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 Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: neolib who wrote (91004)	10/1/2007 12:41:39 PM
From: Elroy Jetson	Read Replies (3) \| Respond to of 306849

It's very alluring isn't it. A fiat money system is fine, just so long as you have the discipline to never produce any more money than the initial supply. You will not find any civilization in history which has ever had this discipline. The problem is, there's always a very compelling reason to produce more money. These reasons occur during the most desperate times and seem to be reasons which only the most hard hearted could turn their back on. You can listen to William Jennings Bryant make his fervent case for monetizing silver in addition to gold, in 1896. _ historymatters.gmu.edu "Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold." The reality is, creating more money isn't a miracle cure - its merely a transfer from savers to those you intend to have the new money. You do make a mistake in assuming all wealth must be monetized with an equal amount of money. There must be enough money to provide for the needs of savings and exchange, which is a small percentage of a society's total wealth. An economy with a fixed money supply is much different to the economy you know. Yet it is the economy which most mankind has lived and prospered with. As the society becomes wealthier, the price of most things fall, that is to say manufactured and produced things. Generally, the price of labor, real estate and other primary factors of production remain constant in terms of money over time. One result is the banking system cannot issue as much debt, due to the fact that the value of collateral does not rise as money is devalued. This results in a less fragile economy. .

To: neolib who wrote (91004)	10/1/2007 2:14:12 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Monetarism run amuck . bloomberg.com Bill Gross, manager of the world's biggest bond fund, said falling home prices will be the main driver of U.S. monetary policy for ``several years,'' and repeated his forecast the Federal Reserve will lower the federal funds rate to at least 3.75 percent in the coming 12 months. The Fed may delay the rate cuts until next year because the economy is showing signs of strength that will prove temporary, Gross wrote in a report published on the Web site of his firm, Pacific Investment Management Co. The Fed on Sept. 18 lowered its target for the overnight lending rate between banks for the first time since June 2003, to 4.75 percent from 5.25 percent. ``The downward path of home prices, however, will dominate Fed policy over the next several years as will the lingering unwind of related financial structures and derivatives that have yet to be discovered by the public, and marked to market'' by their holders, Gross wrote. Gross is chief investment officer at Pimco in Newport Beach, California. The firm, a unit of Munich-based Allianz SE, oversees $692.7 billion, including the $104.4 billion Pimco Total Return Fund. The fund returned 4.57 percent in the three months through Sept. 28, in the top 1 percent of competing funds tracked by Morningstar, the Chicago-based research firm, as the rate cuts Gross had been predicting for more than a year arrived. Pimco's Total Return Fund lagged behind its rivals during the first half of the year as its strategy of favoring short-term government bonds over higher-yielding corporate debt languished. September Rate Cut The Fed lowered its key rate less than two weeks after the Labor Department's monthly employment report showed the U.S. economy lost jobs in August for the first time in four years. The statement announcing the decision said it was intended ``to help forestall some of the adverse effects on the broader economy that might otherwise arise'' from the financial-market response to falling home prices. September employment statistics, to be released Oct. 5, are expected to show job creation rebounded. The median forecast of 79 economists polled by Bloomberg News is for a 95,000 increase in the number of people on U.S. nonfarm payrolls, after a drop of 4,000 in August. Fed policy makers meet on Oct. 31, and interest-rate futures show most traders expect a quarter-point reduction in the federal funds target to 4.5 percent. As of 12:34 p.m. in New York they assigned a 76 percent probability to that outcome and 24 percent odds of no change. `False Hopes' Events that may delay rate cuts this year, Gross wrote, include ``false hopes of a housing bottom, fears of a dollar crisis, or misinterpreted one month's signs of employment gains and faux economic strength.'' The dollar fell to a record low of $1.4283 per euro today, the weakest since the common currency's debut in 1999. Home prices in 20 U.S. metropolitan areas fell 3.9 percent in July from a year earlier as measured by the S&P/Case-Shiller home price index, its biggest drop on record. Home prices are falling as mortgages extended at low ``teaser'' rates in recent years reset to higher rates that are unaffordable for many homeowners. The number of Americans who may lose their homes to foreclosure more than doubled in August from a year earlier, according to a Sept. 18 report by Irvine, California-based RealtyTrac Inc. .