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What's this. A discussion using fundamental analysis.MMMMMMMMM. Isn't it
interesting that in market volatility we look for reasons why rather than
our system. I say let's back test it. Back test what? I don't know call
Omega man have him back test it.There is the rub we have no circumstances
that mirror what is going on today. We are on a Starship into new and
uncharted waters. We cannot backtest because no one has been here before.
-----Original Message-----
From: Gonzo <gonzo@xxxxxx>
To: omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>; Kent Rollins
<kentr@xxxxxxxxxxxxxx>
Date: Tuesday, August 11, 1998 7:29 PM
Subject: Re: DEFLATION MYTH
>The idea is to back it with something of value that does not allow you to
>print money out of thin air... Whether it be gold or something else
valued.
>
>
>-----Original Message-----
>From: Kent Rollins <kentr@xxxxxxxxxxxxxx>
>To: omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>
>Date: Tuesday, August 11, 1998 7:07 PM
>Subject: Re: DEFLATION MYTH
>
>
>>Okay, but what about 30 years from now when gold will be a by-product of
>our
>>fusion reactors?
>>
>>Kent
>>
>>
>>At 08:56 PM 8/11/98 -0400, you wrote:
>>>Simple each serialized bill/digital credit is tracked with a certain
>amount
>>>of gold backing it. When you deposit the money in the bank they pay you
a
>>>certain amount to use it.
>>>
>>>If you are intrested in this subject you can study Austrian Economics or
>>>check out the Von Mises Institute.
>>>
>>>Simple supply and demand.. If gold is scarce, your gold backed bills
will
>>>be able to buy many loaves of bread.
>>>
>>>It goes back to the first existance of money. They didn't want to drag
>all
>>>this gold around.
>>>People appeared that were willing to store it for a fee and write a
>receipt
>>>for it. You could then trade the receipt (a paper note) for goods and
>>>services. The person receiving the note knew that he could at any time
go
>>>and redeem it for gold at the storage facility. The fraud started coming
>>>into the picture when they had thousands of notes out backed by gold in
>the
>>>storage faciltiy. Knowing that not all the people are going to redeem
>their
>>>notes, they started printing up more than one note for each unit of gold
>in
>>>storage (fraudulently).
>>>
>>>Worse case scenario -- A run on the banks occurs, this is fine as long
as
>>>the banks are held accountable to repay depositors.
>>>
>>>FDR relieved the banks of ever having to repay depositors (the so called
>>>banking holiday). This was the worst thing he could do. In the free
>market
>>>he should have let the banks that were going fail do just that. And the
>>>ones that made it financially by the the skin of their teeth or better
>would
>>>be the banks that would be the stronger and more fiscally sound.
>>>
>>>And for a side note.... The Roaring Twenties was built on a credit
>bubble.
>>>When you can borrow money cheaply people are willing to expand their
>>>businesses (get loans for new equipment, buildings, employees ect.) This
>>>creates a look of prosperity on the surface. New houses and pizza
>>>franchises going up everywhere. But it is built on credit that must be
>>>repaid. If there is a slump you can't make the payments etc...
>>>
>>>Under the gold standard there are not extreem fluctuations in business
>>>cycles and interest rates..
>>>
>>>La Gonzo
>>>
>>>
>>>-----Original Message-----
>>>From: Kent Rollins <kentr@xxxxxxxxxxxxxx>
>>>To: Gonzo <gonzo@xxxxxx>
>>>Date: Tuesday, August 11, 1998 5:30 PM
>>>Subject: Re: DEFLATION CRISIS... myth exposed <----Actually Stagflation.
>>>
>>>
>>>>Is there enough gold in existence for us to back our money with it?
What
>>>>about all the currencies around the world? Also, if I deposit $100,000
>in
>>>>the bank and the bank lends it out for someone to pay a home builder,
>does
>>>>the reserve need $200,000 or $100,000 in gold to back it up?
>>>>
>>>>Kent
>>>>
>>>>
>>>>At 10:59 AM 8/11/98 -0600, you wrote:
>>>>>The answer is simple get away from fractional reserve banking and
return
>>>to
>>>>>a full gold standard (not the brenton-woods semi gold standard). The
>>>>>problem is that it is to late for the US because you can not run
>deficits
>>>on
>>>>>a gold standard. They wanted powerful money overseas so they allowed
>>>>>foreigners to exchange their money for gold bullion, but wanted
>>>inflationary
>>>>>money at home. This infationary money cheats the people. Why? because
>>>when
>>>>>you first print the money at the top it has a set value that is greater
>>>than
>>>>>when it trickels down through the economy (a lag time effect). Also
>they
>>>>>can take this money that they just printed and buy real assests such as
>>>land
>>>>>and buildings. This is why they wanted to dual standard money.
