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What do you know about the financial world?


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#1 QueenofHearts

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Posted 11 February 2016 - 08:52 PM

I am starting with assumption that you know about as much as 95% of the world. Nothing. You get your paycheck, pay your rent, eat, maybe have a car if you are old enough and it's gone. Maybe you assume that your job will always be there.

 

We are in the midst of a worldwide liquidity crisis. This could end and everything returns to normal or things can get bad and I mean really bad. 

 

I have explained how the US government borrows its own money from the Federal Reserve which is a cabal of private banksters. In Europe banks borrow from the Central Bank in Frankfurt. If you haven't noticed Deutsche Bank is in trouble and shed 40% of its stock price YTD.

 

Printing money is how the governments pay the bills as Congress and European politicians will not pass new taxes. Some of you think we can trim the fat and cut government spending. Then cut taxes and that will generate more private sector profits and ergo more tax revenues to balance the budget. That is wishful thinking.

 

The world's economies are interdependent and many of the debt instruments that are sold, the buyer's don't really understand the risk. The MBS or mortgage back security industry nearly caused the biggest financial meltdown of all time in 2008. Do you plan to go to college and if so are you going to borrow money to do so? Are you living paycheck to paycheck? Are you so sure about your retirement income? What if you are injured or have a disease and cannot work?

 

What is your back up plan? 


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#2 Napoleon 1er

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Posted 12 February 2016 - 12:08 AM

... back up plan is to reopen the religion topic and pray ...  ;)  ... just kidding.

 

...your question is very interesting but I think it is necessary to give some explanation about what is a liquidity crisis as I'm not sure it is easy to understand. A liquidity crisis is something that happens when a debt owner does either not have the money to reimburse a debt that has reached its term or cannot find another loan to refinance it. At such moment a debt owner becomes  suddenly forced to sell the asset for which he did borrow the money and if the price he can obtain from selling such asset is lower than what he borrowed then he is bankrupt. For an isolated individual case it would not hurt the global world economy but when states or governments are in such liquidity crisis then the consequences are much bigger. When governments need money (in addition to what they get from taxes and fees) they usually print and sell government bonds. So who buys a government bond is in fact loaning money to his government and when everything goes well the government pays him interest during the term of the loan and then reimburse the value of the bond at the end of the term. But to reimburse the value of such bond government need either cash or re-emit new bonds to refinance the payment of the previous ones. Liquidity crisis happens when government do neither have cash nor can emit new bonds, so what happens to government bond/debt owners? ... they don't get their money back. Who are the debt owners? ... mainly social securities like pension funds. Consequence? ...the losers of the liquidity crisis will be elderly and retired people who will not get the money they were expecting to get. How will we "see" that this is happening? ... on one side either pensions will get reduced or pensions will not increase while all prices of consumer goods will increase, on the other side there will be an increased number of private individuals going bankrupt. For the other people (= those who are working to get their pay at the end of the month) there shall not be big changes except they may lose their job if the company for which they work has a big debt and cannot reimburse it. So how to avoide or at least limit those consequences: 1) Plan and organize your retirement in such self sufficiency as if you would not receive any pension money, 2) Make sure you always have the capability to reimburse your debt if needed, 3) When choosing a company or a job make sure to choose a company that has low debts.


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#3 QueenofHearts

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Posted 12 February 2016 - 02:32 AM

... back up plan is to reopen the religion topic and pray ...  ;)  ... just kidding.

 

Sadly praying is not going to help this time around. Great joke and great response. I can add nothing more as that was a perfect explanation of what is coming. We are sailing into The Perfect Storm. Most people will not lose their jobs, but many will. The elderly will stand to lose their standard of living. Ask a Greek.

 

Wow! I didn't expect such a great answer. Thanks Napoleon as that is exactly what is happening. I am worried for those who didn't learn from 2008 in the US. I would dare to say that the economic universe is controlled from Manhattan, London and Hong Kong and maybe Tokyo. Deutsche Bank is in real trouble. Japan is going to negative interest rates, Some Euro countries are already there and the US is not far behind. Napoleon's answer was spot on as well in regards to back up plans. To the young kids on this site, this will affect your parents sooner than you think. Maybe we can do another 2008 magic trick and paper it all over with printed money, but I am not optimistic.


