Whatever your views on the Ukrainian war, what does this war in particular do to the monetary situation? Is it removing money from the system by sending it abroad or is it inflationary?
My personal take is that most of the money "sent to Ukraine" is actually spent in the US on weapons and armaments, which are then sent to Ukraine. Thus, the majority of the money is actually spent in the US, and thus is most likely inflationary.
Follow your excellent logic one more step. Our tax dollars are allocated to stop VladManBad, but the government check gets written to our notorious M-I-C. They churn out the goodies and ship them to Ukraine. Despite of the way your TV lauds it, none of this is a DONATION. Now for that final step -
Does ANYONE really believe that, win or lose, the Ukrainians (or their masters) are NOT GOING TO RECEIVE A BILL FOR ALL THIS HARDWARE?
The question to ask: So when they pony up THAT check, who is it going to be made out to?
I can guarantee you one and all that even though the notorious M-I-C has ALREADY BEEN PAID FOR THEIR PRODUCTS UP FRONT, it's not going to be written to the US Treasury or the US Tax Payer...
I guess the mistake I am making is thinking of the $$ as Foreign Aid only on the front end. The kick backs and 10% for TreasonBoy are what I'd like to see paid back to us poor suckers who "donated" to the IRS in the first place...
Interesting. Didn't Mr Biden announce not long ago boasting the $850B aid package to help Ukraine. Its curious as I continue to see on the occasion Ukraine licence plates during my stint here in Croatia, sporting vehicles shall we say of non modest means suchs as newer BMWs Land Rovers, and other pricey autos. Maybe its nothing, Ukraines' taking out loans? I dont know it seems odd to me.
Thanks, I was wondering if there was a back-door way for central banks to remove money from the system with some war accounting tricks. Otherwise, why pursue such a costly war if you are trying to bring inflation down? (Apart from if you truly believe in the cause but I highly doubt that)
They are not removing money from the system - they are reallocating debt to the Ukrainians so that at the end of the conflict, their previous "investments" were protected and secured by further indenture. Whatever resources reside in Ukraine will henceforth be owned by our loan officers and defense contractors.
Like I said, putting your views on the war aside and focussing purely on the financial aspects, what is the advantage of a war at this already inflationary time?
The major advantage of war right now, in my view is as a distraction, - they don't really care if it's inflationary or not (it is, of course) but they sure don't want us to notice that economically and probably in half a dozen other ways, we're going to hell in a hand basket sometime soon
The other great opportunity in war is the “broken window” effect. All the bullets that are fired, the equipment that is destroyed and which MUST now be replaced (for the safety of the WHOLE of Europe...) are great opportunities to raise cash.
We promise support, write bills and acts, which create purchase orders for stuff that is almost guaranteed to be destroyed and need replacement. It’s much better than simply giving cash, which like a ride will sometime come back. With military spending in support of a war of this nature, the money spent to create equipment is on a one way street. It’s great business. Too bad for the ideologist in Russia and the invaded Ukrainians. They’ll pay with their lives for the West’s Keynesian enrichment.
Bill, how can you make a valid comparison of gold to stocks over a 57 year period without including the effect of reinvested stock dividends? As a investor in stocks of healthy companies that pay reliable and increasing dividends for almost 50 years, I found that the reinvested dividends supercharged my investment return much more than just price appreciation. I suspect that you would be able to buy MORE ounces of gold, not less, with the DOW stocks at the end of the 57 years if reinvested dividends were included.
Good question, Tim Baldwin, but where are your numbers?
"But imagine that you followed your broker’s advice… and you just stuck with the program. Today, you’d be 97 years old. And instead of stocks worth 24 ounces of gold, as they were in 1965, they would be worth 17 ounces! [Stocks DOWN, gold UP] Congratulations, your stocks lost 30% of their value over the last 57 years. (Not including your income from dividends)."
I love asking the kind of question you asked here, but I want to do the arithmetic before I stick my neck out.
