RED ALERT: FX Dislocation_In_Process

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 6:50 am

Originally posted by Gordon Gekko II:

quote:Originally posted by KJ Duke:

quote:Originally posted by sportsbettingman:

Is GOLD a smart buy, even now for those late to the party?

Yes or no.

~Lance It has been one of the most manipulated investments in the history of the world, so flip a coin. Unlike stocks, you are buying something that doesn't generate a return - it is a pure psychological speculation.

[/QUOTE]Duke - let's stick with facts on this one and see how they play out...

If someone invested $1,000 in gold 5 years ago and $1,000 in the S&P 500, what would their current balance look like now for each? How about 10 years ago? [/QUOTE]Slice the time period in different ways, you'll get different answers. In 1980, gold peaked at $600+, the S&P 500 then was trading around 100. Inflation-adjusted, you've lost a lot of money in gold since 1980, and on top of that given up huge equity returns even with the huge selloff we've just had in stocks and the runup in gold.

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 6:56 am

Originally posted by GoBabyGo:

quote:Originally posted by KJ Duke:

quote:Originally posted by Gordon Gekko II:

Duke - I'm interested in your take on the following: Are banks really ponzi schemes? If every person/company/institution went to their banks and attempted to withdraw ALL of their money, would the banks have enough $ to pay? No they would not be able to pay, a typical bank is leveraged at 6x. That does not make them a ponzi scheme.

If you purchase a home using credit and the bank then demands immediate payment, does that make you a ponzi scheme?

See definition of ponzi. Leverage employed does not equal ponzi. [/QUOTE]DUKE,

That is a flawed argument. Homeowners wish they collected deposits.

Banks are in the business of collecting DEPOSITS (its not the Banks money) of which they lend out. now if we go and collect our money and they do not have it, yes its a PONZI SCHEME. [/QUOTE]It is not a flawed argument, if you sell your home you could repay your bank debt. If a bank liquidated all of its loans and investments, it could repay all deposits. Exactly the same thing.

Now, if your home has declined in value and you are forced to liquidate, then you could be insolvent, same for the banks. But, once again, this is not a ponzi scheme, it is insolvency. Two very different things.

Look up the definition of what a ponzi scheme is, then relate that to the stock market. I think you'll discover you don't know what a ponzi scheme is.

Edwards Kings · Post by **Edwards Kings** » Tue Feb 17, 2009 7:18 am

Originally posted by KJ Duke:

You want to know what is REALLY wrong with our society?

No one takes the time to understand things. They think in bullet points, sound bites and hyperbole. See gobaby. How many people actually believe what he believes? Too many, unfortunately. He has virtually no real knowledge, but thinks he knows plenty from watching videos and reading blogs. If it appeals to your senses, it must be true. Throw together a bunch of facts then come up with a theory of why they're happening with no knowledge whatsoever. If the facts are true, then the theory must be true! KJ, their minds are made up. Please don't confuse them with facts.

I see two ways to handle what is going on here. One ends up looking like Carl Spackler sitting in their basements with two gallons of distilled water, some dehydrated survialist food, and a nine-volt flashlight duct taped to a single-shot twenty gage waiting for the power grid to go down.

The other is to get past the "damn, we were screwed" stage and look at how to best place themselves for clawing back, just like what we did in '87, in '01 and will, if we are lucky enough to live that long, end up doing it again. Cycles are up. Cycles are down.

If the ups and downs are so disconcerting, time deposits and tax free munis are what you should be investing in.

sportsbettingman · Post by **sportsbettingman** » Tue Feb 17, 2009 7:36 am

Why is it that the "enemies" of the US and EU just happen to be the countries that resist having the world central banking system forced into their country?

Is it just a coincidence?

Who's living with their blinders on?

~Lance

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 7:43 am

Originally posted by sportsbettingman:

Why is it that the "enemies" of the US and EU just happen to be the countries that resist having the world central banking system forced into their country?

Is it just a coincidence?

Who's living with their blinders on?

~Lance Don't understand the question Lance.

