The U.S. economy

[H]

I came across the following in a newsletter and decided to post it here to see what sort of comments it might generate. Since this section of the BB is called "General Mayhem" I thought this was the appropriate place for it. What do you folks think of this?:

"How come the year-after-year double-digit increases in house prices, or stock prices, or the prices of oil, or commodities, or the rapidly rising prices of anything, is not enough to get the Fed to try and cool down the white-hot asset sector? The answer is obvious, once you remember that this Fed is the most inept, corrupt, ridiculously pompous and smugly arrogant bunch of clueless weenies in US history. They are worried about deflation, which is now defined as when something, even things that are already so grossly overpriced, goes down in price. Like stocks. And bonds. And houses. You know: Everything that that is currently waaayyyyy overpriced.

And why do they want to prevent this deflation in preposterously overpriced things? Wouldn't the US consumer, namely you and me, be better off if things were cheaper? Wouldn't it be a big benefit to us pathetic bozos out here in the real world when our paltry incomes buy a bigger basket of things on payday? Without waiting for your answer, I answer my own question and say, "Yes, it certainly would be a benefit!" But Greenspan does not WANT us to be better off. Why? Because the whole US economy is now totally dependent on things NOT going down in price. In fact, the whole US economy is now dependent on overpriced things being more and more and MORE overpriced! Namely, stocks, bonds and real estate. Weird, huh?"

Taken from "Game Over, Player One"  by The Mogambo Guru (Richard Daughty)

(http://www.dailyreckoning.com/home.cfm?loc=/body_headline.cfm&qs=id=3746)

P.S. For some reason, the link doesn't seem to work quite right ("/body_headline.cfm&qs=id=3746" is not included) so you need to cut and paste the URL. Brian, do you now why the software omits everything after the "="?

[sfortescue]

Why post nonsense?  If interest rates are raised, the prices will go down, but only after incomes go down first.  The net effect would be to make things worse.  I suspect that the writer knows this and wants things to go bad.

The real problem is not the high prices.  The modern economy is a lot like vanity fair in Pilgrim's Progress.  Asked what they would buy, Christian and Faithful said, "We would buy the truth."  The truth is a scarce commodity in the modern economy.  A lot of what's sold is junk disguised as if it is something valuable.  Better defense of consumers from product misrepresentations would result in more resources being guided into the production of the things people really need.  Taxing advertising would reduce the amount of false propaganda.  Directly taxing businesses that advertise would miss foreign companies, so it would be best done by taxing media companies through which advertising is done.

[al Hartman]

Stephen,

     Why aren't you running for president?  Or at least jockeying to replace Greenspan?

 ;)al

[Oscar]

H,

Actually, the author of your quote is correct in that the economy must keep growing.  However what he doesn't understand is that economies grow when millions of free people make free choices about how they wish to spend their money.  He attributes economic trends to a conspiracy by Greenspan and the Fed.

If deflation occurrs investors stop investing, products become scarcer because fewer are produced, and the rate of employment goes down.  This tends to stabilize prices at low levels, but no one has money to buy anything with.  Investors, ie folks who have plenty of $$, tend to put their money into assets that are "safe", such as real estate and precious metals.

Just as "a rising tide lifts all boats", (a generally true description of a growing, market driven economy) the opposite is also true.  A "shrinking" tide lowers all boats.

Greenspan and the Fed do not control the American economy.  They only make it more or less expensive to borrow money.  This influences the economy, but does not control it.

Governments who meddle with economic laws, (which are based in human nature), do so at their financial peril.  One of the least mentioned topics in the leftist media is the way that European countries have been forced to retreat from the Socialist economic policies they enacted after WWII.
(See, "Commanding Heights" by Yergin.  It was also made into a PBS special)

In England, the Leftists hate and despise Margaret Thatcher.  However, I have never heard a whisper of anyone wishing to re-expropriate the industries she privatized.

France has been foot dragging in this area for years.  Anyone see a French car for sale in the USA lately?  They just can't compete in the free market.

God bless,

Thomas Maddux

[al Hartman]

Just as "a rising tide lifts all boats", (a generally true description of a growing, market driven economy) the opposite is also true.  A "shrinking" tide lowers all boats.

Greenspan and the Fed do not control the American economy.  They only make it more or less expensive to borrow money.  This influences the economy, but does not control it.

     ...then there's that other axiom, "only the conspiritors deny the conspiracy."  Thomas, be ye one o' them?!!

 ;)al