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Old 12-05-2008, 03:55 PM   #41
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The Feds don't want to combat inflation, they want to CREATE it. With your economic background brewer, you understand the concept of monetizing debt better than most of the rest of us here.

Pay off you debts with cheaper dollars. The only average citizens who count are mostly those up to their ears in debt. They are a prime reason the "printing presses" will be turned up to high.
It seems to me that we are in an inflatable zodiac that has sprung a leak.
Luckily we have a large stack of scuba tanks in the boat. The folks in charge (world wide Fed and Treasury) have a pretty good idea where the leak is, but no clue how to patch it. So right now they are taking the scuba tanks and inflating the zodiac as fast as they can.

It seems to we face two problems, when the hole eventually gets plugged the zodiac is going to inflate so fast that we are risking the whole zodiac bursting like a ballon (hyper inflation) The longer term problem is every time we use a scuba tank we toss it over board, that's one less scuba tank to use in the future. (Debt).

As far as investments go ISM/OSM anybody
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Old 12-05-2008, 04:53 PM   #42
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Best hedge against this whole thing. Is to keep working.. Providing there's work.

ER/R kinda nixes that though

My concern is with all this bailout action. When does the piper get paid eventually. I hope its when Im dead or nearing it. It will not be pretty.
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Old 12-05-2008, 04:59 PM   #43
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i think even if i was under the stress & depression i had when i quit, if the world looked then like it does today, i'd have found a way to suffer through it. and now that early retirement has served its purpose and relieved my initial stress, now that those conditions no longer exist, now that these new conditions do exist, i find early retirement creating all new stresses all on its own. could be e.r. has outlived its possibly short-lived usefulness. i've no clear idea what direction i'm yet headed but a new career is starting to look inviting.
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Old 12-05-2008, 05:11 PM   #44
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i think even if i was under the stress & depression i had when i quit, if the world looked then like it does today, i'd have found a way to suffer through it. and now that early retirement has served its purpose and relieved my initial stress, now that those conditions no longer exist, now that these new conditions do exist, i find early retirement creating all new stresses all on its own. could be e.r. has outlived its possibly short-lived usefulness. i've no clear idea what direction i'm yet headed but a new career is starting to look inviting.

My back up plan was if my liquid net worth dropped below a figure, I'd go back to work. I am slightly below that number now. What I forget about was the economic conditions that caused me to net worth to suffer also means it is really crappy time to look for a job.
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Old 12-05-2008, 05:45 PM   #45
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Best hedge against this whole thing. Is to keep working.. Providing there's work.
Or eat less. I mean to consume, or to spend less. That is if the original ER plan has some "fun" or discretionary items to cut.

Just yesterday, my wife found cheap airfare to Athens, but we would have to buy right there and then. I regretfully had to pass.
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Old 12-05-2008, 06:19 PM   #46
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Or eat less. I mean to consume, or to spend less. That is if the original ER plan has some "fun" or discretionary items to cut.

Just yesterday, my wife found cheap airfare to Athens, but we would have to buy right there and then. I regretfully had to pass.
Ya I know. Life is rough when we need to pass on flying to Athens or not.
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Old 12-05-2008, 06:27 PM   #47
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SEC yield = 5.78%.

Pssst Wellesley. Lest we forget. I know. Iknow. But someone had to say it.

heh heh heh - could be a rough decade. .
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Old 12-05-2008, 06:29 PM   #48
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Ya I know. Life is rough when we need to pass on flying to Athens or not.
Man, that's all we live for now.

Can't eat as much as I like, for fear of gaining weight. Can't drink as much as when I was young. We have not been inside a shopping mall in years. Last month, for my wife's birthday I found a Belgian restaurant in town, whose proprietor is a Belgian chef. She didn't want to go, so we went to Fresh n Easy to buy stuff so I could cook dinner for her.

We do not eat out when not traveling, period. Nor do we go to the movies. Travel is all the pleasure we have left.
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Old 12-05-2008, 06:43 PM   #49
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... now that these new conditions do exist, i find early retirement creating all new stresses all on its own. could be e.r. has outlived its possibly short-lived usefulness. i've no clear idea what direction i'm yet headed but a new career is starting to look inviting.
Are these new stresses financially related?

If so, in a few years, when the economy recovers, and your houses are worth something again, you may yet change your mind once more. It's OK.

