[ExI] M0 singularity... you're soaking in it

[samantha]

BillK wrote:
> On Sun, Jan 25, 2009 at 4:34 AM, Damien Broderick wrote:
>> Look at the chart at the site:
>> <http://www.safehaven.com/showarticle.cfm?id=12403&pv=1>
>>
>> The author comments:
>> ...I can't believe what is happening in narrow money. M0, the narrowest
>> measure, is usually called the monetary base. It is simply currency (coins
>> and paper dollars) in circulation and in bank vaults plus reserves
>> commercial banks have on deposit with the Fed. These reserves are critical
>> because they are the base from which all other forms of money such as
>> checking accounts are created. The monetary base directly controls the
>> ultimate size of fractional-reserve banking.
>>
> 
> 
> Don't look for easy, 'one indicator explains everything' solutions.

It is way more than one indicator.  In the last four or five months 
alone a whopping total of $8 trillion in various loans, guarantees, 
buyouts and so on to purportedly address the economic mess we are in 
hase been approved.   That is effectively a near doubly of overall 
federal indebtedness.

The economic carnage is far from over.  It is likely just clearing its 
throat.  Ignore it at your own peril.

> The Safe Haven writers tend generally to be gold bulls. They see the
> solution to every financial problem as 'Buy gold!'.  Historically this
> has not always been the best option.

In times of high inflation it is historically a great option.  When the 
normal currency becomes less trusted gold and silver are excellent to 
have.  Yes gold and silver prices go up and down.  But not as wildly as 
a currency can lose value when as overextended as ours has become. After 
the  tide finishes going out in this deflationary period be prepared for 
an inflationary tsunami greater than anything this country has ever seen.

  (Though if you are a gold bullion
> dealer, you do like people to buy and sell gold at all times).
> As with all investments, you have to try to buy cheap and sell dear.
> 
> Yes, M0 has hugely increased. But the current problem is global
> insolvency. Debt, in plain-speak. 

Which the government is racking up in record amounts to supposedly cure 
the problem.

The pile of debt dwarfs the money
> supply increase. New money causes inflation when people spend it, buy
> stuff and drive the price up. 

New money in our present system literally is new debt.  But that is 
another story.


For years to come, people will be using
> any extra money to pay debt off and clear the decks for a fresh start.
> After that has happened, you can start worrying about inflation.
>

What will pay the government's debt?  It is sure not the tax base in 
these troubled times of rising unemployment and pending boomer 
retirement.   The total US federal debt is now greater than the combined 
net worth of all the citizens.   There is no way there will not 
eventually be a massive default.  Before that the currency will be 
inflated tremendously.


- samantha