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Inflation, the hidden tax that crushes the poor and middle class

Discussion in 'Economics and Financials' started by padre31, Apr 20, 2009.

  1. padre31

    padre31 Premium Member Luxury Box

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    Fiat curencies alway beget Inflation as inflating a currency costs no votes as few people understand the idea that the more money that is printed, the less their money will purchase..
     
  2. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Agreed Padre and for anyone that does not think inflation is coming in the near future needs to think again...

    The current crisis is a debt crisis first and foremost. There has been excessive borrowing by U.S. consumers and consumers in many other countries as well for a decade along with leveraging of assets on an unprecedented scale.

    Inflation punishes savers and destroys investment, but it has the advantage of reducing the real value of debt. It also boosts Government revenues, since it pushes more taxpayers into higher income brackets. The U.S. Government is the worlds largest debtor by far. We already pay 450 billion a year in interest on our outstanding debt. Our Government will be the worlds largest beneficiary of any bout of inflation.
     
  3. padre31

    padre31 Premium Member Luxury Box

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    Exactly JoeyD, but like the Fed, America simply does not care to understand "what" this means to them personally, as in higher prices on everything from water to gasoline to toilet paper.

    "We" will be paying off the Govt debt via the inflation they are creating.
     
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  4. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    For quite some time I am afraid padre.......

    I dont think it is only going to affect us either, many other countries around the globe have been throwing money at the problem with a deficit built in before doing so.

    Toss up between who is in more dire straits between the US and the U.K., Europe is in no better shape with the EU......

    Japan still can't crawl out of the hole after the debt they created with their stimulus packages........ Everyday we look more and more like the land of the rising sun economically..........

    Australia and New Zealand used to have budget surpluses... not anymore.....
     
  5. Themole

    Themole Season Ticket Holder

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    This is probably a very simplistic way of looking at it. But silver closed today @ $12.00 per oz. Real money, say a pre 1965 silver dollar should exchange at the rate of one federal reserve note for one silver dollar. If a dollar was a dollar. But it isn't, it takes 12 FRN's to equal one real dollar. Now, there is still skulduggery that comes to play in this scenario. Those who manipulated us into this crisis in 1913, are also manipulating the spot price of precious metals. Silver & Gold, IMHO, are way undervalued. If you are seriously worried about inflation, it might be wise to start accumulating silver. The ratio between Gold and Silver is 74-1. That gives silver a lot of catching up to do before it pulls to it's rightful ratio to gold.
     
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  6. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    I am of the opinion as well that Silver is undervalued and in a lesser fashion Gold as well.

    Gold has only been held below $1,000 an ounce from a concerted between between Central Banks around the globe to keep it undervalued along with Silver.....

    Most ask how is this possible and my response is always,

    Who do you think has the largest deposits of Gold and Silver to be able to sell on the open market to artificially supress the prices?
     
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  7. jupiterfin

    jupiterfin Mild Irritant

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    No link :confused2:
     
  8. padre31

    padre31 Premium Member Luxury Box

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    Sweet Mole, the other really good illustration concerns the dija divided by the price of gold, in 1898 it was 1 to 1, in 1929 it was 16 to 1 in 1932 it was 2 to 1 in 1966 it was 28 to 1 and in 1999 it was 43 to 1 by 2002 the ratio had slid back to say 7 to 1, now we are at 9 to 1 so there is still room for the dija to fall.
     
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  9. padre31

    padre31 Premium Member Luxury Box

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    http://www.campaignforliberty.com/blog.php?view=15750

    http://www.americanchronicle.com/articles/view/40585

    http://www.frbsf.org/publications/federalreserve/monetary/affect.html

    And keep in mind jptr, those 10 years of deficit projections in the trillions will mean that the inflation effect will happen for years after the money has been spent because the lag time will accumulate.
     
  10. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Just so everyone watching these posts are clear this is by no means picking sides, its about monetary policy and mismanagement of debt which I am sure we can all agree there is a long list of previous POTUS from both sides who have had a hand in creating this issue....
     
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  11. padre31

    padre31 Premium Member Luxury Box

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    :hi5:

    The previous administration, including Greenspan mostly receives a pass though, Greenspan intentionally threw the economy into recession in 1999 because inflation was appearing and financial markets were speculating on absolute garbage .Com stocks and instruments.

