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Re Washington s Biggest Lie and Why it Continues to be Told
Posted by: sapporosteve (IP Logged)
Date: December 4, 2012 03:04AM

Here is a recent update from John Williams - the man behind shadowstats.

“The U.S. economic and systemic-solvency crises of the last five years continue to deteriorate. Yet they remain just the precursors to the coming Great Collapse: a hyperinflationary great depression. The unfolding circumstance will encompass a complete loss in the purchasing power of the U.S. dollar; a collapse in the normal stream of U.S. commercial and economic activity; a collapse in the U.S. financial system, as we know it; and a likely realignment of the U.S. political environment.

Outside timing on the hyperinflation remains 2014, but events of the last year have accelerated the movement towards this ultimate dollar catastrophe. Following Mr. Bernanke‘s extraordinary efforts to debase the U.S. currency in late-2010, the dollar had lost its traditional safe-haven status by early-2011. Whatever global confidence had remained behind the U.S dollar was lost in July and August. “

Hyperinflation by 2014!..........honestly can anyone treat this guy seriously. Track his predictions. You might be surprised how incorrect and off base he has been. Every time he is wrong, he simply pushed the dates back.

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Re Washington s Biggest Lie and Why it Continues to be Told
Posted by: Dr. Paul Price (IP Logged)
Date: December 4, 2012 08:43AM

Those who were early in predicting the housing bust were called crackpots ... until it happened.

Being early doesn't mean being wrong, except on the timing.

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Re Washington s Biggest Lie and Why it Continues to be Told
Posted by: jasonfrey33 (IP Logged)
Date: December 6, 2012 01:28PM

Inflation is complex to calculate. Reviewing the BLS website, there are certainly shortcomings. Most notably; not including personal income tax changes or health insurance premiums. They do calculate cost of health care, but this does not account for the rapid transfer of cost from employer to employee. The shadow stats may be true to the old standard of inflation, but the numbers are not realistic to my life. I have not experienced a 70% decrease in purchase power since 2002. I would have to say the CPI is closer to my life, but understated due to factors mentioned in the article. Most notably my food costs seem to have risen higher than BLS numbers.

However, I would be very surprised if future changes are not made to the CPI to ease budget defecits. These future changes are likely to be more dramatic than past changes and will probably include the substitution component into the official CPI number. I also feel for those on fixed incomes without any investments to hedge inflation. They are dependent on the government providing an accurate CPI. Politicians depend on the CPI as an easy way out when it comes to budget debates.

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Re: Washington’s Biggest Lie (and Why it Continues to be Told)
Posted by: cmwy10a (IP Logged)
Date: December 7, 2012 07:42AM

I often wonder why the cost of the largest expense for the top 50% ( those who pay taxes) is not included. The cost of government goes up every year at an outrageous rate while the quality, like education, goes down!

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Re Washington s Biggest Lie and Why it Continues to be Told
Posted by: SeaBud (IP Logged)
Date: December 7, 2012 07:54AM

It is undeniable that inflation will occur in the future - a 6th grader could tell you that. Recognizing the conditions precipitating rampant inflation is the trick. The rise in commodity prices is largely based on the creation of a huge worldwide "middle class" (china/india). This is counterbalanced by the availability of cheap products produced by these workers (electronics, appliances, cars). If you chose to pay for a toyota over an equal car from a third world country (coming, not available yet, but maybe Kia), that is an example of your purchase choice, not inflation. Substitution is a valid concept.

Debt is an issue in the west, but the US could EASILY balance the budget with just a few rational choices (increase age to SS/Medicare, raise taxes on wealthiest, reduce defense spending). It is a political, not an economic, issue. Note, the US will be a net energy exporter within a decade.

Read Fared Zakharia's book on the Rise of Others - the US is not falling but the rest of the world has been rising since WWII - which is natural and good as it will produce stable countries with more consumers. US citizens may no longer be able to expect filet mignon as our birthright. We may substitute other protein. My friends in Holland tell me that 2 families share a pleasure boat. This is substitution but does it meaningfully harm their lives? Not really.

Summary - "Substitution" is a valid economic concept, the world continues to change and focusing narrowly on certain segments is less valid than ever, and never bet against the United States. Having said that, times of irrational exuberance and fear will occur, thankfully, providing many of us opportunities to buy assets on the cheap! I love when fear is in vogue....

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