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Old 02-22-2010, 03:28 PM
 
8,317 posts, read 25,125,069 times
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People make the mistake of believing that inflation and deflation are always mutually exclusive events. The real danger in the present situation is that we Americans will see massive commodity price inflation--stuff the things people need to buy to survive like fuel, food, clothing, etc.--while the value of our assets--real estate, stocks, bonds, etc.--deflate in value. That is very possible in an a hyperinflationary environment, since the average person will have to spend every dime they have (and then some) just for the basics, with no money left to purchase assets--so those assets decline in value. If debasement of the American currency is part of the picture--and it is--imports (which we depend on more and more for basic commodities and goods) will inflate even more radically in value. The final upshot of that is that those dollars will eventually recycle to the US--and those foreigners will use them to outbid us poor American serfs to buy what is left of America's productive assets--things like farmland, for example. Then, we'll be back to what we were in 1770--a colony. All of that actually is already starting to happen--we just keep our heads buried in the sand and pretend it ain't so.

As to being optimistic, I will be that when I see some evidence that we a) recognize that we have a very big problem; and b) start doing the very necessary (but painful in the short-term) things to solve it. We can't even seem to get past "a)", much less start to work on "b)"--so, no, I'm not optimistic right now.
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Old 02-22-2010, 03:38 PM
 
Location: Wherabouts Unknown!
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jazzlover wrote:
As to being optimistic, I will be that when I see some evidence that we a) recognize that we have a very big problem; and b) start doing the very necessary (but painful in the short-term) things to solve it. We can't even seem to get past "a)", much less start to work on "b)"--so, no, I'm not optimistic right now.
jazz...I'm stuck in the same rut as you. My attitude is pinned to what's happening. I've never learned how to generate internal optimism that stands on it own. Mike...kudos to you for mastering that skill. When is your book coming out?
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Old 02-27-2010, 05:03 AM
 
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Quote:
Originally Posted by CosmicWizard View Post
I've never learned how to generate internal optimism that stands on it own. Mike...kudos to you for mastering that skill. When is your book coming out?
I heard some copyright issues with the Norman Vincent Peale estate are delaying publication; that's just the rumor on the street though...
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Old 02-27-2010, 05:18 AM
 
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On a more serious note, if we are in a worldwide depression, as I believe is the case, it should be expected that deflation will continue for the short term (house prices, etc), followed by Argentine style hyperinflation (hopefully not Zimbabwean style!). So, hold cash short term, and convert to assets (on credit if possible) at bargain prices as rapid inflation first shows it's ugly head. Then fasten your seat belts!

I see so many people on this forum who are leaving an area because of their local economy, and who think that things will be better for them in Colorado (listening to John Denver while towing the Uhaul, no doubt). Things are not better, anywhere. It's a depression. During the dustbowl days of the '30s people headed for California, but there is nowhere to run today.

My father prospered during the depression of the '30s because he had real skills and performed a necessary service. He had an auto repair shop. He summed up the depression: "You could buy a hamburger for a nickel, but nobody had a nickel."


Buddy (Dude), can you spare a fiver for a cup of Starbucks?

Last edited by Bideshi; 02-27-2010 at 06:26 AM..
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Old 02-27-2010, 08:59 AM
 
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Bideshi is quite correct. In a severe depression, it becomes a "survival of the fittest" game--there will be winners and losers. That will hold true for individuals, businesses, communities, and regions--and those that survive may not always be those who are "in favor" now. In fact, one cardinal feature of most economic depressions is a severe economic reordering based on new realities. We are seeing the start of that now.

I think one of people's great misconceptions is that Colorado is some new "promised land" that is going to weather what lies ahead better than where those people currently are, and I believe that simply will not be true. If anything, Colorado is tending to mirror the same failing economic, social, and structural policies and practices that are crippling a lot of other places in this country right now--Colorado is just a little late getting to the party.

California, where a lot of the "I want out" refugees are coming from, is probably the prime example of all of those failures: a state that grew far too quickly and unwisely, that embraced unsustainable and economically inefficient living arrangements (read: a total embracing of the automobile-dependent suburban sprawl lifestyle) that drove living costs to the point that the state is became economically inefficient, that coddled a "nanny-state" mentality that embraced egalitarianism over equal opportunity, that--as part of that egalitarian outlook--has promoted a primary and secondary educational system that largely works to the "least common denominator" concept of low expectations and student achievement equivalent to that, that--willingly or not--was overrun with illegal immigration, that has proven itself largely impotent in dealing with crime and gang issues in nearly every city of size in the state (a lot of that fomented by some of the more unsavory of those illegal immigrants), and--finally, and certainly not alone in America--that many of the residents of which have both embraced and espoused the hedonistic "Me first, and the hell with everybody else" attitude that has destroyed the character of many of its communities.

Unfortunately, the old "So goes California, so goes the country" adage is very much holding true for Colorado. Colorado has been making the same mistakes as California did for a lot of years now, and the rot is starting to show. The economic difficulties that have engulfed California are on their way here, and people thinking that Colorado will offer an escape from them are sadly mistaken. As I said, Colorado is a little later getting there, but that seems to be exactly where our leadership--and our own actions--are going to take us. It is too bad that Colorado, and a lot of other places in the US, can't wise up and change course. We sure as hell have a great example only about 800 miles west of us of what NOT to do. "California Dreamin'" has turned into a nightmare, and it is a cancer that is now metastasizing in Colorado.
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Old 02-27-2010, 12:24 PM
 
Location: Sunnyvale, CA
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If you look at the U.S. stock market during the Great Depression, it did not return to its 1929 highs for over 25 years (WWII.) If we are in a severe recession or depression now, it started just two or three years ago, which means we should reasonably expect several more years. People who are saying that we're "coming out of the recession" now are being, in my opinion, shortsighted.
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Old 02-27-2010, 08:07 PM
 
Location: Colorado Springs, CO
2,221 posts, read 4,655,096 times
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Quote:
Originally Posted by CAVA1990 View Post
Aren't the doom and gloomers talking about how we're headed for massive inflation? Won't that turn the upside down homes right side up?
Yes, but it presupposes that incomes at least keep up with inflation so that people can continue to both eat and make their payments throughout the inflationary period.

That, history shows us, is far easier said than done.
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Old 03-01-2010, 04:16 AM
 
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Without jobs there is no recovery. China is now facing massive layoffs because their biggest market, the US, is not buying. It's worldwide and I pray it will not get as ugly as many fear.
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Old 03-01-2010, 12:24 PM
 
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Originally Posted by Bideshi View Post
Without jobs there is no recovery. China is now facing massive layoffs because their biggest market, the US, is not buying. It's worldwide and I pray it will not get as ugly as many fear.
It's funny how many pundits have been hyping China like it is some new paradigm or something but they have their own massive problems.

I saw one video of a city that had been built in China for a million people and almost no one lived there. Funny enough it looked like some of the overbuilt California and Colorado neighborhoods I have seen, down to the architecture and everything.

I think the next few years will be interesting for all.
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Old 03-01-2010, 01:30 PM
 
2,437 posts, read 7,114,517 times
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Quote:
Originally Posted by wanneroo View Post
It's funny how many pundits have been hyping China like it is some new paradigm or something but they have their own massive problems.

I saw one video of a city that had been built in China for a million people and almost no one lived there. Funny enough it looked like some of the overbuilt California and Colorado neighborhoods I have seen, down to the architecture and everything.
What's funny about that?
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