The DOW is crashing

[alchemize]

I would also argue that inflation only impacts poor people. Anyone in the middle class with a 3% or higher raise has more net $ at the end of each year because things that are inflating (gas, certain grocery items, etc.) are not a majority of what the net income is spent on.

This of course excludes idiots who live far above their means and are heavily in debt.

 

[Fineghal]

I suppose you think free trade is terrible too.

 

[alchemize]

Originally posted by: lozina

Originally posted by: alchemize

Originally posted by: lozina

Originally posted by: alchemize
Somebody answer this question (preferably one of the tinfoilers). Are there any first world countries that don't have a central banking system such as the fed?

Yes unfortunately if there are any countries with a central bank system that does not use the fractional reserve system then they are insignificant.

But you're saying is like the typical 'well since the Democrats did it so could the Republicans' when discussing some scandal. Just because it has been adopted all over the modern world doesn't make it right

I see. So the entire world's banking system is corrupt and about to collapse. Guess we don't need to worry about global warming then? What do you propose as a "solution" that wouldn't also collapse the world economy and kill millions (billions)?

Well I didn't say collapse, but this system really is an experiment in human history. We can only guess what's going to happen. One solution which Ron Paul is supporting is to go back to the gold standard where we peg the value of our dollars to gold. I'm not so convinced though that this is the best solution. I like the idea of just abolishing the Fed and their fractional reserve system and establishing a system similar to the greenbacks Lincoln issued during the Civil War. Let Congress have their Constitutional power to coin money again, not some secretive 3rd party corporation.

I've got more faith in a secretive 3rd party corporation than I do congress!

 

[lozina]

Originally posted by: Fineghal
I would just like to point out that if we had zero inflation, the unemployment rate would probably be in excess of 10%.
It's called a phillips curve. Tis an economic expression of the phrase "No free lunch."

And as to deteriorating wages... Yeah right. You want to know WHY the purchasing power of the minimum wage has decreased? Ta da! Inflation! So you're correct. If you want to kvetch about it, take that up with congress. That ball is in THEIR court.

Further, your 1913 theory is absolutely made of tin foil. The reason the U.S. doesn't have a recorded inflation rate pre 1913? Because no one has calculated it!

Inflation is a measure of how much it costs you to get a certain number of goods at a certain price. This is your base year. The Fed's current base year is 1988 or so. What you then do to determine inflation rate is compare this previously determined basket to to another year.

Example: In the base year, 1988, I bought 20 tires at $3500, 100 apples at $22 etc. I then compare how much it would cost me to get the same number of items in a different year. In 1950 it might cost $2300 and $21.

Do you understand how this makes any type of calculated inflation from beyond a certain time period pointless? Do you really want to compare the price of apples and tires in 1913 when the car had only been invented 10 years earlier?

Further the standard CPI (Consumer Price Index), which I generally outlined above tends to OVER-state inflation. For two reasons. The first is that quality of goods tends to go up. The second is that it doesn't take into account substitute goods. If the price of apples goes up, you buy oranges no?

And as a final point: Inflation is not BAD. It only becomes an issue when it gets too high.
Oh and if you REALLY want to complain about something, complain next time you get a raise that only matches inflation. Why? Because while your raise matched inflation, it didn't account for growth in the GDP. So while your pay (adjusted) remains the same, the actual percentage of the pie (GDP) you get actually shrank.

Wait, did you read this article? Because in the article the author says that the BLS does indeed substitute goods and account for so-called "quality improvements" (like this vacuum cleaner we got in 1970's and still works great unlike the newer vacuums that die in a year or two) into their CPI calculation. Are you saying the author is wrong here?

But yeah obviously because of the evolution of goods they are not going to get a perfect picture of inflation over the course of human history which is why they have to estimate these things. Just like how we have to estimate populations, ethnic diversity -all sorts of statistics in history. But an estimate is a good enough picture to see a general trend.

 

[lozina]

Originally posted by: alchemize

I've got more faith in a secretive 3rd party corporation than I do congress!

