Fiscal trogolytes and property values
- Thread starter nonrecourse
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Hi NR,
Are you a Hawthorn supporter? I’ve a mate who is but, strangely, he always bets against them.
He’ll go to a game and scream like mad for the hawks and, if they win, he’s happy. But if they loose, his sorrow is tempered by the nice little ‘collect’ that’s coming his way from the bookie.
Just thought I’d share that with you.
BJ
Are you a Hawthorn supporter? I’ve a mate who is but, strangely, he always bets against them.
He’ll go to a game and scream like mad for the hawks and, if they win, he’s happy. But if they loose, his sorrow is tempered by the nice little ‘collect’ that’s coming his way from the bookie.
Just thought I’d share that with you.
BJ
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Hello Keith;
Since Nixon took the U.S. off what was left of the Bretton Woods exchange system with regards to gold (see;
http://en.wikipedia.org/wiki/Bretton_Woods_system
the entire world banking system has relied on the U.S. fiat dollar. That worked as long as there was continued confidence in America being the world banker and a safe haven to invest in;
To answer your questions;
All banks are insolvent because no currency by right of call can be converted to gold. There is not enough gold on planet earth to redeem all the mega trillions that reserve banks have printed and continue to churn out.
We have a system of fractional reserve banking (FRB) that works as long as everyone had faith in the world banking system. The more complex the financial system became with esoteric financial instruments the more unstable the banking foundations are. Our entire financial system sits on quicksand held together by a prayer and a hope called confidence.
Regulators have been and always will be under resourced and under funded and a sop for real change. Trevor Sykes in his book "The Bold Riders" looked at the same reoccuring crisis from the first fleet to Alan Bond.
http://www.pierpont.com.au/
I expect more of the same from a total collapse of the financial system. More useless regulation and no real reform. We are doomed to repeat history over and over because there is no real will to reform despite all the platitudes we hear trotted out everytime another fiscal accident occurs.
The property markeks underpins all real wealth and cannot be destroyed even with nuclear weapons. The Victorian bushfires used up the equivalent of 500 Hiroshima bombs in energy. The land is still there. Gold and land are the only two refuges.
Our entire banking system revolves around property and keeping people in debt so that they do not hold title to their land.
Debt is a two edged sword. In good times other peoples money can make you very rich. In bad times it will consume you and your family if not contained and controlled.
Cash (fiat) will only be worth what public confidence perceives it to be.
If the US dollar is worthless then the australian dollar will be worth less than that. As Warren Buffett said the stock market is nothing more than a voting machine. That doesn't mean its correct.
There is no 100% guarantees in life Josephine, just death and taxes.
I will be the first one to punch the air and yell with joy if residential property prices in Australia do not collapse.
Thanks NR..... I think I finally understand where you're coming from.
Maybe if you'd said back when you first joined SS that banks have been insolvent since they came off the gold standard, and therefore residential property will fall by 50% within 12 months we could all have saved a lot of typing
.Hi. Why gold? Romans traditionally used salt as a currency. Maybe there is enough salt in all the worlds oceans on the planet to redeem all the mega trillions?
there'll be a lot of puterGeeks out there who'd be gazillionaires - and they won't even have to start a company then.
The bit I don't understand is how can both property prices and the currency collapse at the same time?
Surely they are mutually exclusive - if the world's currencies collapse then property prices will increase in accordance with the decreasing value of that money. If property prices collapse, it means cash is becoming more valuable in comparison to property rather than less (ie deflation is occurring).
Your prediction of the value of money collapsing would surely lead one down the path of owning more property, not less...
Or we could go the way of Shylock in the Merchant of Venice. I could take a pound of your flesh
The bit I don't understand is how can both property prices and the currency collapse at the same time?
Surely they are mutually exclusive - if the world's currencies collapse then property prices will increase in accordance with the decreasing value of that money. If property prices collapse, it means cash is becoming more valuable in comparison to property rather than less (ie deflation is occurring).
Your prediction of the value of money collapsing would surely lead one down the path of owning more property, not less...
Your correct it doesn't. Property collapses first destabilizing the financial markets and banks then the fiat currency is worthless and yes hard assets like gold, silver and property hold real value.
Hmmm if the sky is falling I guess we should all be ditching our houses and living in caves?