GoBabyGo · Post by **GoBabyGo** » Tue Feb 17, 2009 7:58 am

Originally posted by KJ Duke:

quote:Originally posted by GoBabyGo:

quote:Originally posted by KJ Duke:

quote:Originally posted by Gordon Gekko II:

Duke - I'm interested in your take on the following: Are banks really ponzi schemes? If every person/company/institution went to their banks and attempted to withdraw ALL of their money, would the banks have enough $ to pay? No they would not be able to pay, a typical bank is leveraged at 6x. That does not make them a ponzi scheme.

If you purchase a home using credit and the bank then demands immediate payment, does that make you a ponzi scheme?

See definition of ponzi. Leverage employed does not equal ponzi. [/QUOTE]DUKE,

That is a flawed argument. Homeowners wish they collected deposits.

Banks are in the business of collecting DEPOSITS (its not the Banks money) of which they lend out. now if we go and collect our money and they do not have it, yes its a PONZI SCHEME. [/QUOTE]It is not a flawed argument, if you sell your home you could repay your bank debt. If a bank liquidated all of its loans and investments, it could repay all deposits. Exactly the same thing.

Now, if your home has declined in value and you are forced to liquidate, then you could be insolvent, same for the banks. But, once again, this is not a ponzi scheme, it is insolvency. Two very different things.

Look up the definition of what a ponzi scheme is, then relate that to the stock market. I think you'll discover you don't know what a ponzi scheme is. [/QUOTE]Now take your premise one step further does a BANK have an endless supply of money? How were they able to loan loan loan when they do not have the despoits? WHERE did that money actually come into being into paying that seller of that house? The Bank just got it out of its vault? I mean you acknowledge they are levered up 6x?

Answer the FED printed it (now its just a computer entry and BAMM instant money!

So that is NOT a ponzi scheme. (The Bank never had the money to lend what are you missing here?)

But yet we are the ones with the blinkers on. By the way when will the USA repay its 100 trillion debt? I am the stupid one so I need guidance.

GoBabyGo · Post by **GoBabyGo** » Tue Feb 17, 2009 8:12 am

More trust for the markets on the way.

http://www.reuters.com/article/domestic ... 22&sp=true

Just makes you dive in head first. A wonder how many more Madoff's could possibly pop up as assets keep devaluing and outflows start to accelerate? Nothing to see here please move along.

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 8:21 am

Originally posted by GoBabyGo:

Now take your premise one step further does a BANK have an endless supply of money?

They don't. They are able to acquire funds against as asset base using collateral, just like anyone that buys a home.

Originally posted by GoBabyGo:

How were they able to loan loan loan when they do not have the despoits? WHERE did that money actually come into being into paying that seller of that house? The Bank just got it out of its vault? I mean you acknowledge they are levered up 6x?

Whereas you go to a commercial bank for a loan, they go to the Federal Reserve, which functions in a similar manner, as a banker's bank.

Originally posted by GoBabyGo:

Answer the FED printed it (now its just a computer entry and BAMM instant money!

The Fed prints it and has collateral against it, just as a commercial bank has collateral against your loan whether that be an asset in the case of a mortgage, or your ability to earn income in the case of a credit line.

Also, the Fed has a balance sheet, which none of the crazies seem to get. There are debits and credits on their balance sheet.

Originally posted by GoBabyGo:

So that is NOT a ponzi scheme. (The Bank never had the money to lend what are you missing here?)

No that is not a ponzi scheme, you have yet to define a ponzi and relate that definition to the banks or stock market.

Originally posted by GoBabyGo:

But yet we are the ones with the blinkers on. By the way when will the USA repay its 100 trillion debt? I am the stupid one so I need guidance. Debt ended last year around $10 trillion, this year will probably be $12-15 range, I'd guess. The US is paying off debt securities everyday and issuing new debts. Why does it need to be paid off? Does a company have to pay off all its debts to be solvent? No, it does not. This is a capital structure question - how best to maximize value through the proper mix of capital. Right now the world is lending us long-term money at 3.5%, why would we want to pay it off? I'll take 3.5% money all day long and put it to more productive use.

GoBabyGo · Post by **GoBabyGo** » Tue Feb 17, 2009 8:24 am

Originally posted by KJ Duke:

You want to know what is REALLY wrong with our society?

