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MrRodgers -> RE: RonPaulmessageXX...dot com (9/6/2015 2:05:20 PM)
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ORIGINAL: joether
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ORIGINAL: MrRodgers
I don't how you read that into this and others to be honest but I wear drawers and am not worried at all about the US dollar at least for the foreseeable future.
I implied the whole 'don't get your panties in a wad' towards Mr. Ron Paul, his supporters, and the 'Low Information Voters' at large an on this forum. Not directly towards you. My apologizes for that confusion!
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ORIGINAL: MrRodgers
The value of any currency is in fact the expectation one has in what labor or enhanced value one would receive in exchange for it. The confidence in a currency is held that the value remaining steady over the years, i.e., as a store of wealth.
The rate of currency is not based solely on itself, but how it compares to other currencies as well. Is the US Economy stable compared to nation 'A'? Is the US Economy growing faster than nation 'B'. How likely could one invest within the US Economy (be it stocks/bonds, or physical properties) verse nation 'C'?
Its considered both a 'leading' and 'trailing' indicator of the times; depending on how you view currency from a financial stand point. Leading, if you take a 'financial view'. Trailing if you take an 'accounting view'. Either way it gives an indication to the nation's health, economically speaking. But it shouldn't be used as the only tool for understanding the nation's overall economic health.
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ORIGINAL: MrRodgers
One very big fallacy these fear-mongers (sellers) push is that age old expression...'printing' more money. At no time in the last 40 years or more, has the US ever 'printed' up new money as defined, as would need be to actually make the point...adding new currency with new serial numbers into circulation.
Actually we do print more money. That 'paper' bills have a 3-5 year 'usage' life, and coins like 17 years. Is the nation printing more money? Yes. Just not anywhere near the level the fear mongers state. Think of the population of this nation in the 1920's compared to 95 years later. Much large, right? So more money has been printed. But that the money was printed to match the growth of population so that there would be a steady flow in the 'Money Market Appartus'. No, I'm not going to try to explain that economic engine here. I understand how it works; I dont think I could fully explain it. Particularly to those (beyound yourself) that have never taken a college level micro or macro economics course in their live time!
With the creation of credit and then debit cards, printed/coined money has seen a decrease in creation and usage.
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ORIGINAL: MrRodgers
Contrary to popular belief, money 'creation' in a modern economy does not directly involve the manufacturing of new physical money, such as paper currency or metal coins. (with extremely few exceptions)
'Popular Belief' is code for: not holding even a high school's worth of knowledge on business; let alone a college degree's.
The creation of wealth, verse 'being rich' are two different concepts. To which I will refer you to a good book that explains this: "The Millionaire Next Door". You can find it in your library!
The creation of currency has always been modern. Since each groupings of people since before Christ was born, considered their culture and life 'modern'. The Roman Empire was much more modern that those before them. And they had coinage!
Money 'creation' is an artificial value. The easy example is the housing market. Someone bought their house for $75K. Forty or fifty years later, that house is now worth $550K. Did that homeowner have a printing machine that created $475K worth of bills and then stacked them away in the garage? No of course not! Its how 'supply and demand' have created this worth of the home to the owner.
The value of something's worth in money is determine by the 'buyer' and 'seller' whom mutually agree on terms. In the 'old days' that was called 'bartering'. With the technological advancement known as 'currency', one could exchange goods for money. Then came the idea of denominations of the basic coin. Rather than carrying around a bag of coins (which is heavy), they could carry two coins that was worth the same. Centuries later, printed money lighten that load. Within the last thirty years, one could buy stuff with plastic (which weighed far less). Yet, the value of something remains the same: determined by the 'buyer' and 'seller'.
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ORIGINAL: MrRodgers
Inflation: I once read a Georgetown Univ. econ Prof. who said he believed that the idea of money was to be described as M1, M2 and up to M5 with M3, 4 & M5 invented to accommodate a thesis for new PHD and actually represented no practical difference in actual money supply.
