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GameStop exposes the rigged system

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And there's another take

https://www.zerohedge.com/markets/caveat-emptor-are-you-wsb-useful-idiot?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+(zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero)

 

Caveat Emptor - Are You A WSB 'Useful Idiot'?

Tyler Durden's Photo
BY TYLER DURDEN
SATURDAY, JAN 30, 2021 - 21:30

While high-fives and smily-faces abound on the interwebs over the destruction wrought on numerous hedge funds amid the short- and gamma-squeezes in GME and the rest of the heavily-shorted names, some are at least taking a moment to pause and reflect on other possibilities about how this all ends...

2021-01-30_12-22-44.jpg?itok=UHpWEvs8

Via 'The_Law_of_Pizza':

 

I don't work on the trading Floor, but I'm an attorney who services a variety of financial institutions, including broker/dealers.

This isn't the exciting, hilarious answer you want, but a lot of people had no idea it was even happening until the past 48 hours, and even now, it's mostly just a funny news article about some internet trolls making a bubble.

This is a big deal to the shorting community, but to the other 99% of the financial world, nobody gives a shit.

As much as young people on the internet like to imagine this as an epic, David vs Goliath, Wall Street vs Main Street showdown for the history books; from a bird's eye view its actually just a brief dumpster fire where a couple hedge funds lost their shirts betting on one little small cap stock. It has happened before, and it will happen again.

In 6 months, nobody will remember or care, except that (maybe) it will become more difficult for retail investors to trade options.

And not because the greedy hedge fund oligarchs forced the SEC to crack down on retail investors.

But rather because, when this is all said and done, there is going to be a black hole where most of these retail investors' brokerage accounts used to be, and the SEC and brokerage community will be lambasted for failing to protect unsophisticated investors from a bubble.

I have been monitoring the WSB threads, and while the WSB veterans know that they're making a suicide charge for the memes, they have brought thousands of naive, new investors with them - who predominantly think that they're going to somehow come out on top, not realizing that they're cannon fodder for the more savvy WSB users to exit with gains.

Redditors never seem to stop and think about why the WSB guys know so much about derivatives trading.

Or how they seem to know how to access and read from a Bloomberg Terminal.

Or why there are so many users there that can seemingly drop tens or hundreds of thousands of dollars on complicated meme plays.

How do you think that WSB knew that GME was open to a short squeeze and a gamma squeeze play?

WSB's power users are younger finance bros. It's 30-something investment bankers and portfolio managers memeing with each other a. cosplaying as "autists."

If you didn't know what a gamma squeeze was 48 hours ago, you are their exit strategy and the down payment on their next Porsche.

Caveat Emptor indeed.

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1 hour ago, El Nikko said:

And there's another take

https://www.zerohedge.com/markets/caveat-emptor-are-you-wsb-useful-idiot?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+(zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero)

 

Caveat Emptor - Are You A WSB 'Useful Idiot'?

Tyler Durden's Photo
BY TYLER DURDEN
SATURDAY, JAN 30, 2021 - 21:30

While high-fives and smily-faces abound on the interwebs over the destruction wrought on numerous hedge funds amid the short- and gamma-squeezes in GME and the rest of the heavily-shorted names, some are at least taking a moment to pause and reflect on other possibilities about how this all ends...

2021-01-30_12-22-44.jpg?itok=UHpWEvs8

Via 'The_Law_of_Pizza':

 

I don't work on the trading Floor, but I'm an attorney who services a variety of financial institutions, including broker/dealers.

This isn't the exciting, hilarious answer you want, but a lot of people had no idea it was even happening until the past 48 hours, and even now, it's mostly just a funny news article about some internet trolls making a bubble.

This is a big deal to the shorting community, but to the other 99% of the financial world, nobody gives a shit.

As much as young people on the internet like to imagine this as an epic, David vs Goliath, Wall Street vs Main Street showdown for the history books; from a bird's eye view its actually just a brief dumpster fire where a couple hedge funds lost their shirts betting on one little small cap stock. It has happened before, and it will happen again.

In 6 months, nobody will remember or care, except that (maybe) it will become more difficult for retail investors to trade options.

And not because the greedy hedge fund oligarchs forced the SEC to crack down on retail investors.

But rather because, when this is all said and done, there is going to be a black hole where most of these retail investors' brokerage accounts used to be, and the SEC and brokerage community will be lambasted for failing to protect unsophisticated investors from a bubble.

