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Markets need to correct
- Thread starter myminitrading
- Start date
The biggest problem will be inflation, because many things are pushing inflation upwards, one of them is the huge rise in the market. When markets rise further than they should it is equivalent to printing money. In a few months when CPI comes in at 2% annual and people notice that the milk and just about everything else they buy has about 10 times that inflation rate, things will become interesting..
Right on Zebra. The government has its own method of computing the inflation rate which takes into account the nebulous fudge factor of "quality". The change in the method used to compute inflation was, i think, introduced during the Reagan administration, and had the effect of reducing the official figure. This, naturally, is highly beneficial from a political standpoint during times of heavy deficit spending, such as then and now. As entitlements and TIPS are indexed using the official figure it is easy to understand how reducing that figure can save the Treasury billions, to say nothing of the beneficial effect on servicing the debt. That is to say, it is helpful when one wants to use stealth inflation to inflate their way out of debt, as is the situation at present. Just as a long call and short put is a synthetic for long stock, inflation is a synthetic for taxation.
Quote from piezoe:
Right on Zebra. The government has its own method of computing the inflation rate which takes into account the nebulous fudge factor of "quality". The change in the method used to compute inflation was, i think, introduced during the Reagan administration, and had the effect of reducing the official figure. This, naturally, is highly beneficial from a political standpoint during times of heavy deficit spending, such as then and now. As entitlements and TIPS are indexed using the official figure it is easy to understand how reducing that figure can save the Treasury billions, to say nothing of the beneficial effect on servicing the debt. That is to say, it is helpful when one wants to use stealth inflation to inflate their way out of debt, as is the situation at present. Just as a long call and short put is a synthetic for long stock, inflation is a synthetic for taxation.
So what your saying is, the government re adjusts the weightings to suit their agenda?
Our in street slang, THE FRIGGIN MANIPULATE THE NUMBERS.
Quote from demoship:
The US has no way of legitimately paying the 9 trillion $ debt. The only way out is to inflate it away.
Actually only $5 trillion of that is actual debt. The other $4 or so is the social security/entitlement fund parked in treasuries.
They could pilfer the social security fund (take it out of US treasuries) and diversify it entirely in foreign debt and US equities instead, instantly cutting our interest load in half.
Then they could up the distribution age for soc. security another 10 yrs. Additionally, create a net worth distribution exclusion for social security. ie if you have retirement income or wealth above a certain threshold, dramatically reduce your distribution (sell: its for the public good).
Then they could actually balance the budget to surplus, cutting mass govt programs and all this defense spending.
Lastly, we could build massive # of nuclear plants to offset 'commodity inflation pressure' caused by displaced energy demand (into corn, gasoline, oil, etc), inspiring a whole new generation of hybrid/plug-in electric cars and killing commodity inflation in its tracks. [that would offset the need for all of our wasteful defense spending as well]
Oh and of course there's medicare. Copy the french system. Takes care of that burden.
Thats your 5 pt plan for a strong dollar and energy independence (which is the key to the whole thing). Sounds awefully like France, doesn't it?
quote from Mymini...
So what your saying is, the government re adjusts the weightings to suit their agenda?
Mymini, i suppose that that is in effect what has happened, but to be fair it should be noted that even though our Government's method of computing inflation has the appearance of manipulation, and most certainly is politically expedient, there was support from at least some economists for the change. Obviously, economic theory is of little interest to the working-class whose buying power has not kept pace with price increases, and who seem not to understand that pledges of tax reductions in a time of deficit spending only alters the means by which the Government reaches into our pockets.
So what your saying is, the government re adjusts the weightings to suit their agenda?
Mymini, i suppose that that is in effect what has happened, but to be fair it should be noted that even though our Government's method of computing inflation has the appearance of manipulation, and most certainly is politically expedient, there was support from at least some economists for the change. Obviously, economic theory is of little interest to the working-class whose buying power has not kept pace with price increases, and who seem not to understand that pledges of tax reductions in a time of deficit spending only alters the means by which the Government reaches into our pockets.