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alstry (34.92)

How Will Humanity Produce?

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June 10, 2010 – Comments (26)

Humans must produce or humanity will perish.  It is simply the most basic of law of human existence.  Without production, we can't eat, drink, or shelter ourselves and we die.

For a long long long time, most humans produced under the contraints of slavery or military threat.....it is what differentiated the owners of production from those that produced.  Now it is stock certificates and money and gold that differentiates the producers from the owners of production.

Today, most humans produce/work for money.  They exchange their service/time/portion of their life in exchange for dollars, yen, euros etc......

As long as humans are willing to accept money in exchange for their production/service....all works fine. 

However, if humans stop accepting money for production because money no longer allows humans to function to acquire sustainable amounts of food, clothing and shelter.......as income versus costs and prices become inbalanced......humans will get angry and stop producing....or worse yet, act in criminal/violent ways to steal others production.

We simply can't let production stop, humans must produce or humanity will perish.

If humans won't produce voluntarily or with money, are two ways to force humans to produce:

1.  One can stick a gun to a person's head or person's family member and force production by threat.....

or

2.  One can create/defend an external threat and cause men to come together and produce together for their perceived collective survival.....

The math is easy.....humans must produce for humanity to survive.....

Now the only question going forward is what will motivate man to produce when we have given politicians and bankers unlimited power to create money without any constraints from our own production(in other words...bankers and polititicians now have the ability to control all of our production/lives without any limitations of money)....

Seriously Fools....was this so hard to foresee while you were distracted by the ticker?   Historically, the stock market was generally guided by production within the contraints of the rule of law and law of money.  Once both rules were broken last March and confirmed on 9/09.....the stock market changed its nature from investment to gambling.

As more and more can't make ends meet because of bankers cutting off credit and government cutting back spending money it doesn't have....the liklihood of force/violence becomes greater and greater.......

Welcome to the Digital Age......you were told to prepare........now we are here.

26 Comments – Post Your Own

#1) On June 10, 2010 at 4:24 PM, 1315623493 wrote:

Utterly ridiculous once again. There are constraints on monetary policy. It's called inflation and it's what the central banks usually concentrate on fighting. An economy cannot function with excessive levels of inflation. So if politicians and the like can inflate the currency all they want, then we should have 50% inflation, right? We should be like Venezuela, right? But we're not. Inflation is 0%, and your assumptions are faulty. 

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#2) On June 10, 2010 at 4:50 PM, alstry (34.92) wrote:

Not really we have massive inflation and deflation occuring at the same time offsetting each other.

If you own a home or commerical real estate.....you have massive deflation......same if you work in these industries which used to make up a huge percentage of our GDP.

If you are a welfare recipient, government worker, military contractor, or health care provider....we have massive inflation.

Right now autos are stable with production a fraction of levels we had a few years ago....gasoline and food prices are much higher than they were a few years ago.......especially if you factor the smaller packaging in food.

As far as wages generally, they are declining relative to the prices most people spend money on....except for the wages of government workers and bankers....this is where the problem comes in.....

You will undertand very soon......and I doubt you will ever question my assumptions again once you figure out what is occuring.

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#3) On June 10, 2010 at 6:15 PM, 1315623493 wrote:

You did not explain how the Federal Reserve or government don't have constraints on monetary and fiscal policy. I'm telling you, the financial markets provide that constraint. If the government's spending gets to a level seen by financial markets as unsustainable, then you'll see a sell-off in government bonds and the yield skyrocket, making government debt harder to acquire and more expensive. Did you see Greece's yield skyrocket when they announced they were in danger of default? They could not possibly continue to spend like before because it would be far too expensive for them. The Federal Reserve is constrained by inflation. They can't just "print" money willy nilly with no constraints whatsoever. If they do that, inflation sky rockets, and they know that. 

So what are going on about the Fed and government have no constraints. They obviously do. I think I know what is occurring, do you? You seem to think Western civilization on the brink of collapse.  

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#4) On June 10, 2010 at 6:44 PM, alstry (34.92) wrote:

My friend....you have no clue what is going on right thru now....government can print whatever it wants...whether outright printing or fractional reserve lending.

How do you characterize government giving bankers trillions in free money to capitalize balance sheets simply so bankers can loan it back to government at a much higher rate?  Printing or a Ponzi Scheme...I will leave it up to you.

As far as the stock market....