I never intended to retire early. I used to love my work, and still do. But I cannot fit inside a megacorp environment, and have failed at being part-owner of a couple of business ventures. If I need to work, I will. But so far, belt-tightening still works for me.
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Old 12-05-2008, 07:13 PM   #50
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Man, that's all we live for now.

Can't eat as much as I like, for fear of gaining weight. Can't drink as much as when I was young. We have not been inside a shopping mall in years. Last month, for my wife's birthday I found a Belgian restaurant in town, whose proprietor is a Belgian chef. She didn't want to go, so we went to Fresh n Easy to buy stuff so I could cook dinner for her.

We do not eat out when not traveling, period. Nor do we go to the movies. Travel is all the pleasure we have left.
Well its looking good for you. Dollar is getting strong on the foreign currencies. Im pondering visiting Europe real soon.
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Old 12-05-2008, 07:30 PM   #51
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Dollar is getting strong on the foreign currencies. Im pondering visiting Europe real soon.
The dollar strength may be short-lived. But it doesn't matter. Give me Dow 14,000 like last year, and I will gladly pay US$1.5 for 1 Euro, which I did.

Spain was and most likely is still less expensive than other Western European countries. Or we may try Iceland (in the summer of course) to help their economy. FireDreamer is going there soon, IIRC.

My goal in life is two European trips + two domestic trips per year. Will take Canada as substitute for domestic, Caribbean and South America as substitutes for Europe. I am not picky. Whatever the Web brings, I'll take.

Always plan my own itinirary, transportation, and lodging. Forces me to study up on the place, which is also lots of fun. Hey, I am ER'ed, what else do I do with my time? Frequent this forum?
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Old 12-05-2008, 07:49 PM   #52
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We do not eat out when not traveling, period. Nor do we go to the movies. Travel is all the pleasure we have left.

If that is your main pleasure I'd find a way to make it happen . Maybe trade Athens for something less expensive . I' m also a travelholic but lately I traded foreign travel for domestic and it has been great . Lots of interesting places to see in the US . As Dinah Shore said " See the USA in your Chevrolet or Toyota ."
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Old 12-05-2008, 07:58 PM   #53
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The dollar strength may be short-lived. But it doesn't matter. Give me Dow 14,000 like last year, and I will gladly pay US$1.5 for 1 Euro, which I did.

Spain was and most likely is still less expensive than other Western European countries. Or we may try Iceland (in the summer of course) to help their economy. FireDreamer is going there soon, IIRC.

My goal in life is two European trips + two domestic trips per year. Will take Canada as substitute for domestic, Caribbean and South America as substitutes for Europe. I am not picky. Whatever the Web brings, I'll take.

Always plan my own itinirary, transportation, and lodging. Forces me to study up on the place, which is also lots of fun. Hey, I am ER'ed, what else do I do with my time? Frequent this forum?
It might be short lived I dont know. But if you are retired. What are you waiting for. Grab it and go on the cheap..or well semi cheap
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Old 12-05-2008, 08:29 PM   #54
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Spain was and most likely is still less expensive than other Western European countries. Or we may try Iceland (in the summer of course) to help their economy. FireDreamer is going there soon, IIRC.
I did Spain this summer, I am doing Switzerland/France this winter. Looks like it will be Denmark / Sweden next summer. Iceland is definitely in the cards, maybe summer 2010? Or we can fly to Europe with Icelandair and make a stop over in Iceland for a few days... We'll see.
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Old 12-05-2008, 08:31 PM   #55
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I' m also a travelholic but lately I traded foreign travel for domestic and it has been great . Lots of interesting places to see in the US . As Dinah Shore said " See the USA in your Chevrolet or Toyota ."
We have been up/down the West Coast from San Diego to Vancouver.

On the East Coast, from KeyWest up to Maine, actually to St. John, New Brunswick.

In the interior, the usual spots like San Antonio, New Orleans, Chicago, etc... And historic places in Boston, Philly, Virginia, Kill Devil Hills (Wright Bros) etc... Niagara Falls, Toronto, Montreal, Quebec City...

Some places we liked, we returned multiple times, like Seattle (5 or 6), San Fran (5 or 6), Montreal (2), Boston (2), Chicago (2), NewYork (3), Orlando (2), etc... etc...

