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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (12272)	12/30/2001 9:33:21 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hi Maurice, <<Suppose Uncle Al organizes a currency printing race>> There is no need to suppose, because we are well on our way to Wonderland already. <<The risk-free concept of holding cash could quickly turn ugly. The risk premium for real assets, real production and real value represented by CDMA, Toyota, Samsung, houses, dairy farms, trees and oil wells could turn out not to look very risky compared with fiat currencies based on an abstract collective state philosophy of compulsion and repression>> … and thus raising the cost of even risk-free capital, to, oh, say, north of 15% on the long treasury. Maurice, you analysis skipped a whole bunch of steps between FED debasing currency and rise in equity market. You fatally sidestepped the part about imploding equity price due to rise in risk premium of cash in line with inflation expectation causing general rise of interest rate, even as lack of final demand and manufacturing deflation causing production to stagnate and relocate. Your faulty analysis is based on a mistake in logic and error in observation of reality, indicated here, <<fiat currencies based on an abstract collective state philosophy>>, clearly treating other people’s money as a point scoring system as opposed to as savings worked and lived hard for. Repeat reading … Message 16834159 Going one step further, to help you out … (a) Cash is trash, yielding a risk-free rate of 1.5%, due to lack of demand and surplus of supply for cash (b) Liquidity is hand-pumped into the dying body corporate, pressurizing and speeding up the dying process (c) Inflation of some asset class is the result, but not necessarily of equities (d) Lack of demand and pricing power dictates the state of the real economy and profitability, and thus true worth (e) Long rate is dictated by credit suppliers, now shy, and so possibly rises, to compensate for up tick in risk premium of cash, representing purchasing power of wealth producing assets (f) Equity, in comparison, slips on Greenslime Greensputin cannot dictate the price level of equities; he can only dictate either the volume of short-term liquidity or the FED discount rate, but not both simultaneously, and certainly not the long rate, the borrowing power of consumers, the desire to capex by companies, nor the amount of housing folks can productively occupy. Such is the inconvenient reality dictating the dead hand of economics, as Newton’s Laws describe the planetary motions, and Einstein’s equations explain the propagation of your CDMA waves. <<The easiest asset to get hold of is cash, because it can be diluted by printing more>> eventually resulting in what history taught us, namely printing money equals death. And death is bad for CDMA. Now, you are either mad, which I doubt, and so you must be wrong. Chugs, Jay