I have been monitoring the WSB threads, and while the WSB veterans know that they're making a suicide charge for the memes, they have brought thousands of naive, new investors with them - who predominantly think that they're going to somehow come out on top, not realizing that they're cannon fodder for the more savvy WSB users to exit with gains.

Redditors never seem to stop and think about why the WSB guys know so much about derivatives trading.

Or how they seem to know how to access and read from a Bloomberg Terminal.

Or why there are so many users there that can seemingly drop tens or hundreds of thousands of dollars on complicated meme plays.

How do you think that WSB knew that GME was open to a short squeeze and a gamma squeeze play?

WSB's power users are younger finance bros. It's 30-something investment bankers and portfolio managers memeing with each other a. cosplaying as "autists."

If you didn't know what a gamma squeeze was 48 hours ago, you are their exit strategy and the down payment on their next Porsche.

Caveat Emptor indeed.

That's pretty much how I see this.

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3 minutes ago, LiamP said:

That's pretty much how I see this.

I think there is a lot of talk that they're aiming to keep it going for another week because there are still more hedge funds with short positions and the contracts are due this week...it does make you wonder how they know this, is it public information? 

You would also imagine that hedge funds who are exposed aren't likely to be sitting on their hands although I have no idea what mechanism there is to mitigate the risk.

I get concerned when the MSM starts pumping out stories about how the little guy is beating the system, it reminds me just as an example of Bitcoin in 2017 when it rocketed up. It was already ridiculously high when they put the spotlight on it. I remember the radio (probably TV but I haven't watched it for 7+ years) having loads of call ins from people who were talking it up and saying how they'd invested huge amounts and a few months later it crashed again.

I'll bet there are still people trying to get in on GME (for profit) which is surely madness at this point.

It was funny, very funny, but there are probably going to be a hell of a lot of losers when this shakes out.

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57 minutes ago, El Nikko said:

I think there is a lot of talk that they're aiming to keep it going for another week because there are still more hedge funds with short positions and the contracts are due this week...it does make you wonder how they know this, is it public information? 

You would also imagine that hedge funds who are exposed aren't likely to be sitting on their hands although I have no idea what mechanism there is to mitigate the risk.

I get concerned when the MSM starts pumping out stories about how the little guy is beating the system, it reminds me just as an example of Bitcoin in 2017 when it rocketed up. It was already ridiculously high when they put the spotlight on it. I remember the radio (probably TV but I haven't watched it for 7+ years) having loads of call ins from people who were talking it up and saying how they'd invested huge amounts and a few months later it crashed again.

I'll bet there are still people trying to get in on GME (for profit) which is surely madness at this point.

It was funny, very funny, but there are probably going to be a hell of a lot of losers when this shakes out.

Its gone right Dutch Tulip territory now

There was a guy who had turned $25K into about $5 million. IF I was in those shoes 80% of that would have been cashed out and sit on the rest to enjoy the ride against the Banksters

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21 hours ago, El Nikko said:

I've filled the first bed by half. It has a layer of chippings at the very bottom, then a thing layer of horse sh*t and another layer of chippings. As I was walking on it building the bed i've compacted it which isn't ideal but this is really for the health of the soil and the roots will take ages to get down that deep.

Then from the base of the bed upward there is a layer of small logs, branches leaves etc...that's all high carbon stuff and also helps as a filler because otherwise I'd use all my soil filling it. On top of the logs and branches is another 9 bags of horse manure which should work with the carbon to break each other down. More chippings to be half full and then I'll fill the final half with the soil/compost.

Urinating on the beds might not sound nice but it's a very good idea. Before the Victorian days people would come round to collect urine from people's houses...not like the stupid films where people threw it out the window. It was very valuable.

 

Adding b vitamins is a good idea. Increasing microbiological activity will stabilize the nitrogen faster.

https://www.amazon.com/SUPERthrive-VI30179-Vitamin-Solution-Gallon/dp/B000OME81G/ref=asc_df_B000OME81G/?tag=hyprod-20&linkCode=df0&hvadid=193142362025&hvpos=&hvnetw=g&hvrand=17452372203935913108&hvpone=&hvptwo=&hvqmt=&hvdev=m&hvdvcmdl=&hvlocint=&hvlocphy=9057137&hvtargid=pla-308320608880&psc=1

 

 

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(edited)

28 minutes ago, Strangelovesurfing said:

Thanks, I actually live very close to the sea and we can get loads of seaweed especially after a storm I think that's full of vitamin B. 

