Balderdash's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/241378/comments http://seekingalpha.com/news/market_currents/post/36781?source=feed#comment-766174 766174 Wed, 18 Nov 2009 18:08:26 -0500 http://seekingalpha.com/article/168649-deflation-is-the-threat-not-inflation?source=feed#comment-729007 729007
Modern economists seem to have forgotten the 70's.]]> Sun, 25 Oct 2009 08:13:45 -0400
Modern economists seem to have forgotten the 70's.]]> http://seekingalpha.com/article/163348-the-dollar-may-not-be-doomed?source=feed#comment-690433 690433
just because they have a disproportionate amount of income doesn't mean they're fate is tied to the dollar. their theft is denominated in dollars to be sure. but perhaps it's in their best interest to have a 'steady' dollar decline? keep the masses happy by inflating away their debt but slowly enough for the elite to get out of the way (their hopes).]]> Fri, 25 Sep 2009 06:18:01 -0400
just because they have a disproportionate amount of income doesn't mean they're fate is tied to the dollar. their theft is denominated in dollars to be sure. but perhaps it's in their best interest to have a 'steady' dollar decline? keep the masses happy by inflating away their debt but slowly enough for the elite to get out of the way (their hopes).]]> http://seekingalpha.com/article/160456-is-the-u-s-dollar-finished?source=feed#comment-667200 667200 Tue, 08 Sep 2009 16:57:49 -0400 http://seekingalpha.com/news/market_currents/post/32005?source=feed#comment-663486 663486

On Sep 05 08:02 PM Bill L. wrote:

> As a group they are still wrong. The problem is there is 52+trillion
> in debt leveraged with derivatives and only 2 trillion in real dollars
> in the economy to pay for it. What they ignored is any time in history
> their has been this much credit in the economy versus wealth and
> savings, the result was a recession/depression. All these "cash for
> X" programs just encourage Americans to continuing adding to the
> indebtedness of the population while also adding to the indebtedness
> of the country. Stimulating the economy by adding to the amount of
> debt outstanding, when it is already at critical mass is not a long
> term solution.
>
> It actually seems pretty simple to me.
> Amount Owed > Amount Saved = Deflation Persists]]> Sat, 05 Sep 2009 20:28:06 -0400

On Sep 05 08:02 PM Bill L. wrote:

> As a group they are still wrong. The problem is there is 52+trillion
> in debt leveraged with derivatives and only 2 trillion in real dollars
> in the economy to pay for it. What they ignored is any time in history
> their has been this much credit in the economy versus wealth and
> savings, the result was a recession/depression. All these "cash for
> X" programs just encourage Americans to continuing adding to the
> indebtedness of the population while also adding to the indebtedness
> of the country. Stimulating the economy by adding to the amount of
> debt outstanding, when it is already at critical mass is not a long
> term solution.
>
> It actually seems pretty simple to me.
> Amount Owed > Amount Saved = Deflation Persists]]> http://seekingalpha.com/article/158925-sobering-stat-arms-index-indicates-market-is-at-peak-not-bottom?source=feed#comment-652156 652156
they've changed the game. they've turned an imminent implosion into an imminent explosion.


On Aug 29 02:11 AM Michael Clark wrote:

> This is not a surprise -- but I appreciated reading it. We are near
> a top and we will test March lows. Denial is not a fundamental strength.
> And companies with declining earnings are not necessarily a good
> value. I'd rather own a company with a high PE and rising earnings
> than a company with a low PE and declining earnings. In the case
> of this market, we have mostly companies with a high PE and declining
> earnings. That's a very dangerous market condition.]]> Sat, 29 Aug 2009 08:56:01 -0400
they've changed the game. they've turned an imminent implosion into an imminent explosion.


On Aug 29 02:11 AM Michael Clark wrote:

> This is not a surprise -- but I appreciated reading it. We are near
> a top and we will test March lows. Denial is not a fundamental strength.
> And companies with declining earnings are not necessarily a good
> value. I'd rather own a company with a high PE and rising earnings
> than a company with a low PE and declining earnings. In the case
> of this market, we have mostly companies with a high PE and declining
> earnings. That's a very dangerous market condition.]]> http://seekingalpha.com/article/158926-pace-of-insider-sales-continues-to-escalate?source=feed#comment-652150 652150
the euphoria from doubling your money is dampened if you've lost 70% of it first.]]> Sat, 29 Aug 2009 08:50:53 -0400
the euphoria from doubling your money is dampened if you've lost 70% of it first.]]> http://seekingalpha.com/news/market_currents/post/30259?source=feed#comment-624525 624525 Tue, 11 Aug 2009 08:18:15 -0400 http://seekingalpha.com/news/market_currents/post/30144?source=feed#comment-620682 620682 Fri, 07 Aug 2009 20:01:10 -0400 http://seekingalpha.com/news/market_currents/post/28165?source=feed#comment-591588 591588 Fri, 17 Jul 2009 06:00:32 -0400 http://seekingalpha.com/article/146423-predicting-the-next-great-bubble?source=feed#comment-570919 570919

