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

To: bart13 who wrote (75232)	12/10/2006 11:03:46 PM
From: GST	Read Replies (2) \| Respond to of 110194

Hi Bart -- I take the most straight forward approach to defining inflation and am open minded to others so long as someplace in the definition the word 'prices' or 'price levels' or 'price' appears in some form. But when people start to clown around and say that inflation is defined as money and credit supply -- as Mish does (in his own words, not mine) -- then you are not dealing with inflation at all, but rather one of the possible causes of inflation. Prices in the US are set to soar as the economy slows -- for the fringe people who cling to some hazy idea that money supply explains everything, this would be impossible. As for positional goods -- a Harvard education is a perfect example. The value of a Harvard education lies in its social scarcity. Only so many people can get in. If it was easy to get in it would become worthless to me. I am willing to pay almost any price to get in -- literally. Positional goods tend towards price bubbles. This is why real estate bubbles. It is why gold can bubble. It is why stocks with small floats bubble. Real estate in most of America is not really all that frothy -- the real froth is in markets with strong positional appeal. In some markets it spills over to infect large areas -- California for example. But for the most part Greenspan was right to say that real estate bubbles are location specific. Japan's real estate bubble was amazing and puts our own to shame by the way. It is worth noting that it is unusual for markets to bubble that do not have some positional appeal. There are still plenty of places where people in America have little desire to live -- prices there ain't so high.