Buy 100 shares of stock X for 24 ounces of gold in 1965. The dividend yield average of stock X is 1% (the Dow dividend yield average is around 2%) for 40 of the years, and the stock pays no dividend at all for 17 of the 57 years. All dividends are reinvested. In 2022, you would have 149 shares of stock X. According to Bill, the 100 shares is worth 17 ounces in 2022 , so 149 shares is worth 25.3 ounces, MORE than the 24 ounces you had in 1965.
Using the DOW 2% yield and 57 years , you would have 309 shares worth 52.5 ounces in 2022.
So including dividends is important. I am not trying to disprove Bill's excellent point, just show that if you are going to "buy good companies and hold on...." you need to reinvest all your dividends and pray you aren't forced to sell everything during a stock market crash to have a chance to come out ahead at the end. This has been my experience.
THAT's the kind of information we can think with, Tim. Thanks very much.
Would it be fair to expand on the lesson: "... if you are going to "buy good companies and hold on...." you need to reinvest all your dividends," and live within your means, and avoid debt?
Also because I many cases, investors spend their dividend returns. So it’s a theoretical exercise to “reinvest” dividend income. Just like the gold coin comparison was a theoretical comparison. The point, in my opinion, is what is the value of the investment at a point in time measured today and in the past if we used a more objective currency with thousands of years in use. Vs a fiat currency with less than 100 years of use.
It dawns on me that Mr. Bonner, our dear editor, is pissed off and a bit schizophrenic on what the U.S. Federal Government and the Federal Reserve are doing (without telling us what the actual solution(s) is/are), due to self interest.
If I had almost a billion dollars in assets and could convert them into U.S. Dollars and then put them into a U.S. savings account that pays . . . let's say 5 percent interest, RISK FREE (kind of like the good ole' days) I would be pissed off too. I mean, who couldn't live and grow their wealth on 5 million bucks a year (even after paying taxes and inflation?).
Even me, a piker with only 1 percent of Bonner's nest egg could be on "easy street" (here's to you Joel) with one-half a million coming in every year RISK FREE. But, the Marxists that are running our world right now aren't having it . Oh and Bill, I understand your testiness.
Why does the head of the teachers union go to Ukraine? Pick up money to donate to democrats running for office? No need for her to be in Ukraine!! Something fishy there. Alas, I invested in the stock market dead period and wound up like Bill mentioned. Big fat goose egg. Market looking strange today, like we are at the precipice, other shoe about to drop, end of the line, smoking gun, whatever you want to call it. Will NOT be logical!! Just sayin'
Here's a thought, since 1970 US debt is up 55X, stocks up 54X, Dow Jones up 55X, coin cidence?
Bill made the comment 200 years to get to a Trillion, Versus the the last two years representin 40% increase wow! Let that sink in for awhile. Dow 1 Gold 1 maybe, ? Gold $38000 Dow 3500 ? Why not ?
I have been thinking about real wealth as opposed to apparent wealth for some decades. One measure other than gold is real energy availability or expenditure, and the planetary population of 8 billion has risen and reduced poverty linearly with energy production.
In the 1960's (Saudi) oil was US$2 per barrel, and gold was $35, about a 17x ratio.This year I could probably find a date when oil was $100 and gold $1700. I agree that using gold as an indicator of value is not perfect, but it is clear and comprehensible, and I was able to use the technique to demonstrate housing inflation at coffee last week.
The war on energy which is underway is a path to Doomsday. This was discussed on BPR at the beginning of the year, and we will see it in real life in Germany this winter.
From a certain angle you could relate population growth to carbon consumption. Will the same proportionality apply in reverse. It looks that way to me.
Whatever your views on the Ukrainian war, what does this war in particular do to the monetary situation? Is it removing money from the system by sending it abroad or is it inflationary?
My personal take is that most of the money "sent to Ukraine" is actually spent in the US on weapons and armaments, which are then sent to Ukraine. Thus, the majority of the money is actually spent in the US, and thus is most likely inflationary.