Haha, I definitely see your point there, but at least Congress is [somewhat] accountable to us

 

[dullard]

Do you mind if I use the S&P instead? It is just so much more broadly applicable and I have the historical data in front of me.

Unadjusted S&P
Apr 1, 2007: 1471
Apr 1, 2006: 1311, 1-year average gain: 12.2%
Apr 1, 2004: 1108, 3-year average gain: 9.9%
Apr 1, 2002: 1077, 5-year average gain: 6.4%
Apr 1, 2000: 1527, 7-year average gain: 0.5% lost
Apr 1, 1997: 801, 10-year average gain: 6.3%
Apr 1, 1987: 288, 20-year average gain: 8.5%

Inflation
1-year average gain:2.8%
3-year average gain: 3.1%
5-year average gain: 2.8%
7-year average gain: 2.6%
10-year average gain: 2.5%
20-year average gain: 3.1%

Dividends:
Dividends aren't reflected in the indexes. Dividends tend to be 2%-3% if you have a diversified portfolio (especially since the early 1990s when internet stocks made the notation of no dividend stocks popular). Inflation also was 2.6%-3.1% in that period. Thus dividends cancel inflation roughly. To keep things simple, all we need to look at is the S&P gain then. I realize this is overly simplified, but it is close enough for this thread.

If you have only recently entered the stock market (1-3 years), you did well. You got the standard ~10% return. But what about the typical AT posters who tend to be closer to 30 years old (thats me). We started jobs 5-10 years ago and maybe invested back then. What have our original investments done? Some gained ~6% on average and some have still lost money (anything invested ~7 years ago is still down). But many people are older than that. If you look back 20 years, at 8.5% return, we are still below what people typically consider stock returns (I always see people naively saying stocks are almost guaranteed to return 10% in the long run).

There you have it. Short term we've done well. Med term, we've sucked. Long term, we are up, but NOT as well as what people usually expect because they forget inflationary pressure. The devil is all in the details of when you made your investment.

 

[miketheidiot]

OP apperantly forgets that not only ins the economy more stable than it was pre-fed, with higher growth for the most part, but the monetary system itself is in far better shape. Pre-fed, there were bank panics about every 10-15 years, since then, one, and that was before the fed got most of its current powers. In all honesty, the federal reserve is the best piece of government action is modern history, and ron paul is a foolish, ignorant crank, regardless of how genuine he might seem.

 

[Fineghal]

I don't have time to read the full article right now, but the author is attempting to measure the percentage fall of the stock market in other currencies? I mean one, the DOW is a poor measure anyway, as dullard pointed out, and two, measuring a constant (known market index) against a floating variable is... Sketchy. At any given point, the value of another currency is changing vs. that of the U.S. dollar.

"However, it's up in price only? not value! And now I'll prove it with the following charts."

This completely contradicts... Everything. If PRICE has gone up, but not value, then why:

Have we had, over the past century or so an average REAL growth in GDP of 2-3%? (This takes into account inflation)
Why have our living standards increased?
Why do we, as individuals, have more purchasing power than our grandparents did? (That is to say, we can buy more stuff.)

And while the dollar falling is most definitely bad if you've invested in currency markets (which IMHO is stupid), this is good for the economy. A falling dollar = more exports.

Further, a correlation does mean causality. It is inaccurate to say that a declining dollar caused an increase in gold prices. It is probably more accurate to say that other factors effected these things. What the author is implying is that Gold, which could be considered a currency, is being effected by the changing price in the dollar. Do you see how this doesn't make sense? It's like saying that I have two stocks, AMD, and Intel. Intel rises while AMD falls. It is a fallacy to try and say that BECAUSE Amd fell, Intel rose.

As for those adjusted CPI's... You're correct, the BLS does do that. What is not addressed by the author and those pseudo CPI numbers, and the reason I suspect that Shadow Gov's CPI is so high is this:

The government pays attention only to what is termed core inflation. This is an inflation metric that does not track price changes in Oil and Food. These two things are wildly variable. Just look at the 70's (As I recall) when OPEC cut production and oil prices rose some 400%.