On Jul 01 09:29 AM stocknerd wrote:

> The inflation bubble is so....so....predicted now that it can't happen.
>
> In any case inflation will not, can not happen, this year or maybe
> next.
> You must have a viable economy for inflation to happen. You need
> housing to get out of ER---mortage applications were way down meaning
> more life support for housing. Prices for homes is still dropping.
> Sales down most everywhere. Banks still need help. When housing
> prices rise in Vegas please post. No more bloody charts with money
> supply please. It is meaningless and your guess only.]]> Wed, 01 Jul 2009 21:13:20 -0400

On Jul 01 09:29 AM stocknerd wrote:

> The inflation bubble is so....so....predicted now that it can't happen.
>
> In any case inflation will not, can not happen, this year or maybe
> next.
> You must have a viable economy for inflation to happen. You need
> housing to get out of ER---mortage applications were way down meaning
> more life support for housing. Prices for homes is still dropping.
> Sales down most everywhere. Banks still need help. When housing
> prices rise in Vegas please post. No more bloody charts with money
> supply please. It is meaningless and your guess only.]]> http://seekingalpha.com/news/market_currents/post/26177?source=feed#comment-551563 551563
To the external borrower, whether it be the treasury or the public, the result of using either tool is the same: higher interest rates. Given the political pressure to get the economy 'booming' again, we're essentially propping up industries that need to and would otherwise shrink given a higher cost of borrowing (housing for instance). Therefore, whether the fed controls interest rates via open market operations or via internal deposit interest, Bernanke risks choking off the growth fueled by his inflation and causing another nasty recession. This would include raising borrowing costs for the massive federal deficit, a political move that would probably get the fed's charter revoked.

I think the problem with an exit strategy using bond sales is that the bonds he has to sell are junk and he probably can't sell them on the open market for their balance sheet value -- so if he gets $0.1 on the dollar he can't soak up the extra money he sent out paying par for them. The fed therefore creates a back door for soaking up liquidity -- competing with private borrowers on excess reserve loans -- which will keep the fed balance sheet permanently expanded and hopefully draw a 'pig pen' around the excess reserves so they can't escape. The problem with this is that the higher the interest rate goes, the more money Bernanke has to print to pay interest on the reserves, which is essentially going to create a compounding of excess reserves, a runaway problem. In fact, it seems possible that the banks will lend to noone, with Bernanke paying the bank operating costs through inflation, if he sets the interest rate high enough.

Unless he actually DESTROYS the excess reserves, through bond sales (which he can't) or via the hand of god (a large fee), which would anger his banking constituents since they wouldn't be getting bonds out of it (it would be like the bank just whimsically lowering your checking account balance).

My conclusion, therefore, is that this is no exit strategy at all, but just another layer of confusion slapped on the public to allow for backdoor inflation and deficit financing.]]> Thu, 18 Jun 2009 06:06:20 -0400
To the external borrower, whether it be the treasury or the public, the result of using either tool is the same: higher interest rates. Given the political pressure to get the economy 'booming' again, we're essentially propping up industries that need to and would otherwise shrink given a higher cost of borrowing (housing for instance). Therefore, whether the fed controls interest rates via open market operations or via internal deposit interest, Bernanke risks choking off the growth fueled by his inflation and causing another nasty recession. This would include raising borrowing costs for the massive federal deficit, a political move that would probably get the fed's charter revoked.

I think the problem with an exit strategy using bond sales is that the bonds he has to sell are junk and he probably can't sell them on the open market for their balance sheet value -- so if he gets $0.1 on the dollar he can't soak up the extra money he sent out paying par for them. The fed therefore creates a back door for soaking up liquidity -- competing with private borrowers on excess reserve loans -- which will keep the fed balance sheet permanently expanded and hopefully draw a 'pig pen' around the excess reserves so they can't escape. The problem with this is that the higher the interest rate goes, the more money Bernanke has to print to pay interest on the reserves, which is essentially going to create a compounding of excess reserves, a runaway problem. In fact, it seems possible that the banks will lend to noone, with Bernanke paying the bank operating costs through inflation, if he sets the interest rate high enough.

Unless he actually DESTROYS the excess reserves, through bond sales (which he can't) or via the hand of god (a large fee), which would anger his banking constituents since they wouldn't be getting bonds out of it (it would be like the bank just whimsically lowering your checking account balance).

