What is money?

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With all this cash being thrown around, got me thinking that what actually is money.

 

1) US: huge stimulus plan, helicopter cash, unlimited QE.

2) UK: The bank of England announced that it will fund the Government directly.

3) Germany: Half of the country on Kurzarbeit, 9000 for freelancers.

 

With all economies throwing the kitchen sink at the virus,what is the value of anything anymore?

 

Is every single business insolvent?

Is it really the job of Governments around the world  pay everyone a salary.

Have we now reached a situation where businesses are no longer allowed to fail.

 

Are we heading towards hyperinflation?

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Probably will start having a conversation with myself.

 

If Governments can just print money why do we need to pay Tax?

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On 4/9/2020, 5:59:31, RenegadeFurther said:

what actually is money

 

That must have been a real proper bong hit!! 

 

Money is the promise that a set of 1 and 0s on a server somewhere will have value when it's hypothetical time to collect. Actually, it's even more imaginary than that, since more 'value' exists in bank accounts, both private or corporate, or stock indexes, insurance claims, collector's items, etc. etc. than does the paper, or even all the precious metals on Earth, to print its 'worth' on. Let's not even talk about the fantasy of national debt. But all that's not the point. Like many other figments of the human mind, it nonetheless has a real effect because we all tacitly agree that it does. 

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On 4/9/2020, 5:59:31, RenegadeFurther said:

Is every single business insolvent?

Is it really the job of Governments around the world  pay everyone a salary.

Have we now reached a situation where businesses are no longer allowed to fail.

Are we heading towards hyperinflation?

 

In my opinion, you are asking the right questions. 

 

When the US Fed is buying ETFs and junk bonds, it smells a lot like central planning.   

 

Again, in my opinion, economies worldwide never recovered from 2007-2008.   In December, it was already clear, independent of Coronavirus, that there were problems in the financial system evidenced by the return of huge repo operations by the Fed.    Coronavirus will get the blame, but the system was already very unstable.  

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On 4/9/2020, 5:59:31, RenegadeFurther said:

Are we heading towards hyperinflation?

 

I lived during hyperinflation and I am sick of these conspiracy theories, just like people who survived the Holocaust are sick of mummy anarchists mentioning Hitler each time the governments forbids them to wash their pants in Friday afternoon.

 

If you are so libertarian, go to fucking Texas.

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On 4/10/2020, 9:05:38, yourkeau said:

I am sick of these conspiracy theories.

 

Which conspiracy theory do you find objectionable?  

 

This isn't 1990s Yugoslavia either.  The USD is the basis for over 60% of global payments.  In addition, the amount tied up in interest rate derivatives, currency swaps and sovereign debt makes this much different.

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About hyperinflation. Hyperinflation would be when Donald Trump prints money to give promised 1200$ pay-checks to everyone. But he can't do that, the Fed prints money.

 

On 4/10/2020, 9:13:25, balticus said:

The USD is the basis for over 60% of global payments.

 

Why? Because 99% of the people in the world trust the Fed and American legal system more than own central banks / own legal systems.

 

 

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Nobody suggested that Trump was going to be the printer.   

 

Please clarify if I have misunderstood your objection.

 

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Because 99% of the people in the world trust the Fed and American legal system more than own central banks / own legal systems.

 

True but not my point.   Very few people outside of Yugoslavia were impacted when its printers went into overdrive. 

 

When the USD printers hit hyperspeed the impact is global and profound, e.g. derivatives markets and sovereign debt.

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There are usually 2 types of people that ask about money and its value...

 

1... Those who dont have any...

 

2... Those who dont have any..

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Saw this on Twitter today

 

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Donald Trump is printing money so fast the presses are smoking

 

and 

 

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If the government keeps printing money and living on extraordinary and ballooning debt, why do we pay taxes? If they can just keep doing that than they don't need us. Am I wrong?

 

Loads and loads of complaints saying that you can't just put the economy into deep freeze for 3 months and expect it to recover. So what is everyone's thoughts, What will it be? (for Europe US)

  1. A V shaped recovery, aka 2007/2008.
  2. An L shaped recovery where we go into a deep recession
  3. Hyper Inflation due to money printing
  4. Stagflation
  5. Stag-deflation

I think it doesn't matter how much money governments print we are heading into stag deflation. 