About the interior, I once had a chance to come to Dayton for a business trip, and tour the AirForce Museum at WrightPatt Airbase, which is probably where Khan used to work (Khan, are you there?). So, we made a trip to come back so my son who loved biplanes could see their collection. We made a trip out of it, traveling from Columbus to Pittsburg, then to Cleverland, and Sandusky.

In Cleverland, we happened to be there during a town festival with a parade of people in costumes (a park near Mt. Sinai Center, I think). Had a good time, and took lots of pictures. When I came back, had a chance to read "House, A memoir" by Michael Ruhlman about the history and restoration of his beloved house in his native Cleverland.

I do not recall having a bad trip, EVER.

But you see, as an Arizonan, I have seen so much of the West Coast already. And if I want to go elsewhere, then the thought is that may be a few more hundred dollars, a few more hours suffering in that coach seat, we can be in a place we have not been. Little by little, it becomes Greece!
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Old 12-05-2008, 11:49 PM   #56
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A great deal of "money" (assets that people believed they owned at a certain value) disappeared in the past year. This may be the perfect time to "print" more money. I just hope we can bring ourselves to stop when the economy picks up, after deflation stops and before substantial inflation starts.
Printing more money IS ITSELF inflation Kwirk. Think about it. Each new dollar dilutes the value of all the dollars already in existence.

If you owe dollars, this is a grand thing, because when you eventually pay your debt, it will be with dollars that are easier for you to get(earn).

If you own dollars, each of your bucks is now worth less because it is not as scarce anymore. You can't buy as much with it because prices will have risen. (Alas, this possibility is MY fate.) Money loses value as more of it is created.

From the reaction to what I post, I believe most people on this board either overall owe money or have their funds in stocks because there seems to be a great enthusiasm for lower interest rates here.
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Old 12-06-2008, 03:53 AM   #57
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Sorry, Barbarus, but inflation is when prices rise. In a period of deflation increasing the money supply, broadly defined, is not necessarily inflationary (though it may work against deflation).

I suppose somebody with most of their assets in cash could wish for serious deflation but that seems rather cold to me.
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Old 12-06-2008, 04:30 AM   #58
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That's not the case kwirk. Inflation is expansion of the money supply above expansion of production. Raising prices can be one result of inflation but is really more related to liquidity than actual inflation. When there are a lot of dollars flying around and they are easy to get prices rise but people aren't spending money prices decline even though the money supply has been inflated.

Inflation and deflation are purely linked to supply. When supply increases faster than demand that is inflation. The prices of housing dropping is not due to deflation it is due to housing inflation. The supply of houses inflated much higher than demand driving prices down. Right now the number of dollars is increasing but no one is lending any money so the actual demand for dollars is low even while the supply is increasing faster than ever before. That's inflation.

Money didn't disappear from the system, the price of American business assets just lowered. All of the money that went out there went somewhere. You can't have a buyer without a seller. If I buy $10,000 worth of a stock and the stock price drops to zero no money has disappeared. The guy I gave the $10,000 to still has $10,000 I just can't get that money back from him. The problem isn't that money disappeared, the problem is that we gave all our money away in exchange for things that are now worthless. People with actual money didn't lose anything.
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Old 12-06-2008, 12:14 PM   #59
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My back up plan was if my liquid net worth dropped below a figure, I'd go back to work. I am slightly below that number now. What I forget about was the economic conditions that caused me to net worth to suffer also means it is really crappy time to look for a job.
i hear that. only i'm not considering a new career as a short term solution to my current money flow problem, but rather as longterm lifestyle. i might even have to sell low to finance retraining.

i'm 51, single and gay. not exactly the typical early retiree. if i had a partner to travel with, things might be different. i could sell out and vagabond on $3k/month (i'm assuming my partner would have similar cash for himself as i don't have enough for two) and, according to the online gambling calculators i've checked, be back up to speed in about 7 years.

but by myself i don't know if that life is worth it. sure, i'd open myself up to a whole new world. i'd learn a lot about myself in traveling. i'm still considering it. but as to a social night life, which still pleases me, it gives me pause. i'm not some single str8 guy into picking up young bar chics nor a gay chicken hawk looking to take advantage of developing country dudes seeking daddy. i've been checking online for pictures of the gay expat scene overseas and, frankly, it looks a little scary. maybe i'm just immature but i don't see myself as old as the expats in the pictures. i think maybe i'd fit in better with that crowd in 10 or 15 years from now.

