tag:blogger.com,1999:blog-2335748440449035592.post2301581865757671565..comments2008-06-01T20:59:35.522-04:00TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2335748440449035592.post-33676888238294766482008-06-01T20:59:00.000-04:002008-06-01T20:59:00.000-04:00Bill you completely lost me here.<BR/><BR/>Inflation is regressive. Your theory (I think?) assumes when money supply increases, wages somehow increase in kind. That is not the case.<BR/><BR/>Simple reality - it takes maybe 25K to 30K to live "the normal lower/middle class lifestyle" in america - roof over head, food, car, etc. Maybe its 20K, maybe its 35K - whatever. The person making 50K in a high inflation environment will struggle far more than a person making 150k. So when those goods increase in costs who does it hurt more? Should be plainly obvious. Especially in an era of poor wage increases.<BR/><BR/>Last point, deflation is the enemoy of the rich, not the poor. THose with assets suffer. And who controls the majority of the countries assets? They will fight deflation tooth and nail; most of their income is derived from asset depreciation not wages.<BR/><BR/>Inflation - attack on lower runs of society<BR/>Deflation - attack on upper runs of society<BR/><BR/>There could be a scenario (doomsday) where inflation era leads to deflation era. I'm not ready to go there, but some are on that bandwagon.TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-5450288022628156072008-05-30T20:04:00.000-04:002008-05-30T20:04:00.000-04:00MARK I really like the honest open-minded non-kool aid- b/s insight<BR/><BR/>However, I wanted to contest one point so maybe we can learn (mostly me) You said inflation is the greatest regressive tax. That is true at first glance as rising prices for staples especially hurt those with the least money where their wealth is determined at the margin of food/gas prices. However, inflation is not really regressive in some senses (more so historically like 1930s) because inflation is thought to increase employment and "give money to all" as there is easy money and too much money chasing too few goods...well the fact that more people have money is not that regressive. More people having employment due to inflation is rather progressive in a way. Also the inflation erodes away at everyone almost equally as the wealthy are getting poorer each day in terms of purchasing power unless they can get a 8+% return via investing.<BR/><BR/>Overall I am not saying inflation is a progressive tax, I am just saying there may be two sides, one of which is regressive when inflation is looked at on food/ energy and staples because at the margin poorer people suffer, but when looked upon as an employment stimulator (Phillips Curve I believe) if is the opposite of a regressive tax because it helps the poorest, those who would otherwise have no job by giving them jobs via employment.<BR/><BR/>I'm interested to see you prove me wrong so I can learn more :)soccerbill8http://openid.aol.com/soccerbill8noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-37541669081136712192008-05-30T16:04:00.000-04:002008-05-30T16:04:00.000-04:00<I>They probably look at "us" as the idiots :)</I><BR/><BR/>I'm used to people thinking I am an idiot. It's the same look I got when I wasn't leveraging my future with IO loans to buy over inflated property a couple years ago. :)Michaelhttp://www.blogger.com/profile/14603027333434481007noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-43767234932899702762008-05-30T14:54:00.000-04:002008-05-30T14:54:00.000-04:00Michael,<BR/><BR/>I have to say this is my biggest struggle with the market. One must almost "dumb themselves" down and have blinders on and sort of ignore the economic news. My "fear" is one day this tapestry of misinformation gets exposed and everyone sort of wakes up and looks over to the other side of the bed and says "who are you?" It will be Kool Aid Man laying down there and he/she/it won't be so attractive in the morning. So it is like, we can live in this fantasy world where every report is understated and even those understated numbers are "better than expected" - a world where $80 oil causes no stress to consumer, neither does $100, neither does $120 nor will $140. A world where the Fed can cut from 5.25 to 2.00 and increase money supply by 20% with no ill effect etc etc. Some weeks (like this one) I just wish to have that very narrow focus where all I "know" is what is "told to me", and one can do better in the market those times.<BR/><BR/>Anyhow the magic web continues to be woven. We will just smile with vacant stare, nodding our head in agreement as "everything is not only fine but will be so much better soon". And so it will be. Until it is not. But knowing when that tide turns suddenly (Aug 07, Nov 07, Jan 08, Mar 08) is the tricky part and unknoweable. The market is a very hopeful beast trying to explain away everything and with the "official data" supporting their viewpoints I guess who are we to argue. They probably look at "us" as the idiots :)TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-9570196163593447762008-05-30T14:43:00.000-04:002008-05-30T14:43:00.000-04:00CNBC was quite fun this morning. First the CEO of DOW chem telling it like it is and then Mark Hanes blasting analysts over the gov. report showing that 'seasonally' adjusted gas prices were down (where is this gas station they surveyed?!).<BR/><BR/>I've asked this before...how can anyone actually believe these gov. reports when they are this far of base?!Michaelhttp://www.blogger.com/profile/14603027333434481007noreply@blogger.com