Max Keiser: fictitious capital with Michael Hudson Absolutely brilliant

[AIL]

This is real news NOT that carp that is on main stream Media.

Watch listen and learn..

http://www.youtube.com/watch?v=SRzJ8rMP-WY

If you have knowledge you an stop the abuse of the 1 % that are destroying your country.

 

[Woolleybugger]

Thanks for the link, this guy makes a lot of sense.

 

[AIL]

Your Welcome. Did you notice that video was from Press TV IRAN.. To get information on what is really happening in America you have to go out side USA.

Why is Michael Hudson not on US NEWS media? He is American but not a neocon so his opinions are not allowed in western news (predominantly Jewish/Zionist ) organizations.



( I believe that is 96 % of the western news media )

Six Jewish Companies Control 96% of the World’s Media

The power of lies, deceptions and disinformation as Americans pay the price of collective stupidity.

“You know very well, and the stupid Americans know equally well, that we control their government, irrespective of who sits in the White House. You see, I know it and you know it that no American president can be in a position to challenge us even if we do the unthinkable. What can they (Americans) do to us? We control congress, we control the media, we control show biz, and we control everything in America. In America you can criticize God, but you can’t criticize Israel…” Israeli spokeswoman, Tzipora Menache


http://theunjustmedia.com/Media/Six Jewish Companies Control 96% of the World’s Media.htm

 

[degsme]

This is real news NOT that carp that is on main stream Media.

Watch listen and learn..

http://www.youtube.com/watch?v=SRzJ8rMP-WY

If you have knowledge you an stop the abuse of the 1 % that are destroying your country.

WEll not quite. Because ALL valuations are essentially ficticious in as much as they are "mark to Market".

 

[AIL]

Thanks for the link, this guy makes a lot of sense.

keep forgetting to use reply with quote

 

[degsme]

Why is Michael Hudson not on US NEWS media?

Um because he's not altogether factual in his analysis.

 

[AIL]

WEll not quite. Because ALL valuations are essentially ficticious in as much as they are "mark to Market".

So exactly which facts are not factual.

Are you saying that no Frauds were committed "the banks did not know that approving a Mortgage to some that one that falls in this category NO INCOME NO JOB NO ASSETS is a good business practice.

Definition of 'NINJA Loan'
A slang term for a loan extended to a borrower with "no income, no job and no assets". Whereas most lenders require the borrower to show a stable stream of income or sufficient collateral, a NINJA loan ignores the verification process.





Investopedia explains 'NINJA Loan'
A NINJA loan is considered to be a type of subprime lending, often found in the mortgage market.

NINJA While the specifics of any NINJA loan can change, most offer the lender a low initial rate, which is then increased after a few periods of payment. The borrower is hoping for the value of their property to appreciate significantly, allowing them to repay the loan with the newly found equity. However, when the property doesn't appreciate, many borrowers cannot make the repayment. This makes the NINJA loan a very risky proposition for lenders.

BAMS did hundreds of thousands of these loans knowing they would eventually fail.. THAT IS WHY they did not keep the mortages they sold them as Triple A investments around the world.

Banks knew it was all CRAP LOANS> MOST OF THEM WOULD FAIL not good business pratice; they knew it but they all got bonuses for all the FRAUDS.
.
But if you are a father with a family and your kids are starving because you lost your job because of those FRAUDS and you steal a loaf of bread to feed your family you end up in jail for stealing one loaf of bread but these massive obvious FRAUDS go unpunished. You thinnk its ok give me a break..

 

[gabriel]

they kept some themselves

 

[Woolleybugger]

He is saying much the same thing as Keen is saying. The more folks get that message out, the better IMHO>

 

[degsme]

So exactly which facts are not factual.

The whole notion of "ficticious capital". Its true that there is a problem of an overhang in the financial markets with a lot of assets currently being overvalued and the illiquidity in the RE market is allowing this to happen. Bu that is not unusual in any sort of market. That's what "arbs" (ie arbitrageurs) make their money on - the split between "mareket" and "book" value.

Yes there is some overstating of assets going on, but not at the rate this guy claims.

What he is doing is conflating the issue of M3 money supply vs underlying capital assets and the notion of capital assets. What he is essentially discarding as inconvenient data is that much of the M3 money supply is predicated on FUTURE VALUE DELIVERY.