i also checked calculators for two other possible lifestyles. working a job that just pays enough so that i don't have to tap investments gets me back to speed (ie, where i thought i was when i quit) in about 5 years. or selling out and joining the peace corp gets me back in about 4 years. so i'm not without options, short-, mid-, nor long-term.

thing is that i don't know where this economy is going and no one seems to be able to tell me. even if they fix this mess, it seems a temporary fix. we are forever distracted with some concrete 700 billion dollar figure but then i see here and there whispers that this is really a 5 or 8 trillion dollar problem. and then i hear that even that is nothing compared to what we might likely see in our lifetime: the 50 trillion dollar problem when social security & medicare kick-in. i was surprised a 100-year event occurred in my lifetime. seems silly to shut my eyes now to the possiblity of a 1000-year event as well. if i live into my 90s like a lot of my relatives do, that last 10 years might get very expensive. seems i should save for it as best i can.

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Are these new stresses financially related?
financial, social and situational. financially, had i only the money i have now, i might not have made the decision i made to quit working when i did. socially, i don't have enough people in my age group to play with. situationally, see above response.

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If so, in a few years, when the economy recovers, and your houses are worth something again, you may yet change your mind once more. It's OK.
and you'll be writing me a guarantee on that? sorry, not buying it. this might not recover for 10 years. this might even get worse after that. i don't understand a lot of this. i'm reading as much as i can. i'm listening as well as i can. i haven't heard a single pundit speculate without caveat. nothing i read or hear or see gives me much confidence. and that confidence is the substrate of this economy scares me even more.

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I never intended to retire early. I used to love my work, and still do. But I cannot fit inside a megacorp environment, and have failed at being part-owner of a couple of business ventures. If I need to work, I will. But so far, belt-tightening still works for me.
i also never intended this. i quit working based upon conditions in my life which no longer exist. at the time i'd been caregiver for 13 years and was watching my mother in her last days of alzheimer's. i was grieving for my best friend and for my amazing wolfpuppy. early retirement was a welcomed escape from a life that had become too stressfull and depressing. but now is not then. things change. i don't have those problems any more. so much of that pain has subsided. but now i'm down 30-40% financially and i'm facing a whole new set of problems. that's life.

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Money didn't disappear from the system, the price of American business assets just lowered.
splitting hairs

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All of the money that went out there went somewhere. You can't have a buyer without a seller. If I buy $10,000 worth of a stock and the stock price drops to zero no money has disappeared. The guy I gave the $10,000 to still has $10,000 I just can't get that money back from him. The problem isn't that money disappeared, the problem is that we gave all our money away in exchange for things that are now worthless. People with actual money didn't lose anything.
um, that's a little delusional because the guy who took your 10k invested in the very same indexed fund where you just lost 30% so his money is gone too. sure the money went somewhere, back into the smoke and mirrors where it never existed in the first place. this entire system is an agreed upon scam. the only value intrinsic to life is life. everything else is a construct. this economy is nothing more than a social contract drawn with disappearing ink on paper woven from wisps of ether. so do not be surprised as it shreds and vanishes before your eyes.
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Old 12-06-2008, 04:03 PM   #60
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Inflation is expansion of the money supply above expansion of production.
Many things can be inflated including, perhaps, my ego. But if you Google inflation you'll find that the common economic definition is "price" inflation.

Expansion of the money supply beyond expansion of production is certainly the most common cause.

The meaning of "money" is less firm. The most basic definition might be bills and coin (throw in gold?) but that clearly is not what drives our spending. We have bank accounts for which bills and coin do not exist (if we all tried to withdraw at once). Then there are less liquid assets that still help to drive our spending (how many people here are planning reduced spending because their stock or property values have plummeted?). In a sense, available credit is also a form of money because it certainly affects the willingness of many to spend (credit cards).

Money is not created only by the government. If Alice has $10 in the bank and the bank loans it to Bill who gives it to Charlie for a haircut then both Alice and Charlie think they have $10, for a total of $20. The fact that Bill owes $10 does not affect the willingness of Alice and Charlie to spend money. If Charlie puts the money in the bank and the bank loans it to Dick who buys something from Eddy then there is $30 to encourage spending. The government didn't do a thing. The requirement for banks to maintain reserves keeps this from going on forever but many of our current financial players are not banks and have maintained very low reserves (expanding the money supply and inflating the price of assets). Recently we've all seen the effects of low or nonexistant reserve requirements.

I think I've tried to say too much.
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