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Originally Posted by jimhcom
Most economic debates on this forum come from 2 camps. One camp believes in the value of assets and the belief that continuing inflation will reward investment in those assets.
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Which "assets" are you referring to? Real estate, securities, cash, precious metals? All "assets" have some value, but like escalators in the store, some are going up, while others are going down.
Quote:
Originally Posted by jimhcom
The other camp believes that assets are overpriced and that deflation will reward those who hold their wealth in cash and cash equivalents, when asset prices fall and better deals can be had.
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Real estate is overpriced (leveraged price, i.e. bought with a mortgage). But it's coming down from its over-leveraged peak price. Stocks are overpriced, many of them, when considering their P/E ratios. Some people think that precious metals are over-priced, but those keep going UP.
Quote:
Originally Posted by jimhcom
So far, they are both somewhat right.
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Yep. Depends on your point of view.
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Originally Posted by jimhcom
Inflation is continuing, despite massaged government statistics, a good steak is up around $9 a pound, and a decent set of tires for your SUV will set you back nearly a grand.
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Funny how the gubmint doesn't count the cost of food or fuel in calculating CPI, huh?
Quote:
Originally Posted by jimhcom
On the other hand, real estate prices continue to fall, and most indications are that the trend will continue.
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Yep, the trend will continue. Lots of people still out of work, and more losing their jobs. Not promising for a return to 2005. Real estate had a good run for awhile there, now it's time to move onto something else.
Quote:
Originally Posted by jimhcom
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Priced in gold, the Dow is falling rather badly.
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Originally Posted by jimhcom
We are currently in debates over our collective massive debt, which will more than likely be resolved by a combination of higher taxes, lower spending, and inflation.
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Those last three will likely take effect, but whether they will "resolve" the debt situation is highly questionable. Politicians like to look as if they're doing something, even when they're not.
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Originally Posted by jimhcom
None of those things are necessarily good for the market.
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Good for which market? Or did you mean for the economy? For now, the markets are toast, and so is the economy.
Quote:
Originally Posted by jimhcom
The picture this draws in my mind is of two divergent lines on a graph moving in each others direction. Inflation and deflation happening simultaneously.
What is unclear is what will happen when the two lines intersect? When will this intersection happen, and what will be the obvious consequences?
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In my mind, I see multiple CONverging lines, most of which are heading --- DOWN. The most obvious consequences will be a loss of the middle class, and falling standards of living for just about everybody.
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