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#4 Midnightguy

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Posted 12 February 2016 - 02:52 AM

I expect to see another bank crises in the US especially if the Republicans pass bills to remove more regulations from the banks.  Back during the great depression, many safety nets were put in place so banks wouldn't fail and people would regain trust in them.  Over the last thirty years we keep seeing year after year these safety nets being removed.   I don't think we really learned anything from 2008 here in the US.  Why should the banks worry?  They'll just get another bailout again and their top management and CEO's will reward themselves with more bonus checks.  



#5 QueenofHearts

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Posted 12 February 2016 - 03:58 AM

I expect to see another bank crises in the US especially if the Republicans pass bills to remove more regulations from the banks.  Back during the great depression, many safety nets were put in place so banks wouldn't fail and people would regain trust in them.  Over the last thirty years we keep seeing year after year these safety nets being removed.   I don't think we really learned anything from 2008 here in the US.  Why should the banks worry?  They'll just get another bailout again and their top management and CEO's will reward themselves with more bonus checks.  

They started dismantling the regulations during the end of Clinton's second term. The bills to protect the banks are already written into law. Can a worldwide Ponzi scheme go on forever? Each decade passes and people hardly seem to notice they are becoming poorer. How many times can you boil a frog?


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#6 GaryLShelton

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Posted 12 February 2016 - 05:33 AM

A ton of quotes could be brought to bear on this subject. One of my favorites is by a man named Robert Hemphill, Credit Manager for the Atlanta branch of the Federal Reserve.

"If all the bank loans were paid, no one could have a bank deposit,
and there would not be a dollar of coin or currency in circulation.
This is a staggering thought. We are completely dependent on the
commercial Banks. Someone has to borrow every dollar we have in
circulation, cash or credit. If the Banks create ample synthetic money
we are prosperous; if not, we starve. We are absolutely without a
permanent money system. When one gets a complete grasp of the picture,
the tragic absurdity of our hopeless position is almost incredible, but
there it is. It is the most important subject intelligent persons can
investigate and reflect upon. It is so important that our present
civilization may collapse unless it becomes widely understood and the
defects remedied very soon."

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#7 Moriarty

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Posted 12 February 2016 - 05:37 AM

I take economics. Currently the US stock market is quite strong, and moeny flow is good. We shouldnt be too worried. There are better places to discuss economics and politics than on the forums, but I guess it would be interesting to hear other players' opinions on this.

 

Like should we have a minimum wage?

Who has the best money sense to lead America for the next four years?


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#8 astros

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Posted 12 February 2016 - 06:15 AM

I take economics. Currently the US stock market is quite strong, and moeny flow is good. We shouldnt be too worried. There are better places to discuss economics and politics than on the forums, but I guess it would be interesting to hear other players' opinions on this.

 

Like should we have a minimum wage?

Who has the best money sense to lead America for the next four years?

NASDAQ is going down and there is a lot of thought that we are headed for another recession.

 

Minimum wage is tricky. If you raise it the people working at the wage floor will see a quality of life improvement. However, an increase in labor costs will lead to layoffs. A $10/hr job is better than no job for trying to support a family. Changing the minimum wage is not the only way to address poverty either. I personally am economically conservative and do not want lots of government interference in the economy, it creates inefficiency. Therefore, I am against raising the minimum wage on principle.

 

The economy is largely cyclical who is elected as president does not really matter. My largest economic concerns are the increasing costs of social benefits with a longer living and aging population. This is something Congress needs to address or our generation is going to be in trouble in 20 years.


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#9 Moriarty

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Posted 12 February 2016 - 07:15 AM

 

 

Minimum wage is tricky. If you raise it the people working at the wage floor will see a quality of life improvement. However, an increase in labor costs will lead to layoffs. A $10/hr job is better than no job for trying to support a family. Changing the minimum wage is not the only way to address poverty either. I personally am economically conservative and do not want lots of government interference in the economy, it creates inefficiency. Therefore, I am against raising the minimum wage on principle.

 

 

That totally depends astros. I agree that under perfect competition in labor markets like most industries are in the US, minimum wage definitely results in layoffs. Remember that some industries are also monopsonys, where there is a single BUYER of labor. Like the counterpart of a monopoly but on the supply side. In this market, the workers are getting much less than their MRPs. If you look at the supply and demand curve for a monopsony, add a minimum wage, often the employment increases. This is not opinion, this is derived from the S&D curves.

 

I am not too sure about stock market so you are likely to be right. Also about the president.

