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Post by jeffolie on Dec 2, 2008 17:21:19 GMT -6
This is the single best article I have read in many months: Monetizing the Debt By Axel Merk "This aritcle is an excellent discussion of the new, freely admitted, Fed policy of" printing money." It is lenghtly and somewhat complex, but worth the effort. The more we understand the governemnt solutions to the financial crisis, the more we will see the probelmatic long term implications of these policies.." www.europac.net/voicesframeset.asp?id=14
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Post by jeffolie on Dec 2, 2008 17:38:34 GMT -6
There are two areas the above article does not take into consideration.
Money put into circulation, M1 from the BOB (Big Obama Bailout). The Fed is not likely to be able to reverse the BOB's printing press from payment of salaries and purchases of goods and services. Thus, this is one inflationary pocket of money that will impact the economy in 2010.
Another significant area is the declining, decimated housing sector. Continously lowering of housing prices deflates the economy and in my humble opinion will be treated generously in the ever expanding BOB in the Crisis in the Fall of 2009. Money put into circulation to relieve the housing sector will stabilize housing prices and add to M1 for additional inflationary power that the Fed will not see a method of reversing without re-collapsing the newly rescued housing sector.
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Post by judes on Dec 2, 2008 20:40:11 GMT -6
That was a good article, it explained a lot of things clearly. I liked this part, though mentioned ever so briefly:
"While we don't rule out that an inflationary boom is possible, once the liquidity is starting to be mopped up, we are afraid, economic growth is likely to collapse once again. Unless real wages can be improved, consumers must de-leverage. Propping up a broken system will simply make the later crash even more severe."
A hint that real wages need to rise, yet you'll never hear a peep of this from corrupt government or the main stream media.
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Post by jeffolie on Dec 3, 2008 12:27:10 GMT -6
"...once the liquidity is starting to be mopped up, we are afraid, economic growth is likely to collapse once again."
Now that Volcker is among Obama's advisers, he may advise a program of real interest rates above the very high inflation rate that I predict is coming. This would suppress the inflation and at the same time likely crash the malinvested economy. This possibility is an alternative approach to the end game of how the financial world as we know it will end. If Volcker was the head of the Fed I would give this alternative more likelihood, but Helicopter Ben has a proven record of throwing evermore more and credit at the problem. My primary approach is a crashing dollar and very rapid inflation for the end game.
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Post by unlawflcombatnt on Dec 4, 2008 2:11:36 GMT -6
"...once the liquidity is starting to be mopped up, we are afraid, economic growth is likely to collapse once again." This is a very informative article, but very disheartening as well. We're completely screwed as long as Bernanke is Fed chair. We'll be a little better once Paulson has been sent packing, but not much.
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Post by jeffolie on Dec 4, 2008 14:27:21 GMT -6
Can the Fed "afford" to to stabilize the housing market while also bailing out all of wallstreet and Detroit without causing a collapse of the US Dollar?
My prediction that the housing market will be stabilized stands on the Democrats acting as Democrats do. If the housing market is not stabilized, then we will have massive Stagflation with everyday items such as food, gas etc going up while housing continues down. It is Democrats nature to spend and spend. This will be part of the BOB. I expect the dollar to resume its decline with the BOB and very rapid inflation in 2010 leading to the end of the financial world as we know it in 2012. I have 2 end games: one, the dollar collapses entirely into an inflationary depression; or, two, a Volcker styled high interest rate solution stops the very high inflation rate and the economy goes into very deep deflationary depression.
What to do? First we are now getting mild deflation, then we will get inflation for sure, then we may get deflation again. This is a trader's world. The buy and hold investment approach will not work. Timing is everything but at least the up and downs will not be on a daily timeframe, the mild deflation-inflation-deflation events will take years. For example the stabilizing of housing prices will take perhaps 6 months from the 2009 BOB into 2010.
Individually, you do not have to be screwed as long as you are an active, proactive person. The passive, roll over, take whatever happens person will get screwed by the whipsaw events. Pay of your fixed rate debts at the top of the inflation with devalued dollars and move into cash or short term treasuries then for the bold person short commodities for the deflation.
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Post by graybeard on Dec 4, 2008 15:59:15 GMT -6
"It is Democrats nature to spend and spend."
Huh? No Dem has spent us into poverty like Reagan and W Bu$h. Clinton left a balanced budget. You can't blame the Dem CONgress of the last two years like the prior umpteed years of Repub. CONgress.
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Post by jeffolie on Dec 4, 2008 18:16:33 GMT -6
graybeard
You are right about Republican spending money like crazy. They just spend it on a different agenda like 2 wars at the same time and for the friends of Paulson and Ben. I am not aware of any State government or the Federal government spending less year over year in my lifetime. Even when there is a surplus there is always a bigger budget. California is horrible. It always takes in much more tax money and always spends even more. Clinton was no exception, the Federal taxes taken in merely exceeded the ever increasing federal expenditures thus leaving a balanced budget while ever expanding the federal government.
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Post by db on Dec 4, 2008 19:55:27 GMT -6
Yes, it is a good idea to have a balanced budget by taxing the wealthy, and not giving them obscene tax breaks like the Criminal Bush did.
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Post by graybeard on Dec 4, 2008 20:05:21 GMT -6
Thom Hartmann makes the argument that taxing the middle class, and especially the rich, helps the middle class. Heard it again today on his show.
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Post by unlawflcombatnt on Dec 5, 2008 2:43:55 GMT -6
Thom Hartmann makes the argument that taxing the middle class, and especially the rich, helps the middle class. Heard it again today on his show. I heard something like that on the Thom Hartmann show myself. But I thought he emphasized taxing the rich more, not the middle class. He pointed out not only that Clinton raised taxes on top earners, but that tax rates after WWII were in the 90%+ range for top earners.
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Post by graybeard on Dec 5, 2008 6:40:33 GMT -6
I heard him say that if you reduce taxes on employees, the employers will drop wages to match, and hurt everybody.
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