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Old 05-21-2010, 03:37 PM   #141
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Or those whose political leanings prevent them from even acknowledging the history they just lived through. It's astounding, really.
So I guess what I'm hearing is that the crisis that nearly bankrupted our largest banks, that sent unemployment from ~5% to 10% in near record time, that sent credit spreads in both HG and HY markets to levels implying defaults greater than those of the great depression, that sent the stock market down 55%, that started a run on short-term lending off all kinds (from money market funds to repos), wasn't really that bad and the unprecedented government intervention didn't really help.

But rather than all of those things that are part of the historic record, what we really need to be worried about is a debt-monitization driven hyperinflation, notwithstanding years of decelerating inflation. Or perhaps a run on the dollar, which also isn't anywhere in evidence. Or perhaps we need to worry about spiking interest rates because of U.S. credit deterioration, even as 10 year rates decline to 3.25%. Or maybe we need to worry about all three simultaneously.

So the message is ignore and downplay the stuff that actually happened, what we really need to worry about is the stuff that hasn't happened and for which there is no evidence of.

I'm with you!
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Old 05-21-2010, 03:43 PM   #142
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Hmmm....

Three consecutive posts on the thread, the last quoting and responding to yourself.

Recently retired, so whaddya DO all day? Asked and answered.
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Old 05-21-2010, 03:47 PM   #143
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Hmmm....

Three consecutive posts on the thread, the last quoting and responding to yourself.

Recently retired, so whaddya DO all day? Asked and answered.


Actually just got back from a tour of Val Kill (Eleanor Roosevelt's house) and a nearby winery. Just some downtime before I fire up the grill.
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Old 05-21-2010, 04:45 PM   #144
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It's one thing to talk to yourself, but I think you might be going off into the weeds a tad when the conversation gets to be two-sided.
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Old 05-21-2010, 05:38 PM   #145
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So I guess what I'm hearing is that the crisis that nearly bankrupted our largest banks, that sent unemployment from ~5% to 10% in near record time, that sent credit spreads in both HG and HY markets to levels implying defaults greater than those of the great depression, that sent the stock market down 55%, that started a run on short-term lending off all kinds (from money market funds to repos), wasn't really that bad and the unprecedented government intervention didn't really help.

But rather than all of those things that are part of the historic record, what we really need to be worried about is a debt-monitization driven hyperinflation, notwithstanding years of decelerating inflation. Or perhaps a run on the dollar, which also isn't anywhere in evidence. Or perhaps we need to worry about spiking interest rates because of U.S. credit deterioration, even as 10 year rates decline to 3.25%. Or maybe we need to worry about all three simultaneously.

So the message is ignore and downplay the stuff that actually happened, what we really need to worry about is the stuff that hasn't happened and for which there is no evidence of.

I'm with you!


Since I work with a few of the people who have some of the beliefs you are talking down... I will put a post on their side....

The one that I think has more credibility is the guy who move 100% of his 401(k) to cash in Sept 2007 before the crash.. he said the way things were going it could not be sustained.... he has not changed his mind much... in fact, he is more worried now with all the spending by the gvmt...


Take a look at the PROJECTED DEFECITS going forward... and the percent of GDP... ours make Greece look like a saver... if something is not done, there will be a day of recogning (sp?)....

So, taking a look at today and not factoring in all the proposed spending, tax hikes etc. is a fools game...

At least that is what they would say....
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Old 05-21-2010, 05:38 PM   #146
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Not for me. Gone4Good provides appreciated balance.

Audrey
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Old 05-22-2010, 07:33 AM   #147
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Not for me. Gone4Good provides appreciated balance.

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Gracias.
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Old 05-22-2010, 07:46 AM   #148
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So, taking a look at today and not factoring in all the proposed spending, tax hikes etc. is a fools game....

Agreed. Nobody disputes that monetary policy needs to be normalized and deficits need to be reduced. Nobody. The question is over timing.

The folks who have been forecasting a run on the dollar, hyperinflation, and a federal debt crisis have been advocating fiscal and monetary tightening for two years. But history has not borne out their apocalyptic forecasts. Instead of all the dread outcomes we've been promised, we see modest growth amid decelerating inflation. Against that backdrop it's hard to see how higher interest rates and fiscal austerity would have achieved anything but a deeper crisis. Someone please explain how this isn't true?
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Old 05-22-2010, 07:49 AM   #149
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Agreed. Nobody disputes that monetary policy needs to be normalized and deficits need to be reduced. Nobody. The question is over timing.