Unfortunately I don't have any more time to read this article. So I'll check back.

 

[Cerb]

We'd be better off without the Fed, IMO. But, that won't stop upper management from moving their support to India, or manufacturing in China to save a few bucks (and sacrifice quality), nor will it stop loyal employees from being kicked out and given the chance to be rehired at lower wages.

I think the Federal Reserve stinks of cartel, but making that to be a near sole problem is folly, and displays a huge problem with conspiracy theories: there tends to be a really nasty big bad guy, rather than tens of thousands of small ones that just happen to be moving in the same general direction.

If you stop buying th Chinese crap, and CC's workers would stand up and make a fuss, things might get better for us. Until then, watch it all flatten.

 

[blackangst1]

Although I think there are major issues with the Fed (as there are with ANY gov't agency, really) they DO provide some very solid protections for us. We would have a MUCH more volitile economy without those protections in place. Good tradeoff, IMHO.

 

[morkinva]

The Fed is not a govt agency. Read The Creature from Jekyll Island or Eustace Mullins' Secrets of the Federal Reserve. It's a private banking cartel which has bought the politicians approval, and both sides benefit from the scam.

 

[alchemize]

morkinva: And don't forget it's all run by the teh JOOs and of course they orchestrated 9/11!

See what kind of company you share with this topic, Lozina?

Edit: There are 4 categories of folks who are anti-fed:
1) Anti-income tax people (desire - more $ for themselves)
2) "It's the JOOS!" conspiracy whackos (desire - ??? more tinfoil for themselves ???)
3) Anarchists/far left-wingers (desire - less $ for the rich and hence more $ for themselves)
4) Brokers who want to sell commodities (desire - more $ for themselves)

 

[ntdz]

Originally posted by: lozina

Originally posted by: techs


Actually inflation is a good thing, in moderation. It allows a vehichle for growth and a way for changes in prices to be adjusted somewhat hidden from the actual consumer. While hiding the real changes may sound devious, it actually prevents marked differences in price, up or down, of goods that may vary on a weekly or daily or monthly basis.
An example would be if the price of milk changed 30 times a month, than people might see a day when it drops and stores would be sold out for weeks.
I am not explaining it well, but everything I have read indicates that there are good reasons for moderate inflation that benefits us all.

Hmm, moderation is a very relative term. What we are dealing with in our country since the Federal Reserve's inception is far from moderate.

For example, if you had 100,000 dollars in 1940 you would essentially be considered a "millionaire" by today's terms, because you'd have equal purchasing power as a person with $1 million of 2005's dollars.

So what? We've had very little inflation over the last 15 years...been a very good 15 yearas.

 

[LegendKiller]

Originally posted by: Cerb
We'd be better off without the Fed, IMO. But, that won't stop upper management from moving their support to India, or manufacturing in China to save a few bucks (and sacrifice quality), nor will it stop loyal employees from being kicked out and given the chance to be rehired at lower wages.

I think the Federal Reserve stinks of cartel, but making that to be a near sole problem is folly, and displays a huge problem with conspiracy theories: there tends to be a really nasty big bad guy, rather than tens of thousands of small ones that just happen to be moving in the same general direction.

If you stop buying th Chinese crap, and CC's workers would stand up and make a fuss, things might get better for us. Until then, watch it all flatten.

What does buying chinese crap or exporting labor have anything to do with monetary policy being controlled by the Fed by mandate of Congress or Congress itself?

 

[LegendKiller]

Originally posted by: morkinva
The Fed is not a govt agency. Read The Creature from Jekyll Island or Eustace Mullins' Secrets of the Federal Reserve. It's a private banking cartel which has bought the politicians approval, and both sides benefit from the scam.

The Fed doesn't have to be a Government agency. All banks in the national banking system that belong to the Fed are owners in the system. Those banks, in turn, are owned by investors. Thus, those who own bank stocks or invest their funds in banks own the Fed.

 

[Fineghal]

In a nutshell, we need the Fed, or something like it.


