Quote:
Originally Posted by mathjak107
the reason inflation is low with all this stimulus is the lack of demand for credit and spending.
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And the fact that the EU is absorbing US Dollars and the fact that the US Dollar is still the
de facto currency of trade, so nearly every country has to sell or trade something for US Dollars to buy goods on the world market.
Quote:
Originally Posted by mathjak107
and your right, im very concerned about this for a country that depends on 70% of its gdp from consumer spending.
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You understand we're in uncharted territory here, right?
You want me to explain ZERO Level Economies? We got 7,000 years of data to back that up. You want me to explain 1st Level Economies? We got 5,000 years of data to back that up.
You want me to explain 4th Level Economies? We got about 20 years of data.
When in history have you had a technological economy driven in part by the consumption of consumer technology (as opposed to industrial, agricultural or military technology)?
Never, except for the last 20 years or so.
And when have we have ever seen household consumers driving an economy?
Never, except for the last 20 years.
When did that change happen? You have to go back to the change in banking laws during the Carter Administration which leads to the proliferation of consumer credit. That's one reason why your economy is driven by household consumers --- they have credit.
The Gold Standard retards don't understand that.
The second you switch to the Gold Standard, personal credit ceases to exist -- there are no more credit cards -- you pay cash or die of Penis Envy or Butt-implant Envy.
No more households with 5 cars -- his-n-her SUVs, his-n-her sporty cars and the family car. If you are lucky enough to have two cars then you
are the Jonses'.
That would be very traumatic for your economy -- and so will the permanent contraction of your GDP.
Quote:
Originally Posted by mathjak107
if more dollars chasing goods can cause inflation then the de-leveraging of us and the world and less use of credit is sucking away those dollars tilting more and more to at least a short term out look of some deflation.
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That would be true for Australia or New Zealand, but then their currencies are not the
de facto international banking reserve currencies and not the
de facto international currencies of trade.
For countries whose currencies are internationally traded, meaning BIS (Bank of International Settlements) accepts it or recognizes it, we use a Co-efficient of Absorption to determine how much currency
a system can handle. For countries whose currency is not traded, it's a simple matter of GDP vs Money Supply. For all other counties, the system is the country itself -- but not the US whose currency is international -- so the "system" is global.
I suppose it would be easier for me to say that for the US, GDP vs Money Supply isn't relevant, rather what is relevant is GDP vs Money Supply factoring in Global Demand for US Dollars.
I did that about a 2 yeas ago, and the global system can handle about $9 TRILLION to $13 TRILLION US Dollars, but after that, those dollars would be excess and start causing Real Inflation in the US (and also to a lesser extent in those countries tied or pegged to the US Dollar -- like the Argentine Dollar which I think is still pegged to the US Dollar).
Not much point in looking at it now, because the economic problems in the EU would generate false conclusions. Even so, I'm confident in the $9 TRILLION to $13 TRILLION figure, and I already know that America doesn't have the moral courage or the stomach to balance their budget, so the US will run budget deficits averaging $1.5 TRILLION until the rest of the world cuts off the US, about 2023 or so, and then Americans will get slapped in the face with Real Inflation running about 35%-45% percent annually for about 8-9 years, before the annual rate of Real Inflation starts slacking off.
And people thought the 1970s was bad. They'll be begging for the post-WW I Real Inflation (which was much greater than the 1970s).
Quote:
Originally Posted by mathjak107
in the cpi index everyone is figured as a renter. when homes were soaring it tempered the index and made inflation understated.
today doing that overstates inflation and if an index like case schillers is substituted we are actually deflating even though certain sectors like food ,medical costs and energy are high.
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The CPI is totally irrelevant and meaningless.
A proper index would show Real Inflation, Cost Inflation and Interest Inflation, instead of combining all three together leading people to make false conclusions about the economy.
For example, right now and for some time to come, the price of corn is inflating. What is that? That is Cost Inflation. What does the Federal Reserve have to do with that? Absolutely nothing, unless someone is such a nutter they believe the Federal Reserve controls the weather. What does that have to do with interest rates? Absolutely nothing, so increase the Prime Rate, or paying higher yields on treasury bonds or notes will not affect the price of corn.
The only thing that will affect the price of corn here is Supply & Demand.
Economically...
Mircea
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