Tuesday, April 19, 2011

Creeping Inflation - Eating You Away a Piece at a Time

Money Printing: Making More Money from thin air.

When there is more of something, it is therefore worth significantly less... and less and less.

I love the interviewer. She is in no way qualified to interview this man. She knows nothing about even basic finance. The Federal Reserve Board declares 2% inflation is good - that means every dollar you earn is worth 2% less every year. After 5 years, your money buys 10% less than it once did - that's huge. There is no reason for that to happen. No justification. The dollar has lost 95% of its purchasing power over the last 70 years. How? A little inflation every single year. Before we had this mystical entity called the "Federal Reserve Board" (which is a private bank, by the way), the dollar didn't lose ONE OUNCE of value year after year, so any raises or additional money you made REALLY COUNTED and wasn't made just to "keep pace with" inflation. "Prime the pump?" WTF does that even mean? Its a soundbite with no meaning. The more your money buys, the easier it is to live. Devaluing your money is surreptitious theft and there is no reason for it to happen, much less be "desirable." How do people not understand that? Further this Mack woman, in her total stupidity declares the FINANCIAL COMMUNITY thinks its a good idea! Um, you mean those people who trashed the housing market, destroyed the economy, took trillions of taxpayer money and paid themselves bonuses with it? Further, the finance community loves inflation because it FORCES prices of everything up, making their life jaw-droppingly easy. Just buy something and wait 6 months - since you bought that thing in dollars and the dollar is losing value on a constant basis, the thing you bought MUST go up in value and you can sell it and make money - when you sell it you're given dollars in return and even if its more dollars than you bought it for, they are worth less, so how do you really make money off it? Answer: leverage (borrowed money). This is why Wall St. is like a kid with his dad's gun. Wall St. BORROWS BILLIONS and buys things with it. How much of their own money do they use? 1/30th OR LESS of what they spend is actual money of their own. So when I borrow a billion, buy silver with it and silver goes from $1 to $4 per ounce (or from 9 to 42 as it recently did), I make 3 dollars per ounce (or share or unit, whatever you like). I make 3 billion; I pocket 2 billion, pay the 1 billion I borrowed back to the lender and I'm 2 billion clams to the good. Risky? You bet. If the price were to go down, I'm on the hook for billions in losses that I may not be able to cover. Do I worry? Not really. Why? Ben Bernarke is printing money and creating inflation - so the price of silver in dollars MUST go up. Its as close to a sure thing as it gets. This is how normal wall st. working stiffs make 400k+ a year with $2-300,000 dollar bonuses - that's PER year. And the "finance community" thinks 2% inflation is a good idea? WOW, IMAGINE THAT, MS. MACK!!!!!!!! USE YOUR GODDAMN HEAD FOR A SECOND LADY! The other problem is that prices of everything are being supported by money printed out of thin air and if that money is not continually printed, the prices of everything will fall back to their real value - when that happens (not if), everyone who has bought things with borrowed money and waited for the price to go up has their borrowed money CALLED BACK by the lender. The problem? They must ALL SELL what they bought at the same time just as the price of what they bought is crashing. What happens next? Someone calls Henry, "Hank" Paulson and he has to beg Washington for $700 BILLION OF PUBLIC MONEY IN THE MIDDLE OF THE NIGHT FROM HIS KNEES. Nice system.

Its just like the idea that men must "take care of" a (college educated) woman after divorce. Why does someone with a good middle class job and benefits need to be taken care of? How can it be justified when she makes more than he does or when she gets remarried or co-habitates with another? Its just a soundbite that you've been force-fed to believe and you do; when you step back and examine the issue on its merits it makes no sense for two people who are equally capable to be treated in such a way. Every man went to school with girls who were just as smart or smarter than they were and upon divorce these now women are presumed to be incapable of earning due to some kind of hidden bias, which is demonstrably false, but everyone somehow believes it. Its foolishness squared.

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