The folks who have been forecasting a run on the dollar, hyperinflation, and a federal debt crisis have been advocating fiscal and monetary tightening for two years. But history has not borne out their apocalyptic forecasts. Instead of all the dread outcomes we've been promised, we see modest growth amid decelerating inflation. Against that backdrop it's hard to see how higher interest rates and fiscal austerity would have achieved anything but a deeper crisis. Someone please explain how this isn't true?
Aha! "They" have gotten to you! Just put this tinfoil helmet on and let me replace your amalgam fillings with gold ones (I have a screwdriver and some vodka) and you will start to really understand!!!
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Old 05-22-2010, 10:21 AM   #150
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For the record: as one of the designated sourpusses of the forum, I own some gold.

Well, so far it's done better than my euro's... (I'm European)

I don't believe that I have much talent for market timing, but for now the lack of gold threads is reassuring me. I realise that I'm taking a risk, but it may help limit damage from currency problems and bank failures. I hope I'll be able to get out in time and switch to a buy and hold approach after stocks and real estate have been thoroughly thrashed overhere. A man can dream...
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Old 05-22-2010, 11:02 AM   #151
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For the record: as one of the designated sourpusses of the forum, I own some gold.

Well, so far it's done better than my euro's... (I'm European)

I don't believe that I have much talent for market timing, but for now the lack of gold threads is reassuring me. I realise that I'm taking a risk, but it may help limit damage from currency problems and bank failures. I hope I'll be able to get out in time and switch to a buy and hold approach after stocks and real estate have been thoroughly thrashed overhere. A man can dream...
I also have some gold, but I got out of Euros a few years ago . Now I'm wondering whether I should go buy a few. Just for my visits to the old country/continent.
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Old 05-22-2010, 11:16 AM   #152
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I also have some gold, but I got out of Euros a few years ago . Now I'm wondering whether I should go buy a few. Just for my visits to the old country/continent.
Wait a little longer and maybe you'll be able to buy some drachmas, deutchmarks, and guilders instead.
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Old 05-22-2010, 11:49 AM   #153
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Wait a little longer and maybe you'll be able to buy some drachmas, deutchmarks, and guilders instead.
Waiter, gimme me guilders, deutchmarks, and drachmas please, but hold the drachmas.

Ha
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Old 05-22-2010, 05:25 PM   #154
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Certainly some adjustment has to be made for hedonics though.

Cars today cost quite a bit more than they used to, but they also last a ton longer.

In fact, most things have gotten a lot better over the years.

I realize that it is a difficult and subjective thing to measure, but I do think that the government should make some effort to do so.



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We're also forgetting about hedonics. The way the government calculates it...

Say the price of a new fridge goes up 100% but the newer fridge is twice as energy efficient as the old, then the price increase in dollar terms is never counted in the CPI. I can see many instances where this kind of fuzzy math can pose as problematic.
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Old 05-23-2010, 12:58 AM   #155
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Agreed. Nobody disputes that monetary policy needs to be normalized and deficits need to be reduced. Nobody. The question is over timing.

The folks who have been forecasting a run on the dollar, hyperinflation, and a federal debt crisis have been advocating fiscal and monetary tightening for two years. But history has not borne out their apocalyptic forecasts. Instead of all the dread outcomes we've been promised, we see modest growth amid decelerating inflation. Against that backdrop it's hard to see how higher interest rates and fiscal austerity would have achieved anything but a deeper crisis. Someone please explain how this isn't true?

Don't get me wrong... I think things will balance out 'in the long run'.... the question is what kind of pain we will have before it does...

I will give two examples... the tax increases that Obama is putting into place to pay for the health care bill will probably come at the wrong time... but let's say it does not... well, we COULD have had those same exact tax increases to pay down our debt (both stated and unstated) and all the future promises we have already made that we can not pay for.... and we probably would be running a surplus for a number of year...

And as someone else said (don't know who... don't know in which thread)... but why do we follow Keynsian (sp?) economics and spend like crazy when we have a business downturn, but don't follow him when we are having a business spurt (you are supposed to run surpluses then to pay DOWN the debt you incurred on the last downturn)....

