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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (22051)	9/7/2007 4:41:51 AM
From: TobagoJack	Read Replies (1) \| Respond to of 217631

i am simply hopeful that everyone else's assets goes down while mine goes up, or down by not as much :0)

To: elmatador who wrote (22051)	9/7/2007 11:16:53 AM
From: RJA_	Read Replies (2) \| Respond to of 217631

>>What the triggers 'price increases without asset price increases'? That's what we need to discover. I think the real question is -- can we have inflation and deflation simultaneously -- and what would bring that about, how would it manifest, and how would it resolve? Inflation and Deflation simultaneously: Increase in that which you need: food/energy Decrease or milder increase in everything else (optional items). Increases in energy prices will effect manufacture/delivery of all products/services. The ones that go up the most will have the most demand side pricing power -- IE: not optional. Non substitutable. --------------- The resolution: Over time, on the supply side -- at least in the US, the decline in the dollar will reduce the cost advantage of foreign competition. Initially this will have minimal effect. There is a long way to go before equilibrium is reached. Eventually every point of decline will have its effect. This will be offset somewhat by the cost of all imported components, raw materials, and energy. Eventually (over years) it will become competitive to manufacture in the US again. To get there tho, will require a competitive adjustment in living standards... which IMHO we are beginning to see played out now. Those countries that can export goods/services/energy will see less of a decline than those who cannot or do not. ------------- The currency thing and the gold thing: Normally -- in a well managed system, the money supply is increased as the supply of goods and services is increased so the prices of those goods remains stable in terms of quantity of money. Demand is limited by the purchasing power of the consumer -- their available money or credit. Implicit in this is the production of the consumer. He must produce to be able to exchange or get credit. The exchange of goods and services seeks equilibrium. Those that do not produce buy less, those that do produce (or control production) can buy more (or save/invest). Inflationary: In a war environment, the amount of goods and services consumed is not related to individual demand. There is no exchange of goods, no equilibrium. Goods and services are consumed, equipment is destroyed. Money is created (printed) or borrowed to pay for same. Government bailouts of institutions paid for by expanding money supply (see deflation below). Government statistics that understate inflation, allowing the central bank to set the cost of money (interest) to be substantially lower than the inflation rate, creating the incentive to borrow (and thereby expand money supply). Also creates the incentive for risky lending (sub prime). Deflationary: Credit collapse. Bank multiplier effect of money (fractional reserve banking) applied in reverse. Currencies seem to destruct because the requirements demanded of central banks are incompatible: 1. Price stability 2. War finance 3. Pump the economy 4. Attempt to manage foreign competition Gold is merely an attempt to profit from the unavoidable mismanagement caused by trying to simultaneously implement these goals.