 

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I’m staying positive as I see it this way: mankind is showing a virus that we’re so powerful in comparison to it that we’re willing to temporarily inconvenience ourselves in order to save even the weakest and oldest of us, and in the meantime throwing immense scientific resources to kill it off and the threat it represents. It’s the first time in history that we can do this properly and we have almost unanimously decided to do it. After the threat is vanquished we’ll emerge stronger and more ready than before, our economy having been pruned and modernized. 80% of all jobs exist regardless of the crisis, and those 80% employed can carry the load while the 20% affected wait it out or reorientate themselves.
 

It’s not a war, there’s no destruction. People won’t be dying in mass. Everything is set for a massive recovery. There’s a good chance the oil industry will have been dealt a blow it won’t recover from. Mankind has its flaws, but it has all the advantages in comparison to an unthinking, insignificant virus.

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On 4/10/2020, 8:12:42, mtbiking said:

I’m staying positive as I see it this way: mankind is showing a virus that we’re so powerful in comparison to it that we’re willing to temporarily inconvenience ourselves in order to save even the weakest and oldest of us, and in the meantime throwing immense scientific resources to kill it off and the threat it represents. It’s the first time in history that we can do this properly and we have almost unanimously decided to do it.

 

 Oh absolutely, and very much for the first time in history we can actually do this, any other time period we'd be seeing millions dead. 

 

BUT

 

On 4/10/2020, 8:12:42, mtbiking said:

.After the threat is vanquished we’ll emerge stronger and more ready than before, our economy having been pruned and modernized. 80% of all jobs exist regardless of the crisis, and those 80% employed can carry the load while the 20% affected wait it out or reorientate themselves.

 

Listening to a podcast and the guy made a very good comment. He said a service company (as an example a casino) that has laid off 10,000 employees due to Covid is not going to re-hire them all back the moment the social distancing  rules end. They and every other company out there is going to wait and see how this all plays out. In the mean time millions of people have gone months with out an income. Barely one month in 31% of tenants can't pay their rent. This will have a massive knock on effect as millions of landlords struggle to make mortgage payments. This doesn't take into account the Airbnb disaster!

 

I'm expect a U shaped recovery, the questions is how long the bottom of the U will last!

 

As well a lot of people on twitter are, justifiably, freaking out, you simply can't put the economy into a deep freeze expect it to snap back. I walk by a Chinese buffet restaurant that has been shut for a month now, there is simply no way they will survive if it goes on for another month. Even restaurants that have pivoted to take out, yes they are busy but they need far fewer people to run

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Unemployment reached almost 30% in Spain and Greece during the financial crisis and has recovered since then. I don’t expect it to reach those levels in Germany as its economy is more resilient. Most of the jobs that go away first are the jobs in the service industry that require little training, and those jobs always come back in whatever form when demand ramps up - unless forbidden people will not stop gambling (unfortunately), drinking or going out. I’m not denying it to be a painful, expensive process but I’m remaining optimistic.

 

As an aside, this crisis shows again the critical importance of living below one’s means and building financial security in the good years. It’s an attest of minority that after 10 growth years so many businesses and individuals face bankruptcy and ask for help after barely a month of disruptions. We as a society and individuals have to become sturdier than this. Yes, that means less or no fancy vacations and less or no luxury purchases, and -this is critical- less debt fueled, fast growth if you’re a business. It may mean you settle with a steady, boring occupation. It also means sounder jobs and a robuster future for us all.

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On 4/13/2020, 9:38:21, mtbiking said:

We as a society and individuals have to become sturdier than this. Yes, that means less or no fancy vacations and less or no luxury purchases

 

But all that credit is soooooooooooo soooooooooooo delicious!

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Did you catch the news about oil? it literally went negative due to collapsing demand. Mine own feeling is that the feed can print as much money as it wants and it the fight will be over deflation not inflation. 

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On 4/13/2020, 7:43:58, RenegadeFurther said:

The Fed is going to try to print the coronavirus away.

 

There is a secret pan to deal with this which was intended for the 2nd term of Trump but will be deployed now. 

 

Get to know this lovely lady. She will be very important in the next 5-10 years:

 

Trump’s Fed board nominee, Judy Shelton, has a ...

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Who is she, jeremy? And why will she be important?

I am a professional independent insurance broker and authorised advertiser. Contact me.
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Looks like Sally Field to me-not sure why she'd be important. I do like some of her movies and shows, though.

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