unclej0

Don't Be Fooled by Inflation

On Jun 17 02:52 PM austrian63 wrote:

> Ricard,
>
> One error in your response. Bernanke has not taken unconventional
> steps to "DEFLATE" asset bubbles. He has taken unconventional steps
> to RE-INFLATE asset bubbles and therein lies the rub. There will
> be a very high price to pay.
>
> Each subsequent market deflation is much more horrific than the previous
> one and thus requires a much larger dose of the re-inflation drug
> than the previous one. This is what Hayek decrobes as having "A
> Tiger by the tail." The cure is the disease and more cure only makes
> the disease worse until finally the party is unsustainable and even
> the U.S. Treasury and Federal Reserve with their infinite wisdom
> and money creation abilities will not be able to sustain the booms.
>

You are describing a very unstable system. It seems to be the case that mathematical stability is achievable through mathematical controls, not through political bullcrap - which has been our typical tool.

The macroeconomic controls over government investments and expenditures, monetary policy, and tax infrastructure would be better controlled by a carefully designed computer algorithm than by the fed, the treasury department, and the congress.

Why is that not done? Well, people who possess power, however poorly they exercise it, seldom voluntarily give it up. People who have risen to their levels of incompetence usually remain in denial.

What I have said about myself also applies to the movers and shakers of this world: they have the cognitive equipment of hunter-gatherers and an inordinate interest in the rear ends of females.

Don't Be Fooled by Inflation

I am not a trader and I recognize that markets are formed by highly divergent opinions, as we can see here. We are still at the mercy of the banksters who also run the fed and treasury. That is much like being at the mercy of the fickle ancient Greek gods.

So what is a minnow to do? One tack is to invest in things that people will always need, for example, food, green energy, water purification, etc.

The counter argument is chilling: "the market can remain irrational longer than you can remain solvent." That also applies to governments - most of them.

For the individual, rationality also requires understanding the irrationality of others. My evolutionary history did not prepare me very well for that task. Basically, I have the cognitive equipment to be a hunter-gatherer and to have an inordinate interest in the rear ends of females. At age 84, that is not of much use.