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Lifer
- Jun 3, 2002
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Originally posted by: bamacre
:laugh:
That's almost sig-worthy.
Yeah, the economy is super stable right now.
The Fed does nothing but keep us in booms or busts.
And speaking of abject falsehoods, the bolded statement above is certainly one of them. I'd love to see evidence that booms and busts didn't exist before 1913. No doubt you'll bitch out of the discussion like your other buddy, per usual. :laugh:
bamacre
Lifer
- Jul 1, 2004
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Originally posted by: Evan
Originally posted by: bamacre
:laugh:
That's almost sig-worthy.
Yeah, the economy is super stable right now.
The Fed does nothing but keep us in booms or busts.
And speaking of abject falsehoods, the bolded statement above is certainly one of them. I'd love to see evidence that booms and busts didn't exist before 1913. No doubt you'll bitch out of the discussion like your other buddy, per usual. :laugh:
Better yet, explain the causes of the booms and busts before 1913.
Originally posted by: bamacre
:laugh:
That's almost sig-worthy.
Yeah, the economy is super stable right now.
The Fed does nothing but keep us in booms or busts.
So says someone who knows nothing about Fed operations. Do yourself a favor and read something to see how Fed manages inflation, currency (to a lessor degree depending on which country you are talking about) to keep things stable.
Oh and just because Fed has some tools and reserves to manage things doesn't mean it's an all powerful being that will give you good time forever. Maybe you should ask Ron Paul or Jim Rogers for that, I am sure they know all the answers.
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Lifer
- Jun 3, 2002
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The onus is on me to explain a statement you made? Please discuss what your original statement was referring to, since I can't possibly have a discussion with you if I don't know what your original statement actually meant. You typed out that ish, back it up.
Boom and Busts are the American Way!!! We should get use to them instead of feeling entitled to forever growing GDP. When you have the FED and government tinkering in natural market forces you tend to get a bigger bubble that becomes much worse.
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Lifer
- Jun 3, 2002
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Not supported by actual data, which shows just the opposite in fact; more severe busts (especially deflationary busts) before 1913. And you might as well throw the 21 recession and Great Depression in there since the Fed wasn't nearly up to the task then as it is now.
Then why don't you go get a chart of the average dividend yield per year on the S&P since 1971 and then calculate the total return since 1971 assuming dividend reinvestment
First
Lifer
- Jun 3, 2002
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It has already been done for you, read the thread. Stocks for the Long Run, 4th edition Chapter 1 page 6. You don't even have to purchase it, visit a local bookstore and read the chart free of charge. Hell, amazon.com allows free peaks here: http://www.amazon.com/gp/reade...sib_dp_ptu#reader-link
You're dumb, a relative graph of two goods doesn't have to be adjusted for inflation, the amount of dollars beside them is a constant variable for both.
As for dividends, you're right. Gold isn't an investment. You didn't say anything about returns, though, and not every stock offers a substantial dividend. A comparison of principal at least gets the point across: markets should be timed to some degree, stocks can collapse at the most inopportune time for investors.
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Lifer
- Jun 3, 2002
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Huh? I'm not sure what part about gold being "destroyed by stocks over any >15 year period" you didn't understand as being related to and specifically about ROI. The whole bottom line of investing in anything is ultimately to maximize return. To gloss over mean dividend returns because they don't apply to all stocks is irrelevant, a laughable mathematical stance to take when there are boatloads of stocks that have some form of payout ratio. To completely ignore compound interest is utter hilarity too btw. Idiot.
In any case, I do like the backtrack on how, suddenly, you never meant to talk about "returns". What the hell else would we be talking about? :laugh: No, investing heavily into gold as a hedge against inflation does not mean you aren't concerned with returns if you're going to use that lame, contradictory excuse. Investing in gold is a type of ROI even if it's purely protection against inflation.
BansheeX,
You're absolutely right a graph comparing the relative prices of two GOODS doesn't have to be adjusted for inflation. But your not talking about two goods your talking about one good and an INDEX of INVESTMENTS. Take the S&P500 and the AVERAGE dividend and gold gets destroyed per Evans argument.
Do yourself a favor and learn about compound interest, it will make you an exponentially more successful investor.
Evan you should to be more specific; gold is a "unique" catastrophe hedge not necessarily an inflation hedge (stocks can take care of inflation), i.e. it still buys the same amount of bread it did in 1000 BC.
OT:
Given we have a fiat currency printing money is relative. The important questions are: are we issuing debt faster or slower; and is us issuing debt faster or slower than everyone else putting our economy in a better situation than everyone else? Given the dollars recent strength vs everything else it's pretty easy to see that the short term answer is yes we are doing the right thing.
You're absolutely right a graph comparing the relative prices of two GOODS doesn't have to be adjusted for inflation. But your not talking about two goods your talking about one good and an INDEX of INVESTMENTS. Take the S&P500 and the AVERAGE dividend and gold gets destroyed per Evans argument.
Do yourself a favor and learn about compound interest, it will make you an exponentially more successful investor.
Evan you should to be more specific; gold is a "unique" catastrophe hedge not necessarily an inflation hedge (stocks can take care of inflation), i.e. it still buys the same amount of bread it did in 1000 BC.
