"For the system, money has become either totally free, or extraordinarily cheap, and available to all. " The problem when some people read this kind of assertion is that they would ask themselves "Hey why shouldn't money be totally free ? This should be good no ? Is this guy wanting to prevent people from getting rich ? " So this kind of text can be even more dangerous because it doesn't explain really the problem : it can even mislead to the contrary. This is in fact the same argument than FED uses when FED when wants to increase the rates again. When it is said that "money has become either totally free" the term free is ambiguous. Free is associated in people mind with liberty. This would be true if there wasn't a power like FED or Governement, it doesn't really matter if private or public power since it is the same group of people in either case, who has the power to raise the rate so that "free" mean rather low value of unit of money but globally (think global is obvious) the real value of total money is constant that is to say people are paid for example with paper with less and less real value and have to pay what they buy at a relatively high price since I have already explained that Governement and Corporation have more power than people to maintain a certain price even during deflation and they can even profit from low rates whereas the majority of the mass can't especially during crisis they have no more assets to garantee any credit and if they really need to borrow they will have to borrow at a very high rate and sooner or later the rest of their real assets that is to say their home will be taken especially when the rates will increase. So free rather mean "free slavery". Free would mean liberty only in a stable rate hypothesis : this is an impossible premisce since FED pretend to use rate variation for regulating whereas it is more than regulation: it is variation that could appear as not so great but they use an amplificaton system through the banking system so that the entire economy is leveraged like in stock market. And everybody knows : when you use money you don't really own what happens one day to the majority when crisis arrive ? The crisis hasn't arrived yet but it WILL arrive because it is unescapable like gravitation law. When I speak of crisis I mean the secular crisis which happens every 50 or 100 years I don't mean just a little deflation or inflation we have known until now during the seventies eigthies. So it won't happen straight away there could even be a new stock market rally before (I said that my model has a target of 16000 for the most optimistic projection) but it will only imply one thing: the things will get even more worse after the last mania. My estimation is within ten years. I bet that when the FED will need to increase the rate they would exactly use that kind of argument . And then everybody will claim : what a great man ! This is really a farce and again the same farce that reproduce many times in history. And pro-fed Analysts (that is to say the banks and the big brokers) and so called "Goldbugs" oppose one each other - although I find that the Goldbugs speak more truth - nevertheless even goldbugs groups have a big interest to overfrighten people, they are playing their role when needed. It doesn't mean that there is duplicity with FED it means that the FED know perfectly when to let the Goldbugs group speak and when to make them shut up through their exposition or not to the medias.
Ebay's Board of Directors are sure doing their part in fighting Deflation worries... They gave Ebay CEO Meg Whitman a raise. Her base salary went from $250,000 last year to $990,000 this year.
Thanks for all of your thoughts. It's still perplexing that everywhere you see things are not as cheap as the official numbers might be saying. Sure, computers and electronics get cheaper every year, but that's NOT due to deflation. That's just Moore's Law at work and the exponential increase in computing power every 2 years,etc. blah blah. Overseas manufactured goods are cheap because of cheap labor but that's been going on for decades. But there's commodities inflation. Maybe oil prices will drop? Doesn't look like it. Someon here mention that the reason the US equities market is going up is because the dollar is down. I don't think that's the real reason. When the US dollar is down, foreign investors would most likely SHUN US markets, becaue the REAL RETURN will be LOWER after foreign exchange translation. So, what if your investment gone up 20% but the currency in which is based on is down 20%?! hehe. This is what happened during the emerging markets crisis of 1997-1998. Thai baht , Malaysia rupee fell apart and causing their equity markets to fall even futher because it made it totally unattractive. I think the rise in equities is short coverings or portfolio managers chasing performance as they need to put cash to work. not due to falling US dollars. I think something is afoot here. Fed think it's deflation but things are still pretty expensive. Home prices and services are still high. Like someone mention education, health care, and other services are still way high. Maybe when the housing market collasped then we'll have real deflation.... ?
Healthcare has been rising and will continue to rise as the nation ages and most of us are on insurance. The only way it will stop rising is if there is some sort of strong incentive that convinces the insured (us) to conserve healthcare.
Actually, I beg to differ about deflation in electronics and other hard goods. Moore's Law only applies to chips, but deflation is real in just about any hard manufactured goods, whether it be cars, furniture, refrigerators or guitars (my favorite). The reasons include overcapacity and lack of proportionate demand, as well as an ever increasing competetive landscape with regard to companies that manufacture hard goods. With regard to cheap labor, yes it has been going on for some time, but now we are seeing a new wrinkle. It used to be the U.S. only lost manufacturing jobs to cheap overseas workers, and everyone said it's okay, because we're now a services based economy. But because of the global connectedness created by the internet and telecommunications, any service jobs that can be done via internet, phone, et al are now leaving the U.S. to places like Pakistan, India, etc. Why pay Joe the American I.T. guy $100,000 a year (plus benefits), when you can pay Ashok in India 50 rupees a day to do the same job (and not pay pension, health care or any other associated worker costs)? Every time I call customer or tech service for AT&T, AOL, or my web hosting company, or receive a telemarketing call, it seems 95% of the time now I find myself speaking to someone located in India or Pakistan. Commodities inflation, particularly oil and gold is due to simple supply and demand. Oil probably won't drop below a certain floor, due to the simple fact that the supply of oil left in the planet is limited, and best estimates see us running out in 35 years at current consumption rates. Combined with the potential volatility in Saudi Arabia, oil in fact could continue to move much, much higher. Only if a new, reliable energy source becomes mainstream will the price of oil go down in any meaningful way. As for gold, China is about to amend their law in a few weeks prohibiting citizens from owning and hording gold, much like the U.S. had prior to 1970. I suspect we'll see an additional spike in gold once that happens, and unlike corn, soybeans or paper money, gold can't be grown or created on a whim, so it should continue to rise as demand continues.
If you need to contact the SA or DBA, chances are the call will be directed to India immediately. JP Morgan Chase moved their accounting department to India last month.
I've had more than a couple whiskeys, but this statement I do not understand. Lower demand = higher prices? And, I thought gold mines are (in general) running a chunk below cap, so they can up production should a spike occur? I'd appreciate it if you could explain.
harrytrader said something true: "let's say that Inflation and deflation ALTERNING has somehow a "social" role: to take off excess money from the people"
Perhaps you misunderstood. The current law in China prohibits citizens from owning gold. In a few weeks that prohibition will be lifted, and people can buy and own all the gold they want in China.