 

Just wanted to add my insight on monopsonys and suhc


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#10 Napoleon 1er

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Posted 12 February 2016 - 07:37 AM

Just wish to precise that the global liquidity crisis is predicted and announced with "voluminous" words but it has to be understood that on a world population scale there will only be a minority of losers. For example currently 75% of the world population is living with income from agriculture or artisanal work. These people don't have any pension and are to poor to obtain a loan so they have no debt. So these 75% will not at all be affected by a world liquidity crisis. Furthermore from the 25% remaining only a minority will be affected. So at the end the total effect of the liquidity crisis will only be partial. Also after it happens there will be some new equilibriums and life will continue.

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#11 Lonello

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Posted 12 February 2016 - 05:58 PM

For all who haven't read up on the solution of this problem, search for 'tablecoins' on this forum ;).

 

And yes, I do get money for mortgaging my house. And yes, my country documents, the longest of all nations, mortgage rates.... since the year 1517. And yes, the rate never was below zero since. About 500 years of documentation. And yes, we're going into Weimar 2.0. We have lived WELL above standard. VERY well above. Which is why we need TABLECOINS now :).


Lo

#12 astros

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Posted 12 February 2016 - 09:01 PM

That totally depends astros. I agree that under perfect competition in labor markets like most industries are in the US, minimum wage definitely results in layoffs. Remember that some industries are also monopsonys, where there is a single BUYER of labor. Like the counterpart of a monopoly but on the supply side. In this market, the workers are getting much less than their MRPs. If you look at the supply and demand curve for a monopsony, add a minimum wage, often the employment increases. This is not opinion, this is derived from the S&D curves.
 
I am not too sure about stock market so you are likely to be right. Also about the president.
 
Just wanted to add my insight on monopsonys and suhc


I am familiar with monopsonies. Raising the minimum wage in that type of market structure can even increase employment. However, many of our labor markets are competitive so as a whole an increase in minimum wage will lower employment.
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#13 QueenofHearts

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Posted 12 February 2016 - 11:22 PM

Let's look at Economics as a science. The Fed is wrong as often as it is right. Raising the minimum wage will shutter some businesses that cannot compete and some jobs will be lost. It is a built in labor union. Labor lost the war against capital during the Reagan years IMO.

 

So McDonald salaries increase and so do the prices of their hamburgers, but give a man a 300.00 a week raise and he will buy more stuff. Maybe he can buy a car instead of riding the bus. Buy food that is good for his family and people will stop eating Big Macs because they are 6.00. Who cares? Less people dying of diabetes in health costs plummet. Everything is a balance. People lose their jobs at McDonalds and will look for work elsewhere. It is in no one's interest for people to be working at Walmart and coached on how to apply for food stamps and Medicaid while the Waltons are worth 200 billion.

 

There is so little Federal interference unless you are bidding on a government contract. Most of it is state and local licensing. Do you think FDA actually inspects our meat and produce? That the EPA actually regulates anything until it becomes like Flint, Michigan? Don't forget about the SEC was told about Madoff's Ponzi and didn't do a damn thing. The banks knew they were selling garbage MBSs and no one stopped them. Goldman Sachs just paid 6 billion in fines and nobody went to jail. How many hedge funds could handle a run? I would assume, not many.

 

Although 75% of the world may not be affected due to subsistence living, they won't live long and prosper. The family farms are dying. Big Agra will bury them and then hold the food supply hostage. Manhattanites cannot grow their own food and a hungry mob is far more dangerous than Federal Regulations.

 

We need a proportional amount of regulation. In regards to the economy I think I am a centrist. We cannot entrust the marketplace to ensure compliance. Look at BP and their legacy in the gulf. The Porter Ranch methane gas leak in California and even Chipotle who poisoned its customers accidently. We need a balance of free market and regulation, but not regulation for the sake of its own existence. I needs to have clout and enough inspectors to actually inspect or disband them and buyer beware.


Edited by QueenofHearts, 12 February 2016 - 11:25 PM.

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#14 Moriarty

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Posted 12 February 2016 - 11:37 PM

Let's look at Economics as a science. The Fed is wrong as often as it is right. Raising the minimum wage will shutter some businesses that cannot compete and some jobs will be lost. It is a built in labor union. Labor lost the war against capital during the Reagan years IMO.

 

So McDonald salaries increase and so do the prices of their hamburgers, but give a man a 300.00 a week raise and he will buy more stuff. Maybe he can buy a car instead of riding the bus. Buy food that is good for his family and people will stop eating Big Macs because they are 6.00. Who cares? Less people dying of diabetes in health costs plummet. Everything is a balance. People lose their jobs at McDonalds and will look for work elsewhere. It is in no one's interest for people to be working at Walmart and coached on how to apply for food stamps and Medicaid while the Waltons are worth 200 billion.

