Fed funds

[cottonpicken]

Something has to give. Debt is doubling every eight years. And right now debt to GDP is over 300%. Largest peace time ratio ever in the history of the world. I dont see how any paper asset becomes more value able in the long run.

A lot of hedge fund guys i follow and other analysts are really really scared.

[biglentil]

Papers intrinsic value is 0 history has proven that all assets return to their intrinsic value.

[errolanderson]

Tres Knippa (based in Dallas) comments on Fed policy impact on bond markets / U.S. real estate.

http://www.bnn.ca/Video/player.aspx?vid=737298

[cottonpicken]

Happened to catch that guy yesterday and totally agree with him.

[TOM4CWB]

Question:

What is interest?

If there were a set single amount of currency that could not increase in 'value and quantity' how could interest ever be paid by a borrower,,, when the usery to pay the lender back... would not exist!

Productivity must be measured at COST.... a principal of economics... which means that 'Profit' is immoral???

Interest to citizens who own the currency.. is wrong... and it should and must be zero?!!!

Other wise inflation will eat up the currency... which causes central Banks... to create more currency [liquidity or in the new vernacular QE... which is now said as ... get this... EASING...]

So we fought inflation... then defeated inflation by reducing interest to zero... which is really causing DEFLATION...

But now INFLATION... is good... DEFLATION... is the enemy... and Easing is the solution...

WOW is my mind twisted now!!!

Grin!

[TOM4CWB]

DTN musings...extracted from; "Truly Spooky things"
Elaine Kub Contributing Analyst

Wed Oct 28, 2015 11:43 AM CDT
"Unless the neighbor kids stop by on their way to town, trick-or-treaters can be pretty scarce in certain middle-of-nowhere regions of rural America.

..."Or how about the power that central bankers wield over a farmer's income? Not just mild American central bankers, but European central bankers and Chinese central bankers, too. Except that I don't know what those costumes would look like, exactly.

Last week, the European Central Bank suggested that it's willing to do more monetary easing, and the euro dropped more than 2 cents in one day. The value of the euro contributes 57.6% to the calculation of the U.S. dollar index, so due to that one quasi-governmental body's comments, the global price of our own currency jumped 1.5% in a day. And due to that, there was pressure on grain prices. Commodity price tags must get cheaper to motivate buyers whenever the underlying currency gets more expensive in relative terms. Maybe soybeans and corn would have continued gaining value last week as harvest was winding down, but we can't really know how much influence the weaker euro really had. Presumably this was in the Europeans' best interest, making it easier for them to get business loans, but not so great for American commodity exporters and producers.

The other big outside market mover last week was Chinese government reports -- their retail sales and overall economy grew at better-than-expected rates: 10.9% and 6.9%, respectively. Their industrial production growth slowed to just 5.7%, however, and so hints were given that more stimulus or economic reform measures will be seen.

Reality in 2015, therefore, in many ways now resembles modern literature's definitive depiction of a dystopian hellscape. In George Orwell's 1949 novel "Nineteen Eighty-Four," the world has just three nation states: Oceania (present-day North and South America, Great Britain, Australia and the lower half of Africa), Eurasia (present-day Europe and Russia), and Eastasia (basically China and various 'stan countries over to Iran). These three major powers compete via currency wars and every other kind of war.

If we were living in that novel today, presumably U.S. farmers would fall under the control of Oceania's Ministry of Plenty. Power, as exercised by the Ministry of Plenty, included not only the planning and rationing of goods, but the releasing of economic reports which Winston, the novel's main character, must edit. Orwell wrote: "The Times of the nineteenth of December had published the official forecasts of the output of various classes of consumption goods in the fourth quarter of 1983, which was also the sixth quarter of the Ninth Three-Year Plan. Today's issue contained a statement of the actual output, from which it appeared that the forecasts were in every instance grossly wrong. Winston's job was to rectify the original figures by making them agree with the later ones ... It was merely the substitution of one piece of nonsense for another. Most of the material that you were dealing with had no connection with anything in the real world, not even the kind of connection that is contained in a direct lie. Statistics were just as much a fantasy in their original version as in their rectified version. A great deal of the time you were expected to make them up out of your head."

So there's another Halloween costume idea for someone.

