Comments on: ODD THINGS Were Happening to the Price of Volkswagen http://www.dailyreckoning.com.au/odd-things-were-happening-to-the-price-of-volkswagen/2008/11/05/ An independent perspective on the Australian and global investment markets Sat, 21 Nov 2009 10:39:45 -0600 http://wordpress.org/?v=2.8 hourly 1 By: Peter Carvapai http://www.dailyreckoning.com.au/odd-things-were-happening-to-the-price-of-volkswagen/2008/11/05/comment-page-1/#comment-50802 Peter Carvapai Thu, 06 Nov 2008 12:11:40 +0000 http://www.dailyreckoning.com.au/?p=4289#comment-50802 At the moment the preferred vehicle to store wealth is money. This preference for assets in a liquid form causes the prices of the other assets to tumble done making people that owns such assets to show losses in their balance sheets. Large amounts of people are selling houses, shares, unsecured debt, etc,in exchange for money. This is what is bringing the prices down. The stock of money is probably the same, that is, the amount of money in the form of cash and bank deposits has not gone away. It is the buying of certain classes of assets that stopped. The Reserve Bank AS NOT YET BEEN PRINTING MONEY beyond what is normal. People have been lending their money to the government in order to get some risk free return. At the moment they prefer to lend to government rather than to banks. The Government has until now being busy selling bonds and lending and investing the proceeds from the sell of such bonds to the financial institutions that became insolvent. The fear is that at a certain point in time the government debt will become monetized, that is, that the government will start selling the bonds to the reserve bank in exchange for printed money, but that has not happen yet. At the moment the preferred vehicle to store wealth is money. This preference for assets in a liquid form causes the prices of the other assets to tumble done making people that owns such assets to show losses in their balance sheets. Large amounts of people are selling houses, shares, unsecured debt, etc,in exchange for money. This is what is bringing the prices down.

The stock of money is probably the same, that is, the amount of money in the form of cash and bank deposits has not gone away. It is the buying of certain classes of assets that stopped.

The Reserve Bank AS NOT YET BEEN PRINTING MONEY beyond what is normal. People have been lending their money to the government in order to get some risk free return. At the moment they prefer to lend to government rather than to banks. The Government has until now being busy selling bonds and lending and investing the proceeds from the sell of such bonds to the financial institutions that became insolvent. The fear is that at a certain point in time the government debt will become monetized, that is, that the government will start selling the bonds to the reserve bank in exchange for printed money, but that has not happen yet.

]]> By: Coffee Addict http://www.dailyreckoning.com.au/odd-things-were-happening-to-the-price-of-volkswagen/2008/11/05/comment-page-1/#comment-50535 Coffee Addict Wed, 05 Nov 2008 22:29:34 +0000 http://www.dailyreckoning.com.au/?p=4289#comment-50535 Kathy. The fiat money is still there but it is changing hands less frequently. Conseqently it generates less real wealth and represents less real wealth. Kathy. The fiat money is still there but it is changing hands less frequently. Conseqently it generates less real wealth and represents less real wealth.

]]> By: kathy http://www.dailyreckoning.com.au/odd-things-were-happening-to-the-price-of-volkswagen/2008/11/05/comment-page-1/#comment-50518 kathy Wed, 05 Nov 2008 19:41:21 +0000 http://www.dailyreckoning.com.au/?p=4289#comment-50518 I've asked this before and i have to bring it up again, can anyone tell me how with wealth disappearing as fast as all the deflation in shares and housing markets can possibly go in this spiral then surely the fed printing all their new money is just replacing this lost wealth, trouble is it is disappearing from the wealth of average Joe and being redistributed to the banks or even the government in the form of bank ownership. Is it being replaced quicker than it is being lost? Can anyone explain this coming fiat currrency crash in terms dummies can understand? I've asked this before and i have to bring it up again, can anyone tell me how with wealth disappearing as fast as all the deflation in shares and housing markets can possibly go in this spiral then surely the fed printing all their new money is just replacing this lost wealth, trouble is it is disappearing from the wealth of average Joe and being redistributed to the banks or even the government in the form of bank ownership. Is it being replaced quicker than it is being lost? Can anyone explain this coming fiat currrency crash in terms dummies can understand?

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