')Do I have to quote the FED again?
PeakOil is You
Money multiplier makes no sense
Re: Money multiplier makes no sense
by lakeweb » Wed 23 Nov 2005, 20:07:40
$this->bbcode_second_pass_quote('MrBill', '
')Do I have to quote the FED again?
')Do I have to quote the FED again?
Seeing as you have glossed over everything but the following, I guess not.
$this->bbcode_second_pass_quote('MrBill', 'C')ommodities go up and down in value depending on supply & demand and are influenced by seasonality as well as economic cycles. Take the price chart of any commodity, gold, oil, copper, and adjust the price for inflation or look at it a foreign currency or basket of currencies and you will see falls in price as well as increases independent of inflation and/or the value of the dollar. I would suggest you look at the CRB index to start.
Adjusted for inflation? Well, you said it... Adjusted for inflation gold is still $20/ounce. A nice house built in 1950 is still $7,000.
$this->bbcode_second_pass_quote('MrBill', 'i')n a generally falling interest rate environment between 1987 and 2004 which saw Fed funds fall from 18.5% to 1%, now 4%. And the US dollar has both fallen and risen against the euro (legacy currencies), yen and other freely converted currencies.
So? Other currencies are also fiat.
$this->bbcode_second_pass_quote('MrBill', 'R')E backed by a promise to pay. Even under a gold standard, loans are promises to pay in the future in exchange for cash or coin today.
A promise to pay and handing me gold in exchange are two different things. Come on Bill, do you really think we can make good on our debt while we don't produce and the boomer generation rolls into retirement?
$this->bbcode_second_pass_quote('MrBill', 'A')s for your comments about the purchasing power of the dollar you are confusing the dollar's present value against its future value or its ability to hedge against inflation as a future store of value.
Yep, would be pretty dumb to hold a currency that is destined to inflate.
$this->bbcode_second_pass_quote('MrBill', 'I')f you use dollars today to buy appreciating assets, which hedge against inflation, then you will preserve the future value of your dollars today. If you use gold to pay for consumables today, they will not hedge you against inflation in the future.
Now that was just plain silly. Like saying, 'Gold is not an asset, it is money.'
$this->bbcode_second_pass_quote('MrBill', 'O')r do I have to quote the FED?
Well, if you would, it means you have read the material. Then you would understand how the system works. You would also see why we are in a pickle that doesn't seem to have a fix.
What Hath Alan Wrought?
Best, Dan.
