The Gaming Den

Doom wrote:...for some reason, he ended up buying two 1916-D dimes, not sure why, he wasn't one for extras.

Interesting. The 1916-D dime is pretty famous.

Inflation did not create the Nazis, hard money did.

Everyone likes to party like it's 1923, but the Nazis were created by the hard money policies of 1930-32, where hyperinflation was a memory not a reality.

-Username17

Also, vegetarianism leads to Hitler!

You can read the comments section to get a hint at how loud people are laughing at this piece.

Doom wrote:Also, vegetarianism leads to Hitler!

You can read the comments section to get a hint at how loud people are laughing at this piece.

You must be reading a different comments section. The one for the article posted is mostly a discussion of WWII and the current European situation with a few people agreeing with the article and a few disagreeing, but that's mostly lost among the anti-Semites and that nutcases comparing Obama to Hitler.

Only one person makes an actual argument against the article and he's a gold-bug, so it's kind of hard to take his one shitty source from 1975 very seriously.

That being said, when was a Comments section ever a reliable judge of an article's merit?

FrankTrollman wrote:Everyone likes to party like it's 1923, but the Nazis were created by the hard money policies of 1930-32, where hyperinflation was a memory not a reality.

Gee, Frank, it's almost as if people were conflating the hyperinflation with the Great Depression and forgetting that there was a period of 6 years between the two events.

And of course what gets lost in this 'debate' is that the Great Depression was not universal. Sweden got out of the depression well ahead of anyone else by following - you guessed it - Keynesian economic policy.

K wrote: You must be reading a different comments section.

You must not have clicked on the right link. Basically nobody seems to buy that events happening years after Hitler came to power can be legitimately associated with the rise of Nazism. Allow me to assist you in the process by clicking on the link for you and cut-and-pasting:

First comment (in reverse order):

Please. Attention whore, nothing more.

Second comment:

We talkin bout Nazis? I thought the Tea Party was Nazis? No?

That's what MSNBC said though.

Third comment:

Was this German U6 unemployment at 30%? Oh wait, isn't our artificially low U6 unemployment at 20% and we got Obama? Correlation?

(is this the one you're calling agreement? Or is this the Obama nut?)

Fourth comment:

The first Great world war was July 28 1914

We are only a couple years away from the anniversary and almost everyone that was around then is dead, so history can repeat itself.

Fifth comment:

Sure, all we need is some archduke to pimp around in a convertible in Sarajevo. Lots of that going 'round. Could happen any day now

Sixth:

German unemployment is at 7% and the artificial low Euro is helping to export shitloads... still a long way to go.
anyways, why should they start a war? more likely is that they just wait till the Spains and Greeces (or maybe someone with Iran or Syria) start something.

what I find interesting about that story is that someone from SocGen is bringing that up. I guess they're trying to put some pressure on Germany to change monetary policy...

So, after six comments, only one sort of, maybe, might be in agreement. Kinda. Nothing past that point is any better as far as agreement, while the laughter continues:
I thought that was pretty interesting, too. And wouldn't put it past Sarkozy (in agreement with 6th comment)

Wow talk about re-writing history

Just like the Fed not printing during the Depression of '20-'21 caused Adolph Hitler to come to power in the US.
This is a lame rationalization for doing what the ruling elite wants.

Hyperinflation occurred in the early 20s, the Nazis become powerful in the late 20s and early 30s as the Gr8 depression hit them; am I missing something or is this article totally off?

Yup, it actually began even before that. Beyond simple "Revisionism," this article is not just wrong -- but loudly and militantly wrong. See Henry's Hyperinflation piece or read the actual history on http://www.goldonomic.com/When%20Money%20Dies.pdf

This is such a load of rubbish I don't even know where to start

This is historical determinism of the worst sort: mainly, you wonder how the one spouting can breathe with his head so far up his hinder....

How about asking: cui bono?
A SocGen analyst pulls out the well used and well proven Nazi-club against contemporary Germany... hmmm....


Etc.

These aren't arguments, of course, but it's clear few, if any, take this garbage seriously. Only someone deeply ignorant of history could not understand how calling this bad revisionism isn't the entirety of the criticism necessary. The political motivation for the bizarre revisionism is, of course, blatantly obvious. The idea that the near takeover of Germany by the Nazis in 1923 would have been prevented if policies in 1930 (sic) were different is laughable on its face.

That being said, when was a Comments section ever a reliable judge of an article's merit?

Basically, never, but Frank opened the door on that earlier..and then keeps forgetting his own quote which refutes him every time. In this case, of course, we have a theory so blatantly in violation of known historical facts that only a complete idiot would continue to argue that the criticisms are invalid.

If you think the first six comments contain any valid criticism addressing any part of the article and they aren't just random dick-waving, you've proved my point for me.

