[Rich Toscano]

Zeitgeist, I admonished the OP for starting a thread that violates the political flamewar policy of this site, and the thread mercifully winds down. But you somehow think it’s ok to come back a year later and resurrect it?

This thread is closed to further comments.

[Rich Toscano]

Zeitgeist, I admonished the OP for starting a thread that violates the political flamewar policy of this site, and the thread mercifully winds down. But you somehow think it’s ok to come back a year later and resurrect it?

This thread is closed to further comments.

[Rich Toscano]

Zeitgeist, I admonished the OP for starting a thread that violates the political flamewar policy of this site, and the thread mercifully winds down. But you somehow think it’s ok to come back a year later and resurrect it?

This thread is closed to further comments.

[Rich Toscano]

Zeitgeist, I admonished the OP for starting a thread that violates the political flamewar policy of this site, and the thread mercifully winds down. But you somehow think it’s ok to come back a year later and resurrect it?

This thread is closed to further comments.

[Rich Toscano]

Thank you sir! That sentiment is worth posting twice. 😉

[Rich Toscano]

Thank you sir! That sentiment is worth posting twice. 😉

[Rich Toscano]

Thank you sir! That sentiment is worth posting twice. 😉

[Rich Toscano]

Thank you sir! That sentiment is worth posting twice. 😉

[Rich Toscano]

Thank you sir! That sentiment is worth posting twice. 😉

[Rich Toscano]

Hi zk —

I think the debt/deficit rabble rousing is just political posturing and that very little will come of it. (We will someday have to clean up our act, but I’m convinced that politicians won’t be motivated to do this until AFTER a govt debt crisis has begun).

I admit that the above paragraph is speculation and could be wrong. However, I don’t think that matters. Even if I am wrong, and the politicians accidentally initiate a period of deflation, they will just repeat the playbook they used in 2009. To the extent that doesn’t work, they will add some new plays to the playbook until something does.

So there could be a bout of deflation but it’s been shown that a sufficiently aggressive Fed can turn that around. 2008-9 was a perfect storm for deflation: bursting of the biggest private sector debt bubble ever, a horrific synchronized global downturn, a market liquidity crisis, a commodity crash, and a flight into the dollar. And yet the CPI declined, mildly, for 6 months. I doubt very much that the same magnitude of deflationary pressures will ever hit all at once again — but even if they do, the Fed and the govt can just step up the intervention even more aggressively.

If you haven’t read it, the article to the upper right called “Fundamental Investors Should Fear Inflation, Not Deflation” discusses this in quite a bit more depth. But that’s the idea. Short term, things can go anywhere. If something does come of the anti-deficit posturing, that could potentially cause another dip into disinflation/deflation for a bit. But long term the trend will be toward inflation, at least until we are forced by our foreign creditors to clean up our act (but that will mean the inflation already happened).

[Rich Toscano]

Hi zk —

I think the debt/deficit rabble rousing is just political posturing and that very little will come of it. (We will someday have to clean up our act, but I’m convinced that politicians won’t be motivated to do this until AFTER a govt debt crisis has begun).

I admit that the above paragraph is speculation and could be wrong. However, I don’t think that matters. Even if I am wrong, and the politicians accidentally initiate a period of deflation, they will just repeat the playbook they used in 2009. To the extent that doesn’t work, they will add some new plays to the playbook until something does.

So there could be a bout of deflation but it’s been shown that a sufficiently aggressive Fed can turn that around. 2008-9 was a perfect storm for deflation: bursting of the biggest private sector debt bubble ever, a horrific synchronized global downturn, a market liquidity crisis, a commodity crash, and a flight into the dollar. And yet the CPI declined, mildly, for 6 months. I doubt very much that the same magnitude of deflationary pressures will ever hit all at once again — but even if they do, the Fed and the govt can just step up the intervention even more aggressively.

If you haven’t read it, the article to the upper right called “Fundamental Investors Should Fear Inflation, Not Deflation” discusses this in quite a bit more depth. But that’s the idea. Short term, things can go anywhere. If something does come of the anti-deficit posturing, that could potentially cause another dip into disinflation/deflation for a bit. But long term the trend will be toward inflation, at least until we are forced by our foreign creditors to clean up our act (but that will mean the inflation already happened).

[Rich Toscano]

Hi zk —

I think the debt/deficit rabble rousing is just political posturing and that very little will come of it. (We will someday have to clean up our act, but I’m convinced that politicians won’t be motivated to do this until AFTER a govt debt crisis has begun).

I admit that the above paragraph is speculation and could be wrong. However, I don’t think that matters. Even if I am wrong, and the politicians accidentally initiate a period of deflation, they will just repeat the playbook they used in 2009. To the extent that doesn’t work, they will add some new plays to the playbook until something does.