Seems that the swiss bankers balance sheets have started to resemble swiss cheese as they have holes in it so big you can drive an armoured car through them:
http://www.creditwritedowns.com/2009/02/switzerland-threatened-with-bankruptcy.html
http://www.creditwritedowns.com/2009/02/switzerland-threatened-with-bankruptcy.html
if currencies linked to gold are the answers to all the worlds problems, then how come we had the great depression, how come we had the great land boom and bust in the late 1800's. There was no fiat currency during these periods, yet booms & busts still happened.
The world is just going through a natural stabilisation process. The world just went through 5years of minimal turbulence coupled with low interest rates and easy credit, this process now correcting itself. Its no fun during this time, but its just a part of the natural cycle.
The current downcycle will radicially improve once US housing stabalises.
US housing will stabilise once unsold housing declines, although this is not happening yet, the most encouraging sign i see is the reduction in new home construction, low housing starts look bad from an economic point of view (and as a media D&G item) but they reduce future supply which is exactly whats needed.
The world is just going through a natural stabilisation process. The world just went through 5years of minimal turbulence coupled with low interest rates and easy credit, this process now correcting itself. Its no fun during this time, but its just a part of the natural cycle.
The current downcycle will radicially improve once US housing stabalises.
US housing will stabilise once unsold housing declines, although this is not happening yet, the most encouraging sign i see is the reduction in new home construction, low housing starts look bad from an economic point of view (and as a media D&G item) but they reduce future supply which is exactly whats needed.
Hi Chilli;
Because like some people governments like to spend more than they earn. When one credit card is maxed they move onto the next line of credit.
Good example is the current federal government. Lets see how long it takes them to squander the future fund.
Non Recourse during the gold standards, governments were limited by the amount they could borrow as the currency was tied to their gold/silver holdings. If you look at Britain during the 1800's thats why they went to war with China (the Opium Wars), China was depleting Britains silver reserves, so Britain went to war for the right to export opium to China (yes Britain was the first modern day drug pusher) as it was the only material item that China was happy to import from Britain.
But boom & busts have been recorded in prior to the introduction of fiat currencies. So the fiat currencies per sei cannot be blamed for boom/bust scenarios.
But boom & busts have been recorded in prior to the introduction of fiat currencies. So the fiat currencies per sei cannot be blamed for boom/bust scenarios.
There were no credit cards during the Great Depression.... in fact I would be surprised if your average factory worker got much in the way of credit at all in the 1920s.
Chillie and Boomi you have misconstrued what I am on about. We live in one of the richest countries in the world but Australians shoot themselves in the foot economically every day.
I just had a long standing customer who is a self made multi millionaire come into my business this morning and repeat without any prompting from me verbatum about property prices, the depression and economic cycles.
As he was leaving the hairs on the back of my neck stood up when he said I hope you have drummed into your two sons heads that being a conscientious objector and going to jail is a much better alternative to ending up in an unmarked grave having fought another usless war to end all wars.
History continues to repeat itself.
I just had a long standing customer who is a self made multi millionaire come into my business this morning and repeat without any prompting from me verbatum about property prices, the depression and economic cycles.
As he was leaving the hairs on the back of my neck stood up when he said I hope you have drummed into your two sons heads that being a conscientious objector and going to jail is a much better alternative to ending up in an unmarked grave having fought another usless war to end all wars.
History continues to repeat itself.
Seriously mate - is there any connection at all between these 2 statements? You have all these bits and pieces but none of them fit together.
Seems that the swiss bankers balance sheets have started to resemble swiss cheese as they have holes in it so big you can drive an armoured car through them:
http://www.creditwritedowns.com/2009/02/switzerland-threatened-with-bankruptcy.html
You know what. For as long as i can remember the majority of the Australian car enthusiasts have been split two ways. HOLDEN and FORD.At any event they are out there showing there colours of red or blue even showing a bit of hatred for the other at times.
But if you go the there forums you generally see the Ford lovers stick to Ford and Holden lovers stick to Holden. Even the so called red neck car hoons of Australia have the decency to stick to where there loyalties or beliefs lie.
Yet here you are time after time with the same stuff over and over.Post it where it is wanted not here.Yes we do want to hear about all sides of investing both good and bad but give it a break. Even the rednecks dont go this far.
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Maybe it would be worth opening a thread dedicated to the risks of investing so the children have somewhere safe to play
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