Firstly we are not ONE country but actually 50 individual states that have lost control to lobbyists and politicians in Washington DC.
Fortis expects US financial meltdown in the next weeks
- Thread starter luckybastard
- Start date
Firstly we are not ONE country but actually 50 individual states that have lost control to lobbyists and politicians in Washington DC.
Ah yes, patriotism.
While there is a risk of a large decrease in demand and hence deflation -right now the policy seems to be govt spending and injection of liquidity when needed.
These have a tendency to deflate the value of the dollar.
Which causes prices to go up.
What the fed is trying to avoid is depression caused by large deflation in housing. If the they can keep the housing market from crashing long enough for banks to clean up their balance sheets - they may accomplish their primary goal.
Additionally the devaluation of the dollar and gov't spending may have at least two effects. Our real estate may look cheap to foreigners. Inflation may cause wage inflation. Which will make loans easier to afford and cause real estate prices to rebound. Saving the banks and the economy.
In summary - Inflation is plan one - if it fails - watch out.
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To the other poster. Just once I would like to find out why in this era of currency exchange, why it matters that oil is priced in dollars - not euros.
People can exchange their dollars for euros anytime they want. Whats the big deal?
These have a tendency to deflate the value of the dollar.
Which causes prices to go up.
What the fed is trying to avoid is depression caused by large deflation in housing. If the they can keep the housing market from crashing long enough for banks to clean up their balance sheets - they may accomplish their primary goal.
Additionally the devaluation of the dollar and gov't spending may have at least two effects. Our real estate may look cheap to foreigners. Inflation may cause wage inflation. Which will make loans easier to afford and cause real estate prices to rebound. Saving the banks and the economy.
In summary - Inflation is plan one - if it fails - watch out.
-----
To the other poster. Just once I would like to find out why in this era of currency exchange, why it matters that oil is priced in dollars - not euros.
People can exchange their dollars for euros anytime they want. Whats the big deal?
A couple points.
First, US Real Estate and Equities have been super cheap in Euros and Yen for the past 5 years. Where is this flurry of Overseas Buyers at our garage sale prices? Nowhere. Why? Its a Global Meltdown.
Second, price inflation eventually causes wage inflation. This is why the Beauru of Labor Stats worked overtime to disconnect real inflation with CPI via hedonics and price substitution. Because wage hikes key off CPI numbers.....
The Price-Wage spiral is a well-known economic phenomenon. See Germany post WW1 or Zimbabwe current-day for extreme end-effects.
When wage inflation kicks-in, the economy is done for. Cooked and done. Wage inflation - much like price inflation - destroys GDP and real income.
All this stuff doesn't happen in a Bubble. We simply cannot print endless handouts to Save the Day. The stored wealth in freshly printed money is in actuality, stolen from the incomes of work-a-day American families via price inflation.
When wage inflation kicks in, prices for everything GO UP A LOT. Business lose their margins overnight as workers demand more. So what do they do? Jack prices. National demand falls off, as wage gains are immediately erased by a commensurate rise in prices. Often times, moreso. Prices simply rose to offset the hike in wages... Now we're back at square one with the Dollar devalued another 5-10%.
See where this is going?? Essentials like Energy, Commodities, Food, Steel whatever, keep skyrocketing as the dollar is further debased. Until the Average American, or German or Zimbabwean, spends most their paycheck on rent, food, gas, and light.
Wheres discretionary spending now? Remember that component of our economy thats 72% of GDP?? Well, now its only 50%, and we're in for one hell of a shit storm.
Bernacke isn't stupid. When the banks are clear of CDO, they'll just go short bonds, T-Bills and Indicies. Bang. Jack rates to curb inflation and we'll be in a major recession.
There is no reason for him not to do this. This is not rocket science. He can either expand or contract. Further expansion would ruin the economy. Any arm-chair economist or analyst worth his salt knows that. If he did choose the later - to inflate, without recourse - that would signal more grave circumstances than just economic. It would indicate to the astute, that the Political and Corporate Leadership of this Country decided to blow out the Country.
Or the chairman of the board of XYZ decides it's time to blow out XYZ?
Is that what you mean?
If they went blowout route - which I highly doubt they will (Bernacke already made Hawkish overtures and decried further rate cuts ) - if we go that route, it would be to usher in the AMERO. Problem reaction solution.
You know, that pesky North American Union no one likes to talk about??
My 3 cents
May I mention ...
Did the stimulant truck do the entire neighborhood delivery at your house? You are raving a tad bit much.
How levered short are you?
Did the stimulant truck do the entire neighborhood delivery at your house? You are raving a tad bit much.
How levered short are you?
Thats ECON 101, Scab-popper.
Not surprised you slept through it.
Feel free to explain why if you disagree.
I'm all ears.
Not surprised you slept through it.
Feel free to explain why if you disagree.
I'm all ears.
Quote from achilles28:
A couple points.
The Price-Wage spiral is a well-known economic phenomenon. See Germany post WW1 or Zimbabwe current-day for extreme end-effects.
Mate one major point the Zim inflationary environment has NOTHING to do with a Price-Wage spiral and has EVERYTHING to do with a government engineered supply collapse that sparked off the hyperinflation.