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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: loantech who wrote (75547)	12/13/2006 3:53:41 PM
From: benwood	Read Replies (4) of 110194

Mish's (& Heinz's) point I think is that if we did not have monetary inflation in the first place, then, on the whole, you'd see prices stable. So if you allow unmitigated monetary inflation, you will get retail/price inflation. It's a cause and effect argument. I'd rather eliminate the cause than the simply treat the symptom. Why get sick in the first place if one can avoid it? The Austrian economists (and I) believe that if you inflate the money supply, you will create scarcity and you will cause prices to go up. It's great if you get the "new" money -- in the US, that would be GS and JPM and the military industrial complex -- because you can snap up more "stuff" with your new money. If you are on the tail though, like most of us, you will see prices go up and then, after a lag and after gov't statistical distortion, you may get a catch up raise, but you will always lag and you will relentlessly stay behind the curve. If you are on SS like my parents, you will lag 1 to 3% every year on the gov't program of systematically reducing entitlements and systematically shifting wealth to the chosen few. But it's all in the name of revolt-free taxation. The State just prints the money and spends it in a manner that make the public think it's a free bridge to nowhere (or that "nobody" has to pay for the political war in the Mideast so nobody really bothers to complain very loudly). What the masses don't understand is how their retirement nest egg erodes and thus the tax still comes out of their pocket. One of the retirement erosions is the escalation of the retirement plan costs and so those plans simply get tossed out. And so wealth shifts to those closest to the printing presses. How about them bonuses at Goldman Sachs! Must be nice to be so close to the new, hot money.

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