No one takes the time to understand things. They think in bullet points, sound bites and hyperbole. See gobaby. How many people actually believe what he believes? Too many, unfortunately. He has virtually no real knowledge, but thinks he knows plenty from watching videos and reading blogs. If it appeals to your senses, it must be true. Throw together a bunch of facts then come up with a theory of why they're happening with no knowledge whatsoever. If the facts are true, then the theory must be true! So please explain to us (seems like alot of people agree with me on this) how does the FEDERAL RESERVE actually work? Its not a fractional banking system as you say so what is it. In details, because in my college they never offered a class about the FEDERAL RESERVE and how it actually works. Thanks.

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 8:30 am

Originally posted by GoBabyGo:

quote:Originally posted by KJ Duke:

You want to know what is REALLY wrong with our society?

No one takes the time to understand things. They think in bullet points, sound bites and hyperbole. See gobaby. How many people actually believe what he believes? Too many, unfortunately. He has virtually no real knowledge, but thinks he knows plenty from watching videos and reading blogs. If it appeals to your senses, it must be true. Throw together a bunch of facts then come up with a theory of why they're happening with no knowledge whatsoever. If the facts are true, then the theory must be true! So please explain to us (seems like alot of people agree with me on this) how does the FEDERAL RESERVE actually work? Its not a fractional banking system as you say so what is it. In details, because in my college they never offered a class about the FEDERAL RESERVE and how it actually works. Thanks. [/QUOTE]"Fractional banking" is a correct terminology. Why do you think that means all your other wild theories are true?

1) They covered the Fed extensively where I went to school.

2) I addressed the Fed extensively in repsonse to Lance and Gekko on the WCOFF boards, look there. I don't have the energy to regurgerate all of it.

3) Start with the Federal Reserve website FAQ or "how the Fed works" section. That alone gives you a clearer picture than what you have now.

4) There are many books written on the subject of the Fed, try the bookstore or library. Look for one whose basis is factual rather than inflammatory, then you'll at least have some insight to see where the inflammatory ones are based mostly on fiction.

GoBabyGo · Post by **GoBabyGo** » Tue Feb 17, 2009 8:36 am

Originally posted by KJ Duke:

quote:Originally posted by GoBabyGo:

Now take your premise one step further does a BANK have an endless supply of money?

They don't. They are able to acquire funds against as asset base using collateral, just like anyone that buys a home.

Originally posted by GoBabyGo:

How were they able to loan loan loan when they do not have the despoits? WHERE did that money actually come into being into paying that seller of that house? The Bank just got it out of its vault? I mean you acknowledge they are levered up 6x?

Whereas you go to a commercial bank for a loan, they go to the Federal Reserve, which functions in a similar manner, as a banker's bank.

Originally posted by GoBabyGo:

Answer the FED printed it (now its just a computer entry and BAMM instant money!

The Fed prints it and has collateral against it, just as a commercial bank has collateral against your loan whether that be an asset in the case of a mortgage, or your ability to earn income in the case of a credit line.

Also, the Fed has a balance sheet, which none of the crazies seem to get. There are debits and credits on their balance sheet.

Originally posted by GoBabyGo:

So that is NOT a ponzi scheme. (The Bank never had the money to lend what are you missing here?)

No that is not a ponzi scheme, you have yet to define a ponzi and relate that definition to the banks or stock market.

Originally posted by GoBabyGo:

But yet we are the ones with the blinkers on. By the way when will the USA repay its 100 trillion debt? I am the stupid one so I need guidance. Debt ended last year around $10 trillion, this year will probably be $12-15 range, I'd guess. The US is paying off debt securities everyday and issuing new debts. Why does it need to be paid off? Does a company have to pay off all its debts to be solvent? No, it does not. This is a capital structure question - how best to maximize value through the proper mix of capital. Right now the world is lending us long-term money at 3.5%, why would we want to pay it off? I'll take 3.5% money all day long and put it to more productive use. [/QUOTE]So you proved my point the Bank's collateral is the prior collateral (And os on and so on) that they issued. Again out of thin air IT NEVER EXISTED!! What do not you see. Its a big circle jerk. Once properties start devaluing (underlying assets) the derivatives that hold one of these assets blows up and causes a 1.2 QUADRILLION DOLLAR problem (that we have now, but dont tell anyone)now where did this come from? A system of credit upon credit upon credit is a HOUSE of CARDS my friend in my book it is aPONZI SCHEME regardless of the TEXTBOOK DEFINITION.

