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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: LPS5 who wrote (5588)	11/7/2002 10:31:59 AM
From: ahhaha	Respond to of 24758

Shostak is letting his experiences from the past interfere with his judgement of factors in the present. The monetary base is slowing and will continue to do so. The currency component has hardly changed in six months. Most of the base growth was due to currency. The base was growing because FED created a lot of reserves through permanent additions. They did that only because it was consistent with the public demand for money balances in the form of currency. Eventually you have to look at what is happening to real corporate profits. So far, the indications are not that good. You can do lots of things with smoke and mirrors, but the bottom line is that genuine profits cannot be created right now. Yes, "genuine" inflation created profits can't be generated. Is that bad? We have a lot of dead wood lying around that won't get through KT Boundary. The more debt, the more likely it will become extinct. It is not possible, given the level of debt-to-assets on all levels. The bottom line is just not there. I cannot agree with those who say that we have seen the worst. This is the error of extending micro realities to the macro environment. So the macro environment can't grow as fast as it once did. So what? There are two ways out. One is to inflate away the debt. Two is non-inflationary growth stimulated by reduction of taxes. Shostak: All the ratios of capital goods to consumer goods production are still at very high levels. This means that the adjustment we need has barely begun. If we look at the consumer sector, at durables versus non-durables, that’s even worse, which means that we are a long way from meaningful economic recovery. Meaningful relative to what? The inflated past. What we need if we want recovery is a big liquidation of capital goods, to normalize it with the consumer goods sector. Liquidate capital goods? What does that mean? Normalize? The guy is babbling. And in the consumer sector, we need a reduction in the durable goods production relative to non-durable goods production. Some "Austrian" he is. He would introduce an artificiality to bring about a questionable end. I don't like hypocrites. The Fed should not attempt to forestall that. Earlier he says the FED is powerless to do anything, so what does it matter what the FED does? There would be price inflation if people were spending at the same level as they used to. Then it isn't so bad that spending isn't what it would be if it followed the norms of the past. When production is falling, those who produce have less means of payment. We are looking at a snowball of downward pressure. I just looked at the chart of industrial production for 100th time. It shows production is rising and has been since Fall of '01. I don't see where he's shown that there are any forces in place producing "downward pressure". I guess he's extrapolated Schumpeteran Destruction across the entire economy. That isn't correct. There are a lot of corporations and industries which are flourishing in the current environment.