When the U.S. Dollar finally crashes....

[frankhill]

Will YOU be ready?



U.S. National Debt Clock : Real Time (http://www.usdebtclock.org/)

[JustRalph]

Why don't you tell us your previous screen name?

[Saratoga_Mike]

Name a superior, liquid fiat currency. There are none.

[frankhill]

Why don't you tell us your previous screen name?

Ralph

Never posted before today...really. Who do you think I am??

Great minds think alike:)
Frank

[cj's dad]

Why don't you tell us your previous screen name?

You nailed it Ralph; nobody, but NOBODY, jumps into OfFTopic as a Newbie.

[frankhill]

Name a superior, liquid fiat currency. There are none.

Mike,

I am not offering a solution....just a scenario

Frank

Don't think it can't happen

[frankhill]

Curtis

You must be wise...


Frank

Hmmmmm maybe I like talking religion and politics


Am I scaring you:D

[DJofSD]

... we'll all be in a sh*t-load of trouble and there will not be any place in the world to hide from it.

[frankhill]

... we'll all be in a sh*t-load of trouble and there will not be any place in the world to hide from it.


Think about that a little...


Wake up
Frank

[Saratoga_Mike]

Mike,

I am not offering a solution....just a scenario

Frank

Don't think it can't happen

How about the Swiss Franc? Totally unsafe actually - why? What's the size of their banking system relative to GDP? Very dangerous.

How about the Euro? Answer not needed.

The yen? Laughable.

The Chinese yuan? Take a look at the leverage assumed since 2008.

Brazil? Inflation haven.

Indian rupee - interesting currency and the country has much better demographics (younger population) than China. With real reform, the rupee could eventually be an interesting currency, but not now.

How about gold? The reflexive response from fiat currency haters. But I like to measure the price of gold to an inflation index. When I do that, gold is clearly overvalued.

[classhandicapper]

It's going to take awhile because everyone else is printing money (or about to) and our QE program has ended for the time being. The world is in a kind of competitive devaluation period trying to overcome all the accumulated debt.

The Euro situation is probably the worst. There are countries in Europe where the debt load is probably not sustainable, but the country can't even try to print it's way out of the mess because it doesn't have its own currency (Greece being front and center now but there are others).

What's going on there is flat out evil.

The major Euro countries were so hell bent on protecting their banks from their own bad decision making, they effectively forced the Greeks to take on even more debt during the last few years while also forcing austerity that pummeled their economy. So now the Debt/GDP ratio is even higher

If European banks bought a bunch of bad debt from Greece years back, they should have been forced to eat it. They went into the market looking for greater yield (which also comes with greater risk) and then when the debt went bad they took it out of the hide of average Greeks and other taxpayers in Europe to remain hole.

In a just world all these bankers, central bankers, IMF heads, and politicians would be sent to ISIS where they would administer appropriate punishments.

In the next US recession (whenever that occurs), the US Dollar will come under extreme pressures again. It's just a matter of time before the world realizes how unsound central banking and our current monetary system is. What is masquerading as stability is actually a race to the bottom.

[frankhill]

How about the Swiss Franc? Totally unsafe actually - why? What's the size of their banking system relative to GDP? Very dangerous.

How about the Euro? Answer not needed.

The yen? Laughable.

The Chinese yuan? Take a look at the leverage assumed since 2008.

Brazil? Inflation haven.

Indian rupee - interesting currency and the country has much better demographics (younger population) than China. With real reform, the rupee could eventually be an interesting currency, but not now.

How about gold? The reflexive response from fiat currency haters. But I like to measure the price of gold to an inflation index. When I do that, gold is clearly overvalued.

What are you saying, I want to understand.

Frank

[Saratoga_Mike]

Think about that a little...


Wake up
Frank

Do you like posting cryptic messages? If you have a point of view, state it.

How far away is the dollar index from its 50-yr average? Must be radically lower, right? Totally trashed, right? No, the answer is 3%.

[frankhill]

What's going on there is flat out evil.




Yes
Frank

[Saratoga_Mike]

What are you saying, I want to understand.

Frank

If you didn't understand my posting, you shouldn't have started this thread.

[Saratoga_Mike]

It's going to take awhile because everyone else is printing money (or about to) and our QE program has ended for the time being. The world is in a kind of competitive devaluation period trying to overcome all the accumulated debt.

