Dixie Dawg

De-Leveraging Is Not Deflation

So, how does our story end? I've been reading these entries on many, many threads, and the pessimism is overwhelming, and I think many of us are in shock as to the recent unbelievable events. Many of us are using past events to compare to us now, which probably won't work, as the situation is very different from 1980's Japan or Wiemar Germany, as this is spread across global borders.

There has to be a better answer to "buy gold and hold", since if the US tanks, your gold won't do you much good anyway. Your "wealth" is as imaginary having dollars in the bank if yours and other governments collapses and martial law is declared. Unless you live on your own compound in a bunker with a private security force and source of clean water and energy & food production (and if you are, you probably aren't reading this site very often... :)), you are just as dependent on a healthy US AND WORLD economy as the guys & gals in "lazy" US, or "lazy" Russia, or "lazy" Europe.

Fact is, no one on here has any real idea of what will work to get the world out of this mess, and that scares you. I feel that, too, but frankly we'll find a way. We have to, it's better than subsistence farming and feudalism. Or, is the answer in debtor's work camps? Arbeit macht debt-frei?


On Jan 21 01:22 PM BrunoT wrote:

> It's very complicated. I can read the arguments back and forth and
> see merit in both in the micro level.
>
> But I just use common sense. I find it hard to believe that massive
> printing of money and handing it out to those who didn't earn it,
> with no end in sight, is a good thing. Therefore, the market will
> punish this behavior. There is no "something for nothing" in life.
>
>
> I also believe that living it up now and not worrying about how to
> pay for it will lead to ruin later. Isn't that just common sense?
>
>
> It sounds to me like we've punished savings and rewarded indebtedness.
> Anyone sitting on retirement savings making 2% during a period of
> 4-8% price inflation could tell you that.
>
> And now we are moving to punishing future generations as well. We're
> attempting to put off our day of reckoning by moving it to the future
> generations to deal with since we fear the correction happening on
> our watch.
>
> My hunch is we won't get far. My other hunch is that those favoring
> the deflation theories are simply whistling in the graveyard, looking
> for an excuse as to why this massive money creation to temporarily
> prop our standard of living up is a good thing.
>
> It would be nice if we could make the money supply all even, "just
> right", like the 3 bears story. But unfortunately our story won't
> end happily.

Will the Deflationist vs. Inflationist Debate End Soon?

Even if inflation doubles over the next month or two, it's not the "sky is falling" clarion -- it's price deflation adjustment. Prices rise when a) supply of a product is reduced and demand stays level, b) supply stays level and demand rises or c) both (a) & (b) happen at the same time.

I believe that inflation at this point has to be examined as to how it rises, if it occurs from a demand side increase, this should indicate recovery. In my business, we've kept prices generally steady and our demand has luckily stayed even enough to support the prices.

The Bull Run Begins This Week

Completely agree, it seems like every plane I'm on is full to overfull (yes, routes & flights have been cut), every mall parking lot is, if not completely full, full enough to make a lot of people say "what economic downturn?"

Now, this discounts the growing unemployment numbers, mortgage defaults and earnings losses, but frankly how else will we ever see a turnaround unless consumer spending "comes back". Isn't the only thing we have to fear is negative media? Now that Obama is in the White House, look for uplifting and positive spin articles from NYT & CNN to flood the market, so that people aren't afraid to buy buy buy...


On Jan 18 05:17 PM X-15 wrote:

> IMHO, i'm still seeing commerce take place everyday. Americans will
> only save until they cannot take it anymore. Then wallets open commerce
> continues,saw it in 82 & 83 nothing has changed.People say this
> is different,WHY, because many of those going down are rich?

>
>
> What will be different this time, is who will come out first, who
> will grow, who will use this fiscal demolition to advantage.
>
>
> On Jan 18 02:17 PM t_avatarici wrote:

A Fuel Debate Between T. Boone Pickens vs. Fred Smith

You may have noticed the recent ads for the BMW 335d portraying how far one can go and how much less of an environmental impact it is to drive the high efficiency diesel models, so these are now being marketed to everyday drivers as alternatives to hybrids (which sales of in the US are waaay down ). I can only imagine that the hopes of OPEC are linked to the success of these efforts, and wonder if they've invested in BMW and other diesel related companies to promote the continued use of their "product".

I believe Pickens has said from the beginning that his plan was a bridge measure to reduce our dependence on foreign oil until alternate renewable sources are available to come online in the next 50 years or so. OPEC and other oil economy-based nations will feel the brunt of this change over, since there's really no other industries in many of these nations (and frankly "they" don't produce the oil, they happen to live on top of these resources that initially US & European companies discovered, developed and marketed to the world).

Shifting locally produced LNG to auto use and reducing the oil imports is something that Exxon/Mobil and other corporations should embrace now to support the largest consumer base (and probably the most stable and productive economy) in the world as well as reducing the influence and control of OPEC on their bottom line.

The Pickens Plan is a threat to OPEC/Russia, if followed through on, so watch what happens soon in Washington (anyone remember ABSCAM and how easily Senators and Congressmen take money from oil sheiks? Now what if they ask for "No" votes on renewables...?)

Also, a pet peeve of mine is the "importation of foreign oil". Correct me if I'm wrong, but domestically produced oil essentially goes into the same "pot" as oil from Venezuela & Russia and Africa, correct? US produced oil can be purchased by companies in India, China or Cleveland, OH for refining, correct? "Drill, baby, drill" was a failure for the Republicans not because of the environmental issues, but because the voters understood this basic fact and any "new" oil discovery and pumped from ANWAR or the Gulf of Mexico wans't just for the US's direct benefit. What's been framed as a national defense issue is really an energy defense issue, and the OVERALL reduction of oil usage is what Pickens Plan offers, it just happens that 70% (+/-) of that oil comes from overseas due to our demand outstripping our "local" supply.