5 Trillion Dollars - Page 3

On September 18 2008 11:01 CTStalker wrote:
a poorly drawn comic that explains the bullshit in a dumbed down way

http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1

On September 18 2008 11:46 dybydx wrote:

its somewhat inaccurate near the end. typically institutional investors are insulated and have indeed purchased an AAA quality mortgage. the original lender is usually the first to get arse raped.

On September 18 2008 10:24 dybydx wrote:
you CAN regulate it. in the early days, the gov prevented banks from overlending by keeping a reserve ratio. the Fed also has a regulation that automatically loan banks money and guarantee deposits up to 100k. all these are regulations aimed that protecting the public and prevent bank failures.

likewise, you CAN regulate mortgages by forcing banks to keep a reserve if need be. (ie if u have 100B mortgage outstanding, u need a minimum cash balance of 100M.

On September 18 2008 09:08 dybydx wrote:

gold and silver are the universally accepted currency. the US dollar is backed by the US econ, when the US econ fails, US dollar is just paper money. gold and silver is different. the price of gold relative to US dollar changes each year due to strenght of US econ, but if you compare gold to bread and butter, you will see that the value of gold always raises consistently or stay about the same. 1 once of gold can buy u 100 loaf of bread in 1900, it can still buy you 100 loaf of bread today. in contrast, 1 us dollar buy you 10 loaf of bread in 1900, it buy you 1/2 of a loaf of bread today. thus, when in doubt, covert you cash to gold.

thus, unlike paper money (ie US dollar), gold is a hard asset. gold also has alot of industrial and commercial use, so the value of gold never plumets in real term.

On September 18 2008 12:37 gchan wrote:


This is the psychological belief people have behind purchasing gold and silver, but for all intents and purposes, the USD is not just a piece of paper. If the US econ fails and the USD becomes worthless, you will have a lot more to be worried about than just the little hoard of gold you have...which leads to my next point. When you buy gold, you're not actually buying physical gold but a contract that says you own a portion of gold--on the market. If the US economy fails, you can pretty much kiss your contract goodbye as the whole financial system would go down with it.

In the larger picture, "buying" gold and silver doesn't really hedge against stock (or other assets). The US, EU, and other players have been pumping so much liquidity into the market the last couple decades that even physical assets and commodities have become as easy to buy and sell as cash. That's kind of what happened with the housing market--because mortgages (which are traditionally long term assets) were so liquid, people swapped and over speculated their actual value.

On September 18 2008 12:12 gchan wrote:


Well, in theory you can regulate it, but in practicality you can't. The problem with regulating the financial industry is that it changes quicker than the government can keep an eye on it. The government can only do so much because they rely strictly on auditing to see what is going on inside these companies; by the time all the forms are looked and and processed, the data is half a year old and 500 billion dollars undervalued. When you're not working with physical capital, it's very difficult to keep track of everything and thats where the government is limited in it's ability to regulate it.

On September 18 2008 12:37 gchan wrote:


This is the psychological belief people have behind purchasing gold and silver, but for all intents and purposes, the USD is not just a piece of paper. If the US econ fails and the USD becomes worthless, you will have a lot more to be worried about than just the little hoard of gold you have...which leads to my next point. When you buy gold, you're not actually buying physical gold but a contract that says you own a portion of gold--on the market. If the US economy fails, you can pretty much kiss your contract goodbye as the whole financial system would go down with it.

In the larger picture, "buying" gold and silver doesn't really hedge against stock (or other assets). The US, EU, and other players have been pumping so much liquidity into the market the last couple decades that even physical assets and commodities have become as easy to buy and sell as cash. That's kind of what happened with the housing market--because mortgages (which are traditionally long term assets) were so liquid, people swapped and over speculated their actual value.

On September 18 2008 11:23 Archaic wrote:


Probably doesn't factor in the actual direness of the situation, but it is hilarious. Who cares about the United States economy; China can take over anyways. Far East Asia shall take over the world!
It is already starting.

