had a pretty big hand in the misadventures of the Private Banks....sort of choosing not to enforce laws, regulations and good sense.

they did the same for the public sector.

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  • 243 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% +
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      • Even
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      • up 5%



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