>>>>>
>>>>>Nixon took us off the Semi-gold standard (Brenton-Woods) because
>>>foreigners
>>>>>became scared about the US economy and decided to exchange their
dollars
>>>for
>>>>>the gold. The government got worried when the gold reserves became
low.
>>>>>Why was the government worried? Because we were using a fractional
>>>reserve
>>>>>system (a fraction of the dollars out there have gold backing them).
If
>>>we
>>>>>had money fully backed by gold whether paper, coin, or digital credit
>you
>>>>>would experience new parallels or prosperity.
>>>>>
>>>>>Why is this gold backed money better? When you print a bill backed by
>>>gold
>>>>>you have to spend time/energy to get the gold. This time/energy/gold
>has
>>>>>greater value. Slapping a bill on a legalized counterfeiting machine
>does
>>>>>not create value.
>>>>>
>>>>>
>>>>>-----Original Message-----
>>>>>From: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>
>>>>>To: bruceb@xxxxxxxxxxxxx <bruceb@xxxxxxxxxxxxx>
>>>>>Cc: Omega List <omega-list@xxxxxxxxxx>
>>>>>Date: Tuesday, August 11, 1998 9:43 AM
>>>>>Subject: Re: DEFLATION CRISIS... myth exposed
>>>>>
>>>>>
>>>>>>bruceb@xxxxxxxxxxxxx wrote:
>>>>>>>Why, because of all the potential threats to the US economy, this is
>by
>>>>>far the easiest >problemto fix.
>>>>>>
>>>>>>> What got us into the deflationary cycle of the 1930's? The
>government
>>>>>>> contracted the money supply at the very time they should have been
>>>>>expanding
>>>>>>> it. What got us out of it? A massive expansion of the money supply
>to
>>>>>pay
>>>>>>> for World War II (some things you learn by trial and error...).
>>>>>>>
>>>>>>> Bruce
>>>>>>
>>>>>>
>>>>>>Bruce:
>>>>>>
>>>>>>Personally, I'm not particularly interested in forecasting where the
>>>>>markets are
>>>>>>going--I'll trade them if they go up or if they go down. And until
now,
>>>>>I've
>>>>>>read your personal opinions of how the world works and found them
>>>>>interesting. I
>>>>>>don't agree with all of what you've written, but that's what makes the
>>>>>world go
>>>>>>round.
>>>>>>
>>>>>>Now, your statement about deflation being simple to end...I was
trained
>>>as
>>>>>an
>>>>>>economist at the University of Chicago. In fact, while there in their
>>>joint
>>>>>>degree program in the late 1970's, I paid for my schooling by doing
>>>>>research for
>>>>>>the BLS. In theory, deflation can indeed be cured simply by printing
>lots
>>>>>of
>>>>>>extra money. But you speak about it as if the economy will react and
>turn
>>>>>on a
>>>>>>dime. It isn't that simple and it doesn't work that way. No matter
what
>>>you
>>>>>>read.
>>>>>>
>>>>>>I gave a speech at a dinner in Princeton, NJ about seven years ago,
and
>>>Dr
>>>>>Paul
>>>>>>Samuelson was also speaking. And during his speech, he described the
>>>great
>>>>>>difficulty they had trying to get the economy to respond to ANY type
of
>>>>>fiscal
>>>>>>stimulus, as well as the printing of huge amounts of 'dollars.' His
>>>>>statements
>>>>>>boil down to one phrase: At some point, deflation is almost impossible
>to
>>>>>>turn--It's like pushing on a piece of limp string. The economy just
>>>doesn't
>>>>>>respond. He was on the shadow open market committee during the
>1930's...
>>>>>>
>>>>>>I've had my stint as an economist and I'll leave that job to someone
>>>else.
>>>>>But I
>>>>>>hope people that are reading your series take the time to think for
>>>>>themselves.
>>>>>>You've presented some interesting views, but unfortunately, you've
>>>>>presented
>>>>>>them as if they are fact and written in stone. They may be your views.
>>>They
>>>>>may
>>>>>>be right or wrong. But in many of the things you have written about
>here,
>>>>>the
>>>>>>way things unfold will not be dictated by anyone's opinion. And that's
>>>why
>>>>>there
>>>>>>is a market place.
>>>>>>
>>>>>>Best,
>>>>>>
>>>>>>Tim Morge
>>>>>>
>>>>>
>>>>>
>>>>
>>>
>>>
>>>
>>
>>
>
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