Comments on: No alternative to inflation http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: robert zito http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-8094 Tue, 17 Feb 2009 19:45:04 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-8094 John Kemp, would your advice to take out a mortgage now–ahead of coming inflation—-hold true for individuals on fixed incomes—if it were a rental income unit and I lived in half? Thanks, Robert PS I erred and sent this to Nick

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By: robert zito http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-8093 Tue, 17 Feb 2009 19:40:11 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-8093 Nick, as regards your recommendation to take out a mortgage, would that apply as well to people on fixed incomes–especially a rental unit if one lived in one unit and rented the other. Thanks, Robert

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By: David http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-8088 Tue, 17 Feb 2009 17:45:42 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-8088 Whatever happened to the concept that money simply represents value of an object or service to either another individual or to society at large? When you de-link money from a durable benchmark you begin to see all kinds of smoke and mirror inverted pyramids which are either illusionary, unstable or both. If I bought my house for 50k and it’s values seemed to inflate to 150k over the next 10 years should I expect it to be worth more than 50k when our country hits economic hard times? Unless you allow the virtual economy to return to some semblance of reality there will always be the potential for unacceptable instability.

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By: Joe http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-8056 Mon, 16 Feb 2009 23:11:30 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-8056 Nick – your comment is spot on. However since the system is not about to change anytime soon it would be better to use it instead of fighting it. Take out a big mortgage. Buy a second home as rental property. The more long term fixed rate debt you have the better. Especially at today’s low rates with inflation just around the corner.

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By: Henry Ford http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-8053 Mon, 16 Feb 2009 22:25:26 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-8053 There appear to be two basic forms of economies/governments: (1)Free Enterprise, Non-inteference in economic activity by government,(2) Planned economies, government economists decide what should be manufactured, government economists and politicians decide what the workers should be doing. The greater government interference the less freedom the citizens have, but, as in modern China, development and standard of living may be higher IF THE GOVERNMENT DECISIONS ARE RIGHT! The USA, starting with our Revolutionary War and Constitution opted for more personal freedom and less government interference in our commercial and personal lives. As Karl Marx stated in Das Capital, the ‘Bible’ for Communists/Socialists, “Capitalism, without government controls, leads to overproduction and great depressions and mainly the workers suffer for the errors of their employers”. Nevertheless, I for one, would like to have personal freedom and LET THE MARKETPLACE CREATE ITS OWN CORRECTIONS WHEN REQUIRED, WITHOUT GOVERNMENT INTERFERENCE. We Americans now live in the worst of the two worlds I describe. We have developed too much government interference in our business activities as well as our personal lives. This part is plain Socialism. “Government knows best”. The government does not permit the normal contractions of a Free Market to cure and restore the marketplace. More Socialism. But none of the possible advantages of Socialism, such as good universal medical services, or good public school education, etc. So we are just going down the drain on all scores. This type of incompetence in government, and the rising class of the superrich and then the rest, ‘modestly poor’, will lead to riots in the streets and violent revolution. I predict the path we are taking will lead to revolution and violence and forceful change of government within 50 years. The working people will, sooner or later, demand blood to punish whoever they think brought about their pain and distress. Even now the Country is filled with nasty and crooked law enforcement, army reserves, etc. to keep the public in fear and in line. Only the politicians have any freedom. How long can this last?

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By: Nick http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-8049 Mon, 16 Feb 2009 18:52:24 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-8049 All that bloviating and I don’t think I saw one mention of the impact of inflation and deflation on savings. No concern or mention about those that don’t recklessly spend every cent they can borrow on things they don’t need. The focus on the careless spendthrifts in this country never ceases, and surely just reinforces their egotistical views. So the only solution is to devalue the money supply, thereby canceling the debt of the spendthrifts, and canceling the savings of the savers? How about letting the spendthrifts drown, so we all have a good example of why it’s bad to spend every cent you can borrow as fast as possible? The two biggest players that have caused the current economic debacle have been spendthrifts and stupid bankers. The stupid bankers have been getting burned without sympathy; let’s see the same for the spendthrifts. Why did the median house in my neighborhood get bid up to 600k? Because dumb people were given easy credit, that they often didn’t work a day for (zero down!). Ever ask the question of what that has done to the outlook for savers? Savers are in the same markets, competing for the same houses, and unless they were willing to spend as foolishly as the spendthrifts, they could not buy a house. Is the American dream owning a house, or is it owning a house by leveraging yourself into massive debt? Is the American dream owning a house by leveraging yourself into massive debt and then having a socialistic government bailing you out with your neighbors’ and your grandchildrens’ tax dollars? Recessions/depressions are horrible things, especially for spendthrifts, but also for savers. But a society that continually coddles foolish spendthrifts at the expense of savers is more horrible. We need to let the spendthrifts burn and let deflation run its course, and when we come out on the other side, our kids will be able to afford houses – once they’ve earned them.

