eListas - My Lists: socialcredit: Messages

If anyone can make sense out of this tortuously convoluted story,
I would be grateful to receive a translation in simple English. -- JH

At 04:39 AM 1/05/2005 -0700, Bill Ryan wrote:

The banker is, however, due to his encompassing position (the Monopoly of Credit) perhaps able to extract more than his fair share from the economic pie for his services. But that is a matter for regulation, as it is with any monopoly providing an essential public service.

Ed Dodson here:

The key word used by Bill Ryan here is "perhaps." Prior to the dismantling of the system of fixed exchange rates and the ersatz gold exchange standard, U.S. Federal Reserve Notes had an almost absolute monopoly as the world's reserve currency. As we know, this is no longer the case. Shrewd investors, corporate treasurers, pension fund managers, etc. all keep some cash deposits "invested" in foreign currencies. One result is that the credit markets are far more competitive today than ever before. Risk-based pricing for credit is the common practice, as is the reselling of receivables to achieve geographic dispersion of risk. In the residential mortgage lending business, for example, the company that orginates the largest volume of business in the United States -- Countrywide Funding -- is not a portfolio lender at all. Every mortgage loan made by Countrywide is immediately sold to investors, most often after being pooled by Fannie Mae or Freddie Mac as collateral for mortgage-backed securities.

I would argue that the credit markets have become sufficiently sophisticated that the U.S. Treasury and the Fed today have a much more difficult time monetizing government debt. The other players in the credit markets work with specialized models that anticipate Fed actions before they are taken, hedge exposures and employ arbitrage on such a massive scale that the Fed's traditional monetary tools are largely ineffective.

Prior to the expansion in the number of "safe harbor" currencies, the U.S. Government could essentially impose the downside impact of its deficit spending practices on the LDCs almost with impunity, as the debt owed by these countries was all dollar-denominated. Now, the dollar is just one of a basket of currencies that serve this purpose.

If the threat of foreign investors dumping dollar reserves in favor of the Euro or Japanese Yen, etc. materializes, the bond market will demand higher and higher yields for government securities (to counter the falling purchasing power of the dollar against other currencies).

My guess is that we are in for a prolonged period of the return of "stagflation" as occurred in the 1970s. Some of the same variables are at play, including an administration in Washington that seems to limit its reading to its own press releases.

Apologies for the rant, but credit-fueled inflationary spirals are the one's that come crashing down the hardest.

Services:	Home, List Hosting Services, Industry Solutions
Your Account:	Sign Up, My Lists, My Preferences, Start a List
General:	About Us, News, Privacy Policy, No spam, Contact Us


The Most Complete Mailing Lists, Groups and Newsletters System on the Net

HOME SERVICES SOLUTIONS COMPANY