So there could be a bout of deflation but it’s been shown that a sufficiently aggressive Fed can turn that around. 2008-9 was a perfect storm for deflation: bursting of the biggest private sector debt bubble ever, a horrific synchronized global downturn, a market liquidity crisis, a commodity crash, and a flight into the dollar. And yet the CPI declined, mildly, for 6 months. I doubt very much that the same magnitude of deflationary pressures will ever hit all at once again — but even if they do, the Fed and the govt can just step up the intervention even more aggressively.

If you haven’t read it, the article to the upper right called “Fundamental Investors Should Fear Inflation, Not Deflation” discusses this in quite a bit more depth. But that’s the idea. Short term, things can go anywhere. If something does come of the anti-deficit posturing, that could potentially cause another dip into disinflation/deflation for a bit. But long term the trend will be toward inflation, at least until we are forced by our foreign creditors to clean up our act (but that will mean the inflation already happened).

[Rich Toscano]

Hi zk —

I think the debt/deficit rabble rousing is just political posturing and that very little will come of it. (We will someday have to clean up our act, but I’m convinced that politicians won’t be motivated to do this until AFTER a govt debt crisis has begun).

I admit that the above paragraph is speculation and could be wrong. However, I don’t think that matters. Even if I am wrong, and the politicians accidentally initiate a period of deflation, they will just repeat the playbook they used in 2009. To the extent that doesn’t work, they will add some new plays to the playbook until something does.

So there could be a bout of deflation but it’s been shown that a sufficiently aggressive Fed can turn that around. 2008-9 was a perfect storm for deflation: bursting of the biggest private sector debt bubble ever, a horrific synchronized global downturn, a market liquidity crisis, a commodity crash, and a flight into the dollar. And yet the CPI declined, mildly, for 6 months. I doubt very much that the same magnitude of deflationary pressures will ever hit all at once again — but even if they do, the Fed and the govt can just step up the intervention even more aggressively.

If you haven’t read it, the article to the upper right called “Fundamental Investors Should Fear Inflation, Not Deflation” discusses this in quite a bit more depth. But that’s the idea. Short term, things can go anywhere. If something does come of the anti-deficit posturing, that could potentially cause another dip into disinflation/deflation for a bit. But long term the trend will be toward inflation, at least until we are forced by our foreign creditors to clean up our act (but that will mean the inflation already happened).

[Rich Toscano]

Hi zk —

I think the debt/deficit rabble rousing is just political posturing and that very little will come of it. (We will someday have to clean up our act, but I’m convinced that politicians won’t be motivated to do this until AFTER a govt debt crisis has begun).

I admit that the above paragraph is speculation and could be wrong. However, I don’t think that matters. Even if I am wrong, and the politicians accidentally initiate a period of deflation, they will just repeat the playbook they used in 2009. To the extent that doesn’t work, they will add some new plays to the playbook until something does.

So there could be a bout of deflation but it’s been shown that a sufficiently aggressive Fed can turn that around. 2008-9 was a perfect storm for deflation: bursting of the biggest private sector debt bubble ever, a horrific synchronized global downturn, a market liquidity crisis, a commodity crash, and a flight into the dollar. And yet the CPI declined, mildly, for 6 months. I doubt very much that the same magnitude of deflationary pressures will ever hit all at once again — but even if they do, the Fed and the govt can just step up the intervention even more aggressively.

If you haven’t read it, the article to the upper right called “Fundamental Investors Should Fear Inflation, Not Deflation” discusses this in quite a bit more depth. But that’s the idea. Short term, things can go anywhere. If something does come of the anti-deficit posturing, that could potentially cause another dip into disinflation/deflation for a bit. But long term the trend will be toward inflation, at least until we are forced by our foreign creditors to clean up our act (but that will mean the inflation already happened).

[Rich Toscano]

Thanks again TG.. you are too kind! That video was really cool, and I too am very excited about and (long-term) hopeful for alternative energy. But we’ve got a very long way to go there. Last year, (per the BP Statistical Review, as helpful summarized by Gregor Macdonald here: http://gregor.us/solar/global-energy-use-by-source-in-2010/ ) alternative energy accounted for 1.3% of global energy use. That was up 36% from the prior year, which is great… but it was up from an incredibly small share to begin with, and remains quite small. Even if a profitable alt energy source could be developed, it would take quite some time to develop it to get to the SCALE at which it is producing a significant enough amount of global power usage that it is significantly impacting demand for fossil fuels. In the meantime, global oil production has been flat for 5-6 years as global demand has remained in a steady uptrend outside the 08-09 recession.

So I share your optimism on the future of alt energy but the key word there is “future.” In the meantime we are facing a situation of constrained supply and growing demand for oil… imho, this (along with the nominal tailwind provided by currency debasement) provides fundamental justification for high (compared to what we’re used to) oil prices.

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