Bonnie,
>>If the S&P is the new financial standard replacing gold, then housing, utilities, food, etc,
costs less than half of what it did three years ago in S&P units, so does this constitute
deflation?
It's an interesting concept. One's worth is measured not by how many dollar bills or gold coins he has, nor by his house and land, but by how many units of the "stock market" he owns. But couldn't this concept be applied equally well to the market tops of '29, '69, etc.? After those markets returned to more normal historical valuation levels, the owners could not exchange their units for as many goods and services as they might have at the top.
But one must sell those stocks or funds in order to be able to exchange that value for goods and services, which still require greenbacks or their equivalents. No one I know of can trade shares of a mutual fund directly for a new BMW. So what happens when people start selling their funds to reap the benefits? With a relatively declining population, to whom will all these "long haul" investors sell? Since their high PE stocks pay little or no dividend, they can't live off the dividend income and therefore must liquidate the equity for cash in order to use it. And can everybody really be rich? Sounds wonderful, but I remain skeptical.
And Bonnie, are you going to change your last name to Bull? <g>
Jack |
