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Don't be fooled by the stock market advances!

Discussion in 'Political Discussion' started by PatriotsReign, May 26, 2009.

  1. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    Okay, I loved the "what's the difference? Inflation, deflation, either way the sky is falling" line of argument.

    So the only conclusion is that whatever we get, it will destroy society?

    I'm nobody's financial planner, believe me. But this tone strikes me as about as rational as the exuberance that keeps fu(king us in the first place.

    The wheels are still on -- it took some doing, but they're still on.

    I wonder too the impact of a "dampened" economy on these dire predictions (to use a right-leaning word. A "realistic" economy might be a better word, where we don't throw random buckets of fuel into the mix.)

    For example, robust regulation and enforcement on Wall Street (as opposed to the SEC's customary version,) a wary govt eye toward speculative bubbles, and a real economy focused on jobs (as opposed to one focused on earnings) would put a terrible damper on our various chosen casinos. The concept of capital being used to capitalize actual going concerns may even make a comeback. And since it's a world-wide downturn, that's a world-wide reaction. Hell, even quickly growing economies may still be telling themselves "don't be the next 'pacific rim tigers.' "

    Add to that, that China thus far does not consume a hell of a lot for its size. Don't get too used to that. Chimerica is based on the U.S. being the consumer, and China being the lender. As of right now, we don't wanna borrow no more, on the consumer side (leaving aside the ginormous government side for just one moment). They're showing signs of not being so hot to lend any more. Assuming our debt at the government end doesn't get into junk-bond territory, that's the groundwork for an interesting realignment. What do I do if I'm China, and I have all this industrial capacity and a diminished market? Look to the market at home. Either raise wages or drop prices so someone living in China can absorb those goods -- if, as we hear, China's impact from this global recession is mere high single-digit growth.

    The point here isn't just buttressing the emerging concensus that deflation's a given in the near term, and it's not meant really to positively assert that oh, no, inflation will never happen. The point here is that we're in a very weird place, and frankly, nobody knows what the hell the eventual outcome will be. My gut tells me that yes, we have inflated the money supply, and the counterpoint (it's going to balance sheets and savings) is spurious at best, over the long haul. If balance sheets are healthy, banks are lending; if people are putting things off but perceive themselves as safe, you'll have money in their pockets chasing goods, plus whatever lending we've decided we have to spur. I don't get how this doesn't eventually bring inflation.

    But the real point, is that we're in a huge global realignment in many ways, and domestically we may be at the outset of what I think will be an age of government reassertion. I don't know how "socialist" Obama is, probably not socialist enough... but he's socialist enough to put the common good before unrestricted paper growth. We haven't had that since FDR; market trust has been ingrained for decades, on the part of the Dems and the Pugs. A deep distrust has replaced it. If the recovery is slow, more and more public works in renewable energy and other projects will be undertaken. If an unexpectedly good economy returns, one would hope the administration would keep your inflationary fears far hence, by taxing some of that excess cash, so we can start paying outselves back.

    Nobody knows what it looks like if you shoot for sustainable growth. We've taken the Dow as a stand-in for economic health for so long we don't have any idea what an actual healthy economy looks like.

    For my money, sure, inflation's coming. This insane jump of "well if inflation's coming it's got to be the worst kind of inflation and that's hyperinflation" mystifies me.

    But again I'm a simple man.

    Hopefully you guys get it all sorted out, and have stockpiled enough canned goods and ammo to get through it. Me, I am waiting and watching.

    PFnV
     
  2. Real World

    Real World Moderator Staff Member

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    We agree again Shmess, especially about the bolded. With rates in the 4's, you're far better off with a longer term mortgage, and investing money in presently, while there is room for growth.
     
  3. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey


    We must cut this out.
     
  4. PressCoverage

    PressCoverage Banned

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    I'd say acknowledging the energy crisis and it's undeniable affect on global markets is pretty rational. We can't wish our way out of this one, any more than we can spend our way out of it. It's too late for that. It was too late 10 years ago, actually. Perhaps 30. One way or another, there is going to be reduced demand, ... and it's not going to be very pleasant.

    "The wheels are still on?" "Took some doing?" .... We're all of 9 months into this game. 9 months. Meanwhile, we're still losing half a million jobs per month, our auto industry is utterly collapsing, our commercial real estate is on the brink of meltdown, our banks really haven't recovered at all ... and oh, the nuclear threat looms larger and larger across the Pacific.

