Greenspan the Master.
- Thread starter hairdresser
- Start date
IMO, the main problem is that the US Federal Reserve uses Consumer Prices (and not even some important ones like oil and food) as its primary definition of inflation, same with using rent without house prices even though homeownership is around 70%.
What I would do is measure true inflation including oil, food, and house prices in their actual weightings. To smooth it out, I would just use an x-period average. Then, I would use inflation targeting policy so that inflation in the long term would average say 1% a year. For example, let's say true inflation is 2% one year. I would target 0.5% inflation for a year or two to get long term inflation down to 1% and vice versa.
New Zealand and Australia's Central Bank policies have been moving closer to this kind of policy; it will be interesting to see if they keep it and/or how well it works.
-Taric
edit: I forgot to mention I wouldn't do this until we reform Social Security and other government spending since our current inflationary monetary policy has the advantage (IMO) of reducing real Social Security increases.
What I would do is measure true inflation including oil, food, and house prices in their actual weightings. To smooth it out, I would just use an x-period average. Then, I would use inflation targeting policy so that inflation in the long term would average say 1% a year. For example, let's say true inflation is 2% one year. I would target 0.5% inflation for a year or two to get long term inflation down to 1% and vice versa.
New Zealand and Australia's Central Bank policies have been moving closer to this kind of policy; it will be interesting to see if they keep it and/or how well it works.
-Taric
edit: I forgot to mention I wouldn't do this until we reform Social Security and other government spending since our current inflationary monetary policy has the advantage (IMO) of reducing real Social Security increases.
I agree Study and Trade, the smart money is with gold.
The US/Fed continues to print money, spend money we don't have, China is starting to move out of dollars, Iran is moving to the Euro for oil. Iraq was gone to move to Euros for oil until we overthrew Sadam and kept their oil trade on the USD.
Wake up folks. This is nothing more the confidence game, and the confidence in the US dollar is starting to slide. Either we get the debt under control or look out. More countries will start to lose confidence in the dollar if this trend continues. This won't happen overnight.
I am just kicking myself for not buying a Perth Mint Cert at 380 gold awhile back!
I really hope the dollar rallies so I can sell into strength. I am sitting on too many USD.
The US/Fed continues to print money, spend money we don't have, China is starting to move out of dollars, Iran is moving to the Euro for oil. Iraq was gone to move to Euros for oil until we overthrew Sadam and kept their oil trade on the USD.
Wake up folks. This is nothing more the confidence game, and the confidence in the US dollar is starting to slide. Either we get the debt under control or look out. More countries will start to lose confidence in the dollar if this trend continues. This won't happen overnight.
I am just kicking myself for not buying a Perth Mint Cert at 380 gold awhile back!
I really hope the dollar rallies so I can sell into strength. I am sitting on too many USD.
All the Bears are coming out of the closet. Why? Because the Dow is off 60 Points from 11K! 60.
but is it in their best interest to see the USD drop? it could have a huge impact on the global economy by setting certain wheels in motion
I think one of the worst decisions of the past decade or so was doing away with the 30 year note. If the 30 year was still around the Fed/Greenie would probably have stopped interest rate hike at the end of '05. The 30 year is a fantastic vehicle for investors (especially foreign investors and central banks), but the have been forced down to 10 years and maybe even into more gold than they would like to be in.
The whole gold debate is an interesting one, but it has been around much longer than any of us has and most parties in that debate are staunch on their positions. Not going to make much headway debating gold with goldbugs, they simply believe and that's all there is to it. Gold simply put, is one part of a bigger puzzle and it is simply being used as diversification more so than total disbelief in the dollar.
Face it, nobody on the face of the planet consumes like an American and the fate of the world economies, for the time being, is inexorably attached to the American consumer. China NEEDS us, India NEEDS us and any other emerging market with any aspirations for any standard of living can get there faster in no other economy than the US..
When the 30 year comes back, I believe gold will start basing in the 500-600 range, maybe stay there for quite awhile. Gold is good, being long the US economy has been the winning wager since longer than all of us have been alive. The real threat to all this is bigger government and a move away from expanding free markets towards more socialistic, regulated policies. That my friends, the Fed has nothing to do with.
P.S.
Look at the recent legislature decision in Maryland regarding health benefits and companies in their state.
The whole gold debate is an interesting one, but it has been around much longer than any of us has and most parties in that debate are staunch on their positions. Not going to make much headway debating gold with goldbugs, they simply believe and that's all there is to it. Gold simply put, is one part of a bigger puzzle and it is simply being used as diversification more so than total disbelief in the dollar.
Face it, nobody on the face of the planet consumes like an American and the fate of the world economies, for the time being, is inexorably attached to the American consumer. China NEEDS us, India NEEDS us and any other emerging market with any aspirations for any standard of living can get there faster in no other economy than the US..
When the 30 year comes back, I believe gold will start basing in the 500-600 range, maybe stay there for quite awhile. Gold is good, being long the US economy has been the winning wager since longer than all of us have been alive. The real threat to all this is bigger government and a move away from expanding free markets towards more socialistic, regulated policies. That my friends, the Fed has nothing to do with.
P.S.
Look at the recent legislature decision in Maryland regarding health benefits and companies in their state.
I agree with you Iguana, it is in the World's best interst to have a strong dollar so Americans can continue to buy more Chinese crap.
There will come a point when then will realize as we will that we can't repay the debt, if we continue at this rate, and they will look towards other markets. Sure we can print more money, but it will then be worth less.
I believe China is hedging the dollar with their gold diversification, I wish I had done the same, lol
There will come a point when then will realize as we will that we can't repay the debt, if we continue at this rate, and they will look towards other markets. Sure we can print more money, but it will then be worth less.
I believe China is hedging the dollar with their gold diversification, I wish I had done the same, lol