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Behold the penny pyramid.
One never knows what the pyramid will be worth from one month to the next.
On the one hand it is constructed from a currency backed by the full faith and credit of the U.S. government. On the other hand it is constructed from an industrial metal backed by the full faith and credit of the global economy.
These days it is beginning to look like the same hand.
Commodities: It's Oil, Again
And copper, the other significant indicator of industrial demand, fell, posting a second straight weekly decline as supplies rose and economic growth slowed in China, the world's largest consumer of the metal.
That being said, one wonders how much longer China is willing to send us hard goods in exchange for an endless supply of paper US dollars. There's talk of "Peak" oil, metals, food, and so on. Why is it we never hear of Peak Dollars in the news?
Google Results for "Peak Dollars"
Friday: No Major Economic Releases
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[image: Mortgage Rates] Note: Mortgage rates are from MortgageNewsDaily.com
and are for top tier scenarios.
Friday:
• At 10:00 AM ET, *University of Michig...
9 hours ago
8 comments:
Stag,
Take a peek at the following article for a scary view from the peak.
http://news.yahoo.com/s/afp/20080719/bs_afp/zimbabweeconomyinflation_080719174524
I never used to be afraid of heights. Or large numbers for that matter.
Stag,
The insanity of this article is truly mind boggling.
http://www.reuters.com/article/marketsNews/idINN2145401520080721?rpc=44&pageNumber=1&virtualBrandChannel=0
NY's top official is calling for federal aid for investment banks as their employee bonus pool is projected to shrink 20% from last years near record 33 billion.
I don't knnow about peak dollars, but we certainly haven't reached peak handouts or peak bailouts for that matter.
It reminds me of that scene in the movie "The Jerk" where Steve Martin can't stand the sight of cat juggling.
MAB,
From your Zimbabwe link...
Independent economists however believe the official inflation figure is grossly understated, estimating it could be running between 10 million and 15 million percent.
I've got great news. 972 votes gave the article four stars out of five! Hey, I'm just trying to be optimistic. Further, the inflation is bound to come down once their economy slows. 80%+ unemployment just isn't good enough in a non-resilient economy.
I never used to be afraid of heights. Or large numbers for that matter.
I never did mind about the little things. - Maggie, Point of No Return, 1993
I don't knnow about peak dollars, but we certainly haven't reached peak handouts or peak bailouts for that matter.
You are right. No google results for those either. There are also no news results for peak pain, peak misery, and peak cat juggling.
I did find something on peak prosperity though.
China, India and Malthus
http://www.latimes.com/news/opinion/la-op-gardner-clark8may08,0,3833567.story
It seems we're at risk of running out. Go figure.
But now, with much of the energy reserves of the West depleted, China and India will potentially also become frantic importers. The downward march of food and energy prices since 1800 has ended. Current high prices may presage a food-scarce/energy-scarce future.
What will happen depends on the race between technological improvement and growing demand. As I emphasized earlier, no one can predict which force will win. A "full world," Gary, may also be one of cheap and abundant commodities.
But suppose the worse. Suppose abundance is over. Must we fear that?
The answer is no. First, the share of modern U.S. consumption devoted to raw food and energy purchases is small: 1.4% for food raw materials, 7% for energy.
Somebody forgot to watch Mad Max when they were in college. That's all I've got to say.
MAB,
From that last link of mine...
Given that we can easily reduce consumption when costs go up, a permanent doubling of the prices of food and energy would reduce income by less than 6%. At current rates of economic growth, incomes would recover from such a shock in less than three years. After that, onward on our march to ever greater prosperity.
We've already seen oil double 3 1/2 times ($11 to $22, $22 to $44, $44 to $88, $88 to ?). Which ones of those were permanent? Or is he speaking of a future doubling?
Further, imagine if stock prices acted similarly. They permanently double and then they never go higher. That's just crazy talk though (don't let the gloominologists convince you to look at stock prices over the last decade).
Stag,
Somebody forgot to watch Mad Max when they were in college. That's all I've got to say.
I think our economy is at that Mad Max hacksaw scene/choice moment. Hardened steel vs. flesh & bone?
We have some difficult choices to make. From what I see and hear from congress, stagflation may be the best of all possible outcomes.
MAB,
We have some difficult choices to make. From what I see and hear from congress, stagflation may be the best of all possible outcomes.
I think stagflation is what you end up with when there's nothing that can be done. Volcker calls our current situation intractable and who am I to disagree? I certainly don't have any solutions. I just know that I wouldn't want to own a restaurant and I also know I wouldn't want Bernanke's job. You simply can't get people to spend money on discretionary items if they are struggling. A better term might be strugflation.
Downtown Boise restaurants struggling with tough times
http://www.ktvb.com/news/localnews/stories/ktvbn-jul1808-downtown_boise_restaurants.6b2048e0.html
"The restaurant was just struggling. I mean, we weren't even covering costs for months. We just struggled," said Maricich. “Milky Way was open for seven years and we did fine for seven years and the economy just, circumstances that are happening now did not allow us to continue."
Maricich says several other Downtown restaurants are hanging on for dear life -- many unsure how much longer they can last.
I'm fairly sure Boise wasn't even the epicenter of the housing collapse.
Despite this apparent sign of the times, the Downtown Boise Association remains optimistic -- pointing to the addition of seven new restaurants to the Downtown area in the past year and a half.
If I did own a restaurant the following would be my "sign of the times." I'd hope gallows humor could at least draw in a few customers.
Gluttony for Punishment
I doubt it would work though. It might hit a bit too close to home (as is the case with most humor). There used to be a restaurant not all that far from me called Grumpy's. The operative phrase being "used to be."
Stag,
Interesting article by Michael Hudson on the stock market pyramid/ponzi scheme. Hudson, BTW, is pretty much disliked by all of the mainstream. Big time boat rocker.
http://www.harpers.org/archive/2005/04/0080499
I really don't see how the stock market can be considered a good risk adjusted investment at today's levels. Valuations aside, our demographics seem like a time bomb. We seem to alienate foreigners investors too.
It would not surprise me if one day the herd started rushing into tips. Those negative yields earlier this year on the five year tips really make me wonder.
MAB,
The one sure mark of a con, though, is the promise of free money. In fact, the only way the stock market is going to grow is if we the people put a lot more of our money into it. What Bush seeks to manufacture is a boom—or, more accurately, a bubble—bankrolled by the last safe pile of cash in America today. His plan is a Ponzi scheme, and in that scheme it is Social Security that is being played for the last sucker.
It would not bother me in the slightest to miss that ride for the next forty years. The more money that floods into the stock market the less will end up in the price of canned goods.
Why forty years? That would mean inflation would be tame for my expected lifetime. After I'm dead I really won't care so much one way or another I suspect.
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