97-99% of all trading of the "financial markets" are concentrated in a few select institutional hands and co-located computers on exchange floors.

If everyone sold outside these select few....the market could still go up....or down...or left or right.....

No longer does the market reflect the underlying fundementals of business or else 80% or more of the public homebuilders would  have been bankrupt a few years ago...just like 80% of the private homebuilders are gone.

Right now we have massive inflation and deflation happening simultaneously.  NEVER HAS THIS HAPPENED BEFORE IN AMERICAN HISTORY absent a World War so looking backwards will not help unless you are looking for a big fight.

The government is expanding massively relative to the private sector as the private sector is contracting rapidly....it has become so excessive that now the only primary reason we have a private sector left in America is due to government spending....it is completely the opposite of America in the 50s, 60s and 70s.

The Fed and Government have absolutely no constraints anymore....total taxes paid by Americans is only a few trillion dollars per year....government spending is much much more than that.....and loan defaults which would have sunk banks a few years ago are simply being lied about or recapitalzied.

I am quite certain Warren Buffett understands this well...that is why he gave most of his money away and violated practically every rule he used to uphold.

I don't think Western Civilization is collapsing...nor Eastern Northern or Southern.....it is simply morphing into the Digital Age and if you are looking at the ticker for guidance you are looking in the wrong place.

The world is simply converting into government run economies....where the people will potentially have very little individual rights.

For Americans...they will have to change the most....but more and more are changing everyday as hundreds of thousands lose their private sector jobs each week.

Do you enjoy being a servant of government.....?  I prefer being a servant of my maker, man and productivity.

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#5) On June 10, 2010 at 10:09 PM, 1315623493 wrote:

My friend....you have no clue what is going on right thru now....government can print whatever it wants...whether outright printing or fractional reserve lending. How do you characterize government giving bankers trillions in free money to capitalize balance sheets simply so bankers can loan it back to government at a much higher rate?  Printing or a Ponzi Scheme...I will leave it up to you.

Give to the banks? No. The banks have to pay it back. The capital isn't free. So there is nothing to characterize.

 

97-99% of all trading of the "financial markets" are concentrated in a few select institutional hands and co-located computers on exchange floors.If everyone sold outside these select few....the market could still go up....or down...or left or right.....No longer does the market reflect the underlying fundementals of business or else 80% or more of the public homebuilders would  have been bankrupt a few years ago...just like 80% of the private homebuilders are gone. 

Want to back your "stats" up with hard data, or are you just making stuff up? By my recollection, the market priced in European contagion pretty well, so far so good on market reflecting fundamentals. 

Right now we have massive inflation and deflation happening simultaneously.  NEVER HAS THIS HAPPENED BEFORE IN AMERICAN HISTORY absent a World War so looking backwards will not help unless you are looking for a big fight. 

Well, the central banks can't allow deflation to take hold of the economy. When someone loses a lot of blood, they need a blood transfusion, don't they? Or should the doctor, 'let nature take its course', and allow the patient to bleed to death. 

The government is expanding massively relative to the private sector as the private sector is contracting rapidly....it has become so excessive that now the only primary reason we have a private sector left in America is due to government spending....it is completely the opposite of America in the 50s, 60s and 70s.

The government abandoned your laissez-faire capitalist policies when it resulted in a near total collapse of the economy in 2008. The Bush Administration, of all administrations became Keynesians. You laissez-faire capitalists had your chance and blew. Time to let the Keynesians take over a for a while, while you guys figure out what you did wrong. 

The Fed and Government have absolutely no constraints anymore....total taxes paid by Americans is only a few trillion dollars per year....government spending is much much more than that.....and loan defaults which would have sunk banks a few years ago are simply being lied about or recapitalzied.

Again, financial markets are the constraint. Bond yields reflect the financial markets willingness to finance government debt. If the government is broke, yields will skyrocket, and bond prices will plummet. It's financial 101. The Fed can't print non-stop, as a high inflation constrains them, in the face of the inevitable public outcry that accompanies high inflation. Stop saying they have no constraints. 

The world is simply converting into government run economies....where the people will potentially have very little individual rights. 

All economies are government run economies. The level of freedom in an economy is dependent on how much freedom that government chooses to allow. Even in Hong Kong. You are correct that economies are moving towards more state control within their economies but that does not automatically equate to a loss of political or civil freedoms, and human rights. If that were the case, Europe should be a Stalinist dictatorship, but it's not, is it? You subscribe to a false correlation. 