My conclusion, therefore, is that this is no exit strategy at all, but just another layer of confusion slapped on the public to allow for backdoor inflation and deficit financing.]]> http://seekingalpha.com/article/132166-gold-standard-and-the-definition-of-price-stability?source=feed#comment-473488 473488
now i agree that housing should be in the CPI, since it isn't a productive asset, just a large consumable.

the problem is that money arises naturally as a medium of exchange, not as a government declaration. gold standard or otherwise. any attempt to legislate or control the medium of exhange results in distaster.


]]> Wed, 22 Apr 2009 20:39:53 -0400
now i agree that housing should be in the CPI, since it isn't a productive asset, just a large consumable.

the problem is that money arises naturally as a medium of exchange, not as a government declaration. gold standard or otherwise. any attempt to legislate or control the medium of exhange results in distaster.


]]> http://seekingalpha.com/article/132166-gold-standard-and-the-definition-of-price-stability?source=feed#comment-473487 473487
now i agree that housing should be in the CPI, since it isn't a productive asset, just a large consumable.

the problem is that money arises naturally as a medium of exchange, not as a government declaration. gold standard or otherwise. any attempt to legislate or control the medium of exhange results in distaster.


]]> Wed, 22 Apr 2009 20:39:53 -0400
now i agree that housing should be in the CPI, since it isn't a productive asset, just a large consumable.

the problem is that money arises naturally as a medium of exchange, not as a government declaration. gold standard or otherwise. any attempt to legislate or control the medium of exhange results in distaster.


]]> http://seekingalpha.com/article/125103-grand-illusion-the-federal-reserve-part-3?source=feed#comment-421140 421140

On Mar 10 07:28 PM Pirate Jo wrote:

> "Without the inflation, the average individual would have benefited
> much more from these revolutions."
>
> I have no doubt you are correct. But I think this sheds some light
> on why people have been willing to take these abuses. They have more
> comfortable jobs and better incomes than their parents and grandparents,
> and enjoy a better standard of living to boot. If a few "fatcats"
> at the "top" are even richer, do we care? Why should we?]]> Tue, 10 Mar 2009 19:42:44 -0400

On Mar 10 07:28 PM Pirate Jo wrote:

> "Without the inflation, the average individual would have benefited
> much more from these revolutions."
>
> I have no doubt you are correct. But I think this sheds some light
> on why people have been willing to take these abuses. They have more
> comfortable jobs and better incomes than their parents and grandparents,
> and enjoy a better standard of living to boot. If a few "fatcats"
> at the "top" are even richer, do we care? Why should we?]]> http://seekingalpha.com/article/125103-grand-illusion-the-federal-reserve-part-3?source=feed#comment-421107 421107

On Mar 10 06:24 PM Pirate Jo wrote:

> "Using the realistic figures, they make 64% less than they did in
> 1964."
>
> Then how do you account for the increased standard of living? You
> blasted a previous commenter who said prices have gone down, but
> seriously, I am curious about:
>
> - Why I can buy a top-of-the-line bicycle for the same price as I
> paid for mine, five years ago, and get much better features (DuraAce
> shifting instead of Ultegra).
>
> - Why I can buy a widescreen TV for the same price as I paid for
> mine, seven years ago, and get much better features (a flat panel
> that hangs on the wall).
>
> - A desktop computer for the same price as I paid god-only-knows-how-man...
> and get much better features (a better screen, speakers, more memory,
> and even a free printer).
>
> I don't disagree with anything you said in the article, and clearly
> some bubbles exist - the price of homes, which has already burst,
> college eduations, and cars - but the price of food remains low,
> and my utilities cost the same as they did umpteen years ago.
>
> I believe the answer lies with technology - because of technology,
> we are able to buy more with the same amount of money, IN SPITE OF
> the big-government monkey riding our backs. But I'd like to see that
> graph line imposed on top of one of your existing graphs, such as
> the one that shows inflation. Of course that assumes someone knows
> how to measure it.
>
> My mom tells the funny story about how her little brother saved enough
> money by selling nightcrawlers to buy the first television in their
> household. Back then, buying a TV cost a big chunk of the household
> budget. Now you can buy something perfectly serviceable at a garage
> sale. Doesn't this fit in anywhere in your calculations?]]> Tue, 10 Mar 2009 19:10:43 -0400

On Mar 10 06:24 PM Pirate Jo wrote:

