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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (13915)	5/14/2004 2:07:04 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Fri May 14 2004 13:54 trotsky (goldfish, 12:07) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved first you assert that CPI actually 'overstates' inflation, which is an extraordinary claim, to say the least. for instance, CPI doesn't capture housing inflation AT ALL with it's 'owner equivalent rent' concept. furthermore, hedonic indexing and substitution are used to keep it as low, and as far removed from reality as possible. when e.g. prices for beef are rising, this rise is not reflected on the grounds that people 'will begin to eat chicken'. when a computer's CPU doubles in speed, it's price is considered to have halved. however, people are still paying the same ( or even a slightly higher nominally ) amount of money for the PC, and beef will be more expensive even if CPI refuses to acknowlede it. if one follows through with this to its logical conclusion, then people will end up eating dirt just to keep the CPI low. however, THIS one really takes the cake: "I hope the Fed doesn't 'starve' the economy again..... like they did from 97 thru 02. It is just too painful.... " it can't be more painful than the ignorance you display here...this period of 'starving' encompasses the biggest expansion in money supply in the history of the world. far from 'starving' the economy, the Fed egged on an artificial credit induced boom that has saddled us with malinvestments from here to eternity ( like e.g. the 98% of the fibre-optic cable network that aren't even switched on ) , not to mention bringing about the biggest financial asset mania in history as well ( even tulip bulbs at the height of the Amsterdam tulip craze looked like sensible investments compared to the bubble's pinnacle in '00 ) . if only the Fed HAD starved the economy back then, the outcome might have been different, and thus more benign. your often stated 'hope' that they 'will get it right this time' makes as much sense as hoping that cattle will discover the grand unified theory. a socialist central economic planning agency CAN NOT 'get it right'. only the free market can do that.