    At what point does a cancer patient admit to himself he has cancer, and stop believing merely a positive attitude will heal it?

    It's time to move on to the next stage of grief. I believe anger comes after denial. I'll be over here at acceptance.
     
    Last edited: Jun 2, 2009
  5. Real World

    Real World Moderator Staff Member

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    Hey, just out of curiousity, where do you think money is best invested right now? I'm not asking you to give away your specific secrets or anything. Just generalities if possible. Being a real estate guy, I've been stressing to people who are able, to consider that avenue. RE is a lot different in that it's hands on, and takes a certain personal commitment, but from your end, commodities I think you like. What else?
     
  6. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey


    The stock market (with an eye to the long-term - I'm not necessarily bullish on the summer) commodities, energy (the good and the bad kind), and, YES, if I had an extra $100,000 lying around, I'd buy a couple of foreclosed $250,000 townhomes-condos with 20% down at 5% 30 year fixed mortgages and rent 'em out.
     
    Last edited: Jun 2, 2009
  7. Real World

    Real World Moderator Staff Member

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    We're on the same page again.
     
  8. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    I did not say "I'm the only one with this opinion" PC. If I was in a group and made the same statement followed by "It's just my opinion", that would be putting that statement in the proper context.

    Should I have said "it's just my, PC's, Celente and Savinar and Ruppert's opinion"? ;) We've agreed on this for a while...the only difference is the degree to which we believe the economy (and society) will fall.
     
  9. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    I've never said squat about 15 year mortgages shmessy, so what are you talking about?

    I still believe that even "if" some of the stimulus money reaches consumers hands that it won't necessarily "reach the economy". Americans are soooo much in-debt that they won't be spending for long, long time. At least not enough to drive prices sky-high.

    The effect of this economic crisis is that it is transforming the American culture into an "Age of frugality". I believe it will be long lasting just as the Great Depression had a 30 year effect upon consumption (and savings).

    The 90's and early 2000's were the "Age of spend what you don't have"...that's not gonna happen again for decades.

    Finally, when you look at the TRILLIONS that have been lost in the stock market, 401K's and home values, the stimulus money is a drop in the bucket. In other words, it won't even come close to replacing the money that has been lost...not even 2% of it. That being said why would anyone begin to spend money generously when they've lost so much?

    If anything SHOULD have caused hyper-inflation, it was the period from 2002-2007! That was the greatest increase in wealth and the real money supply this nation has ever seen. Can you tell me why we didn't see hyper-inflation then?

    The stock markets & home values aren't coming back anytime soon either.
     
    Last edited: Jun 2, 2009
  10. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey

    1) You posted "But......it's all true" with a poster who had just written "Cash is king, people need to have a 15-year mortgage, and they need a written budget....."

    2) You have been predicting deflation.

    1 +2 = 3
     
  11. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    I never said squat about a 15 year mortgage, I stand by that...I guess I should have said "It's all true except the 15 year mortgage part" huh?

    And not only is deflation coming...it's already here.
     
    Last edited: Jun 2, 2009
  12. tanked_as_usual

    tanked_as_usual Banned

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    hey idiot........where did I say anything about about mortgages?????

    stupid clown
     
  13. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey

    I confused you with State. My deepest apologies.
     
  14. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey


    Yes, the word "All" threw me off. I thought "All" meant 100%.
     
  15. tanked_as_usual

    tanked_as_usual Banned

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    naaahhh......you're just confused in general
     
  16. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    lol....Most of the time. But I didn't exactly study the guy's comment. Now you've messed me up cause I'll have to be more careful in the future.
     
  17. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    That was a little convenient how you failed to reply to my main points of this post. What are your thoughts on....

     
  18. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey

    Originally Posted by PatriotsReign
    1. I still believe that even "if" some of the stimulus money reaches consumers hands that it won't necessarily "reach the economy". Americans are soooo much in-debt that they won't be spending for long, long time. At least not enough to drive prices sky-high.

    2. The effect of this economic crisis is that it is transforming the American culture into an "Age of frugality". I believe it will be long lasting just as the Great Depression had a 30 year effect upon consumption (and savings).

