"It's Different This Time" ??

G

gnome

Is it really? I think perhaps it is.

Economic cycles since 1913 have always been orchestrated by the Fed... easing and expanding credit, interest rates and money supply.

This time, however, we might have experienced "credit exhaustion"... that is, the Fed kept the "pedal to the metal" (and lied about the inflationary impact) until the "marginal credit-based spender"... SHOT HIS WAD...

If that's the case, trying to re-ignite the consumer and re-ignite the economy is tantamount to "pouring gasoline on the burnt-out ashes of a camp fire".

There is NO precedent for this experience in the economic history of the US since the creation of the Fed.
 
Definitely it is different....

Why ....credit.....credit of all kinds....
will be pulled....and out of the equation for chasing goods and services....

...................................................

ie...

What will US highways look like when a minimum 40% down for a car is required for for most individuals?


What will home sales look like when a minimum down payment is 25% or more?

Both with very strict loan requirements.....

Starting from a negative savings rate.....
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Is this bad.....no....

Prices and the cost of credit can become more normal....

..........................................

Imagine....someone retiring might even see reward for their savings some day.......

Why is this a proxy ?

Because when one becomes 65 they cannot double up or down, nor average their age.........
 
Gnome wrote....
Maybe.

Maybe "hyper-inflation in an effort to prevent deflation"... bad, regardless.


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One would think that the Fed has sophisticated models which assist in judgement calls regarding trying to offset asset valuations through monetary devaluation......etc...

But when comments were made not many months ago...ie subprime is contained....makes one wonder...eh ?

Seems as if the fire truck only starts rolling after there is a fire....with no prevention.....won't be long till its all burned up.....
 
what seems to be forgotten from the public's collective memory, is that greenspan went into severe desparation in rates cuts in 2001-2002 that were veeeeery delayed in their effect - for quite a while, they seemed to have no effect at all - a deflationary depression was feared at the time

he basicly conscripted the assets of prudent savers (through near zero interest rates and ultra credit expansion/dollar dillution) and transfered the wealth to the hands of spenders via housing inflation/cash out refi

its was trillions of dollars of outright theft to keep the economy going - 'spend it, or we'll give it to someone who will'

spenders/borrowers seemed to have money fall from the sky - savers saw their hard earned savings evaporate

assets saved from foreginers, newfound wealth from globalization was also injected into the economy due to *relative* and *perceived* stabilty of the dollar vs their own currency

but eventually, you run out of savers to steal from, and foreigners catch on to what's going on - gloablization continues to feed the strength of their own countries, causing them to re-evaluate their perceptions of their own currency vs the dollar. 3 card monte doesnt create wealth, it only transfers it, and you have to have someone to transfer it from - we're running out very quickly. And the wealth generating capacity of the this country has been packed up and shipped away

and you end up like the story of the farm that ran out of coal, and wood, so they burned the wooden windbreak fence to keep the fire going

well now that's burned, the fire's going out, and the wind is howling.....

you can have all the faith in this country you want, you can salute the flag and bleat patriotic mantras, but when you replace wealth creating traditions with wealth destroying habits, poverty is the result no matter who and where you are

Ayn Rand's Objectivist newsletter in the 1960s articulated very well how this works and how evil it is, and the most bazzare thing is, her economics editor was none other than Allan Greenspan himself
 
you can have all the faith in this country you want, you can salute the flag and bleat patriotic mantras, but when you replace wealth creating traditions with wealth destroying habits, poverty is the result no matter who and where you are

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Even third world countries have people with patriotism.....

And they eat too....and enjoy good restaurants.....

But can't pay the bill.....
 
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