Average SD family 2000 vs 2010

[Eugene]

[quote]Do you think that if the central banks and governments around the world (indluding China) were to have allowed everything to fall to wherever it was going to go, without any intervention, that those single-digit P/Es (and prices of assets, in general) were out of line?[/quote]

Things could have fallen deeper than they were. TEMPORARILY. But there was still real demand for AA aluminum, for CAT heavy machinery, and for TXN chips in the world, and it didn’t evaporate as a result of a phase in a business cycle.

[Eugene]

[quote]The FED prints money and buys u.s. treasuries, keeping borrowing costs low for the Federal Government. [/quote]

Ok, let’s stop right here. The effect of the FED buying of US treasures has been analyzed and it is estimated to amount to a pittance, like 10 or 20 bps off of a 10-year yield.

The effect of government spending is larger, but the same spending would’ve gone on just fine without any money creation. People still regard the US 10-year as one of the safest and the most riskless investments in existence. The treasury would be able to sell those bonds at similar rates completely on its own.

[quote]All this money begins circulating in the world economy and ends up in the hands of more and more people who then consume more and more commodities.[/quote]

I don’t see these people. The average wage in the US certainly has not tripled in two years. The USD to RMB exchange rate did not, either.

The process you describe is certainly real, but its scale is not. It is the normal economic stimulation via GDP multiplier. So far it has shaved, optimistically, 4% off of U.S. unemployment (in other words, unemployment is 9%, but it would’ve been 13%). It does not really start creating inflationary pressures here in the U.S. until the economy gets closer to full employment.

[quote], and the ultimate truth detector does as well,[/quote]

Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.

[Eugene]

[quote]The FED prints money and buys u.s. treasuries, keeping borrowing costs low for the Federal Government. [/quote]

Ok, let’s stop right here. The effect of the FED buying of US treasures has been analyzed and it is estimated to amount to a pittance, like 10 or 20 bps off of a 10-year yield.

The effect of government spending is larger, but the same spending would’ve gone on just fine without any money creation. People still regard the US 10-year as one of the safest and the most riskless investments in existence. The treasury would be able to sell those bonds at similar rates completely on its own.

[quote]All this money begins circulating in the world economy and ends up in the hands of more and more people who then consume more and more commodities.[/quote]

I don’t see these people. The average wage in the US certainly has not tripled in two years. The USD to RMB exchange rate did not, either.

The process you describe is certainly real, but its scale is not. It is the normal economic stimulation via GDP multiplier. So far it has shaved, optimistically, 4% off of U.S. unemployment (in other words, unemployment is 9%, but it would’ve been 13%). It does not really start creating inflationary pressures here in the U.S. until the economy gets closer to full employment.

[quote], and the ultimate truth detector does as well,[/quote]

Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.

[Eugene]

[quote]The FED prints money and buys u.s. treasuries, keeping borrowing costs low for the Federal Government. [/quote]

Ok, let’s stop right here. The effect of the FED buying of US treasures has been analyzed and it is estimated to amount to a pittance, like 10 or 20 bps off of a 10-year yield.

The effect of government spending is larger, but the same spending would’ve gone on just fine without any money creation. People still regard the US 10-year as one of the safest and the most riskless investments in existence. The treasury would be able to sell those bonds at similar rates completely on its own.

[quote]All this money begins circulating in the world economy and ends up in the hands of more and more people who then consume more and more commodities.[/quote]

I don’t see these people. The average wage in the US certainly has not tripled in two years. The USD to RMB exchange rate did not, either.

The process you describe is certainly real, but its scale is not. It is the normal economic stimulation via GDP multiplier. So far it has shaved, optimistically, 4% off of U.S. unemployment (in other words, unemployment is 9%, but it would’ve been 13%). It does not really start creating inflationary pressures here in the U.S. until the economy gets closer to full employment.

[quote], and the ultimate truth detector does as well,[/quote]

Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.

[Eugene]

[quote]The FED prints money and buys u.s. treasuries, keeping borrowing costs low for the Federal Government. [/quote]

Ok, let’s stop right here. The effect of the FED buying of US treasures has been analyzed and it is estimated to amount to a pittance, like 10 or 20 bps off of a 10-year yield.

The effect of government spending is larger, but the same spending would’ve gone on just fine without any money creation. People still regard the US 10-year as one of the safest and the most riskless investments in existence. The treasury would be able to sell those bonds at similar rates completely on its own.

[quote]All this money begins circulating in the world economy and ends up in the hands of more and more people who then consume more and more commodities.[/quote]

I don’t see these people. The average wage in the US certainly has not tripled in two years. The USD to RMB exchange rate did not, either.

The process you describe is certainly real, but its scale is not. It is the normal economic stimulation via GDP multiplier. So far it has shaved, optimistically, 4% off of U.S. unemployment (in other words, unemployment is 9%, but it would’ve been 13%). It does not really start creating inflationary pressures here in the U.S. until the economy gets closer to full employment.