 

There is so little Federal interference unless you are bidding on a government contract. Most of it is state and local licensing. Do you think FDA actually inspects our meat and produce? That the EPA actually regulates anything until it becomes like Flint, Michigan? Don't forget about the SEC was told about Madoff's Ponzi and didn't do a damn thing. The banks knew they were selling garbage MBSs and no one stopped them. Goldman Sachs just paid 6 billion in fines and nobody went to jail. How many hedge funds could handle a run? I would assume, not many.

 

Although 75% of the world may not be affected due to subsistence living, they won't live long and prosper. The family farms are dying. Big Agra will bury them and then hold the food supply hostage. Manhattanites cannot grow their own food and a hungry mob is far more dangerous than Federal Regulations.

 

We need a proportional amount of regulation. In regards to the economy I think I am a centrist. We cannot entrust the marketplace to ensure compliance. Look at BP and their legacy in the gulf. The Porter Ranch methane gas leak in California and even Chipotle who poisoned its customers accidently. We need a balance of free market and regulation, but not regulation for the sake of its own existence. I needs to have clout and enough inspectors to actually inspect or disband them and buyer beware.

So your point is that there should or shouldnt be a minimum wage?


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#15 QueenofHearts

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Posted 13 February 2016 - 12:29 AM

Raise the minimum wage in increments. What we are talking about is giving labor a fair shake. A firm foundation. Labor Unions have lost the war. Now all that is left to even the playing field is government intervention.

 

Moriarty you are taking classes in economics and I am reading. I have always paid a living wage and survived quite well, but I wasn't selling hamburgers. I was selling security and people will pay. What do you think the prevailing attitude is in academia?


Edited by QueenofHearts, 13 February 2016 - 12:32 AM.

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#16 QueenofHearts

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Posted 13 February 2016 - 12:38 AM

So your point is that there should or shouldnt be a minimum wage?

I was trying to straddle the fence and not take a side, but as in Stratego you have to take a stand at some point.


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#17 Moriarty

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Posted 13 February 2016 - 12:41 AM

Raise the minimum wage in increments. What we are talking about is giving labor a fair shake. A firm foundation. Labor Unions have lost the war. Now all that is left to even the playing field is government intervention.

 

Moriarty you are taking classes in economics and I am reading. I have always paid a living wage and survived quite well, but I wasn't selling hamburgers. I was selling security and people will pay. What do you think the prevailing attitude is in academia?

There is no such thing as "fairness" in labor. People do not force you to work in bad conditions. Remember that people are competing for workers, and to attract better workers to their company they will compete to become better employers and for better working conditions.

 

Lets say that the government raises the wage to 10 dollars an hour. They made it illegal to pay workers 9 dollars an hour, and now only those who have labor worth more than 10 will be able to be hired. Its better to have most earning nine, then only half earning 10,


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#18 QueenofHearts

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Posted 13 February 2016 - 05:06 AM

There is no such thing as "fairness" in labor. People do not force you to work in bad conditions. Remember that people are competing for workers, and to attract better workers to their company they will compete to become better employers and for better working conditions.

 

Lets say that the government raises the wage to 10 dollars an hour. They made it illegal to pay workers 9 dollars an hour, and now only those who have labor worth more than 10 will be able to be hired. Its better to have most earning nine, then only half earning 10,

Spoken like a man who has no responsibility for a family, a mortgage and bills to pay. I hope I completely misunderstand your premise because I very much disagree. A man or woman who works does not command workforce conditions. He accepts them. People are paid illegally under the table every day. When you get into the real world you will see that capital absolutely dictates working conditions both physically and psychologically. That labor is not in short supply and cannot dictate or walk away. Many work as wage slaves or they don't eat. By your logic there should be no minimum and labor can command higher wages due to market forces. Capital has crushed unions with offshoring labor. The world is awash in the oversupply of labor.


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#19 Moriarty

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Posted 13 February 2016 - 05:18 AM

 People are paid illegally under the table every day. 

Rent Control


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#20 Moriarty

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Posted 13 February 2016 - 05:20 AM

. A man or woman who works does not command workforce conditions. He accepts them. 

The men who make the working conditions are competing for labor as well. Both accept the market condition. The government by regulating working conditions are causing unemployement


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