The Modern Depression

[EJ]

If the government has to level the playing field in the future, how are they likely to do it?

[Ed]

Asset bubbles create wealth inequality that leads to crises that are resolved by a redistribution of wealth by inflation.
If true, what to do?
TIPS
Since its all-time high yield of 4.40%/yr on 1/19/2000, the first-issued 30 year TIPS maturing 4/15/2028 (22 years remaining) has averaged 2.84 %/yr. Today (4/27/2006), its yield is 2.47 %/yr (87% of that average yield), up from 1.92 %/yr as recently as 2/28/2006.

Intellectual honesty is the only tool required.

[jeffolie]

Tips are indexed to the government's lying CPI.

[taz2]

If the government has to level the playing field in the future, how are they likely to do it?

At what point will have have to?


If Republicans have their way this could take years before the public stop saying

“Better to give to the rich then the welfare babies”

“I care more about stopping Gay marriage then my pocketbook.”

The question remains will the Republicans find away to focus the public on other issues then their pocketbooks?



taz

[BK]

Please - Republican and Democrats are to blame - Mr. Greenspan spent a good portion of his tenure with a Democratic President.

Lets place the blame where it belongs - We the people - elect these politicians.

Our primary interest in voting for a party or politician is "What can they do for me or my people".

As a result politicians - take a very short view - their goal vest in their pension plan and get enoguh influence to create a lobby/consulting role after their "Public Service".

Look at Oil prices - we voters love when too much liquidity drives the price of our 3 bedroom ranch to $500,000 - but, don't let my gasoline go up!

[EJ]

Tips are indexed to the government's lying CPI.

I stopped buying TIPs and iBonds in 2002 for that reason.

[EJ]

If the government has to level the playing field in the future, how are they likely to do it?

At what point will have have to?


If Republicans have their way this could take years before the public stop saying

�Better to give to the rich then the welfare babies�

�I care more about stopping Gay marriage then my pocketbook.�

The question remains will the Republicans find away to focus the public on other issues then their pocketbooks?



taz

Republicans are better than Democrats at getting Americans to vote against their pocket books. But this will backfire at some point. If not in the next election than in the one after that.

[EJ]

Please - Republican and Democrats are to blame - Mr. Greenspan spent a good portion of his tenure with a Democratic President.

Lets place the blame where it belongs - We the people - elect these politicians.

Our primary interest in voting for a party or politician is "What can they do for me or my people".

As a result politicians - take a very short view - their goal vest in their pension plan and get enoguh influence to create a lobby/consulting role after their "Public Service".

Look at Oil prices - we voters love when too much liquidity drives the price of our 3 bedroom ranch to $500,000 - but, don't let my gasoline go up!

Ten points for Mr. K. Maybe you can help me with my next commentary.

Underlying the disucssion is Keynesian vs Austrian economics. But on the surface, it's the Free Lunch vs the No Free Lunch school of economics. Everyone wants to believe in the Free Lunch. It's not a hard sell, at least as long as it appears to be working.

[deb]

What about wages? For inflation to save all the "bank-owers", don't we need wage inflation?

We sure don't have much wage inflation now, and with globaliztion, I don't imagine we will be seeing it any time soon.

[EJ]

What about wages? For inflation to save all the bank-owers, don't we need wage inflation?

We sure don't have much wage inflation now, and with globaliztion, I don't imagine we will be seeing it any time soon.

The immigration spigot has been turned off and on for over a century to regulate wage rates in the U.S. When my father's parents were trying to get into the U.S. in the 1890s, the U.S. was going through two major recessions.

[image]http://www.econlib.org/LIBRARY/Enc/art/fig11.jpg[/image]

Wages were declining, unemployment rising and with it political pressure to restrict immigration:

A more comprehensive immigration law had been passed in the spring of 1891. In addition to the previously established categories of undesirables, inspectors now also screened for polygamists, people with prison records for crimes involving moral turpitude, and all persons suffering from a loathsome or contagious disease. The Contract Labor Law of 1885 was stiffened to exclude immigrants who were entering the country at the encouragement of American employers; it was even illegal for American employers to advertise.

http://www.americanparknetwork.com/p...ory/ellis.html

My father's parents had to go all the way to the Gulf of Mexico. That's why there is still a large community from Germany in Texas.

Volcker's anti-inflation policies targeted the unions which went into a steady decline starting in 1980. Unions were a strong force of transmission of inflation. The pro-unionization and anti-immigration political movements we see today are leading indicators of future wage inflation. If these movements result in restrictions on outsourcing and immigration and increased unionization, then the following scenario may play out:

http://www.alwayson-network.com/comm...P10025_0_4_0_C

[Jim Nickerson]

Almost all poticians (99.9999999%) are interested in ONLY two things--their own welfare and getting re-elected.

The only way the current political system will ever get better, from the low level to which it has devolved, is for it to be overthrown and started over.

I voted for Bush as the lesser of two evils, as I perceived the situation, but it should be appreciated evil is evil and the lesser evil is still evil.

Do not look to politicians to solve the problems we have at hand, they created them--how can you expect them to solve the problems?

Jim

[BK]

Wage inflation in the 1970s was (I think) a result of Union contracts that gave Union members a Cost of Living Increase - do you know many Union members that aren't Government employees. Combine the lower number of employees who are covered by Union contracts and add in hedonics ( a wy to minimize how the government figures inflation) , mix in lots of immigrants- legal and illegal - Presto Low to no wage inflation.

[Larry]

Actually, the very expensive "supercars" of the day all prospered during the 20's, when money flowed like water. Almost all of these companies failed in the aftermath of the crash. The failure was not immediate, but it is unfair to suggest that the crash stimulated these companies. Bugatti was only one of the many, including Pierce Arrow, Stutz, Cord, Auburn, Duesenberg, etc., all of whom failed in the 30's.

[jeffolie]

I favor a deflationary depression with mass foreclosures, failed banks and liberals returning to political office. Reasonable arguments have been made for a hyperinflationary depression, but I do not favor this. Either way unemployment will rise to over 30% and gangs will rule the major cities outright. The US will not be able to afford foreign wars anymore until the depression ends.

[Jim Nickerson]

I favor a deflationary depression with mass foreclosures, failed banks and liberals returning to political office. Reasonable arguments have been made for a hyperinflationary depression, but I do not favor this. Either way unemployment will rise to over 30% and gangs will rule the major cities outright. The US will not be able to afford foreign wars anymore until the depression ends.

I expect if any organization took a poll of Americans regarding what they favored as the economic outcome of the current dilemmas that exist, they would all favor continuation of the last 3.5 years. What we individually might favor is of no value in attempting to prepare for the future, more importantly, we need insight as to what is the likely outcome in moving beyond the current predicaments.

Jim