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Michael Kudrna
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Momentum Trader/Technical Trader. Move fast when an opportunity arises, cut losers fast to protect from losses, keep risk low, play the odds when in your favor, don't feel obligated to buy as that will ruin your mindset. Plenty of opportunities out there, don't let yourself feel rushed. ... More
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  • Senator Marco Rubio To President Obama: Raising The Debt Ceiling A Sixth Time? 2 comments
    Jan 7, 2012 1:54 PM

    Another open letter to President Obama has gone viral among the masses via social media.  First it was Leon Cooperman's letter to President Obama that was highly discussed, now it is Senator Marco Rubio expressing his frustrations with the President after he recently requested another debt ceiling increase. 

    The dangers continue to grow as we recklessly add debt and make no significant cuts to balance the budget as Rick Santelli points out using basic math skills that anyone can understand.  Repealing the Bush Tax cuts on households making over $250k a year will only amount to $700 billion in savings over 10 years.  That equates to savings of $70 billion on a $1.3 TRILLION deficit, so clearly taxing the rich is just a political ploy to rally (blind?) the voter-base rather than an actual solution to the deficit problems.

    [Related: CLICK HERE FOR A FREE GOOGLE NEWSLETTER WHEN WE POST A NEW ARTICLE]

    What most don't realize is that we are forced to create inflation just to continue to pay our bills and that inflation is a form of a tax on everyone, regardless of your pay scale.  Every year, the government inflates (taxes) everyone, regardless if you are rich or poor, but it's an invisible tax until you start to realize that costs are going up around you and you're not keeping up with inflation by increasing your own personal revenue year-over-year as your dollar loses its buying power.

    After reading Senator Rubio's letter, I must applaud him.  He calls out the President for not making any serious attempt at cutting spending, but rather making his sixth attempt (and it will be yet another successful attempt) at increasing debt limits.  He points out how President Obama keeps pushing off the growing debt discussion which makes it harder to tackle every day we let it grow.  Hopefully more citizens become aware of the importance of this topic before it becomes too late and we reach the point of no return as we follow the path of Greece, Italy, etc... Some believe we have already crossed the point of no return.  Let's hope they are wrong.  The letter can be seen below.

    CLICK HERE TO READ THE REST OF THIS ARTICLE ON KUDRNA'S STOCK MARKET TALK

     

     

    Kudrna

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  • schrumpfmeister
    , contributor
    Comments (138) | Send Message
     
    "What most don't realize is that we are forced to create inflation just to continue to pay our bills and that inflation is a form of a tax on everyone, regardless of your pay scale. "

     

    I've been told healthy housing is the key to any economic growth plan. I'd suggest we are forced to create inflation to get us out of the housing crash that has us in a stagnant festering mess, bordering on a depression. Every homeowner in America wants their home to go up in value, and a good number NEEDS inflation to render their house equity a value greater than zero. Retail will rise when equity goes up, and tech will respond to retail profits, jobs will follow etc etc, etc...

     

    It might be a tax on everyone, but the money that is printed does not just disappear, its there for everyone to grasp, claw, and create a product for.

     

    It hurts those who expected to just retire on their savings, or those with fixed income not tied to the inflation rate. It hurts the holders of wealth, and create opportunity for the seekers of wealth.

     

    It puts the screw to current domestic foreign debt holders as well. but where else do they go to park their wealth?

     

    I remember when there were surpluses (pre-bush), a few folks actually had the gall to say that it was bad for us to have surpluses, as it provided less investment opportunity for others to have a vested interest in America.

     

    So I'll argue that your comment is a bit to simplistic, there are national defense issues, international trade issues, and standard of living issues that require inflation (thanks to the blood-sucking vampire squid bankers and politicians that brought us to this brink of depression)

     

    Tax the rich (especially the vampire squid bankers that got us into this mess), cut the spending, AND inflate us out of the housing mess. Its the only alternative to depression. The only courses for people is to work, to innovate or to be left behind.
    25 Jan 2012, 10:53 AM Reply Like
  • Michael Kudrna
    , contributor
    Comments (238) | Send Message
     
    Author’s reply » For many, we are still in depression.

     

    One problem is it is rare that a politician actually grasps how the world economic, bond market and monetary system works. The CNBC debate made this known.

     

    You can't inflate out of the housing mess because the housing mess has too much inventory. I don't see how it is an inflationary issue because the main problem depressing prices is too much inventory (and still shadow inventory) that need to be bought up first before anything can be fixed. Inflation doesn't help with the inventory. Some have argued that if the govt was in a better position, they scoop up this inventory and get it off the market and slowly sell it back to the market in block sales which would spur business growth. However, our financial irresponsibility makes this all but a dream.

     

    Secondly, low interest rates which create inflation are not beneficial to the older generation of retired workers trying to live off their low risk income (which are now being forced into dangerous risky stocks at their age which can create another problem for Americans if stocks don't continue to do well every month....and they will not) who are unable to work at their age. Social security won't pay their bills because social security is not tied into TRUE inflation. These are people that are not in a position to maneuver at their age. These are people that don't have the options available that someone younger has to remedy their situation. These are people we should be taking care of, not kicking to the curb. We need higher interest rates for them to survive and be an asset, not another problem for us.

     

    What do I mean by true inflation? Well the govt numbers CPI does not fully take into account energy and food. If energy goes up, most everything else goes up in cost. The average American has to pay more with less (less disposable income) but the govt doesn't even acknowledge this. So I'd argue we are seeing FAR more inflation (therefore a weaker dollar) than most anyone outside the financial industry actually understands. Gold is at record levels and likely to reach even higher levels. If that doesn't speak of high inflation and lack of trust in the strength of the dollar...then I don't know what does.

     

    Our dollar is dying...paper currency doesn't work when all you do is inflate recklessly. That gives reason why the currency will fail sooner than later if we continue this path and replaced with a new currency. That's not something we want to even think about as that would create chaos for the average person who has to start over creating wealth for their family. http://bit.ly/wWA9eH

     

    With all due respect, I'd argue your entire plan is too simplistic. Inflation is not the cure...if it was, we wouldn't be having this talk right now as all we've done is inflate every year. If we could get rid of our debt both as a nation and as people, deflation is actually a benefit to fixing the dollar. As of right now, even talking about deflation sounds crazy because of how screwed we are as a nation. We are debt addicts as it is the easier way to avoid making tough cuts that would lower votes for certain politicians.

     

    Look at Canada, they are fiscally responsible allowing them to take on challenges whereas we are fiscally irresponsible allowing us to tack on more problems to the list of existing problems which means no flexibility. Canada is doing it right, they cut $7 to $1 in the 90's and fixed some of the same problems we have right now. They are likely to have a housing bust in their future, but they are in a much better position to overcome it because they are taking care of their problems, not punting it with being fiscally irresponsible. The scheme only lasts so long until it smacks you in the face.

     

    This is what a good leader sounds like: http://bit.ly/w73iPA

     

    The reality is we are going into a recession or even a depression again at some point if we continue this path. The only question is whether we do it for being responsible and cutting our deficit and debt like responsible adults taking their medicine and learning from it without sacrificing our future generations that are the true victims of this OR we wait until the bond market tells us to make the cuts. Those cuts will be more brutal than most any American is willing to listen to without fear of living in fear. Watch Greece to see what that looks like. Civil war.

     

    Watch Greece and watch Canada. One didn't control their finances, one did. One is able to tackle future problems for odds of a better survival rate, one didn't.

     

    Sorry for my comments being a bit out of order, I wanted to reply to you without waiting, but I'm multi-tasking at the moment.
    26 Jan 2012, 10:05 PM Reply Like
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