Beyond going back to the policy of quantitative easing, there's not much that the U.S. Federal Reserve is likely to do to fight back in a currency war between three major global powers. They can hardly drop interest rates anymore to cheapen our dollar, and they probably wouldn't want to anyway. Even if the U.S. dollar can only go up from here -- which will be a net bearish weight on commodity prices for the foreseeable future -- this will be as positive for American consumers buying foreign products as it will be negative to American commodity producers trying to export products.

Furthermore, we're not living in a novel and there are many more than three countries with policies and currencies that affect our ag products' export prospects. Despite the largest two-day rise in the U.S. dollar index since August, corn and wheat prices were surprisingly resilient last week. Perhaps that's because the euro isn't really the currency against which dollar-denominated grain exports are competing. The Ukrainian hryvnia hit a decade low in February and has been dawdling around that cheap level (22 per USD) ever since. Last month, the Australian dollar hit its lowest level since 2009 ($0.69 USD). The Brazilian real also hit decade lows in September (4.26 per USD). None of those are in the basket of currencies used to calculate the official U.S. dollar index, but the Canadian dollar contributes 9% to the USDX calculation. It too, plumbed decade lows last month, and its daily movements were flat or lower during last week's dollar surge.

Let the dollar's prospects -- especially in comparison to these other grain-exporting nations -- be part of your forward thinking once the costumes have been put away, the candy has all been eaten, the grain has all been harvested, and you are left pondering how long to wait before selling. In a year with abundant grain supplies, the seasonal tendency is to see higher prices in the spring, but it's hard to know what scary influences could weigh on the sector in the meantime.

Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are Really Made" and can be reached at elaine@masteringthegrainmarkets.com or on Twitter @elainekub.

(BAS/AG)"

[errolanderson]

Here's another tidbit to add to the pile of economic dung . . . .

It takes 3% GDP just for the U.S. to just service the interest on its debt, let alone pay anything down. U.S. 3rd quarter GDP is now running at 1.5%.

And the Fed wants to hike interest rates in December . . . beyond ridiculous (IMO).

[cottonpicken]

Look at deficit spending to GDP as a percentage and the miserable growth is even more miserable. The unfounded liabilities will have to be printed away. The currencies are screwed we will see a no offer in the gold price in our lifetimes. And maybe sooner then we think.

[biglentil]

Thats right cotton the day gold is unavailable the value of the dollar has gone to 0. Then the populace may finally wake up to the fact gold is money. I think it was Gerald Celente who stated " when people lose everything they lose it!". Less than one ounce of gold and silver above ground for every man, woman and child on this planet. Think about that for a second.

[cottonpicken]

I was talking about gold on here eleven years ago,imagine that for a second,lol,

[macdon02]

If we get the point that I can use gold as money at the coop after filling the pickup, the price of food will be astronomical. The dollar could be worthless but imo physical assets take over, it wont be just gold. Thats the point where there is complete loss of confidence in govt. Funny that farmers in Brazil and Argentina are using grain in the bin to hedge currency, why not gold?

[biglentil]

Check out Valcambi combibar really the future of bullion imo, love it.

[cottonpicken]

The whole point of gold is that it is not magical or special,its just a median of exchange.

You will not make a return per say,depending on how warped everything has become.

Its just exchange,a chicken coop delivering a few dozen eggs a day probably delivers a better return on investment.

Or pick something else,it doesn't really matter.

[biglentil]

sorry cotton do not agree. To be money all the gold and silver on earth will hold the purchasing power of every single good, piece of land and commodity on this planet. Its gain in value will be exponentially greater than a regular non monetary asset. To reinstate the gold standard we would be looking at $40k an ounce gold.

[cottonpicken]

It doesn't really work that way imo. The purchasing power of the metals is not equal to everything else under the sun including labour. The free market itself dictates the number of bushels of wheat it takes to purchase a a barrel of oil or an hour of labour. The metal is the intermediatary and storage for future purchases.

As far as today's conversion into dollars i agree with you but that's paper currency to gold conversion. Not gold to good or service conversion.

Like i said above "depending on how warped"meaning how undervalued gold is at the present in relation to everything else. Which would be your investment gain.

We only have to go back forty fifty years to when we wher on a gold standard to see the ratios between gold and everything else and convert back to present day values to see where we are at. It's not perfect but paints a nice picture.