It's part of minimizing economic downturns. When you have a recession, you have two methods to shorten/improve whatever. One is adjusting interest rates. This encourages investment and consumption etc. The other is expansionary fiscal policy. Cutting taxes, increased Government spending and all that.

The problem with expansionary fiscal policy is: It's not immediate. It requires congress not only to act quickly, but intelligently. Can we see some problems yet?

The Fed is independent. It doesn't have to worry about going to congress for a budget, nor is it elected. If it is required to stabilize the economy, the Fed can raise interest rates 3 weeks before an election. Do you think ANYONE in congress would do that?

 

[LegendKiller]

Originally posted by: Fineghal
In a nutshell, we need the Fed, or something like it.


It's part of minimizing economic downturns. When you have a recession, you have two methods to shorten/improve whatever. One is adjusting interest rates. This encourages investment and consumption etc. The other is expansionary fiscal policy. Cutting taxes, increased Government spending and all that.

The problem with expansionary fiscal policy is: It's not immediate. It requires congress not only to act quickly, but intelligently. Can we see some problems yet?

The Fed is independent. It doesn't have to worry about going to congress for a budget, nor is it elected. If it is required to stabilize the economy, the Fed can raise interest rates 3 weeks before an election. Do you think ANYONE in congress would do that?

Exactly. Not only that, but having a strong central bank, controlled and owned by member banks ensure that you don't have massive bank runs that can't be supported by the whole system.

Pretty much every modern country has the same system. While I am a strict Constitutionalist, I am also a realist. A Congress of 150 years ago could be trusted with complete banking authority. A Congress of today is filled with so many self-serving idiots that have no grasp of economics that we'd have much worse economic problems.

 

[morkinva]

Originally posted by: alchemize
morkinva: And don't forget it's all run by the teh JOOs and of course they orchestrated 9/11!

See what kind of company you share with this topic, Lozina?

Edit: There are 4 categories of folks who are anti-fed:
1) Anti-income tax people (desire - more $ for themselves)
2) "It's the JOOS!" conspiracy whackos (desire - ??? more tinfoil for themselves ???)
3) Anarchists/far left-wingers (desire - less $ for the rich and hence more $ for themselves)
4) Brokers who want to sell commodities (desire - more $ for themselves)

Excellent, you fit the U.S. citizen in your *signature to a T.

For the more intelligent among you, please read about why the competitors Rockefeller, Warburg, Rothschild would come together in secrecy and hatch what would become the Federal Reserve Act. link

*edit

 

[LegendKiller]

Originally posted by: morkinva

Originally posted by: alchemize
morkinva: And don't forget it's all run by the teh JOOs and of course they orchestrated 9/11!

See what kind of company you share with this topic, Lozina?

Edit: There are 4 categories of folks who are anti-fed:
1) Anti-income tax people (desire - more $ for themselves)
2) "It's the JOOS!" conspiracy whackos (desire - ??? more tinfoil for themselves ???)
3) Anarchists/far left-wingers (desire - less $ for the rich and hence more $ for themselves)
4) Brokers who want to sell commodities (desire - more $ for themselves)

Excellent, you fit the U.S. citizen in your *signature to a T.

For the more intelligent among you, please read about why the competitors Rockefeller, Warburg, Rothschild would come together in secrecy and hatch what would become the Federal Reserve Act. link

*edit

There was no secrecy and the main investors in the bank are the member branches, most of which are owned publicly.

If those guys still own it (or their families) please provide links. Furthermore, please provide any evidence that there is nefarious intent. lastly, provide evidence that having Congress control the bank would be any better by providing specific examples of modern countries with successful economies that operate in such a way.


In other words, for the more intelligent among us need more information than stupid fringe websites, conjecture, half-truths, and outright lies.

 

[halik]

Originally posted by: morkinva

Originally posted by: alchemize
morkinva: And don't forget it's all run by the teh JOOs and of course they orchestrated 9/11!

See what kind of company you share with this topic, Lozina?