The Euro situation is probably the worst. There are countries in Europe where the debt load is probably not sustainable, but the country can't even try to print it's way out of the mess because it doesn't have its own currency (Greece being front and center now but there are others).

What's going on there is flat out evil.

The major Euro countries were so hell bent on protecting their banks from their own bad decision making, they effectively forced the Greeks to take on even more debt during the last few years while also forcing austerity that pummeled their economy. So now the Debt/GDP ratio is even higher

If European banks bought a bunch of bad debt from Greece years back, they should have been forced to eat it. They went into the market looking for greater yield (which also comes with greater risk) and then when the debt went bad they took it out of the hide of average Greeks and other taxpayers in Europe to remain hole.

In a just world all these bankers, central bankers, IMF heads, and politicians would be sent to ISIS where they would administer appropriate punishments.

In the next US recession (whenever that occurs), the US Dollar will come under extreme pressures again. It's just a matter of time before the world realizes how unsound central banking and our current monetary system is. What is masquerading as stability is actually a race to the bottom.

Class, I like your posts, but you must admit you've been dead wrong about the dollar now for years.

[frankhill]

Do you like posting cryptic messages? If you have a point of view, state it.

How far away is the dollar index from its 50-yr average? Must be radically lower, right? Totally trashed, right? No, the answer is 3%.

I don't talk in riddles. The Dollar will crash hard.....tomorow....5 months .....5 years?

Don't know the timing..
Frank

[Saratoga_Mike]

I don't talk in riddles. The Dollar will crash hard.....tomorow....5 months .....5 years?

Don't know the timing..
Frank

It has to crash AGAINST something (i.e., other currencies). Tell me which one? Hell name three and I can tell you why I think you're wrong. If you can't name one currency the dollar will crash against, I'd say you should hit the books.

[Saratoga_Mike]

Why don't you tell us your previous screen name?

good call R

[Greyfox]

Tell me which one?.

Maybe hasn't a Yen to answer that. :D

[frankhill]

Mike


Crash against What? What part of worthless.... Did you read about Germany in 1923? Hint Wheelbarrows of paper money...

Frank

[DJofSD]

good call R
Who are we thinking it might be?

46zilzal, vet scratch or the guy from Boston that had a drinking problem and quit the board with a farewell and whose handle I don't recall?

[frankhill]

Who are we thinking it might be?

46zilzal, vet scratch or the guy from Boston that had a drinking problem and quit the board with a farewell and whose handle I don't recall?


Not me boys....back to topic please:cool:

Frank

[Saratoga_Mike]

Mike


Crash against What? What part of worthless.... Did you read about Germany in 1923? Hint Wheelbarrows of paper money...

Frank

You, my friend, have either no prospective (comparing German money printing to the current Fed) or you're just trying to stir things up. In either case, you don't seem to have anything of substance to say. Therefore, I'm done replying to you here. Have a good night.

[frankhill]

You, my friend, have either no prospective (comparing German money printing to the current Fed) or you're just trying to stir things up. In either case, you don't seem to have anything of substance to say. Therefore, I'm done replying to you here. Have a good night.

Please do not reply in this thread Mike.

Thank You
Frank

[classhandicapper]

Class, I like your posts, but you must admit you've been dead wrong about the dollar now for years.

Not really. I am a loooong term investor.

Honestly, I was a gold buyer in the $400 range years ago. I was a little early, but the dollar eventually went in the tank (and gold up) during the initial fazes of our QE. I rode it all the way up and said I would hold it even though it might go through a sharp cyclical correction. I did basically hold the entire position through the correction. I have no problem with that.

As soon as Japan and others announced their own QEs, I knew the US dollar would strengthen, but it's not actually "strength". It's that the other currencies are weaker. That's why I continue to hold my gold. There is a subtle difference between being strong and being less weak.

All these currencies will take turns up and down relative to each other depending on where real interest rates are, who's printing more money at any given time, how the respective economies are doing, what the budget looks like long term, etc... I can't predict that. But I can predict that they are all irresponsible boobs and do my best to protect myself from them.

So I want to own "things" (gold real estate, stocks..) not paper (bonds and cash). The dollar is still on the fast track to hell. It's just between stations.