Do you enjoy being a servant of government.....?  I prefer being a servant of my maker, man and productivity.

Just because I don't believe we're on the verge of an imminent fascist dictatorship doesn't make me a 'servant of government'. I understand government's role in society in addition to that of the individual. But you have far more faith in the individual/market than I do. Individuals/markets left completely to their own devices results in a select few controlling the many. How much different is that from an oppressive government? Really?

 

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#6) On June 10, 2010 at 11:41 PM, alstry (34.92) wrote:

Give to the banks? No. The banks have to pay it back. The capital isn't free. So there is nothing to characterize.

Are you mentally challenged or simply someone that shouldn't be discussing investing?

If you loan me money at 0% and I loan that same money back to you at 4%......it will take about 15 years for me to accumulate enough interest to pay back the principal and I get to keep the original principal to boot.

In other words, not only do I get your money for free....but I get to tell you I paid you back.......with money that NEVER existed in the first place as nobody produced anything to create it.......

Now what were you saying my little sheep?  You better prepare for war......I hope you can fight because.you obviously don't know how to produce.

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#7) On June 10, 2010 at 11:44 PM, 1315623493 wrote:

The only mentally challenged one here is you. The government doesn't go to commercial banks for loans smart one. They go to the bond market. Derrr...I pity those who take you seriously.

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#8) On June 10, 2010 at 11:45 PM, alstry (34.92) wrote:

Guess which primary dealers are the ones taking down the bonds these days.........?

Please wake up.....my guess is you are not a very good shot.

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#9) On June 11, 2010 at 1:07 AM, oshiri (< 20) wrote:

Comrade LLC-nile --

     Lets' review . . .

Acknowledged unemployment around 10%;

$280 billion in bad loans have been "take care of," ANOTHER $330 billion are yet to be fixed;

in mid-2011, the national debt will exceed GDP;

most savvy investors/Fools are pushing forward their tax burden to 2010 before the Bush tax cuts expire;

as of April 15, 2010, less than 50% of Americans actually pay federal income taxes.

     Comrade LLC-nile . . . all is rosy? Go ahead, make my day, buy yer Government bonds, or at least believe in them. A few of us Fools have decided not to be sheep anymore. You should think about raising your head to bleet. 

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#10) On June 11, 2010 at 1:49 AM, 1315623493 wrote:

alstry, 

Guess which primary dealers are the ones taking down the bonds these days.........? Please wake up.....my guess is you are not a very good shot. 

You tell me, since you seem to know it all. Post #5, I asked, "want to back your "stats" up with hard data, or are you just making stuff up?" You seem to have conveniently ignored me.

 

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#11) On June 11, 2010 at 1:57 AM, 1315623493 wrote:

oshiri,

Comrade LLC-nile . . . all is rosy? Go ahead, make my day, buy yer Government bonds, or at least believe in them. 

Did I say all was rosy, and nothing was wrong? Did I? No I didn't. You read something into my statements that I never said. Alstry wants to declare there are no constraints on government debt or inflationary monetary policy. I made it clear there are. How in the world did you read out of that, that everything is fine and dandy? Right now, the government is able to be in debt up to GDP, but the constraint will eventually stop it if it gets to an unsustainable level, and that constraint will be dictated by the bond market. The bond market will decide when the debt level is too high.

A few of us Fools have decided not to be sheep anymore. You should think about raising your head to bleet.   

Congrats champ. Do you want a pat on the back? I can't count how many times people like you claim to be 'enlightened', and here to shine the light on all of us "sheep". LOL. Don't kid yourself. 

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#12) On June 11, 2010 at 2:05 AM, oshiri (< 20) wrote:

. . . sigh . . .

     We can see that you may actually be LLC-nile for not clicking on any of Sempai Alstrymous' links in the 100+ posts between May and June. You, me, and Farmer Barack can see every single stat, and everything Alstrymous (beta)pegs if you just look man. Please raise your head Johnny Lincolnshire Longwool!

     Me thinks you also want to link your (92.06) to a lowly (<20) with a sh*tload of recs. Hmm . . . "tell me, since you seem to know it all."

     Think comrade, think, before you indeed become known forever as LLC-nile. 

