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  • Are We Lining Up for Another Dollar Shortage? [View article]
    Banks are making huge profits because the Fed purchased the assets for 100 cents on the dollar and selling them for much less. It's a sneaky unjust way to liquidate debt without effecting the supply of money.
    Feb 5 06:07 PM | 2 Likes Like |Link to Comment
  • Golden Ideas for 2010 and Beyond [View article]
    Gold goes through booms and busts just like any other bubble. Gold was worth over 2,000 dollars in the late 70's and early 80's adjusted for inflation. Theoretically, gold will always be on an upward trend because of it's scarcity so it is a good long term investment, but for the short term, prices could easily fluctuate any direction according to investment trends.
    Feb 5 04:50 PM | Likes Like |Link to Comment
  • Are Deflationist Arguments Still on Track? [View article]
    The U.S. bond market will always be attractive because of the volume of dollars around the world. For one reason alone, OPEC only accepts dollars. That causes the demand for dollars grow making it a "world currency." It is accepted by most countries and is considered a safe haven. . Even if people were to stop using dollars, than we would have the upper hand. The only use they will have with the dollars they own is to purchase American goods, or just horde the money which serves no purpose. Either which way, all the dollars would eventually come back to America.
    Feb 5 04:06 PM | Likes Like |Link to Comment
  • Are Deflationist Arguments Still on Track? [View article]
    The fed has been purchasing assets from banks so there will be credit, but the banks have been investing in the stock market instead of lending to consumers. The more the consumers borrow, the more they spend. Remember, inflation is determined by money supply AND the velocity of money. So as long as banks aren't lending, inflation will only be modest.
    Feb 5 03:47 PM | Likes Like |Link to Comment
  • Are Deflationist Arguments Still on Track? [View article]
    Many people are confused about inflation and deflation. I will try to clear things up a bit. Lets say I were to purchase a home worth 100k. If the dollar lost 20% of it's value over a span of ten years, than I would owe whats left on a home that is now worth 120k. My house would gain value and I would owe less than what it is worth... Or lets say I invested a million dollars into software. If the dollar lost 10% value over 5 years, I would get in return 1.1 million dollars plus whatever I earned. The opposite is also true. Lets say I put 100 dollars into stocks and over a 5 year course the dollar gained 25% in value. I would only get 75 dollars in return (plus earnings). It would have been better if I were to rather kept the 100 dollars and let it gain 25% value instead. This is what happened in the Great Depression. the Federal Reserve raised interest rates which caused a sharp contraction in the money supply. It made dollars more valuable relative to their assets meaning that people went further into debt and investors were discouraged from investing because they would get less money in return from their investments.This is why debt-deflation is considered harmful.

    Inflation is bad for longtime investments into the DOLLAR, but that is why you have seen the Fed do away with 30 year securities, and why more people are investing in short-term securities.

    A weak or strong dollar is usually referring to the comparison of currencies in different countries, which is important in a global outlook. A weaker dollar makes goods more competitive in a global market. Goods would look more attractive because they would cost less, therefore increase productivity. The strong dollar through the 90's is what destroyed our manufacturing base. We became less competitive because our goods cost more than elsewhere.
    Feb 5 03:19 PM | Likes Like |Link to Comment
  • How Herbert Hoover Put the “Great” in Great Depression [View instapost]
    Lets say I were to purchase a home for 100k.. If 5 years later the dollar gained 25%, I would owe 100k on a home that's worth 75k. This is what happened in the great depression.
    Feb 5 02:45 PM | Likes Like |Link to Comment
  • How Herbert Hoover Put the “Great” in Great Depression [View instapost]
    It is not what Herbert Hoover did which caused the Great Depression, but what the Federal Reserve did.. After a large boom in the stock markets, the Federal Reserve raised interest rates which caused a sharp contraction in the money supply. It made dollars more valuable relative to their assets meaning that people went further into debt and investors were discouraged from investing because they would get less money in return from their investments.This is why debt-deflation is considered harmful.

    Lets say I put 100 dollars into stocks and over a 5 year course the dollar gained 25% in value. I would only get 75 dollars in return (plus earnings). It would have been better if I were to rather kept the 100 dollars and let it gain 25% value instead. Investors were well aware of this and that's why they didn't invest into the economy making the great depression as severe as it was.
    Feb 5 02:35 PM | Likes Like |Link to Comment
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