> "Using the realistic figures, they make 64% less than they did in
> 1964."
>
> Then how do you account for the increased standard of living? You
> blasted a previous commenter who said prices have gone down, but
> seriously, I am curious about:
>
> - Why I can buy a top-of-the-line bicycle for the same price as I
> paid for mine, five years ago, and get much better features (DuraAce
> shifting instead of Ultegra).
>
> - Why I can buy a widescreen TV for the same price as I paid for
> mine, seven years ago, and get much better features (a flat panel
> that hangs on the wall).
>
> - A desktop computer for the same price as I paid god-only-knows-how-man...
> and get much better features (a better screen, speakers, more memory,
> and even a free printer).
>
> I don't disagree with anything you said in the article, and clearly
> some bubbles exist - the price of homes, which has already burst,
> college eduations, and cars - but the price of food remains low,
> and my utilities cost the same as they did umpteen years ago.
>
> I believe the answer lies with technology - because of technology,
> we are able to buy more with the same amount of money, IN SPITE OF
> the big-government monkey riding our backs. But I'd like to see that
> graph line imposed on top of one of your existing graphs, such as
> the one that shows inflation. Of course that assumes someone knows
> how to measure it.
>
> My mom tells the funny story about how her little brother saved enough
> money by selling nightcrawlers to buy the first television in their
> household. Back then, buying a TV cost a big chunk of the household
> budget. Now you can buy something perfectly serviceable at a garage
> sale. Doesn't this fit in anywhere in your calculations?]]> http://seekingalpha.com/article/122875-inflation-in-2020-if-we-re-lucky?source=feed#comment-404590 404590

]]> Thu, 26 Feb 2009 11:51:45 -0500

]]> http://seekingalpha.com/article/122571-bernanke-vs-feirman-on-the-prospects-for-a-recovery-in-2010?source=feed#comment-402801 402801 Wed, 25 Feb 2009 09:43:09 -0500 http://seekingalpha.com/article/119734-congress-needs-a-course-in-remedial-finance?source=feed#comment-383279 383279
got me there. I'll be that guy wearing the 'pedantic jerk' sticker if you happen to see me on the street.

On Feb 10 08:02 PM mikebrah wrote:

> centi actually means both; it can be 1/100th or 100 as in a centipede.
>
>
> MM]]> Tue, 10 Feb 2009 23:11:35 -0500
got me there. I'll be that guy wearing the 'pedantic jerk' sticker if you happen to see me on the street.

On Feb 10 08:02 PM mikebrah wrote:

> centi actually means both; it can be 1/100th or 100 as in a centipede.
>
>
> MM]]> http://seekingalpha.com/article/119731-stimulus-must-focus-on-high-unemployment-sectors?source=feed#comment-383143 383143
It is irrelevant whether the demand in various 'underutilized' sectors was in the past derived from 'real' demand, where the public values the industry product and works to obtain it, or due to governmentally distorted market incentives, like housing tax credits, farm subsidy, etc.

The fact is that people's demand for products and services have changed, whether it is due to the 'bubble popping' effect (i.e nobody sees housing as an investment right now or can afford to take on auto debt), changes in technology (nobody wants 286 PC's anymore), or simply changes in consumer preferences (crox??). Supporting industries that make things or services that nobody wants is delaying the eventual re-organization and optimization of the economy and at a huge price.

The 'underemployment' is a necessary re-allocation of labor resources. Personally, if I am forced to bear the financial burden for this unfortunate lot, I'd rather feed and clothe them in acts of charity whilst they retooled their brains for productive employment than keep them in jobs that have no place existing anymore.
On Feb 10 05:14 PM Tetrapod wrote:

> Balderdash,
> What you say is true from a pure Austrian perspective. Construction
> is at full employment because all the people that are needed to produce
> the demanded construction products (i.e. houses, buildings) are currently
> employed. However ...
> What the author is saying in non-technical terms is that we should
> create new demand in areas where there is currently an excess supply
> of available labor. These are exactly the areas where demand has
> fallen extensively from recent levels.
> For example, there are a huge number of unemployed construction workers.
> When the government steps in and creates demand for school construction
> and energy retrofit projects for existing structures, it will pull
> from the pool of underutilized workers.
>
> The author is correct that the government should not stimulate health-care
> as there is already a shortage of workers, but that is not to say
> that we shouldn't stimulate health-care technology, which if done
> right, will stimulate an area with excess workers (that is Information
> Technology) and will reduce the load on actual medical staff by streamlining
> the administrative processes. This actually reduces the shortage
> of medical staff (e.g. doctors and nurses). This points out that
> it is dangerous to look at the picture based on industry segments
> (e.g. healthcare) as within one segment it is possible to have both
> excess and insufficient labor availability in different job roles.
> ]]> Tue, 10 Feb 2009 20:19:16 -0500
It is irrelevant whether the demand in various 'underutilized' sectors was in the past derived from 'real' demand, where the public values the industry product and works to obtain it, or due to governmentally distorted market incentives, like housing tax credits, farm subsidy, etc.