OT:
Given we have a fiat currency printing money is relative. The important questions are: are we issuing debt faster or slower; and is us issuing debt faster or slower than everyone else putting our economy in a better situation than everyone else? Given the dollars recent strength vs everything else it's pretty easy to see that the short term answer is yes we are doing the right thing.
I just looked at that graph. It ends in 2001, apparently at the height of the dot com bubble... This graph does not take into account the stagnation we've had in the 2000's and doesn't take into account the huge drop we've had in 2008-2009.
First
Lifer
- Jun 3, 2002
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Read the graph carefully, time on the x-axis is measured until December 2006.
And there is literally no mathematical way to claim gold has made up 200+ years of ground against equity in 07, 08 and 2 months in 09. It's as mathematically impossible as it gets. See Figure 1-4, same chapter.
Look, this is not sound logic. You do not say jumping off a cliff is a good thing because of the wind in your hair 90% down just because the long-term consequences haven't been fully realized yet. Madoff could have used the same logic all the way until the end: he was continuously doing better for himself at the expense of his investors, but he was not doing the right thing at any point. We are Madoff with a printing press, there is no difference.
Better yet, explain the causes of the booms and busts before 1913.
The 2nd Bank of the United States caused the American republic's first nationwide recession:
Andrew Jackson deemed the central bank:
and decided he would abolish it, but the head of the bank, Nicholas Biddle fought back:
Biddle's plan succeeded and Jackson was blamed initially, but when the people found out Biddle intentionally caused the crisis, faith in Jackson was restored and the central bank was abolished in 1836 (well actually, it was restructured into a state bank).
It was fortunate that the people found out the truth b/c the lawmakers were bought and sold by Biddle:
Jackson succeeded in routing out what he called a "den of vipers and thieves", but didn't clear out the vipers' nests and eggs and so the infestation would later return.
The Jackson administration initiated a series of monetary reforms in 1836 for the purposes of curbing inflation and of compelling the nation to return to gold and silver coins for everyday use, and so all banks were required to stop issuing paper notes under $5 (later increased to $20). Under the central bank, total money in circulation had risen by 84% in just four years. It was time to reverse the inflation, as Paul Volker would later do as Fed chairman in combating the rabid inflation of the 1970's. Just as in Volker's case, the rapid contraction of credit (16% reduction of money supply in the first year) caused a recession - the panic of 1837. Predictable, but no pain, no gain (but it's only short term pain if the government stays out of the way like it should and doesn't increase the money supply later on). The U.S. can curb inflation and budget deficits by returning to the gold standard. There are many ideas on how to make this happen. For example, Greenspan, although he long ago abandoned ties to the free market and became and became a central planner both in fiscal and policy sense (to the detriment of all), wrote an article during the Reagan years on how to transition back onto the gold standard:
http://www.financialsense.com/.../straka/2005/0901.html
Though the central bank was gone, what followed were laws that led to a "halfway-house" towards central banking banking which would lead to further instabilities:
- Paper money to gold ratio was declared 2:1 (I'm not sure if this applied to all banks). Not perfect, but livable. The real problem was that "checkbook money" issued by banks had no effective limit. This expansion of credit led to foolish speculative behavior and instability
- The precedent for the Federal Reserve was established when in the 1850's when instead of gold and silver, banks in some states were allowed to base their money supply not on gold and silver, but on government paper securities
- more State chartered banks were established, backed not by gold and silver but money created out of thin air via bonds (note that there were already some state chartered banks established before the 2nd Bank of the U.S. was abolished)
- 'Free banking' was established but is a misnomer. These banks didn't receive state charters, but when being established they were often required to make loans to the state and were under government controls and regulations and supports. These banks played shell games with their gold reserves, and instead of the state exercising its power of enforcing contracts (in this case, it should have been arresting and seizing assets of those bankers who failed to exchange bank notes for gold), it allowed the banks to play their games under the pretense of government 'regulation'.
- in 1862, Greenbacks were issued by the govt. as legal tender for private debts (but not usable for paying taxes). Over the course of the war, the purchasing power fell by 65%
- the government issued tariffs for European goods which badly hurt the Southern economy, and this helped kick off the start of the Civil War. In 1863 the National Banking Act was established. Rather than a single central bank, now there were many national banks. Similar to how the Fed and Treasury operate now, bonds and dollars (United States Bank Notes) were 'swapped' and these notes were declared legal tender.
Post-war inflation, rampant speculative investments, a large trade deficit, & ripples from economic dislocation in Europe caused the panic of 1873. Collectivists sought bailouts & inflation of the money supply:
http://www.harpweek.com/09Cart...?Month=October&Date=11
There's more to cover, but I'm getting tired of writing this, but the bottom line is that we didn't have a truly sound money policy prior to the Fed, and that was a major cause of economic distress. The Founding Fathers knew the dangers of paper money and that is why in the Constitution is says that only gold and silver can be legal tender. And despite some post-civil war economic turmoil, many believe we did well prior to the Fed. Even a central planner like Greenspan:
http://www.youtube.com/watch?v=caIgP3Mnb6g
and Volcker:
"It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with 'free banking.' The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy."
Yes we are creating too much money out of thin air now:
http://blip.tv/file/1800745/
and making all the same mistakes the French did in 1789:
http://www.financialsense.com/...s/casey/2006/1228.html
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