Re: Financial topics
Posted: Sun Jan 09, 2022 8:19 am
While the news of bans and corresponding FUD was prevalent, there is still a sense of optimism in the air. After the dust settled post-El Salvador’s bitcoin law, the obvious next question was: Who’s next? Many assumptions have been made about it being another Latin American country. This certainly makes sense.
In retrospect, El Salvador was almost the perfect country to make this huge leap. It is a small nation that has struggled economically and doesn’t have autonomy over its currency. As a dollarized country, Salvadorans are subject to the whim of the U.S. dollar and the Federal Reserve. I’m not going to debate whether severing ties with the colón in 2001 was the right move (Alex Gladstein covered that topic well here), but I certainly think taking a step toward a Bitcoin standard was.
El Salvador, like many countries in Latin America, is often harmed by U.S. foreign policy and International Monetary Fund (IMF) intervention. The Cantillon effect created by the U.S. hurt the people of El Salvador by inflating their local currency (and any benefits accompanied by this hidden tax are not seen by Salvadorans), enacting sanctions and controlling trade policy. The IMF harms the people of El Salvador by keeping the country indebted and degrading its credit quality to ensure unfavorable terms for future loans (or even holding hostage future lending prospects).
“El Salvador bond spreads to U.S. Treasuries hit a record high on Thursday on growing investor fears the Central American nation will not reach a potential $1 billion loan agreement with the International Monetary Fund and faces negative credit implications linked to its use of bitcoin.”
–Reuters
Richard Cantillon was a 17th century merchant and banker, as well as arguably the world's first modern economist.
Cantillon Effect is not commonly taught in undergraduate economics courses.
When debt levels become too high, prudent banks have an incentive to restrict lending. This should push up interest rates, and make it attractive for borrowers to repay their debts. Which in turn should reduce spending in the economy, and lead to falling output and asset prices.
However, national governments and central banks have different ideas. Governments guarantee bank deposits in order to prevent bank runs. This inadvertently removes each bank’s incentive to act prudently. Central banks pursue “inflation at any cost” in order to oil the wheels of the credit markets. This inadvertently fuels asset bubbles and financial instability. In 2020, the Fed has galloped over the precipice, increasing its balance sheet by around $2.8 trillion over the last 5 months.
A crash, when it comes, may well be much larger and more catastrophic than might have been the case if small recessions over the decades had been allowed to run their natural course.
As a case in point, from 1975 to 2019 the average annual increase in Harvard tuition was 5.1% compared with an average inflation rate in America of 3.7%, and an average annual increase in the median household income of around 3.1%. In other words, the average worker in America has year by year slowly fallen further behind.
https://www.spencertom.com/2020/08/13/t ... on-effect/
And no they do not care about. We are being wiped out and they know the homeless rate is increases non stop now.
The body farm criminals will be in one sooner now than later. This recent recent attack on the Rus for the Orthodox is the anticrist in real time also.
The digitardians laugh at the 10 percent pullback in metal. Nice try and yes we seen the 74 percent run up you lingered in also.
Yall just got wiped clean on accounts you will not even admit also we read. Not picking on digitards just bag holder trying to seek value
or intrinsic value as they piggyback globalist warned of over decades plunges more into denial and misery. We will secure delivery when it
pulls back 10 percent maybe.
The Cantilion effect is real as they collect the border premuim and no the Taxpayer here is yet another victom to the ensueing collapse.
This leads top Jevons but you knew that.....
As it was put clearly however, the emotions in each case are familiar: anger about perceived inequality and injustice, hope that the system can be changed for the better, and a healthy dose of humour or resentment depending on whether the participants are able to laugh at misfortune or become consumed by it.
A bridge to far is here and only one alleged democrat had the balls to say enough. The Uniparty has a problem and no the calvary is not coming you criminal half wits as the tents fill.
Even as crime is surging in California, Gov. Gavin Newsom and his allies in the legislature are seeking to make it more difficult for citizens to defend themselves.
“Blue America offers to Red nothing but scorn, contempt, hatred, insult, humiliation, calumny, outsourcing, open borders, layoffs, lower wages, opioids, losing wars, censorship, trumped-up treason accusations, surveillance, anarcho-tyranny, pre-trial detention, mask mandates, lockdowns, Critical Race Theory, and cancellation. And then not only gets enraged when Red America objects, but demands Red reverence and gratitude in return.”