Edit: There are 4 categories of folks who are anti-fed:
1) Anti-income tax people (desire - more $ for themselves)
2) "It's the JOOS!" conspiracy whackos (desire - ??? more tinfoil for themselves ???)
3) Anarchists/far left-wingers (desire - less $ for the rich and hence more $ for themselves)
4) Brokers who want to sell commodities (desire - more $ for themselves)

Excellent, you fit the U.S. citizen in your *signature to a T.

For the more intelligent among you, please read about why the competitors Rockefeller, Warburg, Rothschild would come together in secrecy and hatch what would become the Federal Reserve Act. link

*edit

hahaha so #2 for morkinva ... it's teh j00z. It's sad that there are so many people with no knowledge of macroeonomics though.

 

[JD50]

Originally posted by: halik

Originally posted by: morkinva

Originally posted by: alchemize
morkinva: And don't forget it's all run by the teh JOOs and of course they orchestrated 9/11!

See what kind of company you share with this topic, Lozina?

Edit: There are 4 categories of folks who are anti-fed:
1) Anti-income tax people (desire - more $ for themselves)
2) "It's the JOOS!" conspiracy whackos (desire - ??? more tinfoil for themselves ???)
3) Anarchists/far left-wingers (desire - less $ for the rich and hence more $ for themselves)
4) Brokers who want to sell commodities (desire - more $ for themselves)

Excellent, you fit the U.S. citizen in your *signature to a T.

For the more intelligent among you, please read about why the competitors Rockefeller, Warburg, Rothschild would come together in secrecy and hatch what would become the Federal Reserve Act. link

*edit

hahaha so #3 for morkinva ... it's the j00z

Haha, I almost spit out my drink. :laugh:

 

[alchemize]

Originally posted by: morkinva

Originally posted by: alchemize
morkinva: And don't forget it's all run by the teh JOOs and of course they orchestrated 9/11!

See what kind of company you share with this topic, Lozina?

Edit: There are 4 categories of folks who are anti-fed:
1) Anti-income tax people (desire - more $ for themselves)
2) "It's the JOOS!" conspiracy whackos (desire - ??? more tinfoil for themselves ???)
3) Anarchists/far left-wingers (desire - less $ for the rich and hence more $ for themselves)
4) Brokers who want to sell commodities (desire - more $ for themselves)

Excellent, you fit the U.S. citizen in your *signature to a T.

For the more intelligent among you, please read about why the competitors Rockefeller, Warburg, Rothschild would come together in secrecy and hatch what would become the Federal Reserve Act. link

*edit

morkinva: What's your college degree in? Assuming it isn't in finance or economics, what formal education have you had on either subject? *note* whale.to websites don't count as formal education.

Back for the rest us us Joo controlled sheeple, this cracked me up:

Bill Meridian writes:
"In the late 1980s, the "Morton Downey, Jr. Show" invited Eustace Mullins, author of Secret of the Federal Reserve
and myself to speak about the Fed on the air. I declined and Eustace accepted. About a month later, major sponsors
pulled their backing and the show was cancelled (sic). I recall reading an article in which Downey lamented that he could
not understand why his life had suddenly taken such a downturn."

Maybe it's cause he's Morton Downey, Jr.? LOL

n 1989, as fascination with Downey's show had begun to wane, he was involved in an incident in a San Francisco International Airport restroom in which he claimed to have been attacked by neo-Nazis who painted a swastika on his face and attempted to shave his head. Some inconsistencies in Downey's account (e.g. the swastika on his forehead was painted in reverse, suggesting that Downey had drawn it himself in a mirror), and the failure of the police to find evidence supporting his story, let many to suspect that the incident was a hoax and a plea for attention.

 

[Fineghal]

Quote:

"On March 16th, 2007, Congress passed a bill to increase the ceiling on the national debt from $8.2 trillion to $9 trillion. Wait a minute? we already owe $8.2 trillion? Yep. A baby that is born as a U.S. citizen today, comes into the world owing approximately$30,000. But hang on? that's only what the baby owes for our reckless deficit spending in the past (debt). What about all the reckless deficit spending promised into the future (liabilities)?