We will all see some major reductions on services in the future... because we will not be able to tax our way out of the problem that is occurring right now...
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Old 05-23-2010, 07:19 AM   #156
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Certainly some adjustment has to be made for hedonics though.
Or in the case where the oak in your fine dining table is gradually replaced with lesser woods. The price doesn't come down, but the quality does. That's inflation to me . . . and to the BLS too.

The BLS has done studies on this and shown that the hydonic adjustments have a modest upward bias on the index. Yup, that's right, upward. But of course the BLS can't be trusted because they are part of the conspiracy to manipulate inflation statistics.

I've found it is pointless to talk about this subject. Folks are convinced that CPI is massively manipulated. They have all kinds of stories and theories to back them up. No real evidence, mind you. This lack of evidence is "surprising" given the simplicity of checking the index against real independent data. But, as with the debate above, simply ignore the evidence if it interferes with a good story.
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Old 05-23-2010, 07:54 AM   #157
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Or in the case where the oak in your fine dining table is gradually replaced with lesser woods. The price doesn't come down, but the quality does. That's inflation to me . . . and to the BLS too.

The BLS has done studies on this and shown that the hydonic adjustments have a modest upward bias on the index. Yup, that's right, upward. But of course the BLS can't be trusted because they are part of the conspiracy to manipulate inflation statistics.

I've found it is pointless to talk about this subject. Folks are convinced that CPI is massively manipulated. They have all kinds of stories and theories to back them up. No real evidence, mind you. This lack of evidence is "surprising" given the simplicity of checking the index against real independent data. But, as with the debate above, simply ignore the evidence if it interferes with a good story.
It would be really interesting to read an article explaining the hedonic adjustments. What adjustments have they made? Did they really substitute ground chuck for ribeye steak?

The problem seems impssible to me. Most folks would agree that machine made shoes are a fine substitute for handmade ones - in fact, we don't even think about it.

On the other hand, is agri-factory produced chicken a productivity increase similar to machine made shoes, or a loss in quality compared to free range chicken?

And what about things that didn't even exist until recently, home computers for example? There is something that went from nonexistent, to very expensive, then experienced dramatic price declines while at the same time saw huge increases in features and power.
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Old 05-23-2010, 08:14 AM   #158
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It would be really interesting to read an article explaining the hedonic adjustments. What adjustments have they made? Did they really substitute ground chuck for ribeye steak?

The problem seems impssible to me. Most folks would agree that machine made shoes are a fine substitute for handmade ones - in fact, we don't even think about it.

On the other hand, is agri-factory produced chicken a productivity increase similar to machine made shoes, or a loss in quality compared to free range chicken?

And what about things that didn't even exist until recently, home computers for example? There is something that went from nonexistent, to very expensive, then experienced dramatic price declines while at the same time saw huge increases in features and power.
The CPI validity is one of the most often discussed topics around here. You can find links to threads discussing the hedonic adjustment controversy dating back to creation - of this forum, that is:

(FAQ archive) The Consumer Price Index (CPI) and its validity... or not.
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Old 05-23-2010, 08:40 AM   #159
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Some folks sign up on the forum and introduce themselves here following the suggestions found here.

Others do the online version of walking into a crowded room and start shouting...
That crowded room can be pretty dense, eh?
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Old 05-23-2010, 08:43 AM   #160
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so i breezed through the thread titles from 2010 - and didnt see anything about gold (or silver).

with the outrageous monetary inflation by the private company known as "the fed".....it is prudent to have some REAL money in your portfolio. real money, as defined by the constitution is gold and silver coins. the paper money printers have gone insane since their house of cards blew up in 2007/2008....see the trillion to europe for their latest escapade --

we are looking at a potential inflationary nightmare resembling..or worse than the late 70's. bonds will be CRUSHED. tips are a guaranteed loser...as they are tied to the bald-faced lie CPI.

imo there are only two places to hide from the insanity - precious metals and a distant second would be oil.

as soon as velocity picks up, the inflation monster will appear. you cannot game the laws of economics.

insane money printing = rising prices

if you are overweight bonds, now is a GREAT time to sell. you can buy them back after they take their lumps.

i'm waiting on double digit 30 yr treasuries.....to ride off into the sunset.
I stopped by this forum a few months ago saying something pretty similar and then found myself dealing with people who can best be described as often wrong but never in doubt.
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