Bed number 2 started...then I ran out of wood and I feel like I've been beaten up xD

 

20210131_154924.jpg

Edited by El Nikko
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If this type of activity continues, I expect that "GameStop" will become a verb!

 

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16 minutes ago, turbguy said:

If this type of activity continues, I expect that "GameStop" will become a verb!

 

The strange thing about all the attention this has got is that it's not really so new...maybe other than apparently it's hurt one or two hedge funds.

Last year Kodak, Hertz and other companies were also pumped via the same 'social media' mob and I don't really remember much media attention.

 

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On 1/29/2021 at 4:22 PM, El Nikko said:

I would love to hear what @Jan van Eck thinks about this situation. Last year he thought we would see a deflationary spiral but it's complicated because we could be having inflation in some goods and deflation in other assets...or is that stagflation?

With the caveat that nobody can predict this future, as we are very much in uncharted territory, there are some trendlines that can be divined. 

The first is that interest rates are never going to be allowed to rise above nominal levels of fractions of one percent in the foreseeable future, say for the next ten or twenty years.  Assume for a moment that interest rates were to rise to a retail level of say 6% - what you as a retail bank customer would pay for a home mortgage loan.  That would presume an interbank lending rate, or "Fed Discount Rate," of 4.5% - one and one-half points below the retail rate.  With a national debt of 29 trillion (and climbing fast), the interest coupon on that debt, to service the debt, would be around 1.3 trillion.   Think about that for a moment: where is the Govt going to find an extra 1.3 trillion each year, every year, just to service the outstanding debt?   And the answer is: it cannot.  So, not only can the national debt no longer ever be paid, but the historical interest rate on that national debt can also never be paid.  

That implies that interest rates coupled to outside benchmarks are going to be administratively outlawed.  Thus, such offshore rate gauges such as LIBOR  [London Inter-Bank Offered Rate]  and HIBOR  [Hong Kong Inter-Bank Offered Rate] will have to vanish from the US financial scene.  Reliance on, or incorporation of, LIBOR and HIBOR into US rate setting would be disastrous if those rates were to climb.  They would make the US Govt insolvent overnight. 

Meanwhile the US Govt would have to allow the national debt to gently inflate away.   Inflation would be the only way to dispose of that huge debt.  Fortunately large chunks of that debt are held by offshore money, so the inflation penalty would lie on the shoulders of those foreigners, who have purchased US T-Bills  (the obvious source of Treasury debt finance) more for safety of capital than for return on capital. 

Nobody is collapsing the US T-Bill debt pile because the US Dollar is the effective world currency, and nobody, I mean nobody, wants to upset that apple-cart.  For example, apartments in Buenos Aires are purchased for cash, and those transactions are in US Dollars.  So you have the Buyer people and the Seller people sitting in some room in an armored building somewhere, counting out vast stacks of US hundred-dollar bills to do the transaction.  And when used-bus buyers from Colombia (and formerly, Venezuela) would show up at dealers in New Jersey to go buy some old inter-city buses, they would bring their suitcases of cash and the stacks would be counted out down there in Camden, NJ and each used bus would be sold (typically for about $24,000).  then the dealer ships the buses to the Port of Miami and off they go to their new role on dirt roads in the back country down there. 

All of these vast myriads of financial transactions, both private and governmental, require the US Dollar to operate.  Nothing else is safe and stable.  So even enemies of the USA need that US Dollar to be there as the world currency.  And so I predict a gradual inflation to inflate away the current debt pile.  My guess is taht it will take a century to get down to a manageable level.  And that also implies at least a half-century of depressed interest rates - held artificially low by government action, simply so the US Govt does not have to pay any real interest on its debt.

Remember that Americans are accustomed to high levels of govt expenditures, especially for transfer payments such as social security, FEMA, and subsidies to the States for all kinds of projects, everything from bridges to school notebooks.  But the same people that want all  this stuff from the govt are not prepared to pay for it in taxes.  So, there is this built-in mechanism to constantly lay on more debt.  that part is quite unsustainable. 

The leftists want to pay for it all by taxing the "rich."  The Rich refuse to pay.  You can argue all you want about "fair share," but if the payors refuse, then the Payees cannot collect.  So the reality is that, by other mechanisms  (such as the sales tax), the taxes collected are on the backs of the poor and the poorer.  