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By: saul http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-7960 Sat, 14 Feb 2009 19:13:17 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-7960 mr. Robert is correct in his commnent. it is short, but explain the real situation of ecomic problem we are in right now. John Kemp is wrong on everything. does he know about fiat money, or it is just that his readers are ignorants of the economic system, and he is enterteining them with nonsense. there are several alternatives to inflation indiviudally speaking, and for the entire economic system if you will. indiviudally, there is the alternative of gold, silver and commodities.(silver and gold are not just commodities but also real money). if one want to keep the value of our own money, better start trading in commodities, silver and gold.
do not save in any fiat money!! by SAUL.

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By: saul http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-7958 Sat, 14 Feb 2009 18:50:14 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-7958 mr. Robert is correct in his commnent. it is short, but explained the real situation of ecomic problem we are in right now. John Kemp is wrong on everything. does he know about fiat money, or it is just that his readers are ignorants of the economic system, and he is enterteining them with nonsense. there are several alternatives to inflation indiviudally speaking, and for the entire economic system if you will. indiviudally, there is the alternative of gold, silver and commodities.(silver and gold are not just commodities but also real money). if one want to keep the value of our own money, better start traiding in commodities, silver and gold.
do not save in any fiat money!! by SAUL.

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By: Robert http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-7906 Fri, 13 Feb 2009 22:10:39 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-7906 Mr. Kemp’s article presents an oft repeated remedy to our nation’s overwhelming public and private debt. However, it ignores an important factor. Our monetary system is entirely composed of bank credit. There is no “real” money in the economy. In other words, from our monetary base to whatever measures of money supply one wishes to use our entire “money” supply is bank credit generated either by commercial banks or the Federal Reserve. We literally borrow every single dollar spent to run our economy. Thus “inflation” is merely the increase in the overall level of our nation’s debt.

The reason that “deflation” is such a problem is that saving and paying down our debts literally reduces our “money” supply since the only source of “money” creation is bank loans. If we don’t increase our borrowing GDP can’t grow since GDP growth and credit growth are directly correlated.

So the argument that the only remedy for the current deflation is inflation is just another way of saying that we need to devalue old debt by taking on ever increasing loads of new debt. That game may have worked in the past but credit is confidence and confidence is in short supply. When it runs out hyperinflation ensues and we are growing dangerously close to such an outcome.

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By: stephen http://blogs.reuters.com/great-debate/2009/02/09/no-alternative-to-inflation/#comment-7849 Fri, 13 Feb 2009 14:32:43 +0000 http://blogs.reuters.com/great-debate/?p=1933#comment-7849 The author of the article is correct about keeping prices constant. Falling prices don’t encourage stability in the marketplace.

However, I think all of you miss the point. We have had 30 years of declining real wages for the vast majority of the population. What are the other types of incomes? Royalties, Rents, Capital Gains, Dividends

The problem is that Joe Average, including Joe the plumber, purchases goods and services out of wages, not out of capital gains, rents, royalties or dividends. So as the wage pool decreases, so does Joe Average’s ability to purchase products, pay off his debts, pay off his mortgage.. purchase a home etc.

Although Henry Ford had some unusual ideas about politics, including birthday cards to Adolf Hitler, his economic thinking was really sound. He wanted his workers paid enough to purchase the products they were making on the assembly line. We have lost our way by ignoring the sound advice of this economic genius. Our companies going abroad seeking cheap labor, and violating the spirit of the XIIIth amendment, has really served no one. Too bad it takes a virtual depression for sense and some ethics to be restored to corporations, the american people, and government.

Yours

Stephen

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