The fact is that people's demand for products and services have changed, whether it is due to the 'bubble popping' effect (i.e nobody sees housing as an investment right now or can afford to take on auto debt), changes in technology (nobody wants 286 PC's anymore), or simply changes in consumer preferences (crox??). Supporting industries that make things or services that nobody wants is delaying the eventual re-organization and optimization of the economy and at a huge price.

The 'underemployment' is a necessary re-allocation of labor resources. Personally, if I am forced to bear the financial burden for this unfortunate lot, I'd rather feed and clothe them in acts of charity whilst they retooled their brains for productive employment than keep them in jobs that have no place existing anymore.
On Feb 10 05:14 PM Tetrapod wrote:

> Balderdash,
> What you say is true from a pure Austrian perspective. Construction
> is at full employment because all the people that are needed to produce
> the demanded construction products (i.e. houses, buildings) are currently
> employed. However ...
> What the author is saying in non-technical terms is that we should
> create new demand in areas where there is currently an excess supply
> of available labor. These are exactly the areas where demand has
> fallen extensively from recent levels.
> For example, there are a huge number of unemployed construction workers.
> When the government steps in and creates demand for school construction
> and energy retrofit projects for existing structures, it will pull
> from the pool of underutilized workers.
>
> The author is correct that the government should not stimulate health-care
> as there is already a shortage of workers, but that is not to say
> that we shouldn't stimulate health-care technology, which if done
> right, will stimulate an area with excess workers (that is Information
> Technology) and will reduce the load on actual medical staff by streamlining
> the administrative processes. This actually reduces the shortage
> of medical staff (e.g. doctors and nurses). This points out that
> it is dangerous to look at the picture based on industry segments
> (e.g. healthcare) as within one segment it is possible to have both
> excess and insufficient labor availability in different job roles.
> ]]> http://seekingalpha.com/article/119731-stimulus-must-focus-on-high-unemployment-sectors?source=feed#comment-382844 382844
Saying 'high-unemployment' sector implies that there is some natural level of employment in any given sector, which there isn't.]]> Tue, 10 Feb 2009 16:24:18 -0500
Saying 'high-unemployment' sector implies that there is some natural level of employment in any given sector, which there isn't.]]> http://seekingalpha.com/article/119734-congress-needs-a-course-in-remedial-finance?source=feed#comment-382841 382841 Tue, 10 Feb 2009 16:21:59 -0500 http://seekingalpha.com/article/118076-thoughts-on-an-inflationary-depression?source=feed#comment-374243 374243
]]> Tue, 03 Feb 2009 08:47:39 -0500
]]> http://seekingalpha.com/article/117119-dollar-gains-as-fed-runs-out-of-room-to-cut-rates?source=feed#comment-369803 369803
Take person A and B and a bank. Person A has $100 and a loaf of bread and deposits the cash it in the bank. Now person B borrows $50 of this and buys a slice of bread from A. A then deposits $50 and his bank account balance is $150 (the money supply increased by $50). B eats the bread and defaults on the loan.

The bank prints up the deficit $50 and gives all $150 it to A, and the money supply remains permanentely higher and now represents a higher base to pyramid credit on. Eventually he deposits this back in the bank and the cycle restarts.

Eventually A catches on because as the new $50 circulates his cost of flour and yeast are rising and he loses confidence in the amount of money he's receiving for his bread slices, plus there's less bread overall and more money.

But more to your point -- let's say the bank only re-prints 50% of the 'lost' deposits because A isn't demanding ALL of his money, just some of it. As long as A doesn't notice, that's fine, but if A finds out that B is essentially eating his bread for free, he won't take any amount of money for his loaf. Either way, there are now $125 in the system, more than we originally started with.

On Jan 28 09:16 PM CJJ wrote:

> Actually, If you have 100 pieces of wood and fire destroys 80 of
> them and you replace 60 of the burned pieces with new pieces it is
> still a net loss of 20 pieces of wood. But thanks for bringing economics
> into the mix. Can we start to write off classical, macro, basically
> all economics at this point. It seems to forget markets involve people.
> Odd, you'd think some of these "smart" people would have figured
> that out by now.]]> Thu, 29 Jan 2009 10:07:24 -0500
Take person A and B and a bank. Person A has $100 and a loaf of bread and deposits the cash it in the bank. Now person B borrows $50 of this and buys a slice of bread from A. A then deposits $50 and his bank account balance is $150 (the money supply increased by $50). B eats the bread and defaults on the loan.

The bank prints up the deficit $50 and gives all $150 it to A, and the money supply remains permanentely higher and now represents a higher base to pyramid credit on. Eventually he deposits this back in the bank and the cycle restarts.

Eventually A catches on because as the new $50 circulates his cost of flour and yeast are rising and he loses confidence in the amount of money he's receiving for his bread slices, plus there's less bread overall and more money.