Beat me to it...
And me
Hi Gordon -
Follow your excellent logic one more step. Our tax dollars are allocated to stop VladManBad, but the government check gets written to our notorious M-I-C. They churn out the goodies and ship them to Ukraine. Despite of the way your TV lauds it, none of this is a DONATION. Now for that final step -
Does ANYONE really believe that, win or lose, the Ukrainians (or their masters) are NOT GOING TO RECEIVE A BILL FOR ALL THIS HARDWARE?
The question to ask: So when they pony up THAT check, who is it going to be made out to?
I can guarantee you one and all that even though the notorious M-I-C has ALREADY BEEN PAID FOR THEIR PRODUCTS UP FRONT, it's not going to be written to the US Treasury or the US Tax Payer...
Hey PG - not following. Is what?
No foreign aid is (ultimately) going to be written to the US Treasury or the US Tax Payer...
Thanks Mr. Loic.
I guess the mistake I am making is thinking of the $$ as Foreign Aid only on the front end. The kick backs and 10% for TreasonBoy are what I'd like to see paid back to us poor suckers who "donated" to the IRS in the first place...
Interesting. Didn't Mr Biden announce not long ago boasting the $850B aid package to help Ukraine. Its curious as I continue to see on the occasion Ukraine licence plates during my stint here in Croatia, sporting vehicles shall we say of non modest means suchs as newer BMWs Land Rovers, and other pricey autos. Maybe its nothing, Ukraines' taking out loans? I dont know it seems odd to me.
Thanks, I was wondering if there was a back-door way for central banks to remove money from the system with some war accounting tricks. Otherwise, why pursue such a costly war if you are trying to bring inflation down? (Apart from if you truly believe in the cause but I highly doubt that)
They are not removing money from the system - they are reallocating debt to the Ukrainians so that at the end of the conflict, their previous "investments" were protected and secured by further indenture. Whatever resources reside in Ukraine will henceforth be owned by our loan officers and defense contractors.
Good luck with that!
DingDingDing! We have a winner Mr. Taco!!
Can anyone say Lend-Lease Program?
Like I said, putting your views on the war aside and focussing purely on the financial aspects, what is the advantage of a war at this already inflationary time?
The major advantage of war right now, in my view is as a distraction, - they don't really care if it's inflationary or not (it is, of course) but they sure don't want us to notice that economically and probably in half a dozen other ways, we're going to hell in a hand basket sometime soon
Thanks, yes I agree with that, I was just wondering if there was another angle I hadn't thought of.
Do consider that they want the war to go on not to end it
Nobody loves war like America.
The other great opportunity in war is the “broken window” effect. All the bullets that are fired, the equipment that is destroyed and which MUST now be replaced (for the safety of the WHOLE of Europe...) are great opportunities to raise cash.
We promise support, write bills and acts, which create purchase orders for stuff that is almost guaranteed to be destroyed and need replacement. It’s much better than simply giving cash, which like a ride will sometime come back. With military spending in support of a war of this nature, the money spent to create equipment is on a one way street. It’s great business. Too bad for the ideologist in Russia and the invaded Ukrainians. They’ll pay with their lives for the West’s Keynesian enrichment.
Bill, how can you make a valid comparison of gold to stocks over a 57 year period without including the effect of reinvested stock dividends? As a investor in stocks of healthy companies that pay reliable and increasing dividends for almost 50 years, I found that the reinvested dividends supercharged my investment return much more than just price appreciation. I suspect that you would be able to buy MORE ounces of gold, not less, with the DOW stocks at the end of the 57 years if reinvested dividends were included.
Good question, Tim Baldwin, but where are your numbers?
"But imagine that you followed your broker’s advice… and you just stuck with the program. Today, you’d be 97 years old. And instead of stocks worth 24 ounces of gold, as they were in 1965, they would be worth 17 ounces! [Stocks DOWN, gold UP] Congratulations, your stocks lost 30% of their value over the last 57 years. (Not including your income from dividends)."