[quote], and the ultimate truth detector does as well,[/quote]

Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.

[Eugene]

[quote]The FED prints money and buys u.s. treasuries, keeping borrowing costs low for the Federal Government. [/quote]

Ok, let’s stop right here. The effect of the FED buying of US treasures has been analyzed and it is estimated to amount to a pittance, like 10 or 20 bps off of a 10-year yield.

The effect of government spending is larger, but the same spending would’ve gone on just fine without any money creation. People still regard the US 10-year as one of the safest and the most riskless investments in existence. The treasury would be able to sell those bonds at similar rates completely on its own.

[quote]All this money begins circulating in the world economy and ends up in the hands of more and more people who then consume more and more commodities.[/quote]

I don’t see these people. The average wage in the US certainly has not tripled in two years. The USD to RMB exchange rate did not, either.

The process you describe is certainly real, but its scale is not. It is the normal economic stimulation via GDP multiplier. So far it has shaved, optimistically, 4% off of U.S. unemployment (in other words, unemployment is 9%, but it would’ve been 13%). It does not really start creating inflationary pressures here in the U.S. until the economy gets closer to full employment.

[quote], and the ultimate truth detector does as well,[/quote]

Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.

[jstoesz]

Eugene,

I think what people here, or at least what I am getting at is that your argument is short sighted…

It is using past performance to predict future results.

Just because the 10year is seen as safe, does not mean this will continue. Just because the CPI (check out shadowstats.com for some perspective btw) doesn’t yet show mass inflation, does not mean that it will not in the future.

Just because we have not seen stagflation since the 70’s does not mean it can not come roaring back…

And the table has been set.

[jstoesz]

Eugene,

I think what people here, or at least what I am getting at is that your argument is short sighted…

It is using past performance to predict future results.

Just because the 10year is seen as safe, does not mean this will continue. Just because the CPI (check out shadowstats.com for some perspective btw) doesn’t yet show mass inflation, does not mean that it will not in the future.

Just because we have not seen stagflation since the 70’s does not mean it can not come roaring back…

And the table has been set.

[jstoesz]

Eugene,

I think what people here, or at least what I am getting at is that your argument is short sighted…

It is using past performance to predict future results.

Just because the 10year is seen as safe, does not mean this will continue. Just because the CPI (check out shadowstats.com for some perspective btw) doesn’t yet show mass inflation, does not mean that it will not in the future.

Just because we have not seen stagflation since the 70’s does not mean it can not come roaring back…

And the table has been set.

[jstoesz]

Eugene,

I think what people here, or at least what I am getting at is that your argument is short sighted…

It is using past performance to predict future results.

Just because the 10year is seen as safe, does not mean this will continue. Just because the CPI (check out shadowstats.com for some perspective btw) doesn’t yet show mass inflation, does not mean that it will not in the future.

Just because we have not seen stagflation since the 70’s does not mean it can not come roaring back…

And the table has been set.

[jstoesz]

Eugene,

I think what people here, or at least what I am getting at is that your argument is short sighted…

It is using past performance to predict future results.

Just because the 10year is seen as safe, does not mean this will continue. Just because the CPI (check out shadowstats.com for some perspective btw) doesn’t yet show mass inflation, does not mean that it will not in the future.

Just because we have not seen stagflation since the 70’s does not mean it can not come roaring back…

And the table has been set.

[sobmaz]

[Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.[/quote]

I am not going to go around in circles but let me point out that there is indeed Gold that can be mined for less than 500 an ounce. However Gold production would be much much less if only the easiest Gold were mined.

Some miners spend over a 1000 an ounce to mine, others 3 or 400.

Anyway, now that I know your position on Gold , I don’t think we could ever agree on anything.

[sobmaz]

[Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.[/quote]

I am not going to go around in circles but let me point out that there is indeed Gold that can be mined for less than 500 an ounce. However Gold production would be much much less if only the easiest Gold were mined.

Some miners spend over a 1000 an ounce to mine, others 3 or 400.

Anyway, now that I know your position on Gold , I don’t think we could ever agree on anything.

[sobmaz]

[Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.[/quote]

I am not going to go around in circles but let me point out that there is indeed Gold that can be mined for less than 500 an ounce. However Gold production would be much much less if only the easiest Gold were mined.

Some miners spend over a 1000 an ounce to mine, others 3 or 400.

Anyway, now that I know your position on Gold , I don’t think we could ever agree on anything.

[sobmaz]

[Don’t you mean the ultimate bubble? Last I checked, it still cost less than $500/oz to get the yellow stuff out of the ground. Somehow the overall inflation and money printing do not seem to raise the real cost of gold.[/quote]

I am not going to go around in circles but let me point out that there is indeed Gold that can be mined for less than 500 an ounce. However Gold production would be much much less if only the easiest Gold were mined.

Some miners spend over a 1000 an ounce to mine, others 3 or 400.

Anyway, now that I know your position on Gold , I don’t think we could ever agree on anything.

[Author]

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