You are poorer today
Posted on: November 4, 2010 - 3:43am
Offline
You are poorer today
Yesterday the Fed announced plans to start quantitative easing. The result is any money in your bank account will be worth less than it was. Basically, we are just pushing a computer button and creating more money. It is a huge risk mostly in that it can cause devaluation of the dollar and assets. It is too damn early for me to give an economics lesson today. Look it up, learn about it, study some economic history and if you haven't already, take steps to protect your assets.
If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X
- Login to post comments
For six months I've been hearing economists whine about deflation and flat inflation, so I doubt we're going to see a spiral of bad inflation because of this.
Everything makes more sense now that I've stopped believing.
You're a really funny guy. At this rate, I can start using Jacksons as toilet paper in a few years.
“A meritocratic society is one in which inequalities of wealth and social position solely reflect the unequal distribution of merit or skills amongst human beings, or are based upon factors beyond human control, for example luck or chance. Such a society is socially just because individuals are judged not by their gender, the colour of their skin or their religion, but according to their talents and willingness to work, or on what Martin Luther King called 'the content of their character'. By extension, social equality is unjust because it treats unequal individuals equally.” "Political Ideologies" by Andrew Heywood (2003)
Another words "diversify your currency" -trade them in for swiss franks.
Wouldn't recommend gold, as it's just another investment bubble.
“A meritocratic society is one in which inequalities of wealth and social position solely reflect the unequal distribution of merit or skills amongst human beings, or are based upon factors beyond human control, for example luck or chance. Such a society is socially just because individuals are judged not by their gender, the colour of their skin or their religion, but according to their talents and willingness to work, or on what Martin Luther King called 'the content of their character'. By extension, social equality is unjust because it treats unequal individuals equally.” "Political Ideologies" by Andrew Heywood (2003)
You're such a silly goose.
Everything makes more sense now that I've stopped believing.
Besides, it isn't in one big chunk anyway, it is over a 6 month period. If there was some sort of inflation craze they could halt injection at any time. Plus, they've been doing this for a while already and inflation is still at 1%, which is lower than they want it to be.
I think a continuation of an existing policy that hasn't yet caused significant problems doesn't merit a chicken little act. I know you'd rather see the Fed go away completely, but they aren't going to go away, and they're just doing their jobs at this point to get things moving again. Even if inflation goes up, that is fine, they *want* inflation to go up. They would rather have inflation go up two points than see it go down one point.
Edit: And besides, inflation is one of the things the Fed actually knows how to control, so on my list of worries inflation isn't as high as unemployment, not even close.
Everything makes more sense now that I've stopped believing.
Yes we have been monetizing our debt for a while. What is changing is the scale in which we will be doing it.
The economy is a big thing that develops momentum, it does not react overnight no matter how much politicians like to pretend otherwise. If the worst case scenario hits and massive inflation begins it will be way too late to do anything about it. In order for things to get real ugly, other countries would have to stop accepting the dollar. Fortunately, most of the world has too much interest in continuing to use our money that I believe it is a remote possibility. However, it is reasonable to expect a 10-20% decrease in your actual purchasing power if all you have is the dollar.
Inflation has started. The internal numbers show that manufacturing base costs have been rising, they just have not been passed to the consumer yet, but it is only a matter of time. The cost of food has also been rising and the cost of energy is likely to rise as well.
We are attempting to do what has failed every time it has been tried while ignoring what has worked every time it has been tried. Do what you want with your money. I don't really care. But people really ought to study a little economic history and realize the gamble our government is taking. Our problem is debt and encouraging more of it won't fix the problem. You don't cure an alcoholic by giving them more alcohol. The idea that an economy can and should grow across the board forever is absurd and the longer we put off the inevitable the bigger the fall. In the long run Keynesian economics simply doesn't work.
If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X
Yes, we could crash the whole system now and re-build it on the basis of something never tried in a large economy and hope the fallout doesn't end up starving us all, or we can try and make what we've got work as long as we can like we've been doing for the last 60 years and try to avoid a crash that will be so bad we can't recover and ends up starving us all.
Time will tell. SPAM and ammo in the meantime.
