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Richard Russell: 'A Hard Rain Lies Ahead'
Hasn't the Fed has been between overly-accommodative to ridiculously stimulative for 10 years? Money supply is much higher now than it was 10 years ago, but stocks are not (although total market capitalization may be). Monetary policy alone does not seem to determine the direction of the market over the short or long term. Perhaps someone can explain this better than me, but I think the answer is related to how much of the new money
-drives corporate profits
-effects the multiple that investors can or are willing to pay for those profits when choosing between asset classes
-effects sentiment and repricing of risk
All sorts of companies are hurt by inflation, especially hyperinflation, and can be bankrupted by it. The survivors' stocks may eventually skyrocket and the market averages may rise. Still, stocks don't seem to be the best way to preserve purchasing power in that circumstance. You would have to select stocks carefully, sticking to sectors that are benefiting from the money printing and are not harmed by other factors (rising labor costs, energy costs, taxes, tariffs, or regulations, for example). That could be certain real estate, commodities producers, or something else, depending on the particular circumstance.
Investors will always be guessing at this, and arriving at different conclusions, even when they all have access to the same data.
Jul 23, 2010. 07:20 AM
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Is Tim Out? Are Sheila and Debt Relief In?
Right. The gov't cannot create wealth. If can only shuffle wealth around by force, which is very demoralizing to productive citizens. The proper role of gov't is not to steal wealth from the productive and waste it. It is to use force where force is necessary: to protect life and property.
Why should debt relief be applied to individuals who borrowed the money and truly owe it? We have bankruptcy laws. Let's obey them!
I don't think Bair is significantly more principled than Geithner. She has run her own Ponzi scheme.
It would be most fair to apply debt relief to people burdened with debt that they didn't even choose for themselves. I'm talking about the next generation of slaves (taxpayers) and their share of the Treasury debt. A Treasury default, that's the sort of principal reduction we should be considering. Painful as it would be, it needs to be faced and overcome so that we can rebuild our country on sound morals and economics.
Jan 10, 2010. 10:15 AM
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U.S. Debt Hysteria Is Getting Ridiculous
I infer that you believe that it is the government's right, and even obligation, to "do something" about unemployment. You seem to believe that increasing debt can raise employment (that is almost axiomatic today). That I disbelieve it is not important. What is important is that your commentary ignores the moral questions about America's predicament.
Destroying the value of the dollar for the sake of raising employment is not an economic issue. It is theft. And it is not a coincidence that immoral government policies lead to decreasing prosperity and the destruction of an economy.
It is not the bureaucrats' right to manipulate the economy or interests rates. Americans are being deprived of a right to sound money, and deprived of a right to save in the way that they choose.
The foundation of serfdom in America is taxation on all forms of savings (taxes on "gains" and "profits" in gold, stocks, real estate, foreign currencies). Imposing a cost on saving, and taxing anything that outperforms the dollar (which is, by the way, almost anything), allows the government to manipulate the dollar for their political purposes. One of those purposes is to transfer wealth from the productive to the unproductive.
Suppose I held a gun to your head and asked for your money. Would you make an economic decision? Or some other sort of decision?
For all intents and purposes there is no economy, because under coercion there can be no economic decisions. Americans have been coerced into behaviors they would not otherwise take. Let's remove all taxes on precious metals, the truly legal money, and discover what free people chose.
It seems that you would treat every American and Japanese as a slave, for the benefit of some imaginary "common good" of lowering unemployment. That is what enrages me.
Considering the amoral, pragmatic issue: the story of Japan is not complete. America is in uncharted territory and Japan is, too. Would you admit that, while hyperinflation in Japan has been avoided, overall things do not look bright? If they had a chance to do things over, should they choose the same policy?
Nov 21, 2009. 09:38 AM
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