Its like the GDP definintion all last year we heard all the ANALysts say hey we are NOT in RECESSION because GDP tells us so. But because these morons live under a rock it did not take a rocket scienist to figure out yes we are in RECESSION. Defintions are symantics.

Again MAIN ST does NOT need WALL ST!! Wall st was created imho to transfer wealth out of the hard working people braking their backs daily. imho

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 8:42 am

Your unwillingness to learn anything and ignore everything you don't understand is quite impressive. I'm done, I can tell you're not serious about learning anything - have fun re-posting your non-sensical, uninformed sound bites.

I am happy to discuss these things with Gekko, Lance and others who have the capacity to listen.

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 8:46 am

Originally posted by GoBabyGo:

Again MAIN ST does NOT need WALL ST!! Wall st was created imho to transfer wealth out of the hard working people braking their backs daily. imho How do you think Main Street was built? There is no Wall Street in Somalia, check in and see how they're doing.

imho = I don't know sh** about anything I'm saying, so I'll just make up stuff that sounds good to me. :rolleyes:

[ February 17, 2009, 02:48 PM: Message edited by: KJ Duke ]

GoBabyGo · Post by **GoBabyGo** » Tue Feb 17, 2009 8:50 am

Originally posted by KJ Duke:

Your unwillingness to learn anything and ignore everything you don't understand is quite impressive. I'm done, I can tell you're not serious about learning anything - have fun re-posting your non-sensical, uninformed sound bites.

I am happy to discuss these things with Gekko, Lance and others who have the capacity to listen. I concur, you also do not bother to look up anything and inform yourself, because your way is the only way. Anyway keep thinking within the box. You sound alot like I once did. Anyway best of luck in baseball.

DOUGHBOYS · Post by **DOUGHBOYS** » Tue Feb 17, 2009 9:02 am

And again with the last word.....

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 9:03 am

Originally posted by GoBabyGo:

... you also do not bother to look up anything and inform yourself, because your way is the only way. Anyway keep thinking within the box. You sound alot like I once did. Sounds like you swing from believing one set of gurus (college/mainstream media) to the next (alternative/delusional gurus), based on which way the wind is blowing.

Originally posted by GoBabyGo:

... you also do not bother to look up anything and inform yourself, because your way is the only way ...

You have no idea how the Fed works, how the equity markets work, how the banking system works, I do. Which of us is not bothering to look up anything?

[ February 17, 2009, 03:35 PM: Message edited by: KJ Duke ]

sportsbettingman · Post by **sportsbettingman** » Tue Feb 17, 2009 9:10 am

"Government owned central banks do not charge the taxpayers interest on the national currency, whereas privately owned central banks do charge interest."

Why does the US choose to stick with a privately owned FOR PROFIT central bank?

What are your main beefs with the teachings of Friedrich Hayek, and the Austrian school of economics?

Do you agree with his quote?

"The past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process."

What is your opinion of this...

http://mises.org/story/2533

~Lance

[ February 17, 2009, 03:18 PM: Message edited by: sportsbettingman ]

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 9:23 am

Originally posted by sportsbettingman:

"Government owned central banks do not charge the taxpayers interest on the national currency, whereas privately owned central banks do charge interest."

Why does the US choose to stick with a privately owned FOR PROFIT central bank?

What are your main beefs with the teachings of Friedrich Hayek, and the Austrian school of economics?

Do you agree with his quote?

"The past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process."

~Lance Hayek-Austrian Economics is one school of economic thought. It's a good economic theory that was put together back in the 50's, I think.

I haven't found a single theory that works perfectly in all situations. Friedman, Keynes, Hayek, many others have advanced the base of economic knowledge significantly, but none has proven to be a holy grail of simple answers that can be applied to every ecnomic cycle, every country, every era.

