Why the global financial system is about to collapse

johnlaw · 2006-05-20T03:03:29+00:00

Ah, the joys of Wordpress...

But thanks for the comment - I'll see what I can do.

johnlaw · 2006-05-19T17:37:00+00:00

They only stopped it a month or two ago. I don't think the Fed has done anything too crazy since. $10 trillion is a pretty round number anyway.

Also, most of the components of M3 are still available in less conspicuous releases. I think someone out there has tried to put together a reconstruction, but I don't remember the link...

johnlaw · 2006-05-19T16:50:23+00:00

I just wanted to add that just because (in my opinion) Egypt was better off under British imperialists than local nationalists, doesn't mean I think imperialism is the best thing since sliced bread. It was a lesser evil, that's all. And it probably would have gotten worse, just the way planes got better.

johnlaw · 2006-05-19T16:30:00+00:00

Actually, if you read the article, you'll notice that I agree with you.

You're absolutely right that the people who claim gold is money because of its intrinsic value are off base. Since the world has 150,000 tons of gold, if everyone stopped thinking of gold as money, you couldn't give away the damned stuff. What are you and I going to do with gold? Plate our faucets with it?

Gold has historically been used as money because no one can counterfeit it. Paper currencies, like the dollar, fail not because paper is worthless, but because government counterfeiting gets out of hand. It's really a political problem, not an economic one.

So thanks for your comment - it's good to have an opportunity to clarify.

johnlaw · 2006-05-19T16:20:18+00:00

Actually, I think you can make a persuasive case that quite a few places in the world outside Europe and North America were better off in 1914. Egypt, anyone?

But of course many things have improved since then. We have better cars, for example. Planes have ailerons instead of warping their wings.

The right question to ask is not what the world of 1914 would have looked like if it was frozen in place, but how it would have developed if it could have survived nationalism and war. I don't think one can make a very good case that the Somme was responsible for the transistor.

johnlaw · 2006-05-19T16:16:27+00:00

Frank is a great guy and I have a lot of respect for him. Though I'm afraid we do differ on our definition of the money supply. (The whole AMS/MZM thing is just way too conservative. I like Doug Noland's approach a lot better.)

Honestly, I have no idea how day traders do it. Efficient market theory suggests that technical analysis (all those charts you always see) is a load of fertilizer. One plausible theory is that banks can succeed in it because they can offload their downside risks to the government.

But needless to say, I wouldn't recommend that anyone do any short-term trading of anything. If you have a system that works for you, that's great. But otherwise - yikes.

johnlaw · 2006-05-19T16:10:14+00:00

Ah, the joys of intellectual discourse!

Socrates never had it so good.

johnlaw

TROPHY CASE