M1 is cash, M2 is readily marketable securities, i.e., something one can sell and turn into cash. So according to most analysts, that's all one need know for policy issues.
I write all of that to make an illustration about the definition(s) of inflation. The actual definition is the increase of costs. BUT that can also mean, an increase in prices because those costs are somebody's price.
Got the actual professor's notes there?
Here is a better understanding of inflation (look also to the author's link).
I could type it all up, but the author does a decent job (minus all the spelling/grammar errors I might make....).
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ORIGINAL: MrRodgers
So the mere 'increase' in the money supply, or low interest rates do not require by any laws of economics or man...an increase in price.
You have it backwards. Price has to increase, before a money supply is needed to cover the additional moment. Your explaining it from a reactionary viewpoint. While that is not wrong, its certain not the most correct understanding of the concept. The increasing of price, can lead to the increasing of a money supply (micro). Not always, but sometimes (at the macro level).
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ORIGINAL: MrRodgers
Low interest rates and higher costs (prices) in my retail business, in now way...requires me to increase my retail prices. So one (I) could just as easily define inflation as the protection of sustaining of the return on capital or taking advantage of increased demand.
The price in your retail establishment are not based on anything except your views of the market. You are the final determining factor in the cost of your goods and services. Most good business people base the price upon many factors; but in the end, its their decision that determines price.
Inflation is a 'trailing indicator' of the times. Meaning we never know what inflation is at the current time/date. We understand its change over a two or three month period of study. But be careful about making assumptions of the market from the micro level; as the macro level does not always operate on the same terms of understanding. The bigger your company, the more likely you'll look at things from the macro level rather than the micro. There is no 'dollar level' that determines whether one will look at things from the micro or macro level in business. It is so subtle of a change that it is not a 'blip' on most people's radar screens.
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ORIGINAL: MrRodgers
So in the US and the world economy, the dollar is in not under any pressure, there is little to no inflation and thus still remains the world's steadiest, most secure and strongest currency and ultimately...store of wealth. So there is no reason to change one's portfolio or to fear what these fear-mongers say or to buy their advice.
I beg to differ!
Within the United States of America, the worth of the dollar changes due to a number of factors. One factor is location. How much 'house and yard' can one get in the greater Boston, MA for $500K? Not much. How about for Austin, TX? A much bigger house and yard. How about north of Fairbanks, AK? Big house, Big Yard, no neighbors. But then, what is the likely 'Return on Investment' (ROI) for each house? In the Boston area, the price will rise steadily and quickly. In Austin, the price will rise, but not as steadily compared to Boston. North of Fairbanks? You first have to have a buyer in order to make a sale. Who the hell wants to live north of Fairbanks?
Another factor is the stability of government. If the US President is having a bad time in office, America's economy woos worsen. When the President is experiencing good times, the economy can be effected. Same with Congress. If Congress is 'humming' along, the economy will generally drive towards a bull market. When Congress is not operating as it should, the economy steers towards a bear market. Investors here in America get worried when some idiot Republican talks about shutting down the US Government. If you dont believe me, study the economic flow of events when we had a partial shut down due to Sen. Ted Cruz's outburst a few years back. The economy shifted to the negative during that two week period.
A third factor is the employment of workers. If workers are poorly compensated for their work; generally you will find long periods of downward economic growth. When workers are paid well (or making enough disposable income), the economy can shit upwards for long periods of time.
But the United States of America does not operate on a national economy, but a world economy. Thanks to technology and logistics, the nation deals as easily with nations on the other side of the planet (i.e. China) as it does across state lines. When the American financial markets took hits in 2006 to 2008, the world's economy was equally if not more effected than within the United States. Recently China's economy has experience set backs. Within six hours, the markets in Europe, (and few hours after that) an America, were effected.
