Now what's your point? A strong US economy & a VERY weak currency. Is that your rational? Is it that what you want? O.K. but than don't blame the oil producers if you can't pay your gas bill in the near future, my friend!
Greenspan the Master.
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I'm not buying gold. I'm maintaining my position on small rental, but upscale rental unit because I'm anticipating increasing rents while my payment stays locked in. Buying Gold without some form of leverage takes you nowhere in "real" terms. Graph the "real" inflation adjusted price of gold some time and you'll see a flat line. I used to be a gold bug myself until I learned about leverage. Well selected rare gold coins are probably a better bet.FWIW, I think Greenspan did an excellent job that will be a hard act to follow. He raised rates slowly to slow the housing industry because he knew full well that what was fueling our trade deficit and spending was the wealth effect and spending of our home equities. He knew this, but he never came out an said it, because at his level, even a casual comment could be catastophic. We'll see home price rises slow down but not reverse except for the crazy frothy areas. Meanwhile, rents will play catch up because so many landlords took profits there aren't many left, and as the economy improves, the kids will get jobs and need places to live (small places).
Regarding Gold, If I had sold a rental property 3 years ago and bought gold with it, I could sell that gold today, and just barely buy back that rental property. Nothing happened in real estate except the dollar weakened, and that wasn't Greenspan's fault. It was massive deficit spending approved by the legislative and executive branch of the government that I love dearly.
Smart Money
Was the last sentence sarcasm?
Kind of.
The trouble is that economic phenomena work slowly but steadily. Much too slow for people to easily comprehend and tie together.
"I do think the American worker is the most productive and innovative in the world."
It used to be the European worker till many started voting with their feet and "set foot" into the US.
Today, the US, like Europe have become systems for distributing poverty, ruled over by socialist-gospel spreading barons, so much loved by the people. Inflation and debt are merely symptoms.
Where will that US worker have to flee to when time comes to again vote with his feet?
The trouble is that economic phenomena work slowly but steadily. Much too slow for people to easily comprehend and tie together.
"I do think the American worker is the most productive and innovative in the world."
It used to be the European worker till many started voting with their feet and "set foot" into the US.
Today, the US, like Europe have become systems for distributing poverty, ruled over by socialist-gospel spreading barons, so much loved by the people. Inflation and debt are merely symptoms.
Where will that US worker have to flee to when time comes to again vote with his feet?
what the f#&k did you say?
And that's really the issue, isn't it? The loss of price stability that is coming is pretty much an undisputed issue. It is probably the only thing that will cause the US collectively to get off our rears and compete for real. And I think we will, but not without a lot of pain for a while. OTOH, it creates a lot of opportunity.
The big question in my mind is this:
do we get deflation followed by inflation, or will it be inflation followed by deflation (which is a more likely scenario). Inflate the debt away, precipitate a fiat currency crisis, then revalue by returning to a gold or bimetallic standard.
However, in the back of my mind I fear a scenario in which there is wage, asset, and manufactured goods deflation combined with commodity inflation, thereby pretty much wiping out most of the economic gains of the last century. That would probably be worst outcome possibility.
could the loss in purchasing power be moving away from the gold standard and not so much the fed?
japan...
I really don't see why so many on this board are so in love with Japan. Yes they have a productive work force, but only recently have they really started to make progress into banking reforms which will truly make their market a "free" market. Japan still protects its corporations from outside competition through restrictive business laws and practices. Japan is just starting to emerge from a funk of deflation/recession that has lasted for over a decade.
I, personally, think that there are other emerging markets and economies that will show more promise in the future, but only if their political structure stays sane and stable. I do believe there are countries in Eastern Europe, such as Poland, that have what it takes to become real growing forces, but only time will tell.
One way to prove this point is that if you had some seed capital and wanted to start a business anywhere in the world, where would you go? I would think most of us would choose the U.S. for such a scenario, but beyond that, I personally wouldn't balk at Poland or the Czech Republic. Taxation rates and stability are very favorable. Population is VERY educated and most, if not all below the age of 30, speak English as a second language. I would also have to say that Ireland rates as well, although not as highly due to the probability that they will only become more regulatory in nature and taxation is excessive.