Everything makes more sense now that I've stopped believing.
they way they calculate inflation is so bogus
they leave food and energy out of their calculations, and of course food and energy are seeing quite a bit of inflation (well an increase in price which is the consequence of inflation, not inflation itself)
OK, on that part of my portfolio, I am a bit down for now.
However, I firmly reject the idea that money can be lost that simply. Well, except for those who don't bother to learn how money works.
I have four retirement accounts that are split across twenty different parts of the general economy. Perhaps my mid-caps are shit today. But a couple of days ago, the fed announced that they are buying bonds at above market value.
As this is late on a Friday night, I can't get anyone on the phone to ask questions but I have a bunch of guys who really know their stuff backing me up. Between the various accounts, some part of my action gets rebalanced every few days.
Basically, I get an automatic 7% to 10% return consistently. In fact, my ROTH give me an automatic 15% on top of whatever it earns regardless of what it actually does. That contract lasts for another three years.
OK, I am done bragging for now.
However, my general point remains. One simply is horridly dishonest if one claims that a single market segment is the totality of the economy.
The last time that I had this discussion in person, I said that things are only bad where they are bad. The reply that I got was “have you seen the unemployment numbers?”
Well, yes I have. I think that right now, they are about 9.5%. Well, you can pick the thing that is bad right now. That does not mean that the sky is falling.
I can walk to a bar right now and spend like $5 for a beer. I can spend another $8 for a plate of nachos that are just salty enough to keep me so thirsty that I keep buying beer (as if I needed an excuse to buy beer).
Are stock brokers jumping from the roofs of tall buildings? No? That happened back in thw 1920's when the shit really hit the fan.
=
Every once in awhile. Especially ones who invested heavily in sub prime mortgages. But stockbrokers occasionally commit suicide even in a booming economy because and individual stockbroker can always lose millions when a bet doesn't pan out.
But yes, your point is completely true. There is always some sector of the economy that will actually benefit from others failing. The trick is identifying which sectors will do well and which will fail. Even if the worst case scenario happened there will be opportunities to make a shitload of money and the stock market in general can be expected to rise faster than inflation in the short term. I never trust the stock market as a whole in the long term, I prefer to be very picky about my stocks and always thought diversification for the sake of diversification was simply a way to throw money away. I have always bought the Andrew Carnegie approach,
A weakening dollar tells me that it would be wise to invest in exporters, commodities and companies that produce necessities in general. And having a little liquidity in physical gold, silver or gems (buying any of these without actually getting the physical object is stupid) that could be used in the worst case scenario is never a bad idea both as insurance against a potential currency collapse and as mobility if you ever need to spend money without the government knowing about it.
The people who get screwed are the ones who don't have any investment money and are reliant solely on what they have in the bank or buy things like CDs or US treasury bonds or are surviving week to week on their paycheck. It sucks to be them anyway. If the dollar weakens substantially it will suck even more. Especially since food and energy are two things that can be expected to get significantly more expensive and are things you can't eliminate from your budget.
I'm pissed off because I am planning a hunting trip to Zimbabwe next year and now it is going to be more expensive. For some damn reason whenever I plan these trips the dollar crashes.
edit: Ironically, it would be a real good time to be substantially in debt if the rate is fixed. Which if you have read most of my economic posts, I am constantly harping on the average American who is over their head in debt. But if you have debt that is manageable through the initial inflation until your wage catches up, paying off that house you can't afford will become easier.
If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X
I'm richer thanks to this, not poorer.
Enlightened Atheist, Gaming God.
We are also poorer because China is undercutting the value of our dollar. We are poorer because Bush allowed big business to it's slash and burn anarchy policies. So go ahead and blame the fed if you wish, but as long as the Wal Mart class keeps buying our politicians off, we will continue our race to the bottom.
There is only one vote that counts in America now, and that vote belongs to big business.
"We are a nation of Christians and Muslims, Jews and Hindus -- and nonbelievers."Obama
Check out my poetry here on Rational Responders Like my poetry thread on Facebook under Brian James Rational Poet, @Brianrrs37 on Twitter and my blog at www.brianjamesrationalpoet.blog