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#13) On June 11, 2010 at 2:26 AM, oshiri (< 20) wrote:

Er, um, ah, yah, I , um think, but, maybe . . .

Former President Bill Clinton said Thursday that Nevadans are right to be angry about record high unemployment and home foreclosures, but he said voters shouldn't punish U.S. Sen. Harry Reid because Republicans -- not Democrats -- caused the economic crisis.

http://www.lvrj.com/news/bill-clinton-urges-nevadans-to-back-reid-96115509.html

     Nothing to see here, move on . . . dot org . . .  

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#14) On June 11, 2010 at 2:30 AM, oshiri (< 20) wrote:

Politicians and bankers.

Democrats and Republicans. 

Police and thieves.

Six of one, half a dozen of another.

RAISE YOUR HEADS FOOLS! 

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#15) On June 11, 2010 at 3:00 AM, 1315623493 wrote:

oshiri

We can see that you may actually be LLC-nile for not clicking on any of Sempai Alstrymous' links in the 100+ posts between May and June. You, me, and Farmer Barack can see every single stat, and everything Alstrymous (beta)pegs if you just look man. Please raise your head Johnny Lincolnshire Longwool!Me thinks you also want to link your (92.06) to a lowly (<20) with a sh*tload of recs. Hmm . . . "tell me, since you seem to know it all."Think comrade, think, before you indeed become known forever as LLC-nile.  

You sure got me there! Your only response is, "Dig through the hundreds of alstry blog posts!" I'll stick to this one, thank you very much. Unless you have something substantive to say other than your self-righteous enlightenment gig, don't bother responding to me. 

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#16) On June 11, 2010 at 7:24 AM, alstry (34.92) wrote:

I will make it easy for you....

Since the Chinese have started  eating rice....they only own a total of about a Trillion dollars of U.S. Bonds....and a few hundred billion of agency stuff....

That is one trillion TOTAL.........loaned  to America over the past five thousand years.....

In the last two years......America has and is issuing OVER $3 trillion in NEW debt and lots of refininancing to boot.

Other than our primary dealers, no nation in the world can come close to loaning that kind of money.......and our primary dealers can only lend if we give them money to spend.......which never existed in the end for creating this artificial perception of an economy on the mend.

When you are dribbling the ball down the court...always look up, it will make hitting the open man much easier.

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#17) On June 11, 2010 at 9:13 AM, 1315623493 wrote:

Nobody is denying the debt levels are going in the wrong direction. But the fact of the matter is, debt levels and monetary policy do have constraints. As long as you admit that, we can move forward. Also, as long as the dollar is one of the strongest currencies in the world, we'll always be a net importer and spender. 

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#18) On June 11, 2010 at 9:27 AM, alstry (34.92) wrote:

It is NOT just that they are going in the wrong direction.

THERE IS SIMPLY NOT ENOUGH MONEY IN THE WORLD TO SUPPORT THIS LEVEL OF SPENDING UNLESS YOU ARE PRINTING ESSENTIALLY UNLIMITITED AMOUNTS OF MONEY.

The money that we are using to finance the current deficit is essentially a Ponzi Scheme with money that doesn't exist.

But don't stress too much, Markopolis warned the SEC about Madoff for at least five years before anything was revealed.....AND THAT IS BECAUSE MADOFF TURNED HIMSELF IN......

Markopolis was Greek....coincidently, so was Jim Chanos who uncovered Enron.....

Greeks are not sheep.....They eat sheep.

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#19) On June 11, 2010 at 11:00 AM, 1315623493 wrote:

It is NOT just that they are going in the wrong direction.

Then the bond market should have imploded by now which of course, it hasn't. Bond yields are near historically lows, for your information. If it is as bad as you say right now, yields should be 10+%. 

THERE IS SIMPLY NOT ENOUGH MONEY IN THE WORLD TO SUPPORT THIS LEVEL OF SPENDING UNLESS YOU ARE PRINTING ESSENTIALLY UNLIMITITED AMOUNTS OF MONEY. 

Again, who disagrees that governments are spending too much? Who? Me? No. Printing unlimited amounts of money, again, would result in high inflation, and high bond yields as bond holders sell their government bonds. Now we're just going in a loop. Can't you just admit that there are constraints? Two words. Greek austerity. Obviously, one can't continuously spend unsustainably without repercussion. 

The money that we are using to finance the current deficit is essentially a Ponzi Scheme with money that doesn't exist. 

