Posted on 03/21/2010 4:35:02 PM PDT by TigerBait
Properly invested, it will be inflated
I know. But it’s still hard to believe. I’m sure it’s how people felt during other upheavals in the world. *sigh* It really is a curse...may you live in interesting times.
............Americans will be following their international investments abroad, exiting the country to live elsewhere in freedom and with good health care they pay for themselves. There is not much else they can do as the nationalist socialists take over our free economy and reduce the liberties of a free nation.
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That’s my plan ,, I got a late start but I have houses and a farm in a stable country with pretty girls and clean beaches... I just need that money thing and I’m all set... my mango trees still have 2 years to grow before they will be producing in commercial quantities.
I love this country but I can’t stop the tidal wave of socialism ,, I can only move out of the way and return when it starts to recede.
One can hope. I don’t have much confidence at the moment. I believe the leftists want us all to be poor.
Properly invested, it will be inflated
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Then you get the 401k distribution check and your bank holds it for a week because it’s out of state (and they need the money NOW) and by the time it’s cleared it’s worth half.
“The economy will have to be restructured someway”. I think it is already too late to expect the government to be able to follow through on its obligations. The health care plan, whether it passes or not, will have little effect on the ultimate fiasco of government default, except to bring it on sooner. I am afraid we will see a collapse like the Soviets did in 1989. I think they were more realistic about their chances, and wiser in their choices, in the 1980’s than our government is right now.
I don’t think they want hyper inflation, merely inflation at rates that will eliminate the deficit bubble in a reasonable time
2. We are potentially facing a unique situation where we see an inflation in all necessary products (combined with the elimination of nearly all non-essentials) and a deflation of things like income and home values. This double-edged sword will cause a more rapid and deeper depression than anyone is familiar with.
Agree with your description, but it is certainly not unique. The current example going around is Zimbabawe: I'm sure home prices are pretty damn low, but the money is increasingly worthless in buying the survival necessities. It is also the same thing that happens in a slum: the homes are cheap (deflation), the disposable funds are non-existent for the law abiding (inflation). Or think about the burgeoning taxes, healthcare costs, and energy costs, sucking a greater and greater proportion of one's income while income and prices are albeit increasing.
That is exactly what is happening now across the US and will get worse. Any Dept of Commerce algorithm expressing "deflation" versus "inflation" can be totally manipulated. The real result is impoverishment!
You are one of the few to describe this: think of all those Nobel economists.
I’m thinking of the Russian collapse. Hard money became scarce but scarcity of goods drove up prices. Necessities became expensive, but luxuries and consumer items became cheap as people sold all they had to buy necessities.
I’m actually retired and from a personal financial standpoint the idea of hyperinflation horrifies me.
However, I have land and if I really feel it’s necessary I can convert currency into a form of wealth store that can survive hyperinflation.
On a personal financial level I would stand to lose a hell of a lot in a hyperinflation scenario. Even if I could convert to all precious metals and land value would be lost. But when I was discussing hyperinflation I was not talking about what was good or bad for me personally. I was talking about the macroeconomic state of America as a whole and for America as a whole hyperinflation may represent the least bad option.
True, in a scenario of hyperinflation or currency overhaul those who were responsible and didn’t binge do get hurt and I probably stand to lose a lot more than the average American who fits this category. However, we currently have a labor oversupply, a capacity oversupply and as a nation we now have more in debts than we do in liabilities.
If we are headed for an economic malestrom anyway and the two choices are hyperinflation or deflation the United States would have a far better chance of surviving hyperinflation and a currency reset than it would surviving deflation with more than half the deeds in the country going underwater. And that might be the real choice the country faces. It’s unpleasant but its also the fault of the country as a whole for getting us there.
Thats my fear
You are correct. I should have stated “unique to Western economies.”
This is not a path most economists have any clue to look for on the radar. The closest to understand this is the Austrian school.
I was always a Chicago-school supporter and loved Milton Friedman. I still love his writing that explains the interdependence of democracy/freedom and capitalism/free-markets. But his monetarism always stuck in my craw. And when I started reading his “Money Mischief,” I really fell away from him.
He supported the New Deal at first and has always been a big supporter of the Federal Reserve and fiat currency. It wasn’t until very late in his life that he started to understand that fiat currency without any restraint cannot work. He tried to salvage his monetarism by stating that it would only work if the % increase in currency every year were limited by Constitutional Amendment to some % of GDP. But as you said, the numbers are so easy to rig (look at the DJIA, absolutely NO reason it should be at 10,700, or even 8,700 for that matter, but there it is), that even an Amendment wouldn’t be able to keep the rate of the inflated currency at any percentage of GDP. The first thing I thought when I read that was, “Hey, Dr. Friedman, 30% of GDP is government spending. If they want to print X number of dollars next year, all they need to do is increase government spending by Y amount this year. That would be a double-whammy on the rate of inflation and destroy your plan.”
But, of course, my first reaction to his monetarism is always, “Hey, shouldn’t the market decide the cost of borrowing money, rather than some central agency randomly setting the interest rate and creating all these bubbles?”
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I’m sorry, I should not have assumed your personal situation. It just really is upsetting to be at this age, having followed the rules, put money away, put our kids thru college on our own dime (in addition to ourselves thru college) and now, this crap. My neighbor was saying this weekend, that he hadn’t saved anything for retirement, but he wasn’t worried about it. He’s our age, but he’s a lib and I’m sure he thinks Uncle Sugar will take care of him.
It just makes me ill. Of course, it’s all in God’s hands anyway, but sheesh, why couldn’t it have happened 10 years ago when we could have made up for some of what’s going to be lost before retirement.
Stupid people who think there is a free lunch. A lunch you and I are going to pay for for them.
It’s going to be extremely difficult to control ... when it gets rolling it will have a natural tendancy to accelerate ,, and the braking action is ????? to raise rates??? stop printing all money??? VERY hard to do when necessities such as food have costs and inflation built into the pricing during the lead time/growing time... The politicians won’t have the strength to stop the snowball. They may aim for (lets say) 15% a year for 6-8 years to cut the actual debt payout by 75%-90% or so but I don’t see it ending well.
I can’t argue that you are wrong. You may very well be on the money.
My perception is that they want inflation and hope.....that is hope, to manage the rates to some level that will be hated but tolerated.
To pull that trick off will be amazingly difficult as the gov’t (deadweight) is so large a part of the economy now .. Reagan pulled it off with a solid manufacturing base and tax cuts. This medical takeover is a blatant power grab ,, any number of freepers could have actually put together a constitutional plan that would have been a positive for the economy, Obama got the taxes he needs to push us into a depression and cement his power over the stupid disconnected masses. We will probably parallel the “great depression” in that production will fall , there will be inflation in true necessities and deflation in all other items. Right now we are seeing inflation in food , fuel , auto’s and such but housing , clothing and many others are dropping .. that trend will accelerate.
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