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.

Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (133367)	4/21/2013 6:05:13 PM
From: RetiredNow	Read Replies (1) \| Respond to of 149317

It's a seeming irony, but let me try to explain. I do believe we are experiencing heavy deflationary headwinds from Demographics and Globalization. In a free market, these headwinds would naturally shrink our economy and lower prices across the board in a rapid and orderly manner. That would be hard on some people, but one of the very big benefits is that the middle class would pay lower prices for everything. In addition, the economy would reset for long term growth as capital was reallocated to those areas with the highest reward relative to risk, and workers would retrain to meet the demand for their labor. Now let's talk about Bernanke. His response to the deflationary headwinds is to print money with abandon. This is an artificial response to a fundamental problem. Printing money won't make the Baby Boomers get any younger. Printing money won't make globalization and labor / pricing arbitrage go away. Those economic forces will play out regardless of what the Fed does. So what impact does the Fed's money printing and ZIRP actually have? It floods money to the Big Banks and to the top 1%. The wealth disparity accelerates. Prices for the middle class and poor skyrocket, while their wages stagnate. Capital formation is stymied, since there's no point in saving money, and this destroys investment needed to maintain future growth rates. It also misallocates capital systemically, almost guaranteeing subpar growth for the long term, as debts rack up faster than growth and become unpayable. The bottom line is that Bernanke is pissing into a tsunami and hoping to divert the onrushing storm. Not going to happen. Bernanke crucified the 99% on the alter of his own vanity. No one is ultimately bigger and badder than market forces.