|
PureBytes Links
Trading Reference Links
|
Ira:
Thanks. I thought only I was paying those high prices. I haven't been back to
brush up on economics since I finished at the University of Chicago in 1980. But
everything I see these days looks like inflation...I sometimes wonder what other
people are looking at when they talk about how we are all basking in such low
prices. Only a few select raw material prices are low--although taking grains as
an example, even the prices for raw grains are turning around and heading
higher. And in their case, the farmers had the 'benefit' of near record low
prices for their crops, while the prices for the finished goods made from their
crops escalated year after year. Those of you that think we have been benefiting
from low grain prices might want to look at a basket of goods that is produced
from a bushel of corn, for example. While raw prices declined the past two
years, the finished products sky rocketed.
Sure, you get more computer for your $3K, but the everyday needs are costing
more and more. I just shake my head every time someone here or in the media
quotes the PPI or CPI ex food end energy. Folks, personally, I need heat, I need
to eat, I need gas for my car and I pay a huge amount for my family's health
insurance.
Last bit: Most people in this country don't think about or understand asset
driven inflation. But there has been a huge amount of wealth created in this
country by the stock market surge for the past umpteen years. That wealth is
simple creation of monetary assets. And what will it translate to? Inflation.
The fun is just beginning, folks.
Best,
Tim Morge
Ira Tunik wrote:
> Your right, there is no inflation. Gas at $2 isn't inflationary, Medical
> insurance up 18% isn't inflationary, housing costs up 16% to 40% depending
> upon where you live isn't inflationary, Dentist visit up 25% not
> inflationary, restaurant prices up 15% to 25% depending on where you are at,
> (exclude McD and Wendy's for you gourmet eaters), when inflation hits are we
> going to be in big trouble. Ira
>
> Daniel Goncharoff wrote:
>
> > It is important to understand the problem faced by Greenspan.
> >
> > The market goes up in an 'irrationally exuberant' way. He says he will
> > take away the punch bowl as soon as he sees signs of the party getting
> > out of hand, ie, when he sees inflation rise.
> >
> > The economy keeps growing at a healthy pace. But inflation doesn't rise.
> > Instead, the increase in wealth from the stock market is reinvested, not
> > spent.
> >
> > This leaves Greenspan with a dilemma. Does he raise interest rates
> > anyway, risking stifling the economy and creating a deflationary
> > environment? Or does he wait for signs of the stock market bubble
> > translating into artificially higher asset prices?
> >
> > Obviously, he has done the latter. But inflation is not there. The
> > wealth effect is much smaller than economists would have expected.
> >
> > The FT recently had an article saying that spending patterns of
> > individuals reflect a 75% expectation of a serious market downturn.
> >
> > Perhaps it would have been better to assume that raising interest rates
> > would not have an important economic impact. Perhaps not...
> >
> > Regards
> > DanG
|