(By the way, I'm pretty sure I posted that I bought more gold in the $1200 months ago, but that's not a market call. It's a long term value call).

[Saratoga_Mike]

Who are we thinking it might be?

46zilzal, vet scratch or the guy from Boston that had a drinking problem and quit the board with a farewell and whose handle I don't recall?

I have no clue, but I don't think it's 46zilzal. Wasn't he a very liberal doctor from Canada? I don't think he'd take issue with our indebtedness. I care about our indebtedness, but I get tired of dollar bashing that is based on headline reading. I don't know those other two posters....sorry I missed the guy from Boston, though - sounds like he was interesting.

[frankhill]

With the way we are printing money.....and we are not coming off of WWI, I reserve the right to compare it to 1923 Germany

Frank

It is a free country....mostly

[Saratoga_Mike]

Not really. I am a loooong term investor.

Honestly, I was a gold buyer in the $400 range years ago. I was a little early, but the dollar eventually went in the tank (and gold up) during the initial fazes of our QE. I rode it all the way up and said I would hold it even though it might go through a sharp cyclical correction. I did basically hold the entire position through the correction. I have no problem with that.

As soon as Japan and others announced their own QEs, I knew the US dollar would strengthen, but it's not actually "strength". It's that the other currencies are weaker. That's why I continue to hold my gold. There is a subtle difference between being strong and being less weak.

All these currencies will take turns up and down relative to each other depending on where real interest rates are, who's printing more money at any given time, how the respective economies are doing, what the budget looks like long term, etc... I can't predict that. But I can predict that they are all irresponsible boobs and do my best to protect myself from them.

So I want to own "things" (gold real estate, stocks..) not paper (bonds and cash). The dollar is still on the fast track to hell. It's just between stations.

(By the way, I'm pretty sure I posted that I bought more gold in the $1200 months ago, but that's not a market call. It's a long term value call).

I don't agree with your fast track comment, but good post.

[frankhill]

Not really. I am a loooong term investor.


As soon as Japan and others announced their own QEs, I knew the US dollar would strengthen, but it's not actually "strength". It's that the other currencies are weaker. That's why I continue to hold my gold. There is a subtle difference between being strong and being less weak.


Hmmmmmm ya think?

Frank

[_______]

Mike


Crash against What? What part of worthless.... Did you read about Germany in 1923? Hint Wheelbarrows of paper money...

Frank

If you're suggesting inflation is a major threat, you'll have to provide some evidence of it in the economy. The threat has been deflation.

The only hyperinflation I have seen is the vocal pitch of people screaming about an inevitable currency collapse for year after year after year.

Here's a rule about predictions: Without a time frame they are useless. You have to accept the chance of being proved wrong. Saying something will happen in the hazy future is meaningless.

[frankhill]

If you're suggesting inflation is a major threat, you'll have to provide some evidence of it in the economy. The threat has been deflation.

The only hyperinflation I have seen is the vocal pitch of people screaming about an inevitable currency collapse for year after year after year.

Here's a rule about predictions: Without a time frame they are useless. You have to accept the chance of being proved wrong. Saying something will happen in the hazy future is meaningless.


I respect your right to voice your opinion.

Frank

[frankhill]

If you're suggesting inflation is a major threat, you'll have to provide some evidence of it in the economy. The threat has been deflation.

The only hyperinflation I have seen is the vocal pitch of people screaming about an inevitable currency collapse for year after year after year.

Here's a rule about predictions: Without a time frame they are useless. You have to accept the chance of being proved wrong. Saying something will happen in the hazy future is meaningless.

Hyperinflation is unknown in countries that have turned their money printing presses loose?

Frank

[Saratoga_Mike]

If you're suggesting inflation is a major threat, you'll have to provide some evidence of it in the economy. The threat has been deflation.

The only hyperinflation I have seen is the vocal pitch of people screaming about an inevitable currency collapse for year after year after year.

Here's a rule about predictions: Without a time frame they are useless. You have to accept the chance of being proved wrong. Saying something will happen in the hazy future is meaningless.

People lack perspective. They need to look at the Fed's balance sheet as a % of GDP over time. And I like your rule.

