U.S. bailout package will spark inflation and shift the burden to foreign investors

[luckytxn 2,265]

Yes and that long recovery was blamed on the government trying to throw money at the problem. It supposedly made the problem worse and deepened the depression. It is one of the main reasons I am cringing at this bailout and stimulus #######. It is a different age now and all and maybe it will be different this time. There are many more examples of horrendous run away inflation and deflation and what not because some government tried to correct the problems facing its citizens. I really think they mean well and all but damn what if they are wrong?

Edited January 26, 2009 by luckytxn

[w¡n9Nµ7 §£@¥€r 123]

We could be in for a long ride down...

[luckytxn 2,265]

We could be indeed and the rest of the world is going down with us.

Another thing that everyone needs to remember is also that in history there has never been a successful government intervention to correct this type of problem. The only way this problem has been solved is to let the weak go down and the strong survive. Afterwards everyone remembered the lessons learned.

[w¡n9Nµ7 §£@¥€r 123]

Afterwards everyone remembered the lessons learned.

Until the next time they forget.

[luckytxn 2,265]

True and most do not read and remember history.

[w¡n9Nµ7 §£@¥€r 123]

Or they choose to ignore it, because this time it's different.

I remember hearing a lot of that during the real estate bubble from NAR economists denying there was a bubble at all.

[geezer 1]

Afterwards everyone remembered the lessons learned.

Until the next time they forget.

I'm not sure if there is anyone living today that has experienced what is happening now. There are some parallels to previous recessions and even the Great Depression but my feeling is that this is very different than anything thats happened before.

Because of this uncertainty lots of mistakes will probably be made when we look back but nobody no what to do now for sure....

[luckytxn 2,265]

Total meltdowns of economies have happened many times before. Actually recently but not in the U.S. It can be studied now and see what is right to do and what is wrong.

[geezer 1]

Total meltdowns of economies have happened many times before. Actually recently but not in the U.S. It can be studied now and see what is right to do and what is wrong.

Maybe..

I dont share your optimism, hope your right...

[luckytxn 2,265]

Optimism? Ok.

[w¡n9Nµ7 §£@¥€r 123]

[Rocky_nBullwinkle 6]

There more than a few of us that are waiting for the next upturn in the economy to cash out and take the spouse back to her homeland. A friend did that last April, taking his wife and two kids to live near Baguio, in the Philippines. I am thinking his timing is pretty good, since my own retirement lost half its value last year. The only investments I have that are still holding value are all foreign investments.

--Bullwinkle

[mRx 16]

And the best thing to do is just to stop spending so much money and start getting a surplus and paying down the debt. Radical idea. Anyone want to guess who did it last?

Lucky, thats what Geezer was talking about......deflation. If we all stop spending, that's going to cause deflation. It's not a good thing. Any price instability is bad, inflation or deflation. The bad things about deflation would include.......

would be consumers putting off purchases further in hopes of even lower prices.

companies scale back production due to low demand, thus cutting more jobs.

Not necessarily.

Historically, deflation occured once inflation reached it's precipice, at which times banks become hesitant of their rising liabilities and low reserves, so they contracted credit. The increased savings on the part of the consumer (due to uncertain future), is essentially an increase in the demand for money, which consequently leads to the rising supply or surplus of production. Hence, prices fall, wages fall, and the highly demanded dollar gains back "purchasing power", which is really all that counts. It doesn't matter if you have 1 penny or 1 million dollars, it matters what power that currency has to purchase. If wages are allowed to fall to actual market levels, then unemployment wouldn't be necessary, as costs would lower nearly equally with prices for producers. Once prices stabilized, then purchasing would increase, actual wages would increase, and the economy would reach an equalibrium.

[geezer 1]

Optimism? Ok.

Optimism that people can study and know what is the best thing to do in this situation.

As I said before I dont think anybody really knows what is going on, how much of the world ecomony is at risk and what to do to fix it.

I personally dont see inflation as a risk now, I'm much more worried about deflation.

I can see a scenario where assets (housing, stocks, commodities, wages ect.) may only be worth 10-30% of their value at their peak of the last few years. If they crash to those levels it could take a generstion to recover.

An equilibrium at those levels could very well cause massive civil unrest, and in such a scenario you can be sure immigration will all but be stopped...

[w¡n9Nµ7 §£@¥€r 123]

I can see a scenario where assets (housing, stocks, commodities, wages ect.) may only be worth 10-30% of their value at their peak of the last few years. If they crash to those levels it could take a generstion to recover.

An equilibrium at those levels could very well cause massive civil unrest...