Dislike in a Comments sections does not equal valid criticism. If it did, libertarians and LOLcats would rule the world.

Nice that you picked out the gold-bug and his cutting-edge article from 1975, but that doesn't say much for the strength of the criticism when that's the only comment that meets the minimum requirements.

U.S. Debt is cheaper than cash?

Interesting if true. Though of course, the obstructionism will prevent making any significant use of this window.

The problem is relying on it ... it's cheaper now, but you need it to be cheaper every year to continue to pay for necessary imports (by which I don't mean shiny baubles from China, but oil). It won't hold, it can't hold ... and by using the crutch of debt too much you might actually speed up the collapse.

Default is inevitable, the optimal path towards it is not obvious ... the only obvious thing is that the current path is optimal for the 0.1%, they didn't get to be the 0.1% by paying government to do things which weren't optimal for them and they certainly have better information than us.

MfA wrote: Default is inevitable

Uh... what? The US was completely solvent and running a surplus before the Bushites drove the finances into the ground. If US unemployment can fall to historical norms, which with sufficient government investment it can, there is no reason that the US has to default on anything in the foreseeable future. The US has never defaulted on debt, and doesn't have to default on any of the debt it has now or on any of the debt it issues in the next couple of decades.

Unless the US decides to do something flipping retarded like sign away their monetary sovereignty to the European Central Bank or the vagueries of the precious metals market, default is not only not inevitable, it's implausible.

-Username17

Money printing to the point where your foreign partners enforce a trade balance because they don't trust your IOUs is just as much a default as an outright one.

Default and trade balance is coming, sooner or later. The Iran situation, the refusal of China billionaires to allow wage inflation and their sovereign debt being used as the final bubble to end all bubbles is buying the US some time, but it can't last.

PS. the pre-Bush surplus was essentially based on suckering foreigners to make failed investments inside the US, ie. the dotcom bubble ... the US hasn't been able to pay for it's import with product since it's own peak oil, that's why Nixon had to get off the gold standard. Ever since then suckering foreigners into bubbles has been their main method of maintaining their trade deficit ... they're down to the last bubble.

PPS. suckering isn't quite right for it's non first world trading partners, they essentially allowed themselves to be used to import technology and knowhow through outsourcing ... but at least in China's case that has pretty much run it's course.

Trade deficits don't mean what you seem to think they mean. Having a trade deficit means that money is flowing out of your country and that goods are flowing in. That can be good or bad, depending on the circumstances. If you have generally low unemployment, a trade deficit basically just means that people around the world are sending you material tribute in exchange for you giving them pieces of paper that they can put in stacks somewhere far away - like what happens to Switzerland. If you have high unemployment, it means that some portion of your demand is being taken by foreign producers and that trade is actively inhibiting recovery.

Trade surpluses similarly don't have consistently positive or negative connotations. A trade surplus combined with high unemployment involves your country being raided for its natural resources in exchange for pieces of paper from your imperial overlords. A trade surplus with low unemployment means that you are using exports to turbocharge your economy and put people to work.

Economies can function well at high or low trade surpluses or trade deficits. While they are self correcting in the long run, that long run is measured in not just "decades" but actual generations, and there isn't any reason why the switch from one to the other would necessarily be a bad thing or even a big deal. I know it was fashionable in the early nineties to bitch and moan about the US Balance of Trade, but honestly it was not and is not a major concern.

The US economy would be better right now if they devalued the dollar, forced appreciation on the Renminbi, and exported more. But that's just one of a dozen things that could be done to right the ship of US employment to a course of economic stability. Balance of trade will probably go positive at least for a while sometime in the next sixty years, but then again it might not, and there's no reason it has to be catastrophic either way.

-Username17

I don't believe the US would be better off if it devalued ... it will actually decrease it's competitiveness in the short term ... any decrease in labour costs would be wiped out by having to pay the actual price for oil, rather than the massively subsidized one they have now. Their standard of living will plummet.

Which is neither here nor there though, it will happen regardless what they want sooner or later. Investors don't have generation long horizons, they just kept buying into bubble after bubble. Before the US got off the gold standard, trade deficits of the current magnitude lasting for decades would have been completely impossible ... this is entirely a new thing, which together with peak fucking everything completely escapes traditional macro economic theory. It's one giant fucking bubble.

I think the Eurozone has a chance of a smooth transition with it's 17 nation clusterfuck, because it at least is relatively near to trade balance as a whole ... it just needs to work out internal imbalances. The US is just living on borrowed time.

The US has one long shot chance to escape a massive hit to living standards, a miracle break through in energy. I think their patent system and captured court system will safely ensure that won't happen though.

MfA wrote:I don't believe the US would be better off if it devalued ... it will actually decrease it's competitiveness in the short term ... any decrease in labour costs would be wiped out by having to pay the actual price for oil, rather than the massively subsidized one they have now. Their standard of living will plummet.

