GaryBG

Don't Expect Hyperinflation for U.S. Economy

If debt in this country continues to be destroyed thru losses on mortgages, business and personal bankruptcies by the score, credit card write offs, diminished asset values which require balance sheets to either be replenished with additional capital or a much smaller entity, doesn't the issuance of $billions of Fed dollars replenish some of the destroyed dollars? To what degree will they have to overshoot to cause massive inflation? Jeremy Grantham makes an argument that $10 Trillion+ of debt will have to be written off over the next 6 years. Were the Fed not supplying a gigantic amount of dollars, would be not be destroyed by a lack of dollars?

A Socratic Dialogue: Fearing the Collapse of U.S. Treasury Bond Prices

I don't know the ages or experience of those commenting...but, when money market funds were paying 22% before Volker came and crushed inflation, we saved and we didn't spend because we couldn't keep up with all the rising costs all the time. We had a successful company and we could not raise prices fast enough. We adjusted pay rates several times a year. No one got ahead. It was miserable. Bond prices were just terrible. Good companies had lots worth 50 or 60% of face. No one bought because no one knew how much worse it would get. Today may well be the salad days for the next 10 years.


On Jun 14 05:30 PM The Virginian wrote:

> That's only in the "real world." In the theoretical world of the
> sophist economist (outside of the Austrians), high interest rates
> are a dis-incentive to save. In all seriousness, I don't know where
> the Keynsians come up with this stuff. The above argument is so
> far from the common-sense reality of most people, it's no wonder
> most economists make meteorologists look like Oracle of Delphi.<br/>

GM Common Stock Is Worth More than You Think

Don't buy the shares? The bankruptcy is at 8AM on Monday, 1.5 hours before the market opens.


On May 30 11:49 AM notsuoh wrote:

> Comments are funny. One is saying buy and the other sell. I have
> a few shares and would like to know whether I should sell at markets
> open or wait a bit. I know this is terrible but I bought at .77
> so if it may possibly go up even just a little I can make some money
> but if it does not then I stand to lose a bit. What do I do, I am
> new to this.

Debunking the "Decline of the Middle Class" Myth

If a person is hopelessly in debt, does that person have any responsibility for the choices made that got them there? Or, was the person forced to buy things not needed, not stay current on CC payments, not improve their education and competency in order to learn more? Is there something actually unusual about a recession and a strain on personal finance? Has no one been told that they should save for a rainy day?

Any government big enough to give you all you want is big enough to take everything you have. Lesson of the current crisis...personal responsibility is the missing behavior.

Fannie and Freddie Did Not Cause This Crisis

"And their response was unwise - Fannie and Freddie followed the shadow banking sector downward." Mark, that is quite the soft pedal for the role Fannie and Freddie played. They at best did this because the thought it was the political right thing to do or they did it because they wanted to make a lot of dough (as Raines had done under the incentive plans he had set up). Unwise? What would have happened if they had NOT done this? If they had just done business as usual? By taking on more risk when they didn't have to (they did not have to in order to fulfill the mission), they created an exothermic like financial reaction and they entire system went up in the resulting reaction. There should not be a quasi-governmental institution who operates without the boundries of economics. They made their own rules and they broke the bank.

How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play it

This is very similar to the prediction of Harry Dent who at one time forecast a 40,000 DOW (and had the metrics to support it) and now calls for a substantial depression starting around the end of 2009 and extending for quite a number of years. The short story of it is simple. in 2008, the midpoint of the BabyBoomers passed age 55. At that age, savings become more important than acquisitions as there is not a lot of time left or promotions to come to pay off the debt in time for retirement. We are a consumer led economy. It makes great sense to me, does mirror the Japanese model of their lost decade. It also makes sense to me that it could be much worse because we, unlike Japan, are a net debtor nation and that will go on and on. Spending $700 billion a year just to buy oil is the road directly to financial disaster. It isn't a theory as that is what we are doing at this moment and without an energy plan of any sort anywhere in sight. I'd agree it looks bad and intend to continue to get to a conservative position where wealth protection ranks number one, period. The risk is too great and the only negative is to miss out on the next big financial gain...in what or when I have not a clue.