Remember what Mitt Romney pointed out in that famous hotel room where the Puerto Rican maids surreptitiously recorded him:  the bottom 47% of society pays no federal income tax in the USA.  The real taxpayers are the "upper middle classes," not even the very rich, simply because there are more of the UMC folks than there are of the Rich.   But the bottom 47% does pay a lot, simply because they are politically unorganized; they get screwed over via fees and indirect taxes.  And they know that they are being screwed over, so that is why you see those outbursts of fury down at the Capitol. 

Will the bottom 47% somehow do a French Revolution and force the re-structuring of society?  Probably not.  They have not hit rock bottom just yet, although the members of the very poor States are sure getting close. And those people have guns. 

So one place where funds can be scraped off is in the import trade, which is what Mr. Trump figured out with his flashy "trade wars."  You already know that he did not much give a damn about Chinese market-share manufacturing; he had his MAGA hats and golf stuff all made in China, along with the "fashion line" of his daughter Ivanka.  So you can reasonably conclude that tariffs are here to stay, so that they can finance the debt.

The other place is where Bill Clinton was able to siphon off lots of cash.  Remember that in his day it looked like the national debt, at that time less than 5 trillion, would be completely paid off in the next decade.  The mechanism was a "trading tax" on Wall Street trades; a little nibble here and a little nibble there and pretty soon you are talking real money.  When george took over he made the mistake of hiring these Goldman Sachs pigs as his advisors and Treasury Secretaries, and sure enough the trading tax was history.  Then with Dick Cheney saying that "deficits don't matter; don't bother me with that stuff," you were back to an exploding debt as the Administration started spending money that they could not raise from taxes. 

IS there the potential for runaway inflation, Argentine style?  Sure there is.  How about asset devaluation?  Sure there is.  How about Stagflation?  Sure there is.   And therein lies the rub: nobody can realistically predict how it plays out, other than to say that continued expansion of the national debt beyond the carry capacity of an expanding economy will be a disaster.  That, that definitely is not going to work.  So, final prediction:  interest rates will remain very depressed, savers get nothing for their troubles, and the debt will start to gently inflate away.   Cheers.

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On 1/30/2021 at 4:02 PM, NickW said:

In the Uk, unless there is a specific condition you can keep chickens as they are classed as domestic livestock. Need to be careful with cockerels as their crowing can come foul of nuisance legislation. 

No roosters allowed here either. 

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On 1/29/2021 at 10:29 PM, Dan Warnick said:

Chickens stink, man!  The putrid smell of ammonia.  Nasty.  

Not if you take care of them properly. We have no smell in ours. You would have to smear the poop on your nose. We use wood chips as base and they are cleaned weekly. 

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(edited)

On 1/30/2021 at 12:12 PM, Eyes Wide Open said:

Right now wall st is in a very uncomfortable position, Musk seems to be involved in some manner. The SEC is now investigating him with possible ties to the Proud Boy's. 

Meanwhile he is in a tizzy with Bezos over satteltie distribution. 

This drama only gets worse as time goes on... Musk funding the Proud Boys...one just can't make this up.

But no mention of the fact that dozens of corporations funded Black Lives Matter which is a socialist, transsexual, violent group which is based on a lie that a thug was unfairly killed by a cop who he attacked. The Proud Boys had their leader assasinated by an antifa group of plotters. They are not racist and have been choir boys compared to antifa and BLM. 

Edited by ronwagn
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5 hours ago, ronwagn said:

Not if you take care of them properly. We have no smell in ours. You would have to smear the poop on your nose. We use wood chips as base and they are cleaned weekly. 

True.  If you have small numbers, it should be manageable.  But when the apocalypse comes and you're raising enough for the greater neighborhood?  Oh, I guess if the apocalypse comes nobody will care about the smell.  Certainly not the Zombies.

All in jest, dear Ronnie.  All of my chicken experience comes from the commercial operations of Dekalb outside of Illiopolis (my hometown) where they have commercial chicken houses of the huge variety, some holding as many as 60.000 yard-birds each.

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On 1/31/2021 at 10:45 AM, El Nikko said:

And there's another take

https://www.zerohedge.com/markets/caveat-emptor-are-you-wsb-useful-idiot?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+(zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero)

 

Caveat Emptor - Are You A WSB 'Useful Idiot'?