In retrospect, El Salvador was almost the perfect country to make this huge leap. It is a small nation that has struggled economically and doesn’t have autonomy over its currency. As a dollarized country, Salvadorans are subject to the whim of the U.S. dollar and the Federal Reserve. I’m not going to debate whether severing ties with the colón in 2001 was the right move (Alex Gladstein covered that topic well here), but I certainly think taking a step toward a Bitcoin standard was.
El Salvador, like many countries in Latin America, is often harmed by U.S. foreign policy and International Monetary Fund (IMF) intervention. The Cantillon effect created by the U.S. hurt the people of El Salvador by inflating their local currency (and any benefits accompanied by this hidden tax are not seen by Salvadorans), enacting sanctions and controlling trade policy. The IMF harms the people of El Salvador by keeping the country indebted and degrading its credit quality to ensure unfavorable terms for future loans (or even holding hostage future lending prospects).
“El Salvador bond spreads to U.S. Treasuries hit a record high on Thursday on growing investor fears the Central American nation will not reach a potential $1 billion loan agreement with the International Monetary Fund and faces negative credit implications linked to its use of bitcoin.”
–Reuters
Richard Cantillon was a 17th century merchant and banker, as well as arguably the world's first modern economist.
Cantillon Effect is not commonly taught in undergraduate economics courses.
When debt levels become too high, prudent banks have an incentive to restrict lending. This should push up interest rates, and make it attractive for borrowers to repay their debts. Which in turn should reduce spending in the economy, and lead to falling output and asset prices.
However, national governments and central banks have different ideas. Governments guarantee bank deposits in order to prevent bank runs. This inadvertently removes each bank’s incentive to act prudently. Central banks pursue “inflation at any cost” in order to oil the wheels of the credit markets. This inadvertently fuels asset bubbles and financial instability. In 2020, the Fed has galloped over the precipice, increasing its balance sheet by around $2.8 trillion over the last 5 months.
A crash, when it comes, may well be much larger and more catastrophic than might have been the case if small recessions over the decades had been allowed to run their natural course.
As a case in point, from 1975 to 2019 the average annual increase in Harvard tuition was 5.1% compared with an average inflation rate in America of 3.7%, and an average annual increase in the median household income of around 3.1%. In other words, the average worker in America has year by year slowly fallen further behind.
https://www.spencertom.com/2020/08/13/t ... on-effect/
And no they do not care about. We are being wiped out and they know the homeless rate is increases non stop now.
The body farm criminals will be in one sooner now than later. This recent recent attack on the Rus for the Orthodox is the anticrist in real time also.
The digitardians laugh at the 10 percent pullback in metal. Nice try and yes we seen the 74 percent run up you lingered in also.
Yall just got wiped clean on accounts you will not even admit also we read. Not picking on digitards just bag holder trying to seek value
or intrinsic value as they piggyback globalist warned of over decades plunges more into denial and misery. We will secure delivery when it
pulls back 10 percent maybe.
The Cantilion effect is real as they collect the border premuim and no the Taxpayer here is yet another victom to the ensueing collapse.
This leads top Jevons but you knew that.....
As it was put clearly however, the emotions in each case are familiar: anger about perceived inequality and injustice, hope that the system can be changed for the better, and a healthy dose of humour or resentment depending on whether the participants are able to laugh at misfortune or become consumed by it.
A bridge to far is here and only one alleged democrat had the balls to say enough. The Uniparty has a problem and no the calvary is not coming you criminal half wits as the tents fill.
Even as crime is surging in California, Gov. Gavin Newsom and his allies in the legislature are seeking to make it more difficult for citizens to defend themselves.
“Blue America offers to Red nothing but scorn, contempt, hatred, insult, humiliation, calumny, outsourcing, open borders, layoffs, lower wages, opioids, losing wars, censorship, trumped-up treason accusations, surveillance, anarcho-tyranny, pre-trial detention, mask mandates, lockdowns, Critical Race Theory, and cancellation. And then not only gets enraged when Red America objects, but demands Red reverence and gratitude in return.”