Notice the United States has a $16 trillion debt, yet no one is demanding the collection? Because all the financial groups around the planet know, that if that debt was demanded, the US Economy would go down the tubes. Within a few hours after that, so would the world's economy. Each nation around the world holds differing levels of debt. Each nation needs some level of debt to actually operate (macro level). This does not make sense to most people at the individual level (micro level). It allows nations to 'make offers' based on debt to handle purchases of resources or services.
On the surface, no one is paying the United States to fly bombing runs on ISIS in Syria and Iraq, right (or gathering intelligence)? Yet, those nations in the area are benefiting from our intelligence and bombing runs. Yet 'how much we owe them' is decreasing. All of it is 'off the record books'. It allows nations a reason to deal with each other, even if their relationship is icy (i.e. USA verse USSR during the cold war).
An an individual level, I would suggest this:
A ) Take time and study financing. Take some course work. Read books.
B ) Find a good financial person like a Certified Financial Planner (CFP).
C ) Take what you have learned and how your being advised into consideration when investing
D ) Realize you will take financial loses regardless of how well you studied the subject matter from time to time.
E ) If your ROI is lower than the market's, then consider that your decision making may have some flaws and study them further (with help from your financial person).
F ) Buying gold is a fool's lost of investment. Be it in a bear or bull market. Only fools invest into gold when the market takes a down turn. The smart people have usually performed steps A, B, and C; therefore knowing how to invest more intelligently.
1) The value of a currency as to its actual buying power, IS the expectation of what labor or enhanced value one receives in exchange. The value of any currency as reflected in another currency's ability to exchange called exchange rate and a matter purely of speculation. Part of that speculation is in the underlying value of it buying power but in forex arbitrage, the goal is pure speculation to derive a profit from the spread between the buying and the selling of the two currencies in question.
2) As I wrote, almost all of my research informs the definition of inflation as singularly the increase in the money supply. The money supply can be arbitrary and thus does not need be in response to prices, or effect prices up or down. Thus my stipulation still holds true...the mere increase in its supply does not cause or define inflation. Your link backs that up.
3) My price at the retail level is purely my decision to either absorb in increase in costs or reflect those costs in concert with what I chose to be the minimum return on capital or an achievable maximum return all with considering any competition. Inflation in the costs of my goods and services to me is quite known, down to the last penny. It is not some average or an estimate. Also, all of my considerations are on a micro level.
4) As for the strength of the dollar, what I said is true. Within the US, it is a matter of my expectation of the labor or enhanced value of a good I can expect for [it] while in the world markets, it is a matter of the confidence in the dollar to maintain a store of wealth. So domestically there is confidence in its buying power, and world-wide there is strong confidence in [its] store of value as reflected in treasuries selling out very quickly still and at historically low interest rates. All of the fear-mongering since Obama's election has been partisan bullshit.
I need consider no other factors in deciding whether or not to 'abandon' the dollar as these promotions like Dr. Paul's would suggest. The speculation in govt., the economy and various issues in the marketplace have stood the test-of-time since Brenton Woods when Nixon and dollar really, had the strength to end the era fixed exchange rates (1971)
5) As for our debt, NOBODY can demand their money back. Let's get that straight now. ALL they can do is...sell it. Furthermore, markets are always making corrections and yet...the dollar is never 'abandoned !!' In fact, I agree with those who suggest that international investors are more or less...addicted to the dollar and they can't abandon it. They'd be shooting themselves in the foot.
6) Rather superficially, (surface) no one is asking America to do much of anything on the international front to which they have ever contributed financially but for a few very profitable exceptions. The extent to which any of our military campaigns or the US economy at large, effects the strength of the dollar, none has occurred with the brief exception of oil embargo which was market manipulation due to 'Market Power' as illustrated in your link almost all of which backs up what I've been writing on inflation and also...the strength of the dollar.
As for what I need educationally. It is no formal or institutional education at all. I need no CFP, or advice on investing as at my age, I am beyond ROI and into the party phase of my life. My only concern as usual...is taxes.
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