Tyler Durden's Photo
BY TYLER DURDEN
SATURDAY, JAN 30, 2021 - 21:30

While high-fives and smily-faces abound on the interwebs over the destruction wrought on numerous hedge funds amid the short- and gamma-squeezes in GME and the rest of the heavily-shorted names, some are at least taking a moment to pause and reflect on other possibilities about how this all ends...

2021-01-30_12-22-44.jpg?itok=UHpWEvs8

Via 'The_Law_of_Pizza':

 

I don't work on the trading Floor, but I'm an attorney who services a variety of financial institutions, including broker/dealers.

This isn't the exciting, hilarious answer you want, but a lot of people had no idea it was even happening until the past 48 hours, and even now, it's mostly just a funny news article about some internet trolls making a bubble.

This is a big deal to the shorting community, but to the other 99% of the financial world, nobody gives a shit.

As much as young people on the internet like to imagine this as an epic, David vs Goliath, Wall Street vs Main Street showdown for the history books; from a bird's eye view its actually just a brief dumpster fire where a couple hedge funds lost their shirts betting on one little small cap stock. It has happened before, and it will happen again.

In 6 months, nobody will remember or care, except that (maybe) it will become more difficult for retail investors to trade options.

And not because the greedy hedge fund oligarchs forced the SEC to crack down on retail investors.

But rather because, when this is all said and done, there is going to be a black hole where most of these retail investors' brokerage accounts used to be, and the SEC and brokerage community will be lambasted for failing to protect unsophisticated investors from a bubble.

I have been monitoring the WSB threads, and while the WSB veterans know that they're making a suicide charge for the memes, they have brought thousands of naive, new investors with them - who predominantly think that they're going to somehow come out on top, not realizing that they're cannon fodder for the more savvy WSB users to exit with gains.

Redditors never seem to stop and think about why the WSB guys know so much about derivatives trading.

Or how they seem to know how to access and read from a Bloomberg Terminal.

Or why there are so many users there that can seemingly drop tens or hundreds of thousands of dollars on complicated meme plays.

How do you think that WSB knew that GME was open to a short squeeze and a gamma squeeze play?

WSB's power users are younger finance bros. It's 30-something investment bankers and portfolio managers memeing with each other a. cosplaying as "autists."

If you didn't know what a gamma squeeze was 48 hours ago, you are their exit strategy and the down payment on their next Porsche.

Caveat Emptor indeed.

 

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Glass-Steagall was legislation designed to curtail the manic speculation that led to the Wall Street Crash. Bill Clinton repealed it. His wife received hundreds of millions of dollars from speculators to try to get her elected. Now they have financed another nobody. Looks like you are out of war heroes when it comes to candidates for US president.

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10 hours ago, Dan Warnick said:

True.  If you have small numbers, it should be manageable.  But when the apocalypse comes and you're raising enough for the greater neighborhood?  Oh, I guess if the apocalypse comes nobody will care about the smell.  Certainly not the Zombies.

All in jest, dear Ronnie.  All of my chicken experience comes from the commercial operations of Dekalb outside of Illiopolis (my hometown) where they have commercial chicken houses of the huge variety, some holding as many as 60.000 yard-birds each.

I once lived near a cattle feed lot so I know. I think hog farms are by far the worst. 😆

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59 minutes ago, ronwagn said:

I once lived near a cattle feed lot so I know. I think hog farms are by far the worst. 😆

So half the thread is about GME

and the other half is about the POWER of wood chips! 

Maybe we could pump woodchips like reddit to 2000% 

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On 1/31/2021 at 6:00 AM, El Nikko said:

I think there is a lot of talk that they're aiming to keep it going for another week because there are still more hedge funds with short positions and the contracts are due this week...it does make you wonder how they know this, is it public information? 

You would also imagine that hedge funds who are exposed aren't likely to be sitting on their hands although I have no idea what mechanism there is to mitigate the risk.

I get concerned when the MSM starts pumping out stories about how the little guy is beating the system, it reminds me just as an example of Bitcoin in 2017 when it rocketed up. It was already ridiculously high when they put the spotlight on it. I remember the radio (probably TV but I haven't watched it for 7+ years) having loads of call ins from people who were talking it up and saying how they'd invested huge amounts and a few months later it crashed again.

