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Old 10-12-2012, 05:15 PM
 
621 posts, read 592,540 times
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Quote:
Originally Posted by gwynedd1 View Post
Sorry I am just so used to new ZIRP created money flowing out of the country. That is to say if we purchased foreign productive capacity. However fiscal spending on real value here could also create some in a slack economy. However internationally it would always be the case.
If we want to increase our domestic manufacturing base then we would need start buying back our national debt and and have a high domestic savings rate. Loaning out new money isn't the way to go to print new money. We need to start retiring debt faster than we make new debt. Printing cash will do this. You are thinking in terms of public works projects (remembering what you've said else where.)

The government is oversized in the US. We need to downsize it. The problem is that if we cut government spending the economy will implode. We need the effects of a new bubble without having a new bubble. A bubble is assets going up without wages following the trend. If wages lead assets then you have inflation and less debt as % GDP. If we freeze non inflation adjusted government spending and then inflate wages you downsize the government.
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Old 10-12-2012, 09:46 PM
 
19,277 posts, read 16,811,947 times
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Quote:
Originally Posted by pie_row View Post
If we want to increase our domestic manufacturing base then we would need start buying back our national debt and and have a high domestic savings rate. Loaning out new money isn't the way to go to print new money. We need to start retiring debt faster than we make new debt. Printing cash will do this. You are thinking in terms of public works projects (remembering what you've said else where.)

The government is oversized in the US. We need to downsize it. The problem is that if we cut government spending the economy will implode. We need the effects of a new bubble without having a new bubble. A bubble is assets going up without wages following the trend. If wages lead assets then you have inflation and less debt as % GDP. If we freeze non inflation adjusted government spending and then inflate wages you downsize the government.
Normally I would agree that we need to downsize da guberment, but public works is not the place I would do it. There is a good deal of shadow central planning in the private sector. So as far as downsizing I'd say housing subsides, home interest deductions, corn and soy and on and on.

This here internet was a DARPA project for example. They will not always work but they do have some success. It sure beats housing bubbles.
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Old 10-13-2012, 11:39 AM
 
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Quote:
Originally Posted by gwynedd1 View Post
Normally I would agree that we need to downsize da guberment, but public works is not the place I would do it.
What I look at when I see this written by you is this. The need to return to financial responsibility in the US and the world is paramount. So financial responsibility first public works second.
Quote:
Originally Posted by gwynedd1 View Post
There is a good deal of shadow central planning in the private sector. So as far as downsizing I'd say housing subsides, home interest deductions, corn and soy and on and on.
I would go a step farther. Lets plan an economy that has jobs for our grand kids to do.
Quote:
Originally Posted by gwynedd1 View Post

This here internet was a DARPA project for example. They will not always work but they do have some success. It sure beats housing bubbles.
A housing bubble is just financially irresponsible planning. I've had enough of that for one lifetime.
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Old 10-13-2012, 02:23 PM
 
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Originally Posted by thrillobyte View Post
Many here were saying that it was just a matter of time and economics before interest rates on savings and CD's returned to a healthy 4-6% like before the crash.

I'm here to tell you savers that interest rates will NEVER return to anything above 1%. QEI is putting so much money into banksters' coffers that they see no need to lose money paying interest to savers who have proven they will keep their money in the banks, even at .05% interest.

I've taken appropriate action relative to my own finances. I have enough in savings and real estate to comfortably draw down the principle for 15-20 years--my life expectancy at the outside. I will simply spend it all down and die broke like Stephen Pollan advises in his mega bestseller of the same name. That is my middle finger to Dimon, Stumpf, Moynihan, Blankfein and all the other crooks who run our crooked banking system.
No you won't. You'll live broke.

Dollar inflation in the next year could get pretty awful.

When you look at the petro dollar going away, because of China's global currency swap deals... ala;
Brazil, Russia, Iran, UAE, Africa, Chile etc....

The Dollar is going to be so gluttonous that it's value will tank. Bringing about inflation that will make food and fuel double every quarter.

Your cash investments are soon to be useless.
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Old 10-13-2012, 08:42 PM
 
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Originally Posted by modeerf View Post
No you won't. You'll live broke.

Dollar inflation in the next year could get pretty awful.

When you look at the petro dollar going away, because of China's global currency swap deals... ala;
Brazil, Russia, Iran, UAE, Africa, Chile etc....

The Dollar is going to be so gluttonous that it's value will tank. Bringing about inflation that will make food and fuel double every quarter.

Your cash investments are soon to be useless.
Hmm. I've been saying just about this for some time. Nice to here it from someone else.

What do you think about leading the coming inflation with higher wages by the minimum wage law?
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Old 10-14-2012, 12:25 PM
 
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Originally Posted by pie_row View Post
Hmm. I've been saying just about this for some time. Nice to here it from someone else.