This is where guys like Schiff fail. They want to learn one thing and apply it religiously to every situation, and then they stop learning. They don't stop looking for things that support their theory, but that is seeking confirmation, not really learning.

The one guy I respect more than anyone in economics was Milton Friedman because he would admit shortcomings to his theories as evidence evolved and the world changed, and he never stopped learning while staying incredibly sharp even into his 90s.

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 9:30 am

Originally posted by sportsbettingman:

"Do you agree with his quote?

"The past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process."

~Lance To an extent this is true. This the belief of those who want the gold standard. But the question is not one of stability, rather standard of living.

Think of it this way. If I offered you a 5% guaranteed return for life on your investment with no volatility, would you prefer that to a 10% guaranteed return with unknown volatility?

Our system is one of higher risk (volatility) and higher return. Would the US have gotten to be the world superpower on the gold standard? Probably not. Would someone else have done so in our place? Probably.

So again, which is your preference? Greater wealth and prosperity (as a country) or greater stability with less prosperity, and all the political implications that go along with this?

[ February 17, 2009, 03:33 PM: Message edited by: KJ Duke ]

sportsbettingman · Post by **sportsbettingman** » Tue Feb 17, 2009 9:50 am

Thanks for turning me onto Milton Friedman.

http://www.youtube.com/watch?v=JfdRpyfEmBE

We see eye to eye.

He saw Big Brother too!

~Lance

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 9:51 am

Originally posted by Edwards Kings:

quote:Originally posted by KJ Duke:

You want to know what is REALLY wrong with our society?

No one takes the time to understand things. They think in bullet points, sound bites and hyperbole. See gobaby. How many people actually believe what he believes? Too many, unfortunately. He has virtually no real knowledge, but thinks he knows plenty from watching videos and reading blogs. If it appeals to your senses, it must be true. Throw together a bunch of facts then come up with a theory of why they're happening with no knowledge whatsoever. If the facts are true, then the theory must be true! KJ, their minds are made up. Please don't confuse them with facts.

I see two ways to handle what is going on here. One ends up looking like Carl Spackler sitting in their basements with two gallons of distilled water, some dehydrated survialist food, and a nine-volt flashlight duct taped to a single-shot twenty gage waiting for the power grid to go down.

The other is to get past the "damn, we were screwed" stage and look at how to best place themselves for clawing back, just like what we did in '87, in '01 and will, if we are lucky enough to live that long, end up doing it again. Cycles are up. Cycles are down.

If the ups and downs are so disconcerting, time deposits and tax free munis are what you should be investing in. [/QUOTE]Very true EK, and that there are more of us who choose to persist rather than withdraw into the bunker is probably what gets us out of this economic mess, sooner or later.

KJ Duke · Post by **KJ Duke** » Tue Feb 17, 2009 10:00 am

Originally posted by sportsbettingman:

Thanks for turning me onto Milton Friedman.

http://www.youtube.com/watch?v=JfdRpyfEmBE

We see eye to eye.

He saw Big Brother too!

~Lance Thanks for the link Lance. Love this line: "the people that go around talking about their soft heart, I admire them for that, but very often that softness unfortunately extends to their head as well".

The guy I was most honored to ever meet in my career was Milton, attended a small luncheon with him in Chicago 10-15 yrs ago. The guy was just a brilliant, independent, creative thinker with nothing but good intentions.

DOUGHBOYS · Post by **DOUGHBOYS** » Tue Feb 17, 2009 10:24 am

On CNBC, during a crises or unusual situation, one of the hosts inevitably cries out, "What would Milty do?"

sportsbettingman · Post by **sportsbettingman** » Tue Feb 17, 2009 10:42 am

Killer...I now have a drinking buddy for 9 hours over the next week.

http://video.google.com/videoplay?docid ... oose&emb=1

~Lance

Gordon Gekko II · Post by **Gordon Gekko II** » Tue Feb 17, 2009 10:55 am

Originally posted by KJ Duke:

I'll take 3.5% money all day long and put it to more productive use. therein lies the problem duke. the government doesn't use it productively.