But more to your point -- let's say the bank only re-prints 50% of the 'lost' deposits because A isn't demanding ALL of his money, just some of it. As long as A doesn't notice, that's fine, but if A finds out that B is essentially eating his bread for free, he won't take any amount of money for his loaf. Either way, there are now $125 in the system, more than we originally started with.

On Jan 28 09:16 PM CJJ wrote:

> Actually, If you have 100 pieces of wood and fire destroys 80 of
> them and you replace 60 of the burned pieces with new pieces it is
> still a net loss of 20 pieces of wood. But thanks for bringing economics
> into the mix. Can we start to write off classical, macro, basically
> all economics at this point. It seems to forget markets involve people.
> Odd, you'd think some of these "smart" people would have figured
> that out by now.]]> http://seekingalpha.com/article/116297-evidence-that-big-inflation-is-coming?source=feed#comment-369350 369350

On Jan 28 07:13 PM jrs87sch wrote:

> I think we have to have some major moves in economic growth before
> we have to worry about any significant changes in inflation.
>
> If you have an opinion, tell me about it at www.InvestorPitStop.co...]]> Wed, 28 Jan 2009 21:21:32 -0500

On Jan 28 07:13 PM jrs87sch wrote:

> I think we have to have some major moves in economic growth before
> we have to worry about any significant changes in inflation.
>
> If you have an opinion, tell me about it at www.InvestorPitStop.co...]]> http://seekingalpha.com/article/116297-evidence-that-big-inflation-is-coming?source=feed#comment-369349 369349

On Jan 28 07:13 PM jrs87sch wrote:

> I think we have to have some major moves in economic growth before
> we have to worry about any significant changes in inflation.
>
> If you have an opinion, tell me about it at www.InvestorPitStop.co...]]> Wed, 28 Jan 2009 21:21:30 -0500

On Jan 28 07:13 PM jrs87sch wrote:

> I think we have to have some major moves in economic growth before
> we have to worry about any significant changes in inflation.
>
> If you have an opinion, tell me about it at www.InvestorPitStop.co...]]> http://seekingalpha.com/article/116297-evidence-that-big-inflation-is-coming?source=feed#comment-367303 367303

On Jan 27 01:21 AM Dirk McCoy wrote:

> First, prices wouldn't multiply by the same factor- principle on
> debt, for one example. Another would be certain currencies. Another
> would be goods with higher investment requirements, like automated
> flat panel TV factories, as opposed to those with lower investment
> requirements, like boomer middle managers.

You're right ... prices won't multiply by the same factor with an injection of money into the banking system. Rather, it will mutilate savers and reduce the value of debt. Point here is though, society can't get something for free here; you're always robbing peter to pay paul unless you manage to multiply all prices, debts, etc, by the same factor, which is not only impossible but totally pointless.

>
> Second, as people saw their asset values recover relative to debt,
> wealth effect would kick in, and spending resume. As banks had fewer
> loans defaulting, their performance would recover as well.
>

This is tantamount to kicking the can down the street. If the banks are the source of the new captial, it will originate as loans and encourage people to go deeper into debt. Until people reach their new debt ceilings, banks will get repaid, essentially through the loans they just provided. But without a parallel increase in real wealth and productivity the result will be the same and performance would deteriorate 'post-stimulus'.

> Third, increase in supply and demand lead to greater specialization
> and division of labor- this is where real productivity and improved
> living standards emerge. This only leads to collapse and liquidation
> when interventionists show up with their every 7-8 year or so Fed
> interest rate hikes to slow down an "overheating" economy and create
> another Latin/Asian/global financial crisis. If they just stop meddling,
> then instead of wholesale economic destruction, just a few less productive
> producers- usually the late entrants, not the early- will have to
> turn over management/ownership to more productive players.

Would you have us permanantely suppress interest rates? The fed does this by monetizing treasury and other debt instruments . At some point a currency crisis would ensue and not any amount of dollars would buy you a lollipop as people realized it's all a sham. What leads to higher living standards is increased production of goods, services and technology which can't possibly be properly encouraged through capital injections and attempts to prop up home prices.
>
> On Jan 26 08:57 PM Balderdash wrote:]]> Tue, 27 Jan 2009 07:25:50 -0500

On Jan 27 01:21 AM Dirk McCoy wrote:

> First, prices wouldn't multiply by the same factor- principle on
> debt, for one example. Another would be certain currencies. Another
> would be goods with higher investment requirements, like automated
> flat panel TV factories, as opposed to those with lower investment
> requirements, like boomer middle managers.

You're right ... prices won't multiply by the same factor with an injection of money into the banking system. Rather, it will mutilate savers and reduce the value of debt. Point here is though, society can't get something for free here; you're always robbing peter to pay paul unless you manage to multiply all prices, debts, etc, by the same factor, which is not only impossible but totally pointless.