Comptroller General David Walker, (chief auditor of the United States) says that the unfunded (deficit) liabilities now exceed $50 trillion. So if we add the debt to the liabilities, we end up with every man, woman, and child in the United States owing $194,000.00? even a newborn baby. "Welcome to the world kid! Here's the bill."

Here's the thing though, there is no reason that all our debt has to be payed off. If we said "Hey, the debt must be payed off by 2050. We're going to need to run budget surpluses of 40bn a year for the next 40 something years" then yes, it's a problem and we're hurting our economy, and future generations.

HOWEVER we don't have to pay it off. For one thing, if we had no debt, US bonds wouldn't exist. The only real negatives are: If the ration of debt to gdp gets too high, inflation can go out of control. (Right now aprox. 33%) Further, if debt goes to high, it can crowd out other spending. Basically, the amount the govn't pays in interest on its debt cannot be spent on other more worthwhile things. School systems, highways etc. Right now the percent of Govn't income spent on interest to the national debt is about 1.87%

Further, the ration of our gross national debt to gdp has declined most years since 1945.

In essence, as long as the debt grows at a rate equal or less than the gdp, we're generally fine. And it doesn't get too high.

Example of too high deficit was late 80's when Bush 41 reneged on his promise and raised taxes. He had to, otherwise inflation == sux0rs.

(Did I ruin my point?)

 

[Cerb]

Originally posted by: LegendKiller

Originally posted by: Cerb
We'd be better off without the Fed, IMO. But, that won't stop upper management from moving their support to India, or manufacturing in China to save a few bucks (and sacrifice quality), nor will it stop loyal employees from being kicked out and given the chance to be rehired at lower wages.

I think the Federal Reserve stinks of cartel, but making that to be a near sole problem is folly, and displays a huge problem with conspiracy theories: there tends to be a really nasty big bad guy, rather than tens of thousands of small ones that just happen to be moving in the same general direction.

If you stop buying th Chinese crap, and CC's workers would stand up and make a fuss, things might get better for us. Until then, watch it all flatten.

What does buying chinese crap or exporting labor have anything to do with monetary policy being controlled by the Fed by mandate of Congress or Congress itself?

Nothing. That's the point. I don't see the economy booming, inflation is certainly a problem, and of course precious metals do well--they have a natural rarity combined with industrial needs for them.

But, I don't see the Federal Reserve behind the talking heads about our economy doing well. No one wants it looks bad. Anyone who can (IE, not a pessimist) will try to spin it to look good, even if they aren't consciously attempting to do so. Likewise, anyone who's job depends on it looking good will make it look good. Statistics have a miraculous malleability. The many causes and consequences may be linked by something as simple as an inflation statistic, but I'm not sure I can see how they are linked back to it, nor how the Fed is making it all a horrible nightmare.

 

[3chordcharlie]

Originally posted by: lozina

Originally posted by: JD50
Inflation isn't all bad. Its good for just about anyone that is borrowing money.

Yeah, in some isolated incidents sure. But keep in mind that borrower has to be making income somewhere to pay off that loan and that income is being affected by inflation. Plus don't forget the interest rates on the loan.

Constant, planned inflation (even if it's at a level of zero, which it isn't for a number of reasons) is a great way to have a functioning credit market.

Under a market with uncertain inflation, and sometimes deflation, you have much greater problems for lenders and borrowers to come to an agreement. In fact, under deflation, there may be no reason to lend money at all - simply holding the money, in cash form is a money-making investment.

Gold is as fickle as anything else - have a read up on the pre-gold rush deflationary period, and the bankruptcies it caused, then the significant inflation that happened when gold was found. The 'losers' in the inflationary period got paid back nominal dollars+interest worth less than their initial loan, but the losers in the deflationary period literally lost the shirts off their backs.

Knowing that inflation will be pretty close to 2-3% means you can set a rate based on this, the lender is happy because they get paid, and the borrower gets to pay the debt back in nominal dollars, so as long as the predicted inflation value is a good estimate, there is no 'loser'. With the Fed in place, that inflation estimate is 'good' most of the time.