chemical_kev
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Steve Keen examines the available data and finds it supports his claim that mortage credit expansion drives house prices rises. I agree with him that it does, and I think I know what the causal mechanism is (as in my recent post to this thread).
But why are things set up like that? What’s the motive?
It’s this. Credit expansion benefits two groups: banks and debtors. Banks like credit expansion because each new loan issued is money they create out of thin air and add to their books as an asset. Debtors like credit expansion because creating new money (i.e. inflating the money supply) devalues the currency – and with it their debts.
This is the crux of the matter: Governments are by far the world’s biggest debtors and they also have the power to set the monetary policy that allows banks to expand credit.
That toxic symbiosis between banks and government is the nub of the problem and neither of them is going to change it voluntarily.
oooh lordy!
pick a bale o’ cotton
oooh lordy!
pick a bale a daybankster tell the cleanshirt
pick a bale o’ cotton
massa tell the cleanshirt
pick a bale a dayyou better jump down turn around
pick a bale o’ cotton
jump down turn around
pick a bale a dayon the understanding that gold is only useful for long-term capital preservation and would only be useful after coming out the other side of a (potentially drawn out) crisis
and on the understanding that gold is not a panacea to getting through the actual crisis when more immediate wants will dominate …
what are people’s thoughts on allocated reserved bars bought via BullionVault?By the way, hoarding cash is certainly not a robust response to the war on cash. They can just re-issue new set of notes and declare the old ones null and void. You have to take your old ones to the bank to change them into new ones (at an extremely unattractive rate) or, in the event of a cash ban, you have to take your old notes to the bank to convert them into bank deposits.
The first one was done in Russia and Poland in the nineties. I was there, I saw what it did. Ordinary people were wiped out.
What’s a poor boy to do?
Need to get out of equities, they’re in an unsustainable bubble. Need to get out of bonds, they’re in an unsustainable bubble. Need to get out of real estate, it’s in an unsustainable bubble. Need to get out of bank deposits, they’re vulnerable to bail-in confiscation. And there’s a war on cash. Phew!
The least bad option (in the UK) seems to be very short-dated gilts (1 year or less). Yeah, you’re guaranteed to lose a little because consumer prices are going up faster that the interest rate paid … but that seems to be the least bad thing one can do at the moment. Thoughts?