You can believe what you want of course. But that is objectively not what happened when Quantitative Easing happened. The value of a dollar as a trade good dropped, but actual wages and prices in the United States did not change much. The price of oil went up and down with respect to world demand, and peak oil makes worldwide economic growth severely constrained. The negative reinforcement of economic growth causing fuel price spikes that cause economic contraction is pretty harsh and has been for several years.

But there is absolutely no link between Dollar devaluation and the US losing its privileged status for oil trade. We get cheap oil because we will shoot people right in the face if they don't give us cheap oil. The relative value of a dollar is completely immaterial.

Which is neither here nor there though, it will happen regardless what they want sooner or later. Investors don't have generation long horizons, they just kept buying into bubble after bubble. Before the US got off the gold standard, trade deficits of the current magnitude lasting for decades would have been completely impossible ... this is entirely a new thing, which together with peak fucking everything completely escapes traditional macro economic theory. It's one giant fucking bubble.

That is horse shit. Europe and China sat around with a metal standard and a massive one-way trade imbalance for four hundred years. People mine new gold. The economy expands over time. You still want silk and tea and the Chinese still don't want anything except shiny rocks. And it drags on. For hundreds of actual years. It came to an end when Europe sent actual boats full of marines to set fire to things and take their metals back. But it easily could have dragged on for hundreds of years more.

The idea that trade imbalance necessarily destabilizes the world is simply not true. The idea that there has to be a reckoning at all, let alone "soon" is simply not born out by history. Trade imbalance is a thing that happens. It just means that there is more of one good flowing one way than is flowing another way. That's kind of what trade is for. At first it's the rice/oranges trade imbalance, and then it's the spices/silver trade imbalance, and right now it's the cheap plastic crap/pieces of green paper trade imbalance. But it's not the end times and it has never been the end times, and when things actually do collapse, trade imbalance won't be the thing that causes it.

-Username17

Quantitative easing didn't even make a dent in US trade deficit, the world devalued with it ... and will continue to do so until the dollar loses reserve currency status and the US gets forced into trade balance.

The US has not used force to get oil in it's recent wars and probably won't going forward, I don't think US citizens would support it if things got too blatant. Iran's threat to Saudi Arabia is partly engineered for sure ... but that's different from a direct military threat by the US itself. The US is more of a mercenary than a conqueror.

Massive trade deficits? Transport limited trade to a small percentage of GDP in the pre-industrial age, 10s of percentages of GDP trade deficits didn't exist ... and still Europe ran out of gold eventually and chose to go to war over it, hardly a smooth transition.

MfA wrote:Quantitative easing didn't even make a dent in US trade deficit, the world devalued with it ... and will continue to do so until the dollar loses reserve currency status and the US gets forced into trade balance.

Dude, here is what the Trade Deficit actually looks like:



See that bit at the end? That's the Trade Deficit shrinking. Did the world end? No. Did you even notice? No.

-Username17

Steadily increasing again from the end of that graph ...

http://www.tradingeconomics.com/united- ... e-of-trade

MfA wrote:Steadily increasing again from the end of that graph ...

http://www.tradingeconomics.com/united- ... e-of-trade

And the dollar is steadily increasing again too. I do foreign exchange fairly often because I live in Europe and have dollars. And my dollar gets more Czech Crowns than it did last year by a substantial margin. Also: QE2 is over.

I do not know why you would think that would obviate my point.

-Username17

So the world devalued with it and the Americans never really got to taste what trade balance would be like. Even then they were crying about gas prices and blaming traders, they certainly did notice.

MfA wrote:So the world devalued with it and the Americans never really got to taste what trade balance would be like. Even then they were crying about gas prices and blaming traders, they certainly did notice.

Uh... no. The US went through a period of devaluation. Not large devaluation or irrevocable devaluation, but devaluation nonetheless. The US dollar was weaker for a while. During that period, the US balance of trade was very much closer to neutral. Had the devaluation been longer or larger, the US trade balance could have moved all the way positive. This is something that could happen at basically any time. Prices are the primary way in which trade imbalances are created and destroyed.

The United States has the fourth most productive people on the planet and has fourteen times the population of the top three countries combined (although to be fair, one of them is fucking Luxembourg). Is it possible for the US to increase production to meet demands when the inevitable comes and people start wanting to buy US products more than US citizens want to buy theirs (ie.: the trade imbalance unravels and starts flowing the other direction like it did for four years after we left the gold standard)? Of course it is. The US has the industrial capacity for all that any more. It would actually be a good thing because it would force the US companies to increase production and hire more workers to meet the sudden increase in demand.