[DJofSD]

People lack perspective. They need to look at the Fed's balance sheet as a % of GDP over time. And I like your rule.
There was a tidbit in the news this week, and, if I recall correctly, it was somewhere between 40 and 50% of GDP.

[frankhill]

There was a tidbit in the news this week, and, if I recall correctly, it was somewhere between 40 and 50% of GDP.


Sooner or later we will realize that the party is over...ready or not

Frank

[classhandicapper]

The inflation vs. deflation debate is a very good one.

This is the way I see it.

Many countries are so indebted (public and private sector), the free market is trying to correct the excesses in a deflationary way. It's rather basic. If you can't support your debt load you eventually go bust, which in turn puts more pressure on others and they goes bust etc... until all that's left is the prudent, wise, responsible, businessmen and households that can. That's a debt deflation. They can be minor or they can be severe depending on how big the excesses were.

In order to combat that, governments have been expanding debt and central banks have been printing money and manipulating interest rates to help people carry their debt loads, encourage them to borrow even more to stimulate activity, etc..

So we have huge deflationary forces from the free market trying to straighten out the mess doing battle with huge inflationary forces from government/central banks trying to prevent it (and IMHO potentially make the excesses even larger and more difficult later) .

The reason so many people have been wrong on inflation is that there hasn't been much precedence for this in the US. Every time central banks have behaved like this in the past it caused inflation. But in those other cases, there were no massive deflationary forces in opposition. We are in uncharted territory.

The other reason inflation hasn't shown up yet is that some of the new money is being directed at stocks and bonds instead of the real economy. So you could say there IS inflation, but it's asset inflation, not CPI inflation.

Finally, a lot of the money is not flowing anywhere. The fed printed it, the banks took it, and then they sent it back to the Fed as excesses reserves. That's a little complicated, but think of it as a huge pile of dynamite that hasn't been used yet, but could someday set off an inflationary explosion.

No one knows how this is going to resolve itself because it depends on the actions of government, central bankers, and people in the future.

All you can do is as an investor is understand that we have a mess and try to protect yourself no matter how it resolves itself. That way you are one of the last men standing. IMO, the main thing you should do is stay away from debt or anything that is highly leveraged.

[Saratoga_Mike]

There was a tidbit in the news this week, and, if I recall correctly, it was somewhere between 40 and 50% of GDP.

It's 24% of nominal GDP, significantly smaller in size than the BOJ's balance sheet.

[classhandicapper]

It's 24% of nominal GDP, significantly smaller in size than the BOJ's balance sheet.


What was the percentage in 2007?

[Saratoga_Mike]

What was the percentage in 2007?

From memory 6% to 10%. I will get you an exact number. Wrong question, though, imo. Where was it in 1948? What happened to inflation in 1949, 1950, 1951, 1952, 1953, 1954 and 1955? You would have predicted massive inflation in 1950. Your case would have been much, much more powerful at that point in time than now. You could have argued post WW II economic activity would drive the velocity of money higher and inflation would run wild. Never happened.

Study the BOJ's balance sheet. Their balance sheet was 25% of GDP in 2002. Where was the hyperinflation in 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010 and so on?

[sammy the sage]

Well Frank...to TO BE perfectly frank if I may....I totally AGREE w/your thinking...to A point...

that being...if one agrees w/you...NOW WHAT....your answer please....what ARE YOU doing to be ready....you STARTED it....now at least have the decency to LEAD....

[frankhill]

Well Frank...to TO BE perfectly frank if I may....I totally AGREE w/your thinking...to A point...

that being...if one agrees w/you...NOW WHAT....your answer please....what ARE YOU doing to be ready....you STARTED it....now at least have the decency to LEAD....

Sam

I don't profess to have the answers. For me, I am salting away some "junk" silver coins, working on buying some land, and becoming a better gardener. I don't keep a lot of money in the bank, and I am very skittish regarding the stock market.

I may be crazy but I am truly scared of what could happen when, as I referred in an earlier post, it is realized that the "party is over".


Frank

[thaskalos]

I don't have any worries about the crashing dollar. I have converted my money into Greek drachmas.

[frankhill]

I am not saying we in the United States are the only people in danger...I just happened to come across this today.

http://www.lewrockwell.com/2015/02/david-stockman/the-global-economy-will-be-rocked/

[Hoofless_Wonder]

Name a superior, liquid fiat currency. There are none.