>
> Second, as people saw their asset values recover relative to debt,
> wealth effect would kick in, and spending resume. As banks had fewer
> loans defaulting, their performance would recover as well.
>

This is tantamount to kicking the can down the street. If the banks are the source of the new captial, it will originate as loans and encourage people to go deeper into debt. Until people reach their new debt ceilings, banks will get repaid, essentially through the loans they just provided. But without a parallel increase in real wealth and productivity the result will be the same and performance would deteriorate 'post-stimulus'.

> Third, increase in supply and demand lead to greater specialization
> and division of labor- this is where real productivity and improved
> living standards emerge. This only leads to collapse and liquidation
> when interventionists show up with their every 7-8 year or so Fed
> interest rate hikes to slow down an "overheating" economy and create
> another Latin/Asian/global financial crisis. If they just stop meddling,
> then instead of wholesale economic destruction, just a few less productive
> producers- usually the late entrants, not the early- will have to
> turn over management/ownership to more productive players.

Would you have us permanantely suppress interest rates? The fed does this by monetizing treasury and other debt instruments . At some point a currency crisis would ensue and not any amount of dollars would buy you a lollipop as people realized it's all a sham. What leads to higher living standards is increased production of goods, services and technology which can't possibly be properly encouraged through capital injections and attempts to prop up home prices.
>
> On Jan 26 08:57 PM Balderdash wrote:]]> http://seekingalpha.com/article/116297-evidence-that-big-inflation-is-coming?source=feed#comment-367302 367302

On Jan 27 01:21 AM Dirk McCoy wrote:

> First, prices wouldn't multiply by the same factor- principle on
> debt, for one example. Another would be certain currencies. Another
> would be goods with higher investment requirements, like automated
> flat panel TV factories, as opposed to those with lower investment
> requirements, like boomer middle managers.

You're right ... prices won't multiply by the same factor with an injection of money into the banking system. Rather, it will mutilate savers and reduce the value of debt. Point here is though, society can't get something for free here; you're always robbing peter to pay paul unless you manage to multiply all prices, debts, etc, by the same factor, which is not only impossible but totally pointless.

>
> Second, as people saw their asset values recover relative to debt,
> wealth effect would kick in, and spending resume. As banks had fewer
> loans defaulting, their performance would recover as well.
>

This is tantamount to kicking the can down the street. If the banks are the source of the new captial, it will originate as loans and encourage people to go deeper into debt. Until people reach their new debt ceilings, banks will get repaid, essentially through the loans they just provided. But without a parallel increase in real wealth and productivity the result will be the same and performance would deteriorate 'post-stimulus'.

> Third, increase in supply and demand lead to greater specialization
> and division of labor- this is where real productivity and improved
> living standards emerge. This only leads to collapse and liquidation
> when interventionists show up with their every 7-8 year or so Fed
> interest rate hikes to slow down an "overheating" economy and create
> another Latin/Asian/global financial crisis. If they just stop meddling,
> then instead of wholesale economic destruction, just a few less productive
> producers- usually the late entrants, not the early- will have to
> turn over management/ownership to more productive players.

Would you have us permanantely suppress interest rates? The fed does this by monetizing treasury and other debt instruments . At some point a currency crisis would ensue and not any amount of dollars would buy you a lollipop as people realized it's all a sham. What leads to higher living standards is increased production of goods, services and technology which can't possibly be properly encouraged through capital injections and attempts to prop up home prices.
>
> On Jan 26 08:57 PM Balderdash wrote:]]> Tue, 27 Jan 2009 07:25:50 -0500

On Jan 27 01:21 AM Dirk McCoy wrote:

> First, prices wouldn't multiply by the same factor- principle on
> debt, for one example. Another would be certain currencies. Another
> would be goods with higher investment requirements, like automated
> flat panel TV factories, as opposed to those with lower investment
> requirements, like boomer middle managers.

You're right ... prices won't multiply by the same factor with an injection of money into the banking system. Rather, it will mutilate savers and reduce the value of debt. Point here is though, society can't get something for free here; you're always robbing peter to pay paul unless you manage to multiply all prices, debts, etc, by the same factor, which is not only impossible but totally pointless.

>
> Second, as people saw their asset values recover relative to debt,
> wealth effect would kick in, and spending resume. As banks had fewer
> loans defaulting, their performance would recover as well.
>

This is tantamount to kicking the can down the street. If the banks are the source of the new captial, it will originate as loans and encourage people to go deeper into debt. Until people reach their new debt ceilings, banks will get repaid, essentially through the loans they just provided. But without a parallel increase in real wealth and productivity the result will be the same and performance would deteriorate 'post-stimulus'.