World Economy: China
Inventions & Innovation: Japan
Technology: S. Korea
That "political issue" country: N. Korea
Cyber Gaming: S. Korea

To explain more about the Cyber Gaming community, and how it is taking over... think about Spirit Tournament. They are taking the best from the rest of the world, and containing them in S. Korea training houses. They hire thousands of Dark Archons (As seen in OSL commercials) to maelstrom the pro-gamer material foreigners while the rest of the world deteriorates. They take over, and Far East Asia owns everything, the best of the best of every thing possible on Earth. GG

Wow.. didn't I drift off topic....

Yeah.. losing money 'n stuff, US in debt. Bad.

On September 18 2008 13:39 Not_Computer wrote:
just curious, is there anything you can buy other than gold and silver? i know gold is probably the most "reliable global currency" but i was also thinking about the usefulness of it.

say, "buy crude oil barrels and hide em in your basement" or "buy plutonium and don't tell your neighbours why their lawn is glowing"

On September 18 2008 13:39 Not_Computer wrote:
just curious, is there anything you can buy other than gold and silver? i know gold is probably the most "reliable global currency" but i was also thinking about the usefulness of it.

say, "buy crude oil barrels and hide em in your basement" or "buy plutonium and don't tell your neighbours why their lawn is glowing"

On September 18 2008 12:19 Smurg wrote:
Going to war all the time is expensive.

40% of the government's spending money goes to the military/war effort per year?

On September 18 2008 13:26 ahrara_ wrote:
hey so I have a couple of questions. Monetary theory confuses the shit out of me. Can you explain exactly how the performance of the economy and the value of currency is linked? Why was the dollar on the decline for so long? Why is it going up again?

What do you mean by pumping liquidity into the market? is that the same as having lots of very liquid assets? How are mortgages liquid? How does that liquidity lead to overspeculation?

On September 18 2008 13:19 dybydx wrote:

my friend, ever been to viet nam? when they say "buy gold" they literally have that bright yellowish dense metal that you can bite into. other nations that had war and inflation troubles often turn back to the gold standard. trust me, it works. just make sure u remember where u buried it and pay ur property tax. ^^

On September 18 2008 14:02 Ecael wrote:
dybydx, if we are going to point at physical objects, it is by far more practical to have life necessities than gold in the case of a financial failure. Should the US financial system crash, even gold in physical form won't be particularly useful. I for one would much rather have stores of food and other necessities to barter with. Caller when he brought up the gold/silver point was much more likely to be pointing at it as a kind of security against inflation rather than the kind of medium of exchange you are suggesting.

ahrara, forex is rather weird like that. Currency theoretically reflect the strength of the economy backing, but really it points closer to the relative strength of the particular economy in comparison to another. The decline earlier in the year, particularly from the period after Bear Stearns rescue was due to the relative strength of Europe in comparison to America, and that showed in Q1 growth as well. The recent boom of the dollar was much due to the slowing of growth in Europe as people switched to greenbacks for better security, and as we see now people are switching to the Japanese Yen in favor of the dollar.

I am not quite sure as to why gchan worded that part about liquidity like that though, so I'll leave it to him to explain that part better.

Not_Computer, crude oil is in many ways more reliant on the industry than gold and silver.

EDIT - dybydx...when was the last time we raised rates.

On September 18 2008 14:08 gchan wrote:
Well, some people may actually keep physical gold around as security, but the vast majority of people do not. I think most physical gold is actually held by governments or large organizations (like the IMF, World Bank). But thats besides the point; my point was that dumping a bunch of USD for gold (or other commodities) really does nothing because if the USD defaults/goes bankrupt (which is next to impossible), the rest of the world is pretty much fucked as well. It'll be the equivalent of an economic nuclear holocaust.
Case in point, this image indexes the ratio of Dow Jones/ounce of gold. They pretty much, in the long run, go hand in hand