Hmmm. Name a fiat currency that hasn't eventually failed. There are none.

For those thinking the U.S. dollar is in no danger, the assumption is that the U.S. economy remains strong and the dollar remains the world's reserve currency. While the dollar may enjoy a respite in the near-term as the haven of last resort, it's being undermined as the rest of the world's economies are changing to function without Wall Street, the Swiss or "The City". The dollar also has to contend with economic policies based on cheap energy, questionable measurements and never ending expansion, all of which are complete folly.

That sickening feeling in your stomach is the symptom of the Empire's roller coaster having reached the top and beginning the acceleration downwards. There are no seat belts. The crash or great contraction is coming, and whether one has precious metals, guns & ammo, arable land, or faith in a supernatural being's intervention, it may not make much difference versus simply keeping your head in the sand and hoping for the best.

[frankhill]

.

That sickening feeling in your stomach is the symptom of the Empire's roller coaster having reached the top and beginning the acceleration downwards. There are no seat belts. The crash or great contraction is coming, and whether one has precious metals, guns & ammo, arable land, or faith in a supernatural being's intervention, it may not make much difference versus simply keeping your head in the sand and hoping for the best.


Agreed. However having your head out of the sand is better in my opinion.

Frank

[Saratoga_Mike]

Hmmm. Name a fiat currency that hasn't eventually failed. There are none.

For those thinking the U.S. dollar is in no danger, the assumption is that the U.S. economy remains strong and the dollar remains the world's reserve currency. While the dollar may enjoy a respite in the near-term as the haven of last resort, it's being undermined as the rest of the world's economies are changing to function without Wall Street, the Swiss or "The City". The dollar also has to contend with economic policies based on cheap energy, questionable measurements and never ending expansion, all of which are complete folly.

That sickening feeling in your stomach is the symptom of the Empire's roller coaster having reached the top and beginning the acceleration downwards. There are no seat belts. The crash or great contraction is coming, and whether one has precious metals, guns & ammo, arable land, or faith in a supernatural being's intervention, it may not make much difference versus simply keeping your head in the sand and hoping for the best.

As _____ already pointed out, timing is everything.

My head isn't in the sand. I just know the amount of leverage carried by major countries around the world. In addition, I've examined the size of various central banks' balance sheets, now and over the course of time. I'm sure you've study these facts, too, and we've just drawn different conclusions. I think the difference is your religious about your views on these matters, whereas I readily admit I could be wrong.

[ReplayRandall]

If you want to follow the "real" world currency exchange, I would highly suggest you look at the following site, and get acquainted with the definition of "SDR":
http://www.imf.org/external/np/fin/data/rms_five.aspx

[Hoofless_Wonder]

As _____ already pointed out, timing is everything.

My head isn't in the sand. I just know the amount of leverage carried by major countries around the world. In addition, I've examined the size of various central banks' balance sheets, now and over the course of time. I'm sure you've study these facts, too, and we've just drawn different conclusions. I think the difference is your religious about your views on these matters, whereas I readily admit I could be wrong.

It was not my intent to imply anyone's head is in the sand, at least not in this thread. My view is that whether one is a "prepper" or can't wait for the next episode of Keeping Up With The Kardishians", in the end it may not matter. I used to think like frankhill, and believe that keeping my head out of the sand was better - but now I really believe that "ignorance is bliss".

I'm hardly "religious" about my views, if by that you mean I hold them in blind faith. I do not, and as a former meteorologist and suspect horseplayer, I'm more than humble enough to admit I could be wrong.

My overall view could be summed up in two words - "peak oil" - though that's not the basis for my entire outlook. A great transition is underway, and I'm quite doubtful it occurs smoothly and without violence. The crashing of the dollar, waking up one day with 401K and IRA accounts nationalized, bank holidays, currency crises are all on the table, and short of a Constitutional Convention are baked in the cake - IMHO, which of course could be totally wrong....

[classhandicapper]

From memory 6% to 10%. I will get you an exact number. Wrong question, though, imo. Where was it in 1948? What happened to inflation in 1949, 1950, 1951, 1952, 1953, 1954 and 1955? You would have predicted massive inflation in 1950. Your case would have been much, much more powerful at that point in time than now. You could have argued post WW II economic activity would drive the velocity of money higher and inflation would run wild. Never happened.