So the bond market is a Ponzi Scheme? That's new. 

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#20) On June 11, 2010 at 11:05 AM, alstry (34.92) wrote:

The only contraint is a massive depression unlike any this nation has seen in its history......

My bet is the politicians will choose a massive war......it is easier for them.....as we will become productive and not point our guns inward.....

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#21) On June 11, 2010 at 1:12 PM, 1315623493 wrote:

The only contraint is a massive depression unlike any this nation has seen in its history......

That's almost what we had in 2008 but the central bank and government aren't going to stand by and watch it happen.  

My bet is the politicians will choose a massive war......it is easier for them.....as we will become productive and not point our guns inward.....

And what do you base that prediction on? Our wars are contributing to our deficits, so it flies in the face of logic. 

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#22) On June 11, 2010 at 1:30 PM, alstry (34.92) wrote:

Deficits must be based on production....without deficts we have depression......

 

So you tell me where the production will come from absent war to sustain anything close to the current deficit....

Your choice...war or depression.....war worked last time at the expense of tens of millions of lives.....my guess is it will be tried again.

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#23) On June 11, 2010 at 2:38 PM, 1315623493 wrote:

Deficits must be based on production....without deficts we have depression......

Deficits, according to Keynesian economics, is based on aggregate demand. 

So you tell me where the production will come from absent war to sustain anything close to the current deficit.... 

The US will be stifled by the bond market if the current deficits continue. You are an idiot if you think the US is going to unilaterally and belligerently go to war, just to fix their excessive debt levels.  

Your choice...war or depression.....war worked last time at the expense of tens of millions of lives.....my guess is it will be tried again. 

Riiiight. So you're basing your prediction on a distorted interpretation of history? We fought in World War II to stimulate the economy? Really? @_@

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#24) On June 11, 2010 at 3:13 PM, alstry (34.92) wrote:

Actually, your foundation on Keynesian theory is playing out perfectly into my thesis....

Without credit in a credit based economy.....there is no money which is simply a derivitive of demand.

Remember it was JM Keynes that said there would NEVER be another down turn in the American economy...ever ever again.

He made this statement I believe in 1927...it may have been 1928.

You know the rest of the story.

Now you tell me who has a distorted sense of history...;)

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#25) On June 11, 2010 at 5:32 PM, 1315623493 wrote:

Actually, your foundation on Keynesian theory is playing out perfectly into my thesis....Without credit in a credit based economy.....there is no money which is simply a derivitive of demand.Remember it was JM Keynes that said there would NEVER be another down turn in the American economy...ever ever again.He made this statement I believe in 1927...it may have been 1928.

Got a source for that statement of fact? Just when I asked you to source your other statements of fact...

97-99% of all trading of the "financial markets" are concentrated in a few select institutional hands and co-located computers on exchange floors.If everyone sold outside these select few....the market could still go up....or down...or left or right.....No longer does the market reflect the underlying fundementals of business or else 80% or more of the public homebuilders would  have been bankrupt a few years ago...just like 80% of the private homebuilders are gone. 

It seems like your making up numbers as you go along. 

You know the rest of the story.Now you tell me who has a distorted sense of history...;)

You just insinuated the united states fought in world war II to stimulate its economy. Before that, you said the government and central bank have no constraints, when they really do. Clearly, it's you with the distorted view. 

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#26) On June 12, 2010 at 4:29 AM, tomatoflu (< 20) wrote:

By now most people know the simple math that if only the principal of a loan is created into existence by banks, then there will never be enough money in the world to service the interest unless more loans are created because the money to pay for the interest was not created....
That's bad enough.
However, even "the" TomatoFlu (TF) finds the way in which fiat currency is 'destroyed' by the banking system, scary.
Arghhh....

As the existing debt is serviced, all payment that goes towards servicing the principal actually destroys or un-creates the fiat currency used to do so.....wow!!

Banks are not creating new principal (Debt.) for loans so that......

"Commercial bank money (money created in the banking system through borrowing and lending) - sometimes referred to as checkbook money.

When a commercial bank loan is extended, new commercial bank money is created. As a loan is paid back, the commercial bank money disappears from existence".

from http://en.wikipedia.org/wiki/Money_creation

scary markets indeed!!

1000 well wishes Alstry.

 The 'Tomato Flu' age will be interesting.

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