In fact, the US should go out of their way to make it happen. All they have to do is to convince people in foreign countries that the US Dollar may very well be worth less in the future, causing a run on US products. I suggest that Ben Bernanke show up drunk to a press conference while wearing a Hawaiian shirt and mumbling about how the Federal Reserve is going to buy Italian Bonds "because the rates of return are like... super good". The resulting uneasiness in the rest of the world over the potential future value of the dollar would cause them to... stop hording US dollars and start buying our crap. You know, a titanic fiscal stimulus that we don't ever have to pay back.

You seem to think that the trade imbalance is some sort of guillotine over our heads. It's not. It's the United States lending money overseas at zero percent interest with no particular due date. Yeah, that may not be the best policy, but foreigners suddenly deciding to pay it back wouldn't be the end of the world either.

-Username17

FrankTrollman wrote:This is something that could happen at basically any time. Prices are the primary way in which trade imbalances are created and destroyed.

And GDP per capita denominated in barrels of oil is the primary way in which standards of living are created.

The US has the industrial capacity for all that any more. It would actually be a good thing because it would force the US companies to increase production and hire more workers to meet the sudden increase in demand.

If they can afford the oil to actually make it possible ... yes the US still has very good infrastructure and education (although the mal-investment from the bought and sold government has hurt) so it is in a reasonable position to compete with the EU and China for oil ... but not at current US median wages.

Standards of living have to go down, the US trade deficit doesn't represent handing profits to foreign trading partners ... it represents the US getting a significant amount of shit for free, and even if the US makes it itself again it won't be able to do it at lower cost than free.

In fact, the US should go out of their way to make it happen. All they have to do is to convince people in foreign countries that the US Dollar may very well be worth less in the future, causing a run on US products.

Because China is always jumping at the bit to convert it's reserves into a higher standard of living for it's citizens? No, it would cause a run on gold, US equities and US real estate ... forcing the US to at some point to reneg on neo-liberal policy (implement capital controls among other things) or be forced into the same position as Ireland.

You seem to think that the trade imbalance is some sort of guillotine over our heads.

No I think foreign oil dependence is the guillotine hanging over all our heads, and the trade deficit countries accustomed to getting it at an artificial discount for multiple decades are most at risk.

PS. about Norway ... oops, it's actually part of the single market, but not the EU

Peak oil is a problem, but it is not a uniquely American problem and will not hit America harder than it hits other places. We know this because peak oil has been happening for about five years now, and the United States is not hurt by it more than other places are hurt by it. Oil will become more scarce, and that will make the US have to use proportionately less oil. But China and India will have to use proportionately less oil too.

It's like you learned two alarming sounding facts and are trying to fit the global narrative to them. But in reality the world is more complicated than that. Trade deficits happen because people want your money more than they want your stuff. They can also happen because you are rapidly running out of money and credit... but that simply is not the case with the US. Similarly, while the US uses a lot of energy in order to maintain its productivity, remember that they are using energy almost twice as efficiently as China. In a world where energy becomes more scarce, that is going to hit many other countries harder than it hits the US. Where do you think oil goes? The country where the GDP is $3.9 per kg or the country where the GDP is $5.9 per kg?

-Username17

FrankTrollman wrote:Oil will become more scarce, and that will make the US have to use proportionately less oil. But China and India will have to use proportionately less oil too.

Whether it's proportional completely depends on the willingness of foreign partners to keep subsidizing US consumption.

Trade deficits happen because people want your money more than they want your stuff. They can also happen because you are rapidly running out of money and credit... but that simply is not the case with the US.

Credit is not something you can stock ... whether you'll be running out can be hard to judge and it's out of your hands.

Similarly, while the US uses a lot of energy in order to maintain its productivity, remember that they are using energy almost twice as efficiently as China.

Unfortunately the amount of energy needed to maintain the American standard of living completely obliterates that advantage at that moment.

In a world where energy becomes more scarce, that is going to hit many other countries harder than it hits the US. Where do you think oil goes? The country where the GDP is $3.9 per kg or the country where the GDP is $5.9 per kg?

To the country giving you the best deal in return ... whether that be military protection, product or quality investments.

You want to know why the trade imbalance exists? It's because THIS actually worked. Ben Bernanke announced that he was making dollars more available to the European Central Bank if they needed it, and Italian bond prices dropped almost a third of a percent.

Not enough to save the Euro of course, but the simple fact that reminding people that they can get dollars caused a market rally indicates that there is still a demand for dollars as a safe haven. And as long as that is true, there is going to be a trade imbalance. Some non-zero number of people are going to trade stuff for dollars and then hide those dollars in vaults. As long as that is going on, a trade surplus is not even possible.

-Username17

FrankTrollman wrote:As long as that is going on, a trade surplus is not even possible.

Only for neo-liberals ... with trade restrictions and capital controls it's trivial.