What do you think about leading the coming inflation with higher wages by the minimum wage law?

You have to stop asset inflation before even trying that. We had wage inflation in the 90s it it quickly led to asset inflation. So in reality it would be safer to let the assets tank because then I would know the real evil has been squashed. If however that could be contained then some wage inflation to a point then might be useful. However credit fueled asset inflation must be destroyed.
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Old 10-14-2012, 01:35 PM
 
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Quote:
Originally Posted by gwynedd1 View Post
You have to stop asset inflation before even trying that. We had wage inflation in the 90s it it quickly led to asset inflation. So in reality it would be safer to let the assets tank because then I would know the real evil has been squashed. If however that could be contained then some wage inflation to a point then might be useful. However credit fueled asset inflation must be destroyed.
Wage inflation in the '90s was driven in part by increasing debt. Now the Fed has been trying for 4 years to get asset inflation what we have coming is more asset deflation. Pull back 0.25% prime and watch real estate drop. We have in full bloom a commercial real estate bubble. That will pop. The macro pix less 0.25% prime and (QE I QE II and QE III) is for lower asset prices. Assets will need to find a true bottom before we get wage inflation by labor market forces.

A run on USD would cause high fuel prices, high food prices etc. The labor market would still be in a contracting labor position. So no demand for new workers so no pressure for higher wages. Hyper stagflation.

Now if we lead this mess with higher wages, set up buying back the national debt, and rebuilding our manufacturing base, then this would tend to restore and maintain faith in the good old USD. Make China work harder for Hegemony.
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Old 10-14-2012, 02:25 PM
 
19,277 posts, read 16,811,947 times
Reputation: 7485
Quote:
Originally Posted by pie_row View Post
Wage inflation in the '90s was driven in part by increasing debt. Now the Fed has been trying for 4 years to get asset inflation what we have coming is more asset deflation. Pull back 0.25% prime and watch real estate drop. We have in full bloom a commercial real estate bubble. That will pop. The macro pix less 0.25% prime and (QE I QE II and QE III) is for lower asset prices. Assets will need to find a true bottom before we get wage inflation by labor market forces.

A run on USD would cause high fuel prices, high food prices etc. The labor market would still be in a contracting labor position. So no demand for new workers so no pressure for higher wages. Hyper stagflation.

Now if we lead this mess with higher wages, set up buying back the national debt, and rebuilding our manufacturing base, then this would tend to restore and maintain faith in the good old USD. Make China work harder for Hegemony.
Assets will rise faster than da guberment debt so again assets, other than industrial capital, need to be held in check.

What QE is doing is neutralizing any fiscal stimulus, even the good stuff let alone the automatic stabilizers. The money goes out and is quickly sucked into a rising asset prices and interest bearing assets for banks. Bernanke is wrecking any ability to move assets to a real market price.

Higher wages will just quickly become asset inflation all the same.
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Old 10-14-2012, 02:46 PM
 
621 posts, read 592,540 times
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Quote:
Originally Posted by gwynedd1 View Post
Assets will rise faster than da guberment debt so again assets, other than industrial capital, need to be held in check.
OK if we push wages high enough to support house prices above the peek of the last bubble and the house prices go there then the banks will be solvent.
Quote:
Originally Posted by gwynedd1 View Post

What QE is doing is neutralizing any fiscal stimulus, even the good stuff let alone the automatic stabilizers. The money goes out and is quickly sucked into a rising asset prices and interest bearing assets for banks. Bernanke is wrecking any ability to move assets to a real market price.
If Mohammad can't go to the mountain then the mountain should got to Mohammad. Then move the market price to the assets. Da. No really adjust the wages to fit the desired prices.
Quote:
Originally Posted by gwynedd1 View Post

Higher wages will just quickly become asset inflation all the same.
Man that took you a long time to get. Just kidding. There are two ways out of a liquidity trap. Crash the market and have an economic depression or inflate away the value of the existing debt. The Fed is trying the middle ground and the Fed will fail. Japan didn't have a run on its currency because they had a high enough savings rate to start with. We may very well have that run.




“Assets will rise faster than da guberment debt”


We need to start having the government debt go down. This will increase the value of it and so tend to prevent a run on USD.
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Old 11-26-2012, 12:39 PM
 
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Originally Posted by gwynedd1 View Post
Cash is completely different. Everyone cannot save money at the same rate to have any effect. Its a debt instrument. Cash is nothing but an obligation to the rest of the economy. It might not be a different asset to you. The total amount of cash and government bonds is nothing but government obligations. Every private cash asset is just an obligation. It cancels out.
The coins in your pocket aren't a debt obligation they are the stuff you use to repay the obligation with.
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