    Greenspan left in 06, Helicopter Ben Bernanke was put in charge of the Fed, then the 3 hour, 600 billion event happened, the equity markets were literally depleted of cash in 3 hours and the trading windows were closed.

    That led to TARP and all the rest of the current Monetization and Inflationary Creation, what I had in mind wasnt the laying of political blame, rather what everyday Americans can expect for the next decade or more, slowly rising prices, or quickly rising prices, and stagnant wages and job creation.

    I only half joke when I say planting a garden is not a terrible idea.:sad:
     
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  12. padre31

    padre31 Premium Member Luxury Box

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    The IMF received permission at the G20 summit to sell 400 million dollars worth of gold Joey D, so the price will be depressed for quite sometime even though they "pledged" not to sell it in a manner that would damage the market.

    http://www.marketwatch.com/news/sto...AB663-768C-49EB-A5E0-A944F35661AB}&siteid=rss

    So even that classic "safe haven" will be under pressure for the next two years, but if Middle Class World decides things are going to heck in a handbasket all bets are off, 400 tons equals to millions of ounces of gold hitting the market.
     
  13. Themole

    Themole Season Ticket Holder

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    I take it very seriously, padre.
     
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  14. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    I was unaware of this agreement Padre....

    Thanks for the info...... makes me even more patient to wait for precious metals to make a deep runup in price......


    For anyone to believe that you need your freakin head examined......
     
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  15. padre31

    padre31 Premium Member Luxury Box

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    Same here bro, put out the plants today...and it's surprisingly supposed to get chilly tonight..:angry:

    As a part of this inflationary pressure, we will see the rebirth of the "nuclear family" as well as some other long unused skills like haggling and trading and a bit more "making do".
     
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  16. padre31

    padre31 Premium Member Luxury Box

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    For the last stroke against Gold:

    http://www.telegraph.co.uk/finance/...-as-hedge-fund-managers-buy-gold-futures.html

    When hedge fund guys are involved, IMO they will short sell and further depress prices.



    But..but...by early next year everything gonna be all right.
     
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  17. Themole

    Themole Season Ticket Holder

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    Are you in Fl. Padre?
     
  18. padre31

    padre31 Premium Member Luxury Box

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    Nah, in the Mtns of WNC.
     
  19. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Would be really interesting to see how people would adjust if things really got crazy and you had to fend for yourself by hunting and farming like the old days.....
     
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  20. Themole

    Themole Season Ticket Holder

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    Be more than interesting joey. It would be terrifying. I would wager 99 % of the 18 million in Fl. don't have the skills nor a place to use them if they did.

    One other bad thing is they have no place to go but north to leave the state.
     
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  21. Themole

    Themole Season Ticket Holder

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    Nice!
     
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  22. padre31

    padre31 Premium Member Luxury Box

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    I don't think we are headed towards a Jim Rogers style Dystopia Joey D, I do think businesses will contract in response to the toxic climate that is being created, inflation in which businesses cannot raise prices and then they have the added burden of Government mandated healthcare and increased unemployment benefits and higher taxes at the local, county, state and federal levels.

    And one thing that really should be mentioned in relationship to a discussion about Inflation is the manipulation of the Consumer Price Index, the CPI no longer accounts for fuel, food, housing or energy costs, so called "core inflation" is a hollow term.
     
  23. padre31

    padre31 Premium Member Luxury Box

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    Well, now we are veering off course, but let me say anyone who would leave a pennisula with food all over the place is a bit daft, or just plan ol' lazy..

    I came up in Venice FL, every kid I knew had a blue crab trap and knew how to fish or shrimp a bit...those were the days...:yes:
     
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  24. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Funny you mention this Padre as I have been hammering this point to clients for years on how the the CPI numbers no longer reflect for actual inflation......

    Food and energy are 2 of the largest costs to consumers yet you remove it from the core CPI number?

    That was bullshyte all along on the Governments part......


    BTW... put me in the woods with a rifle and a fishing pole and I can tell you my family will eat....
     
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  25. padre31

    padre31 Premium Member Luxury Box

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    Exactly, they did create the "real" inflation index, but that is not accurate, you have to hope someone who blogs has access to Shadowstats.

