{"id":6197,"date":"2008-12-20T20:05:51","date_gmt":"2008-12-21T03:05:51","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=6197"},"modified":"2008-12-20T20:05:53","modified_gmt":"2008-12-21T03:05:53","slug":"joe-strummer-my-thoughts-on-the-looming-crisis","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/6197\/joe-strummer-my-thoughts-on-the-looming-crisis\/","title":{"rendered":"Joe Strummer: My thoughts on the looming crisis"},"content":{"rendered":"

“Joe Strummer” is the pseudonym of a frequent commenter on BloodhoundBlog. He runs a weblog of his own — under a different pseudonym — and leads a life of joy, contemplation and undisturbed privacy under his real name. But no matter how he is denominated, Strummer is an expert in the Austrian School of Economics, a colloquium of great minds who are, alas, the eternally unheeded Cassandras of the decline of Western Capitalism. In this essay, penned yesterday, Strummer shares with us his reflections upon the burgeoning economic crisis:<\/p>\n

 
My thoughts on the looming crisis<\/strong><\/p>\n

by Joe Strummer<\/em><\/p>\n

This is a graph of the nominal value of the assets that the Fed has “owned” over time. Notice the fairly flat, slightly rising line until September\/October of 2008.<\/p>\n

<\/p>\n

Two points about this graph. First, the Fed did not get value for the $1.2 trillion it has purchased in “assets” since October. The $1.2 trillion in nominal value is actually nearly worthless. That’s because these “assets” are the mortgage backed securities backed by now- or soon-to-be-broken promises to pay by individual homeowners.<\/p>\n

Second, the Fed has merely pumped about 1.2 trillion of dollars into the market place free. In other words, it has taken nothing out of the economy of value. When the government adds currency – what Jim Cramer calls, dropping wads of cash from helicopters – without getting anything in return, it’s called inflation.<\/p>\n

Now, $1.2 trillion in new currency is bad, but not nearly as bad as when the Fed loans money to banks at a .5 interest rate. The Fed simply is printing money for any bank that wants to borrow it at .5 percent. Consequently, banks are now borrowing to 1) cover the losses they incurred to make themselves solvent, and 2) to have cash reserves that they can then use when the economy picks up to lend at future, higher interest rates.<\/p>\n

All of this inflation hasn’t hit the real economy because banks are hoarding that money to wait for better borrowers or because borrowers simply are hunkered down right now trying to wait out the storm.<\/p>\n

When the economy starts Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

“Joe Strummer” is the pseudonym of a frequent commenter on BloodhoundBlog. He runs a weblog of his own — under a different pseudonym — and leads a life of joy, contemplation and undisturbed privacy under his real name. But no matter how he is denominated, Strummer is an expert in the Austrian School of Economics, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[251,29,8,5,28],"tags":[],"class_list":{"0":"post-6197","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-big-mother","7":"category-group-therapy","8":"category-investment","9":"category-real-estate","10":"category-retirement","12":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":2345,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2345\/unchained-melodies-unchained-impulses\/","url_meta":{"origin":6197,"position":0},"title":"Unchained melodies: Unchained impulses","author":"Greg Swann","date":"December 8, 2007","format":false,"excerpt":"This one is from Brad Coy, who wanted to tip his hat to pseudonymous commenter Joe Strummer with a Joe Strummer cover of Bob Marley's Redemption Song. If I have a favorite Clash tune it's This is Radio Clash, simply because I like the idea of a pirate satellite. As\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2064,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2064\/sub-prime-mortgage-crisis-caused-by-unexpected-success\/","url_meta":{"origin":6197,"position":1},"title":"Sub Prime Mortgage Crisis Caused By Unexpected Success","author":"Brian Brady","date":"October 19, 2007","format":false,"excerpt":"Sub prime mortgage are defaulting at record proportions.\u00a0 Lenders are closing their doors and confidence is waning on Wall Street. Greed, corruption, and irresponsibility have all been cited as the reasons for this contraction and collapse. While these factors might be contributing reasons, they are all byproducts from the underlying\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":17615,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/17615\/overnight-news-if-america-had-a-rioting-contest-everyone-would-lose-but-still-which-side-would-win\/","url_meta":{"origin":6197,"position":2},"title":"Overnight News: If America had a rioting contest, everyone would lose. But: Still: Which side would win?","author":"Greg Swann","date":"December 19, 2020","format":false,"excerpt":"On January 6th, America's having a house party \u2013 or something like that. I don't have a link to share yet, but the President has invited his supporters to Washington to remind Congress who owns half of the privately-held firearms in the world. Trump's Tweet says: \"Be there, will be\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"Ya think it's easy?","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/08\/BHBNewTopImage-300x225.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":17479,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/17479\/overnight-news-wheres-hunter-is-old-news-where-the-hell-is-china-joe\/","url_meta":{"origin":6197,"position":3},"title":"Overnight News: \u201cWhere\u2019s Hunter?\u201d is old news. Where the hell is China\u00a0Joe?","author":"Greg Swann","date":"November 16, 2020","format":false,"excerpt":"So the primary election strategy failed when Trump beat the margin of cheating. Then the fallback cheating failed so badly that the fallback narrative \u2013 \u201cTrump is stealing the election!!\u201d \u2013 is also failing. China Joe is in the unhappy position of losing the election because of the fallback cheating\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"Ya think it's easy?","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/08\/BHBNewTopImage-300x225.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":2435,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2435\/my-thoughts-exactly\/","url_meta":{"origin":6197,"position":4},"title":"Always a crisis?","author":"Richard Riccelli","date":"December 27, 2007","format":false,"excerpt":"One Hed Fits All. 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