Recessions can't happen anymore and markets can only rise.
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Notional Recession
- Thread starter Avid_Consumer
- Start date
Quote from duard:
Pretty clever, huh!?!
extremely clever. i'm also gleaning what i can from the last few years, attempting to learn from what's been done. fool me once... how does it go? With the DXY so close to all time lows over the last 2 years, it will be very interesting to see where monetary expansion can go from here.
i hate to cite wiki so frequently, but how many of these conditions does the US currently satisfy?
from:
http://en.wikipedia.org/wiki/Chronic_inflation
To accommodate chronic inflation, normal economic activities are disrupted: Consumers buy goods and services to avoid even higher prices; property speculation increases; businesses concentrate on short-term investments; incentives to acquire savings, insurance policies, pensions, and long-term bonds are reduced because inflation erodes their future purchasing power; governments rapidly expand spending in anticipation of inflated revenues; exporting nations suffer competitive trade disadvantages forcing them to turn to protectionism and arbitrary currency controls.
also from:
http://en.wikipedia.org/wiki/Hyperinflation
Governments will often try to disguise the true rate of inflation through a variety of techniques. These can include the following:
* Outright lying as to official statistics such as money supply, inflation or reserves.
* Suppression of publication of money supply statistics, or inflation indices.
* Price and wage controls.
* Forced savings schemes, designed to suck up excess liquidity. These savings schemes may be described as pensions schemes, emergency funds, war funds, or similar.
* Adjusting the components of the Consumer Price Index, to remove those items whose prices are rising the fastest.
The CME should make an M3 contract available. How do I get in on the steady decline of my purchasing power directly at the source?
I don't want to speculate on volatile assets or distorted and understated risk premia, I simply want a liquid, stable medium to store value and conduct exchange
I don't want to speculate on volatile assets or distorted and understated risk premia, I simply want a liquid, stable medium to store value and conduct exchange
Quote from Avid_Consumer:
What do people feel the general odds are that we may not see a recessionary price drop in the US indices, now or any time soon?
I think people are very bearish. Sentiment has sucked for months. That's why we're rallying. Traders are short and each week 401k money keeps on pumpin'. Absent a considerable uptick in rates investors will seek returns in equities. If you want to go short a market that seems to be dislodging longer time-frame longs you should look at Bonds.
Priced in eur, gbp, particularly gold, etc the US indices have been in a prolonged and fairly dismal looking real recession for a few years ... you can see this for example by charting a ratio spread of the dow to gold.
Why price US assets in EUR? Why not JPY which has extended today into multi year lows? I'm not disagreeing with your thesis just your over optimization. Personally this is my take. Most nations are running troubling deficits. Japan has 2.6 times the per capita debt of the U.S. Gold is becoming an uber currency in itself. That's why even during periods of relative dollar strength, gold keeps chugging along.
is it possible that due to accelerating monetary expansion exceeding 10% a year that the Fed may actually disguise the recession in notional terms until the next expansionary phase?
Great question AC. The Fed's on the fence. Price expansion is worrisome (hence a dozen and a half bumps in FF's) but higher commodity prices are often a brake on the economy in themselves. Certainly many Big Macs and movie rentals have gone instead into peoples gas tanks, eh? However wage expansion is clearly evident. IMO the Fed knows that commodity producers and global consumers could care less about U.S. rates thus the Fed is impotent in fighting those inflationary forces. By aggressively raising rates from here, they only heighten the odds of stagflation, i.e. not allowing wages to keep up.
is this what bush meant by an 'ownership society', basically intending to accelerate devaluation of the dollar and artificially boost the prices of anything priced in dollars?
Undoubtedly. The dollar was ridiculously high. Other than Americans vacationing abroad and exploiters of third world labor, who really prospers from a greenback that strangles domestic competitiveness? Assets are king, cash is...well, fiat. One can elect to build wealth through paychecks that have decreased purchasing power hence reduced savings potential or they can purchase assets. I find it hilarious that otherwise intelligent people would rather cast their lot with competing wage slaves in Bombay rather than suck it up and buy seemingly overpriced hard assets that offer protection from global currency collapse.
Quote from Pa(b)st Prime:
I find it hilarious that otherwise intelligent people would rather cast their lot with competing wage slaves in Bombay rather than suck it up and buy seemingly overpriced hard assets that offer protection from global currency collapse
You remind me of caveman that is purchasing caves thinking that people will always need a place to live and your "hard assets" are golden investments. I'd rather "cast my lot" at human ingenuity
Quote from Pa(b)st Prime:
Undoubtedly. The dollar was ridiculously high. Other than Americans vacationing abroad and exploiters of third world labor, who really prospers from a greenback that strangles domestic competitiveness? Assets are king, cash is...well, fiat. One can elect to build wealth through paychecks that have decreased purchasing power hence reduced savings potential or they can purchase assets. I find it hilarious that otherwise intelligent people would rather cast their lot with competing wage slaves in Bombay rather than suck it up and buy seemingly overpriced hard assets that offer protection from global currency collapse.
good points, i see where you're coming from. the DXY was at an index level of 120 when bush came to office, now we sit at 84ish. 120 was a relative extreme, having only been higher from '83 to '85
I just think that by dislocating inflation so profoundly from the risk free rate, the net effect has been unbalanced accross the population.
since the vast majority of the nation's wealth is concentrated in the hands of a very small percent, the net effect of an 'ownership society' has been at the expense of most americans. in the end it has been a wealth stratification policy advantaging almost entirely those who were already wealthy.
the other issue with asset growth during bush's tenure is that it has been largely notional, and not real growth. i'm all for the concept of rewarding risk on competetive assets, but this is more along the lines of coersion by artificial monetary policy. by investing, i'm not expressing belief in a company or asset's competetive advantage, i'm placing trust or seeking shelter in monetary debasement
i just don't like coersion. never have.
Quote from Avid_Consumer:
good points, i see where you're coming from. the DXY was at an index level of 120 when bush came to office, now we sit at 84ish. 120 was a relative extreme, having only been higher from '83 to '85
Notice what stocks did in 86 and 87 as the dollar was breaking. There's nothing new under the sun AC........
Quote from MadBulgarian:
You remind me of caveman that is purchasing caves thinking that people will always need a place to live and your "hard assets" are golden investments. I'd rather "cast my lot" at human ingenuity
Those caves are still there.
What's the worth of the caveman's first currency?
so what's the plan for the dollar folks?
despite the cheerleading today, i'm sure i'm not the only one who noticed how sharply it's falling. the euro is a few good days from an all time high and the dxy is a handful of bad days from at least a 30 year low..
despite the cheerleading today, i'm sure i'm not the only one who noticed how sharply it's falling. the euro is a few good days from an all time high and the dxy is a handful of bad days from at least a 30 year low..
Quote from Avid_Consumer:
so what's the plan for the dollar folks?
despite the cheerleading today, i'm sure i'm not the only one who noticed how sharply it's falling. the euro is one good day from an all time high and the dxy is a handful of bad days from at least a 30 year low..
could easily break down soon, nearing 82.50, historical lows are possible.