Thursday, 10/31, Market WrapUp (Best month in 15 years)

Financial Sense Online ^ | 10/31/2002 | James J. Puplava

[David]

Response to your #40:

Your posts are both very simplistic and very insightful.

You express the ultimate bottom line of monetary policy here--"discipline in . . the creation and maintenance of money base." This is the ultimate issue. And the cause of the economic cycle; all depressions, most contractions, all can be laid at the door of the fed--the severe cycles resulting from excess credit creation and consequential bubbles.

But there is a good market mechanism to solve the problem--maybe more than one. Private money unrelated to a government sponsered entity might work. A much simpler answer is to use pieces of gold as money which proposal has been the subject of extended debate here on other threads.

But you have to recognize that there is a reason for the Fed--or actually two reasons. The US Government does not want to cede the power of control of the money system to the private market exchange system because that is one of the greatest powers government has over its citizens. So, powerful owners of capital, under the guise of the fed which was labled as a central bank but which is not, took over the money system of the United States as part of a legalistic maneuver that on paper was intended to insure that the money system would be managed as a level playing field (which may have lasted for a while).

[hinckley buzzard]

This is the calm before the perfect storm.

If you want to go to the beach, fine.

Buy the dips and knock yourself out. Catch the perfect wave.

But no belly-aching next summer when your house is worth less than your mortgage and your stocks are all delisted because they are under a dollar.

Normal people, on the other hand, should be preparing to sell into this rally now, and getting ready to buy gold/mining shares in December.

[hinckley buzzard]

"So we're going to suffer #2 while he pursues #3."

False. We are going to have #2 whether anyone wants it or not. The only questions are when and how much.

#3 is irrelevant drivel.

[Willie Green]

#3 is irrelevant drivel.

Well, you need to convince Dubya of that.
But he doesn't seem to want to hear anything about it.

[hinckley buzzard]

Here is one factor that will lead to the end of the housing boom/bubble:

There are currently in this country tens of thousand of homes in foreclosure, and the lenders are going to have to put them on the market sooner or later--they have billions of dollars tied up in non-performing mortgages and in these relatively profitless times that is not sustainable. The assets will have to be liquidated.

So what happens to the housing market when tens of thousands of units come onto the market at distress-sale prices (Over-supply)? And at the same time the consumer figures out that he is tapped out, and has no way to take on more debt (Dropping demand)?

Those trends are in action now, not just speculation for the future.

[hinckley buzzard]

I see no evidence that he wants to invade anybody with large invading armies. I think he would consider it the ultimate achievement to get "regime change" without risking the military at all.

As for the treasures to be had, we already buy all the oil from Iraq that we want--hundreds of thousand of barrels a day, in case you haven't been paying attention.

Why would we spend a hundred billion dollars to go and "mug" someone with whom we can successfully make deals for far less cost?

[Willie Green]

US takes role in Colombia to new level

[Willie Green]

Why would we spend a hundred billion dollars to go and "mug" someone with whom we can successfully make deals for far less cost?

What a clever idea!
Hire a "hit man" so we can keep up appearances as "legitimate" businessmen!
Must've gotten that one out of the mafioso handbook.

[imawit]

Oh, this makes the fact that the numbers aren't worth s... ok.

[Always Right]

Once again, the "Financial Sense Online" negative spin. Since WHEN is 3.1% GROWTH CONSIDERED BAD? Europe would BEG to have such growth. It was "not in keeping with expectations."

I kept looking for that growth number when reading the report, it was not there. What kind of 'report' is this? I guess in there 2000+ words there was not enough room to say 3.1%. All they said was how disappointing todays numbers were. What a crook. No one was expecting 3.1% growth. This STUPID report needs to be renamed TODAY'S MARKET GLOOM PROPAGANDA.

[Always Right]

There are currently in this country tens of thousand of homes in foreclosure, and the lenders are going to have to put them on the market sooner or later--they have billions of dollars tied up in non-performing mortgages and in these relatively profitless times that is not sustainable.

Housing starts each months are over a million. If 10,000 houses are put back into the market, it will not pop any 'bubble'.

[LS]

What the hell are you talking about? So all government numbers are unreliable? You ready for your tin hat?

I KNOW people who work inside these agencies: NBER, Treas Dept. and (previously) Commerce. They are good, honest people who don't arbitrarily "fudge" numbers so that Pupulva or Financial Sense Online can say "oh, they are s**t" just because they don't like them.

Now, I don't recall you, or anyone else, when the numbers were DOWN, saying, "Oh, we can't believe them. They are lying about a good situation." Nope. Didn't hear that. With you (apparently---correct me if I'm wrong), if the numbers are BAD, then they are genuine and honest, but if they are good, they are fraud. That's Barbra Streisand, and you know it. And I object to the implication that good, honest people are lying. If you had a clue about how these numbers are compiled in the first place, you'd know it's darn near impossible to "fudge" them just from the manner in which they are compiled. Now let's remove the tinfoil, please.

[LS]

Finally, buz, at least YOU will say what all these gloomsters really mean, which is "Buy GOLD." It's a dumb strategy, but at least you have the guts to say it. I notice that many here dance around what they really are, which is goldbugs.

But you are way off as a seer.

[LS]

Yep, Richard, and that's why gold is stuck, energy prices continue to fall, and interest rates are at near all-time lows. Yep, those are sure signs of inflation, I gotta hand it to ya.

[LS]

I say again. The "experts" almost always want a rate cut to spur growth. The exception was the 1990s, when (due to Clinton's refinancing of the debt) they were terrified of inflation---all the while we were drifting into DEFLATION.

But the point is, rate cuts don't HELP the money supply, so it is the wrong policy prescription.

[tm22721]

The productivity gains of the 90s have led to an interesting situation. No matter how much money the Fed pumps in, it's not enough to fuel inflation because the supply and distribution of goods is much more responsive to changes in demand.

So no matter how much consumption increases, there is so much idle capacity from increased production efficiency, that it cannot outpace increasing price competition, ie DEFLATION.

An unprecedented economic situation, indeed, and one that the economists have (as of yet) failed to recognize and incorporate into their models.

BUMP

[B4Ranch]

#52 + #53 May I be so crude as to ask, what makes you feel that you are the "Expert" in this thread that gives you the authority and expertise to critcize everyone? Please tell us where your knowledge base comes from. Is it success?

[B4Ranch]

Many thanks to you both.

[gabby hayes]

Thanks. I especially appreciate the intervention/manipulation dimension.

[LS]

Yah, I'd say some success. Also, a pretty thorough knowledge of history. Some, from research of the 12 or so books I've published, most recently, "The Entrepreneurial Adventure: A History of Business in the United States" (Harcourt, 2000). Oh, also I was a rock drummer whose band opened for the James Gang, Steppenwolf, Savoy Brown, Mother's Finest, and who played the Troubadeaur with the Who in attendance and was the guest of the Allman Bros. at their Cincy concert. That's my main qualification :)