I'll bet there are still people trying to get in on GME (for profit) which is surely madness at this point.

It was funny, very funny, but there are probably going to be a hell of a lot of losers when this shakes out.

The amount made doesn't have to correlate with the amount lost does it? If both hold on to a GOOD stock then they will eventually make money, right?

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9 hours ago, Richard D said:

 

https://www.fool.com/investing/2021/01/28/what-is-a-gamma-squeeze/

Clamp squeezing a piggy bank.

caveat emptor ĕmp′tôr″

  • n.
    The axiom or principle in commerce that the buyer alone is responsible for assessing the quality of a purchase before buying.
  • n.
    a commercial principle that without a warranty the buyer takes upon himself the risk of quality
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On 2/1/2021 at 2:58 AM, Jan van Eck said:

With the caveat that nobody can predict this future, as we are very much in uncharted territory, there are some trendlines that can be divined. 

The first is that interest rates are never going to be allowed to rise above nominal levels of fractions of one percent in the foreseeable future, say for the next ten or twenty years.  Assume for a moment that interest rates were to rise to a retail level of say 6% - what you as a retail bank customer would pay for a home mortgage loan.  That would presume an interbank lending rate, or "Fed Discount Rate," of 4.5% - one and one-half points below the retail rate.  With a national debt of 29 trillion (and climbing fast), the interest coupon on that debt, to service the debt, would be around 1.3 trillion.   Think about that for a moment: where is the Govt going to find an extra 1.3 trillion each year, every year, just to service the outstanding debt?   And the answer is: it cannot.  So, not only can the national debt no longer ever be paid, but the historical interest rate on that national debt can also never be paid.  

That implies that interest rates coupled to outside benchmarks are going to be administratively outlawed.  Thus, such offshore rate gauges such as LIBOR  [London Inter-Bank Offered Rate]  and HIBOR  [Hong Kong Inter-Bank Offered Rate] will have to vanish from the US financial scene.  Reliance on, or incorporation of, LIBOR and HIBOR into US rate setting would be disastrous if those rates were to climb.  They would make the US Govt insolvent overnight. 

Meanwhile the US Govt would have to allow the national debt to gently inflate away.   Inflation would be the only way to dispose of that huge debt.  Fortunately large chunks of that debt are held by offshore money, so the inflation penalty would lie on the shoulders of those foreigners, who have purchased US T-Bills  (the obvious source of Treasury debt finance) more for safety of capital than for return on capital. 

Nobody is collapsing the US T-Bill debt pile because the US Dollar is the effective world currency, and nobody, I mean nobody, wants to upset that apple-cart.  For example, apartments in Buenos Aires are purchased for cash, and those transactions are in US Dollars.  So you have the Buyer people and the Seller people sitting in some room in an armored building somewhere, counting out vast stacks of US hundred-dollar bills to do the transaction.  And when used-bus buyers from Colombia (and formerly, Venezuela) would show up at dealers in New Jersey to go buy some old inter-city buses, they would bring their suitcases of cash and the stacks would be counted out down there in Camden, NJ and each used bus would be sold (typically for about $24,000).  then the dealer ships the buses to the Port of Miami and off they go to their new role on dirt roads in the back country down there. 

All of these vast myriads of financial transactions, both private and governmental, require the US Dollar to operate.  Nothing else is safe and stable.  So even enemies of the USA need that US Dollar to be there as the world currency.  And so I predict a gradual inflation to inflate away the current debt pile.  My guess is taht it will take a century to get down to a manageable level.  And that also implies at least a half-century of depressed interest rates - held artificially low by government action, simply so the US Govt does not have to pay any real interest on its debt.

Remember that Americans are accustomed to high levels of govt expenditures, especially for transfer payments such as social security, FEMA, and subsidies to the States for all kinds of projects, everything from bridges to school notebooks.  But the same people that want all  this stuff from the govt are not prepared to pay for it in taxes.  So, there is this built-in mechanism to constantly lay on more debt.  that part is quite unsustainable. 

The leftists want to pay for it all by taxing the "rich."  The Rich refuse to pay.  You can argue all you want about "fair share," but if the payors refuse, then the Payees cannot collect.  So the reality is that, by other mechanisms  (such as the sales tax), the taxes collected are on the backs of the poor and the poorer.  