It ignores how money works. Consider this scenario

You come and spend 40 hours digging a ditch for me for $1,000.

I can either

• Give you $1,000 in US Currency that is backed by "the full faith and Credit of the USA"
• Give you a used motorcycle in trade (like a Honda Nighthawk that has a Blue Book value of around $1k)
• Give you an unsecured IOW for $1,000
• Give you an unsecured IOW for 40 hours of physical labor
• Give you an unsecured IOW for 10 hours of software programming labor
• Give you an IOW for $1,000 secured by a lien against my house or car

Of those 6 options, ONLY TWO are "backed by non fictisious assets" according to this guy. But all the others are equally viable. IN fact the fungibility of an IOW for programming time or ditch digging is proably higher than that of a used motorcycle of somewhat unknown provenance.

Note also that ALL of those IOWs - except for the US Dollars - are actually a promise FOR FUTURE WORK (and in actuallity the US Dollars are as well), not something 'backed by assets'.


So this notion that bank deposits MUST BE BACKED BY TANGIBLE ASSETS is - as Richard Feynyman coined "Not even wrong"... because at its core, it misrepresents what money actually is and represents.

 

[degsme]

He is saying much the same thing as Keen is saying. The more folks get that message out, the better IMHO>

Nah he's not. Keen does not conflate money with actual tangible assets. This guy does. Keen full well understands that money is actuallly a FUTURE LABOR promisory note. And that acutal capital asset valuation has not inherency in it. Rather such valuation really is based on what amount of work people are willing to do IN THE FUTURE to acquire that asset.

THAT's the key difference.

 

[AIL]

China Russia, India and many other countries do not have faith in US dollars. They are trading goods in other currencies. China is trading with Japan using Yen not dollars etc. your American dollars will have less value in the future because trading in other currencies will only increase..Therefore holding USA dollars may not be a good investment it may be like holding on to a home that is underwater..Eventually the owner has to walk away.

China, Russia to drop dollar in bilateral trade
http://articles.marketwatch.com/2010-11-23/news/30911622_1_currencies-trade-settlement-yuan

U.S. Dollar: 11 Reasons It Could Be The End Of The Petrodollar

http://articles.marketwatch.com/2010-11-23/news/30911622_1_currencies-trade-settlement-yuan


I say good riddance, It about time the world puts a STOP to USA bullying tactics . We have had enough. The world is putting and end to the dollar..
Now you will be on the receiving end of your bullying..

Do unto others as they do to you..

 

[Woolleybugger]

You are getting lost in the weeds. The message is that assets do not back the amount of money out there at all which is an indictment of reckless lending and asset speculation which is the main message both Keen and this guy are making. The rest is just nitpicking to pick an argument...

 

[degsme]

You are getting lost in the weeds. The message is that assets do not back the amount of money out there at all which is an indictment of reckless lending and asset speculation which is the main message both Keen and this guy are making. The rest is just nitpicking to pick an argument...

Here I disagree. As I understand Keen - his point is that the lending was reckless because it overvalued CURRENT market pricing and undervalued risk. But it does not fundamentally misunderstand how monetary systems work

Max Keiser has as his core premise, a misundertanding of how a monetary system works.


And the difference is important. bEcause while the "Top Line" message SOUNDS the same "Reckless Lending Caused the Problem".... the analysis and prescriptions are rather different. Keen argues for regulation and breakup of banks - which is essentially the same thing that David Stockman (Reagan's old Budget Director) is arguing (and Barney Franks, and Chris Dodd and and and)

Whereas Keiser seems to be saying "A Pox on the System"...

 

[degsme]

China Russia, India and many other countries do not have faith in US dollars. They are trading goods in other currencies. China is trading with Japan using Yen not dollars etc.

No not really. That the RMB is directly mapped to the Yen without the added cost of two intervening transactions is irrelevant. The VALUATIONS of the Yen and the RMB in that trade are actually based on their respective valuations against the US Dollar.

Russia AS A GOVERNMENT wants to be 'relevant" and Putin has political reasons for trying to make the Ruble have some international value, but its a bit like Cuba leading the "Organization of Unaligned States" - its that irritating little schnauzer barking at your heels.

India's Rupee has no valuation outside of its valuation against the US Dollar


And the best evidence of the "lack of trust" in the US Dollar are the cash inflows into the US Treasury Bond auctions from RMB, Ruble, and Rupee nations.