    Trot Lines..and apple jack...:lol::shifty:
     
  26. Themole

    Themole Season Ticket Holder

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    :lol:Oh, I remember the days.
     
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  27. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Apparently I am on the outside looking in for this one.........


    What does that mean or am I showing my age by asking?
     
  28. Themole

    Themole Season Ticket Holder

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    No joey, probably show your good sense. Apple Jack, was a popular (might still be) loose leaf chewing tobacco.
     
  29. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Never heard of that one...... Good thing I dont chew.... :lol:
     
  30. padre31

    padre31 Premium Member Luxury Box

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    Well it's that, it's also when one takes apple cider and "jacks it up" by freezing after adding one of the backwoods distillers main ingredients..:lol:
     
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  31. joeydolfan

    joeydolfan Season Ticket Holder Club Member

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    Now that one I would be interested in.... have a recipe? :lol:
     
  32. Themole

    Themole Season Ticket Holder

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    I've only drank apple cider thrice in my life. Fresh and in the Canadian Rockies. Very good stuff.

    Now, the other stuff you refer to, I've had bad to very fine.
     
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  33. padre31

    padre31 Premium Member Luxury Box

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  34. Themole

    Themole Season Ticket Holder

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    Nice site. So that's where "The Last Whole Earth Catalog and Mother Earth News" migrated to.
     
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  35. padre31

    padre31 Premium Member Luxury Box

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    Probably, it's in the UK though.

    One of the benefits of the internet is there is a tremendous amount of information out on the web that can be used if times get hard, the problem is quality control and motivation.

    Americans just no longer put out that sort of effort as a whole, as late as the mid 70's and Gerald R Ford's WIN (whip inflation now) program there were modern Victory Gardens being raised in the US, that trend dwindled until the last 3 years when a sudden explosion in seed sales has happened.

    Very American, complete apathy, then total panic when problems come knocking on the front door.
     
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  36. Themole

    Themole Season Ticket Holder

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    We still grow em here in rural north Florida Padre. Gardens grown in these sandhills require a lot of water but they sure do makeup well.
     
  37. padre31

    padre31 Premium Member Luxury Box

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    Really? This might be of interest to you then:

    http://organicgardening.about.com/b/2009/03/12/how-much-is-your-garden-worth.htm

    Not bad, and as prices rise and quality falls, that 2,200 will only grow larger.

    Plus there is a nice feeling of accomplishment when you grow your own.

    In the UK, which is going through a much more severe time then we in the States are dealing with, there is a two year waiting list to garden in the London City set aside plots of land..two years...that is astounding.

    My quibble with it is, if one is a professional like a doctor then the time spent gardening is actually underproductive, if one can bill 200 dollars per visit then that couple of hours a week seems like money loser unless one is just a fan of organic veggies.

    When I was a wee lad in SW Florida, there used to be orange trees and grapefruit trees all over the place, now the area is so developed that is a quaint notion of yesteryear.
     
  38. Themole

    Themole Season Ticket Holder

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    Thanks Padre, I now have the page bookmarked and will get back to it for a closer look.

    A friend of mine has been trying to get me into hydroponics. He sent me pictures of his garden that really produce a good yield from a very small amount of space. The plants are grown in PVC and are gorgeous.

    It's been a while since I was in SW Fl. I can remember traveling through Clermont, where once was beautiful groves of orange and grapefruits. Like you said, they have turned all that into subdivisions.
     
  39. padre31

    padre31 Premium Member Luxury Box

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    Pricey though.


    Haven't heard of Clermont, at least not off hand, I used to stomp around the Ft Myers up to Clearwater area though, iirc, Clermont may be in that area? It's been 20 years, maybe more.

    Apparently, the next shoe to drop in the great unraveling is Credit Card debt, and to me that is the most serious issue, nearly everyone has a credit card and when those defaults start destroying the value of the CDS and other exotice financial instruments, things will get downright ugly.

    Let BoA or Citi collapse and all the people who have their cards won't be able to purchase anything, and there will be no Bank to step in and offer new lines of credit, that will grind things to a standstill when millions suddenly have to rely on cash to buy anything.
     

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