> Third, increase in supply and demand lead to greater specialization
> and division of labor- this is where real productivity and improved
> living standards emerge. This only leads to collapse and liquidation
> when interventionists show up with their every 7-8 year or so Fed
> interest rate hikes to slow down an "overheating" economy and create
> another Latin/Asian/global financial crisis. If they just stop meddling,
> then instead of wholesale economic destruction, just a few less productive
> producers- usually the late entrants, not the early- will have to
> turn over management/ownership to more productive players.

Would you have us permanantely suppress interest rates? The fed does this by monetizing treasury and other debt instruments . At some point a currency crisis would ensue and not any amount of dollars would buy you a lollipop as people realized it's all a sham. What leads to higher living standards is increased production of goods, services and technology which can't possibly be properly encouraged through capital injections and attempts to prop up home prices.
>
> On Jan 26 08:57 PM Balderdash wrote:]]> http://seekingalpha.com/article/116297-evidence-that-big-inflation-is-coming?source=feed#comment-367056 367056

On Jan 26 05:27 PM RVN-VET wrote:

> 360 billion would give each american 1 million to be given on a ration
> card for specific items (only) and only so much a year (to meat out
> over time) to save their homes, and to buy only american products.
> This would be the only grass roots program that would insure BIG
> MONEY would not just blow more BIG MONEY...or make more big money.
> The payback here from grass roots is that all americans would be
> insured against loseing their homes.
>
> Any auto MFG should explain to BIG OIL they should take a vested
> interest in their companies because without them there would not
> be a BIG OIL. I don't know where the BIG OIL become so independant
> they think they can artifitially inflate prices by restricting output
> to insure income levels but this is totally an independant idea from
> somewhere that has too much control over OIL. So if they want to
> continue they should care about their future and INVEST.]]> Mon, 26 Jan 2009 21:08:41 -0500

On Jan 26 05:27 PM RVN-VET wrote:

> 360 billion would give each american 1 million to be given on a ration
> card for specific items (only) and only so much a year (to meat out
> over time) to save their homes, and to buy only american products.
> This would be the only grass roots program that would insure BIG
> MONEY would not just blow more BIG MONEY...or make more big money.
> The payback here from grass roots is that all americans would be
> insured against loseing their homes.
>
> Any auto MFG should explain to BIG OIL they should take a vested
> interest in their companies because without them there would not
> be a BIG OIL. I don't know where the BIG OIL become so independant
> they think they can artifitially inflate prices by restricting output
> to insure income levels but this is totally an independant idea from
> somewhere that has too much control over OIL. So if they want to
> continue they should care about their future and INVEST.]]> http://seekingalpha.com/article/116297-evidence-that-big-inflation-is-coming?source=feed#comment-367048 367048
What matters here is profit margin -- the producer will increase production to the extent that the input prices -- raw materials, labor, etc, lag the output prices. If we simply multiplied all prices by 100, there would be no harm done because all prices would rise in equal proportion.

The reason that inflation is so dastardly is that the prices don't always rise in equal proportions.. those who get the money first get to buy stuff at low prices and screw the rest of us who saved our dollars. Indeed, inflation encourages malinvesment because the producer that increases production in response to inflation due to a temporary iniquity will soon see his newfound profit margins collapse and lead to liquidation.

Hope this helps

On Jan 25 07:49 AM Hilew@verizon.net wrote:

> Your comment -- "When a central bank doubles the monetary base in
> a matter of months, a lot more money is going to be flooding into
> the real economy. It will compete for finite goods, services, and
> investments, driving up prices" -- doesn't this instance send a message
> to manufacturers and service providers to rehire and crank up production
> to satisfy demand, thereby correcting the problem?? What am I missing?]]> Mon, 26 Jan 2009 20:57:23 -0500
What matters here is profit margin -- the producer will increase production to the extent that the input prices -- raw materials, labor, etc, lag the output prices. If we simply multiplied all prices by 100, there would be no harm done because all prices would rise in equal proportion.

The reason that inflation is so dastardly is that the prices don't always rise in equal proportions.. those who get the money first get to buy stuff at low prices and screw the rest of us who saved our dollars. Indeed, inflation encourages malinvesment because the producer that increases production in response to inflation due to a temporary iniquity will soon see his newfound profit margins collapse and lead to liquidation.

Hope this helps

On Jan 25 07:49 AM Hilew@verizon.net wrote:

> Your comment -- "When a central bank doubles the monetary base in
> a matter of months, a lot more money is going to be flooding into
> the real economy. It will compete for finite goods, services, and
> investments, driving up prices" -- doesn't this instance send a message
> to manufacturers and service providers to rehire and crank up production
> to satisfy demand, thereby correcting the problem?? What am I missing?]]>