    The 90's and early 2000's were the "Age of spend what you don't have"...that's not gonna happen again for decades.

    3. Finally, when you look at the TRILLIONS that have been lost in the stock market, 401K's and home values, the stimulus money is a drop in the bucket. In other words, it won't even come close to replacing the money that has been lost...not even 2% of it. That being said why would anyone begin to spend money generously when they've lost so much?

    4. If anything SHOULD have caused hyper-inflation, it was the period from 2002-2007! That was the greatest increase in wealth and the real money supply this nation has ever seen. Can you tell me why we didn't see hyper-inflation then?

    The stock markets & home values aren't coming back anytime soon either.
    __________________________________________________________

    1) That's your opinion. I believe it will reach the American consumer between 10/09 and 10/10. Unlike you, I am not stating that the situation has already occurred and has been adjudicated.

    2) If you believe this crisis will effect a long-term age of "frugalism" in America, you haven't been studying American society since the advent of mass (electronic) communications and advertising. Not gonna happen.

    3) 2002-2007 caused the Fed to lower interest rates on short-term Gov't bonds to almost 0%. There's no more arrows in the pouch.
     
  19. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    ???? How could "2002-2007 cause the Fed to lower interest rates on short-term Gov't bonds to almost 0%"? It's more like "the fed increased the money supply by lowering interest rates to almost zero and THIS caused the phenominon that occured from 2002-2007"

    In other words, the money supply was increased enormously! But guess what happened? No big inflation (except in home & stock values).

    1. I told you why I believe people won't spend (debt and caution), so tell me why you believe people will spend freely. Remember, it would have to be at least at the rates we saw in 2002-2007.

    2. And you haven't studied the history of the effect the Great Depression had upon American society. People don't buy BECAUSE of advertising, they buy because they have the money (or the credit). Believe me and your history books, this crisis is having and will have a HUGE impact upon the American psyche...and frugality is and will continue to be the outcome.

    I don't know about you shmessy, but I'm sickened by the way I spent money. I am not thinking "I can hardly wait to buy some stuff again!" And I believe that is the common attitude.

    Maybe there are some who are psyched to buy again, but the longer this recession goes on, the more people will see the idiocy in the way they acted. And this recession will go on for quite a while.

    You of all people should be glad that people are going to save more than ever for retirement and depend upon people like to do it. ;)
     
    Last edited: Jun 2, 2009
  20. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey


    "???? How could "2002-2007 cause the Fed to lower interest rates on short-term Gov't bonds to almost 0%"? It's more like "the fed increased the money supply by lowering interest rates to almost zero and THIS caused the phenominon that occured from 2002-2007"
    ___________________________________

    WRONG. WRONG. WRONG. The fed raised interest rates 17 straight times between 6/26/2003 and 9/18/07 from 1% to 5.25%. They started LOWERING interest rates from 9/18/07-12/16/08 (5.25% to 0%) first due to the oil price explosion and second due to what the oil price explosion did to our economy coupled with the credit crisis.
    __________________________________
    "In other words, the money supply was increased enormously! But guess what happened? No big inflation (except in home & stock values)."
    __________________________________

    Yes, money supply increased greatly due to that. NOW Stage IV is occurring. A massive stimulus that is actually taking place in THIS country and will be putting currency in Americans' hands (instead of Iraqi).

    My point is that the monetary stimulus has not been merely this third stage which you somehow have been harping on. It has been this decade's Four stages (massive tax cuts, Iraqi war spending, historic fed easing and massive domestic stimulus).

    Put all four of those together within an 8 year period, coupled with the perceived scarcity of energy resources and a VASTLY weakened dollar and you have a very good argument for hyper-inflation for the next decade plus.
    _____________________________________

    "1. I told you why I believe people won't spend (debt and caution), so tell me why you believe people will spend freely. Remember, it would have to be at least at the rates we saw in 2002-2007."
    __________________________________

    The next inflationary period won't be driven by consumer DISCRETION. It will be driven by high energy prices and a weakened dollar.

    Think: Were Americans bigger spenders in the inflationary 1970's? Were Americans "frugal" in the low inflation 1990's? Your definition of why inflation occurs is too narrow.
    ___________________________________

    More to come when I get the time.
     
    Last edited: Jun 2, 2009

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