Remember what Mitt Romney pointed out in that famous hotel room where the Puerto Rican maids surreptitiously recorded him:  the bottom 47% of society pays no federal income tax in the USA.  The real taxpayers are the "upper middle classes," not even the very rich, simply because there are more of the UMC folks than there are of the Rich.   But the bottom 47% does pay a lot, simply because they are politically unorganized; they get screwed over via fees and indirect taxes.  And they know that they are being screwed over, so that is why you see those outbursts of fury down at the Capitol. 

Will the bottom 47% somehow do a French Revolution and force the re-structuring of society?  Probably not.  They have not hit rock bottom just yet, although the members of the very poor States are sure getting close. And those people have guns. 

So one place where funds can be scraped off is in the import trade, which is what Mr. Trump figured out with his flashy "trade wars."  You already know that he did not much give a damn about Chinese market-share manufacturing; he had his MAGA hats and golf stuff all made in China, along with the "fashion line" of his daughter Ivanka.  So you can reasonably conclude that tariffs are here to stay, so that they can finance the debt.

The other place is where Bill Clinton was able to siphon off lots of cash.  Remember that in his day it looked like the national debt, at that time less than 5 trillion, would be completely paid off in the next decade.  The mechanism was a "trading tax" on Wall Street trades; a little nibble here and a little nibble there and pretty soon you are talking real money.  When george took over he made the mistake of hiring these Goldman Sachs pigs as his advisors and Treasury Secretaries, and sure enough the trading tax was history.  Then with Dick Cheney saying that "deficits don't matter; don't bother me with that stuff," you were back to an exploding debt as the Administration started spending money that they could not raise from taxes. 

IS there the potential for runaway inflation, Argentine style?  Sure there is.  How about asset devaluation?  Sure there is.  How about Stagflation?  Sure there is.   And therein lies the rub: nobody can realistically predict how it plays out, other than to say that continued expansion of the national debt beyond the carry capacity of an expanding economy will be a disaster.  That, that definitely is not going to work.  So, final prediction:  interest rates will remain very depressed, savers get nothing for their troubles, and the debt will start to gently inflate away.   Cheers.

Thanks for replying Jan, I'm still processing the whole situation and your input is very much appreciated.

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Yikes! 

Am I right that the volumes being traded are very small? That would be odd.


 

sdf.PNG

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While people are or maybe still be jubilant about the destruction of a fund or two...

Why would other hedge funds that weren't short of these stocks not be pilling in to short stocks that are up 1000%???

 

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(edited)

On 2/1/2021 at 2:58 AM, Jan van Eck said:

With the caveat that nobody can predict this future, as we are very much in uncharted territory, there are some trendlines that can be divined. 

The first is that interest rates are never going to be allowed to rise above nominal levels of fractions of one percent in the foreseeable future, say for the next ten or twenty years.  Assume for a moment that interest rates were to rise to a retail level of say 6% - what you as a retail bank customer would pay for a home mortgage loan.  That would presume an interbank lending rate, or "Fed Discount Rate," of 4.5% - one and one-half points below the retail rate.  With a national debt of 29 trillion (and climbing fast), the interest coupon on that debt, to service the debt, would be around 1.3 trillion.   Think about that for a moment: where is the Govt going to find an extra 1.3 trillion each year, every year, just to service the outstanding debt?   And the answer is: it cannot.  So, not only can the national debt no longer ever be paid, but the historical interest rate on that national debt can also never be paid.  

That implies that interest rates coupled to outside benchmarks are going to be administratively outlawed.  Thus, such offshore rate gauges such as LIBOR  [London Inter-Bank Offered Rate]  and HIBOR  [Hong Kong Inter-Bank Offered Rate] will have to vanish from the US financial scene.  Reliance on, or incorporation of, LIBOR and HIBOR into US rate setting would be disastrous if those rates were to climb.  They would make the US Govt insolvent overnight. 

Meanwhile the US Govt would have to allow the national debt to gently inflate away.   Inflation would be the only way to dispose of that huge debt.  Fortunately large chunks of that debt are held by offshore money, so the inflation penalty would lie on the shoulders of those foreigners, who have purchased US T-Bills  (the obvious source of Treasury debt finance) more for safety of capital than for return on capital. 