Study the BOJ's balance sheet. Their balance sheet was 25% of GDP in 2002. Where was the hyperinflation in 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010 and so on?

Inflation did rise during WW2.

Also, There is always a delay between massive money printing and actual inflation (money can flow into assets first, human behavior is a factor, reserves matter etc...)

The case of Japan is simple. It's exactly what I said in my previous post on inflation vs. deflation in the US now. The Japanese have been trying to recover from a massive equity and real estate bubble in the late 80s all along. Rather than let the free market DEFLATE and wipe out all the excesses in a depression like bust, they chose to fight it by supporting "zombie banks" that should have liquidated, with massive increases in government spending, and monetary printing. All that inflationary action is offsetting attempts by the free market to deflate.

The real question is whether inflationary actions like that simply extend what would have a short lived but massive bust of a few years into a 20-30 year milder debacle or create new excesses that will eventually cause an even bigger inflationary/deflationary bust than what they were trying to prevent to begin with.

That's the question that's going to be answered in Japan, Europe, and the US eventually. There's almost no question that Keynesian actions like that extend the milder pain for much longer, the question is whether it's worth it. It's not worth it if the patent dies from cancer when a quick heart attack and recovery was the alternative.

[Robert Goren]

Inflation did rise during WW2.

Also, There is always a delay between massive money printing and actual inflation (money can flow into assets first, human behavior is a factor, reserves matter etc...)

The case of Japan is simple. It's exactly what I said in my previous post on inflation vs. deflation in the US now. The Japanese have been trying to recover from a massive equity and real estate bubble in the late 80s all along. Rather than let the free market DEFLATE and wipe out all the excesses in a depression like bust, they chose to fight it by supporting "zombie banks" that should have liquidated, with massive increases in government spending, and monetary printing. All that inflationary action is offsetting attempts by the free market to deflate.

The real question is whether inflationary actions like that simply extend what would have a short lived but massive bust of a few years into a 20-30 year milder debacle or create new excesses that will eventually cause an even bigger inflationary/deflationary bust than what they were trying to prevent to begin with.

That's the question that's going to be answered in Japan, Europe, and the US eventually. There's almost no question that Keynesian actions like that extend the milder pain for much longer, the question is whether it's worth it. It's not worth it if the patent dies from cancer when a quick heart attack and recovery was the alternative.Nice theory. Too bad the facts and history say that it is 100% wrong.

[Valuist]

Nice theory. Too bad the facts and history say that it is 100% wrong.

Like where? In Greece now? In other countries with crumbling currency?

[classhandicapper]

Nice theory. Too bad the facts and history say that it is 100% wrong.

What are you talking about?

Japan definitely had a massive asset bubble in stocks and real estate in the late 80s. Prices are still not even back to those levels decades later.

Japan has definitely been fighting deflation ever since then by running huge stimulus programs. Their government debt to GDP ratio has been growing for years, interest rates have been ridiculously low for a long time, and they've been printing money on and off ever since to try to keep their economy afloat (including now).

It's classic pushing on a string.

The deflationary pressures within the free markets are fighting against the government's and BOJ's efforts to reflate. So far all they have to show for it is a lot more debt, a weak currency against gold, and a still comatose economy.

The US is close to 7 years into the same exact policy with similar results.

We have negative real interest rates that that are slowly eating away at people's savings, massively more federal debt to GDP than when we started, a currency that has depreciated against gold, and despite it all they are still scared shitless to raise interest rates to normalized levels because it might kill the economy and expand the deficit again as rates rise on all that new debt.

If the economy weakens where are our bullets to fight it given that we already have interest rates close to zero and massively higher debt to GDP ratio?

Do we run 2 trillion dollars deficits, set interest rates to nominal negative levels (which is what Europe is being forced to do), and have a QE infinity?

At what point do you admit that what you are doing is preventing a crash but distorting the economy worse for the long term?

What happens if this grand experiment fails?

[Saratoga_Mike]

Inflation did rise during WW2.

Also, There is always a delay between massive money printing and actual inflation (money can flow into assets first, human behavior is a factor, reserves matter etc...)

