Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: AC Flyer who wrote (41000)	11/6/2003 3:13:34 PM
From: macavity	Respond to of 74559

Mind Reading? I did not say that it was either good or bad. As I have said previously I do not blame Mr Greenspan for what is going on. The Fed's raison d'etre is not to kill/control inflation - it is to maintain growth. Mr Greenspan more than knows what he is up against. I am just pointing out the following: Money Supply when measured in Gold is actually contracting. And thus we are in a classical K-Cycle winter. It just does not feel like it as we have a fiat currency system - hence the pun about the Global Warning. From my high-school maths, I appreciate the trick of changing your coordinate axis to view the same space, as this often gives insights into a problem that are not always visible. We are seeing the liquidation of investments made during the past boom. This liquidation reduces the money supply. Mr G knows this and is doing all that he can to keep the whole ship afloat by flooding liquidity into the system. I agree with you that money can be a red herring that is why I looked at the DJ-30 vs Gold. The exchange of the expected goods and services of 30 leading comapnies in ozs of gold. In an Asset Bubble - as with all bubbles - all that happens is that The Market realises that the present value of the goods and services purchaseable, implied by the financial assets (say, The Stock Market) is in excess of the goods and services over which those financial assets have claim. Yes, it is all an exchange of goods and services in the end - you find no argument against that here. I just point out that the malinvestments will be liquidated. Either quickly (US1929) or slowly (Japan1989) - that is all. I am not debating the morality of the choices made by Mr G on behalf of the politicains. The supply of goods and services (new capacity and competition caused by easy money, China, India etc) is increasing relative to the supply of money (created by Mr G, destroyed by bankruptcies and defaults etc.). We are deflating, once again I do not disagree with you. I am just pointing out why it may not feel like it. -macavity