Nobody is collapsing the US T-Bill debt pile because the US Dollar is the effective world currency, and nobody, I mean nobody, wants to upset that apple-cart.  For example, apartments in Buenos Aires are purchased for cash, and those transactions are in US Dollars.  So you have the Buyer people and the Seller people sitting in some room in an armored building somewhere, counting out vast stacks of US hundred-dollar bills to do the transaction.  And when used-bus buyers from Colombia (and formerly, Venezuela) would show up at dealers in New Jersey to go buy some old inter-city buses, they would bring their suitcases of cash and the stacks would be counted out down there in Camden, NJ and each used bus would be sold (typically for about $24,000).  then the dealer ships the buses to the Port of Miami and off they go to their new role on dirt roads in the back country down there. 

All of these vast myriads of financial transactions, both private and governmental, require the US Dollar to operate.  Nothing else is safe and stable.  So even enemies of the USA need that US Dollar to be there as the world currency.  And so I predict a gradual inflation to inflate away the current debt pile.  My guess is taht it will take a century to get down to a manageable level.  And that also implies at least a half-century of depressed interest rates - held artificially low by government action, simply so the US Govt does not have to pay any real interest on its debt.

Remember that Americans are accustomed to high levels of govt expenditures, especially for transfer payments such as social security, FEMA, and subsidies to the States for all kinds of projects, everything from bridges to school notebooks.  But the same people that want all  this stuff from the govt are not prepared to pay for it in taxes.  So, there is this built-in mechanism to constantly lay on more debt.  that part is quite unsustainable. 

The leftists want to pay for it all by taxing the "rich."  The Rich refuse to pay.  You can argue all you want about "fair share," but if the payors refuse, then the Payees cannot collect.  So the reality is that, by other mechanisms  (such as the sales tax), the taxes collected are on the backs of the poor and the poorer.  

Remember what Mitt Romney pointed out in that famous hotel room where the Puerto Rican maids surreptitiously recorded him:  the bottom 47% of society pays no federal income tax in the USA.  The real taxpayers are the "upper middle classes," not even the very rich, simply because there are more of the UMC folks than there are of the Rich.   But the bottom 47% does pay a lot, simply because they are politically unorganized; they get screwed over via fees and indirect taxes.  And they know that they are being screwed over, so that is why you see those outbursts of fury down at the Capitol. 

Will the bottom 47% somehow do a French Revolution and force the re-structuring of society?  Probably not.  They have not hit rock bottom just yet, although the members of the very poor States are sure getting close. And those people have guns. 

So one place where funds can be scraped off is in the import trade, which is what Mr. Trump figured out with his flashy "trade wars."  You already know that he did not much give a damn about Chinese market-share manufacturing; he had his MAGA hats and golf stuff all made in China, along with the "fashion line" of his daughter Ivanka.  So you can reasonably conclude that tariffs are here to stay, so that they can finance the debt.

The other place is where Bill Clinton was able to siphon off lots of cash.  Remember that in his day it looked like the national debt, at that time less than 5 trillion, would be completely paid off in the next decade.  The mechanism was a "trading tax" on Wall Street trades; a little nibble here and a little nibble there and pretty soon you are talking real money.  When george took over he made the mistake of hiring these Goldman Sachs pigs as his advisors and Treasury Secretaries, and sure enough the trading tax was history.  Then with Dick Cheney saying that "deficits don't matter; don't bother me with that stuff," you were back to an exploding debt as the Administration started spending money that they could not raise from taxes. 

IS there the potential for runaway inflation, Argentine style?  Sure there is.  How about asset devaluation?  Sure there is.  How about Stagflation?  Sure there is.   And therein lies the rub: nobody can realistically predict how it plays out, other than to say that continued expansion of the national debt beyond the carry capacity of an expanding economy will be a disaster.  That, that definitely is not going to work.  So, final prediction:  interest rates will remain very depressed, savers get nothing for their troubles, and the debt will start to gently inflate away.   Cheers.

OK my first question would be this.

How do we get inflation...it's money printing to be simplistic 

Then if we do that how can we can inflate the debt away?

That's a bit of a logical problem for me...what do you think?

 

Edited by El Nikko
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The swamp critters protect their own

 

AF0D0722-6CCF-42F7-AA4E-4F775559FBA5.jpeg

89FA0014-3EA0-4E87-AE35-781CC5D23616.jpeg

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(edited)

Buys vastly outnumbered sells but the price went down 48%

3F97606D-2402-49E2-859E-9833FDD74C57.jpeg

Edited by Ward Smith
Can you say manipulations?
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