I am just saying that America still incubates and encourages more innovation (not outright production and manufacturing) than any other place on the planet. A devalued currency isn't a bad thing as long as that currency has the capability of increasing in value. A high valued currency isn't necessarily a good thing, but a currency that is backed by stability, innovation, and high productivity is a GREAT thing. You see America, right now, has the capability of increasing its dollar value as it sees fit through the freedoms in our government. Yes, we could have a strong dollar, the most valuable currency in the world, but we choose economic expansion instead. For that expansion to occur right now, a weaker dollar is better. Now, the REAL problem is that when we weaken our dollar and spur productivity and economic expansion, our expansion isn't fast enough due to the OVERSPENDING of our government. You see, we can keep interest rates very low and see a strengthening dollar and economic expansion as long as we keep national spending in check. Heck we could have extremely low rates on capital and low taxation rates as well if we had a government that was bare bones.
It all comes down to what you want. Weak dollar is not a bad thing, but the reasons for its weakness is where the devil is in the details.
Sorry about the verbose post, but I really think that too many people overlook the importance of the political will or actions that underly currency markets. We could have a strengthening dollar next week if we wanted to, but that probably would mean taking actions that, in the long run, might lead to an even weaker dollar for much more serious reasons.
I, personally, think that there are other emerging markets and economies that will show more promise in the future, but only if their political structure stays sane and stable. I do believe there are countries in Eastern Europe, such as Poland, that have what it takes to become real growing forces, but only time will tell.
One way to prove this point is that if you had some seed capital and wanted to start a business anywhere in the world, where would you go? I would think most of us would choose the U.S. for such a scenario, but beyond that, I personally wouldn't balk at Poland or the Czech Republic. Taxation rates and stability are very favorable. Population is VERY educated and most, if not all below the age of 30, speak English as a second language. I would also have to say that Ireland rates as well, although not as highly due to the probability that they will only become more regulatory in nature and taxation is excessive.
I am just saying that America still incubates and encourages more innovation (not outright production and manufacturing) than any other place on the planet. A devalued currency isn't a bad thing as long as that currency has the capability of increasing in value. A high valued currency isn't necessarily a good thing, but a currency that is backed by stability, innovation, and high productivity is a GREAT thing. You see America, right now, has the capability of increasing its dollar value as it sees fit through the freedoms in our government. Yes, we could have a strong dollar, the most valuable currency in the world, but we choose economic expansion instead. For that expansion to occur right now, a weaker dollar is better. Now, the REAL problem is that when we weaken our dollar and spur productivity and economic expansion, our expansion isn't fast enough due to the OVERSPENDING of our government. You see, we can keep interest rates very low and see a strengthening dollar and economic expansion as long as we keep national spending in check. Heck we could have extremely low rates on capital and low taxation rates as well if we had a government that was bare bones.
It all comes down to what you want. Weak dollar is not a bad thing, but the reasons for its weakness is where the devil is in the details.
Sorry about the verbose post, but I really think that too many people overlook the importance of the political will or actions that underly currency markets. We could have a strengthening dollar next week if we wanted to, but that probably would mean taking actions that, in the long run, might lead to an even weaker dollar for much more serious reasons.
Sure, without the gold standard a loss in purchasing power is almost assured because the government and the Fed, being the first to spend the newly created money, benefit most from debasement. Savers as you would expect are the ones that are hurt the most by the process, but in the US most people have woken up to it in some respects, so they no longer save. Greenspan put it beautifully in 1966: âIn the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.â
The government and the Fed focus entirely on their BS inflation numbers, but the money supply, being the most accurate measure of inflation is of no concern to them. I had a quick look at one of Bernankeâs papers on inflation recently and saw a well written speech with the most intricate, and useless, analysis of the BS inflation statistics, but no reference to money supply growth. They just do not want us to know about the money supply and that is why they are doing away with the M3 statistic. So much for the transparency of the Fed under Bernanke.
As long as the newly created money ends up in real-estate or stocks, they are content, but once it ends up in the prices of goods they blame everyone but themselves for it. When that happens they often impose wage and price controls such as Nixon, or in the distant past as in the case of the Roman emperor, Diocletian, who debased his coins with copper, the death penalty on any merchant who puts up prices.