The case of Japan is simple. It's exactly what I said in my previous post on inflation vs. deflation in the US now. The Japanese have been trying to recover from a massive equity and real estate bubble in the late 80s all along. Rather than let the free market DEFLATE and wipe out all the excesses in a depression like bust, they chose to fight it by supporting "zombie banks" that should have liquidated, with massive increases in government spending, and monetary printing. All that inflationary action is offsetting attempts by the free market to deflate.

The real question is whether inflationary actions like that simply extend what would have a short lived but massive bust of a few years into a 20-30 year milder debacle or create new excesses that will eventually cause an even bigger inflationary/deflationary bust than what they were trying to prevent to begin with.

That's the question that's going to be answered in Japan, Europe, and the US eventually. There's almost no question that Keynesian actions like that extend the milder pain for much longer, the question is whether it's worth it. It's not worth it if the patent dies from cancer when a quick heart attack and recovery was the alternative.

Please re-read my post. I asked about inflation AFTER WW II (I believe I asked about 1950 and the following 5 or 6 yrs). Study the Fed's balance sheet as a percent of GDP over time. On your "real question" paragraph, we entirely agree!

[Saratoga_Mike]

Like where? In Greece now? In other countries with crumbling currency?

The euro was a horrible idea. It's amazing that countries were dumb enough to go along with it. Ceding one's central bank powers is ceding one's economic sovereignty. But you and Class should like what's happening in Greece. Love it, actually, no? They aren't being allowed to print their way of their mess - I assume you agree with that, no?

[classhandicapper]

Please re-read my post. I asked about inflation AFTER WW II (I believe I asked about 1950 and the following 5 or 6 yrs). Study the Fed's balance sheet as a percent of GDP over time. On your "real question" paragraph, we entirely agree!

My knowledge of the 50s is very limited.

25-30 years ago, I spent some time studying stock market history. In the 50s, stocks were very cheap based on PE ratios and interest rates were extremely low. That was kind of an anomaly based on other research I had done. It made little sense to me.

The only thing I read was that there was some kind of government program to manipulate interest rates on government debt down during some part of that period. It was probably not much different than some of the stuff that's going on now. The details of the program and what else was going on at the time that could account for an expansion of the Fed's balance sheet, a relatively cheap stock market, and no inflation is outside my knowledge.

I know that these things can be very unpredictable. There is no neat formula for where new money goes if anywhere at all. Sometimes it's real estate, sometimes it's stocks, sometimes it's junk bonds supporting excessive telecom or oil production, and sometimes it's the real economy and CPI.

My best guess about the 50s has always been that people were so shell shocked from the depression and WW2, everyone was sitting on money and afraid to do anything risky at all. So if the Fed balance sheet expanded and the government was manipulating interest rates down, perhaps it was similar to now in that excess reserves were piling up because no one wanted to lend or borrow. But that's a theory based on a theory. :lol:

[Saratoga_Mike]

Class - you should check out the St Louis Fed's website (if you trust such a dubious source) - tons of historical info. It's the St Louis FRED (Fed Reserve Economic Database, I believe). Economic history didn't start 30 years ago. That's a general statement and not meant to criticize you. There's just a lot of data out there worth examining, imo.

[classhandicapper]

Class - you should check out the St Louis Fed's website (if you trust such a dubious source) - tons of historical info. It's the St Louis FRED (Fed Reserve Economic Database, I believe). Economic history didn't start 30 years ago. That's a general statement and not meant to criticize you. There's just a lot of data out there worth examining, imo.

I've used FRED a little for my research. At the time, I was mostly interested in stock market history, not economics. Value Line used to give you this great chart spanning stock market history going back to before the 20s when you subscribed (which I did looking for ideas). I used FRED mostly for interest rate history.

I got interested in currency and banking issues later as I started getting exposed to Austrian Economics, the Mises Institute, Rothbard etc.. That was probably 15 years or so ago. Most of my thinking on economics is drawn from those guys, but with a few twists.

My investment philosophy incorporates both.

I'm a bottom up value investor in terms of picking stocks (stole as much as possible from Warren Buffett), but I try to understand the long term "big picture" from an Austrian perspective to avoid macro storms that may be in the future that I can't time.

I think that's a good formula. It comes down to how skilled I am at picking undervalued companies or stealing great ideas from people whose opinion I respect.