I love asking the kind of question you asked here, but I want to do the arithmetic before I stick my neck out.
Here's a very conservative hypothetical example:
Buy 100 shares of stock X for 24 ounces of gold in 1965. The dividend yield average of stock X is 1% (the Dow dividend yield average is around 2%) for 40 of the years, and the stock pays no dividend at all for 17 of the 57 years. All dividends are reinvested. In 2022, you would have 149 shares of stock X. According to Bill, the 100 shares is worth 17 ounces in 2022 , so 149 shares is worth 25.3 ounces, MORE than the 24 ounces you had in 1965.
Using the DOW 2% yield and 57 years , you would have 309 shares worth 52.5 ounces in 2022.
So including dividends is important. I am not trying to disprove Bill's excellent point, just show that if you are going to "buy good companies and hold on...." you need to reinvest all your dividends and pray you aren't forced to sell everything during a stock market crash to have a chance to come out ahead at the end. This has been my experience.
THAT's the kind of information we can think with, Tim. Thanks very much.
Would it be fair to expand on the lesson: "... if you are going to "buy good companies and hold on...." you need to reinvest all your dividends," and live within your means, and avoid debt?
The last 2 have been my experience.
Also because I many cases, investors spend their dividend returns. So it’s a theoretical exercise to “reinvest” dividend income. Just like the gold coin comparison was a theoretical comparison. The point, in my opinion, is what is the value of the investment at a point in time measured today and in the past if we used a more objective currency with thousands of years in use. Vs a fiat currency with less than 100 years of use.
It dawns on me that Mr. Bonner, our dear editor, is pissed off and a bit schizophrenic on what the U.S. Federal Government and the Federal Reserve are doing (without telling us what the actual solution(s) is/are), due to self interest.
If I had almost a billion dollars in assets and could convert them into U.S. Dollars and then put them into a U.S. savings account that pays . . . let's say 5 percent interest, RISK FREE (kind of like the good ole' days) I would be pissed off too. I mean, who couldn't live and grow their wealth on 5 million bucks a year (even after paying taxes and inflation?).
Even me, a piker with only 1 percent of Bonner's nest egg could be on "easy street" (here's to you Joel) with one-half a million coming in every year RISK FREE. But, the Marxists that are running our world right now aren't having it . Oh and Bill, I understand your testiness.
Why does the head of the teachers union go to Ukraine? Pick up money to donate to democrats running for office? No need for her to be in Ukraine!! Something fishy there. Alas, I invested in the stock market dead period and wound up like Bill mentioned. Big fat goose egg. Market looking strange today, like we are at the precipice, other shoe about to drop, end of the line, smoking gun, whatever you want to call it. Will NOT be logical!! Just sayin'
Don Harrell
Here's a thought, since 1970 US debt is up 55X, stocks up 54X, Dow Jones up 55X, coin cidence?
Bill made the comment 200 years to get to a Trillion, Versus the the last two years representin 40% increase wow! Let that sink in for awhile. Dow 1 Gold 1 maybe, ? Gold $38000 Dow 3500 ? Why not ?
I have been thinking about real wealth as opposed to apparent wealth for some decades. One measure other than gold is real energy availability or expenditure, and the planetary population of 8 billion has risen and reduced poverty linearly with energy production.
In the 1960's (Saudi) oil was US$2 per barrel, and gold was $35, about a 17x ratio.This year I could probably find a date when oil was $100 and gold $1700. I agree that using gold as an indicator of value is not perfect, but it is clear and comprehensible, and I was able to use the technique to demonstrate housing inflation at coffee last week.
The war on energy which is underway is a path to Doomsday. This was discussed on BPR at the beginning of the year, and we will see it in real life in Germany this winter.
From a certain angle you could relate population growth to carbon consumption. Will the same proportionality apply in reverse. It looks that way to me.