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

To: mishedlo who wrote (71683)	10/11/2006 7:56:24 PM
From: Tommaso	Respond to of 110194

>>>Comparisons to Weimar are absurd<< Yes. But comparisons to the United States of 1970 are not.

To: mishedlo who wrote (71683)	10/11/2006 8:37:15 PM
From: bart13	Read Replies (1) \| Respond to of 110194

The Fed and the Govt will NOT bail out the little guy at their own expense. They had little choice in the '30s - there were very significant forces talking about a new government, McFadden was threatening, etc. Take a look at the Bankruptcy reform act of 2005. It intends to make people debt slaves forever, not bail them out with jobs. This is the bottom line - the Fed & gov't, etc, will do whatever is needed to continue this very long term trend.

To: mishedlo who wrote (71683)	10/11/2006 8:57:15 PM
From: forceOfHabit	Read Replies (1) \| Respond to of 110194

mish, I understand your basic scenario. The answer is simple and I have stated it many times. 1) The Fed and the Govt will NOT bail out the little guy at their own expense. Umm, what part of hyper-inflation (y'know, destroys savings, pensions, jobs) do you consider "bailing out" the little guy? 2) Hyperinflation ends the game... For whom? My answer, explicitly stated in my last post: "Who survives/thrives? The wealthy who can a) move assets out of the country into other currencies, b) own productive assets and can surf the wave of inflation, c) are in a position to take a cut from government projects (Can you say Halliburton?)." If the government (Congressmen and Senators) and their friends fit these criteria (I submit they do), then the game does not end for them, and they have little disincentive to taking the route I've suggested. In fact, the "game" doesn't end for the "little guys" either. They just get relegated to wage slave status which is pretty much where they're already headed anyway. 3) The Fed can not create jobs (Congress MIGHT attempt it) or they might not. The Fed does not have to go along and/or would be forced to raise interest rates if they did. That will kill a lot of people. By "kill" I take it you mean "impoverish". So, basically nothing you say here disagrees with anything I wrote. 4) Take a look at the Bankruptcy reform act of 2005. It intends to make people debt slaves forever, not bail them out with jobs. I wasn't implying that make work jobs would in any sense "bail out" those unfortunate enough to require them (except, perhaps, to stave off starvation). Have you ever heard the phrase "wage slave"? "Debt slave", "wage slave", perhaps you are simply agreeing with me? 5) Global wage arbitrage I could have sworn you began this post by stating that you "understand" my basic scenario. I take it by "understand" you mean "didn't bother to read" or perhaps "didn't bother to think about". In response to "global wage arbitrage" in connection with the make work project method of injecting tons 'o money into the economy, I wrote "government sponsored make work projects can easily require domestic labor, wage arbitrage impossible" To elaborate: construction work on roads/bridges/Hoover Dams is inherently done locally. The bills authorising them can include requirements that only American citizens can be employed, that materials sourcing must be done domestically etc. Does that make it clear that "global wage arbitrage" is not possible in this context? Do you have a counter argument for that? 6) While it may be true that some retirees sitting comfortably in huge cash positions would benefit from deflation, those with wealth primarily tied up in real estate sure would not. Nor would those tied up with wealth in the stock market. Very very few would actually benefit. Those few are the extremely wealthy. The Masses NEED inflation but DESERVE deflation (because of reckless spending). How often does the market give people what they desperately need? Bizarre. The first three sentences pretty much restate my position. The last two sentences make very little sense to me. "The Masses NEED inflation"?? They "DESERVE deflation"?? WTF are you talking about? "How often does the market give people what they desperately need?" Damned if I know. I would have thought that the whole point of a modern economy was to give people what they desperately need (food, shelter, security, basic health care), and also what they merely enjoy (leisure, entertainment, luxury, more health care), so I might be inclined to answer the question "Most of the time.", but then I'm no economist. 7) Comparisons to Weimar are absurd Why? Do you have any reason for this assertion. I'll admit that as yet I have no informed opinion one way or the other, just a sneaking suspicion that constructive parallels might exist. I'll let you know when I've done a little reading, and if you prefer to defer your reply until after I have, that's fine with me. ON the other hand, you stated in [6] that those with wealth tied up in the stock market would not benefit from [in]flation. Let me refer you to a great quote from "The Great Disorder" by Gerald Feldman that someone on this board posted in the last few days (sorry I can't locate it for you). It said essentially that during the Weimar era, the stock market was a huge source of income for people. If whoever posted that quote could retrieve it for me, I would be grateful. Finally, although "The answer is simple and I [you] have stated it many times." you neglected to answer this part at all (once again I quote from my last post): "...please remember to explain to me how the government deals with its unfunded SS liabilities (and its absurd deficit, and rapidly expanding debt) in the deflationary scenario you describe." I'm still curious. I don't believe I've seen your answer to that yet. Will the rapidly expanding class of senior citizens on fixed incomes be living high off the hog in this deflationary world of yours? Will the dwindling pool of working age schlubs bust their butts to support them? Inquiring minds want to know. foh