Homestead mailing list

[bob ford <bobford79 AT yahoo.com>]

I will reply to you 'generally' about wealth destruction, and leave mr 
buffett out of the picture.  If you own a stand of timber; that timber has 
value, which gives you  'wealth' . If the timber burns, that 'wealth' is 
destoryed.  It transferred to no-one.

In a more complicated macro-economic picture, one could say that the burning 
of your stand of timber increased the value of all of the similar timber left 
standing ? ..............


You wrote ">   1) we can not avoid the inflationary effects of the money
> printing - it will happen ".  Austrian economics would agree with you.  
> Inflation would occur simply with the printing of the money.  

There is an opposing view that says that ias long as the wealth 'destruction 
is 'equal' to the newly printed fiat money, then inflation will not occur; 
and that if the wealth destruction 'exceed' the money printed, then we will 
in fact have a 'deflationary' depression.  I tend to agree with the Austrian 
school, as do you; but , I have my concerns, still.

..............bob ford

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--- On Sat, 12/6/08, Leslie <cayadopi AT yahoo.com> wrote:

> From: Leslie <cayadopi AT yahoo.com>
> Subject: Re: [Homestead] National Debt Much > $100 Trillion & the Bond 
> Market Bubble
> To: bobford79 AT yahoo.com
> Date: Saturday, December 6, 2008, 11:32 AM
> Well, I figure that wealth doesn't necessarily get
> destroyed.......... it just gets transferred from one person
> to another.......
>  
> Using "Buffet" to illustrate
> hypothetical examples............. (all figures are
> fictitious - but everyone knows "Buffet is market saavy
> and acquires wealth - the wealth that used to belong to
> others... and "Buffet" represents all characters
> who understand how to transfer the wealth of others into
> their own pockets.)  
>  
> Let's say "Buffet" had 1 Billion in cash
> invested in Junk Bonds, which he knows are in a bubble.  He
> starts selling into the final peak and turns his 1 Billion
> into 4 Billion.  He is selling to the eventual bagholders -
> those that arrive late to the bubble ponzi scheme and buy
> the top.  He took their wealth and put it is his pocket. 
> The wealth didn't disappear, it transferred fromt he
> pockets of late-comer speculators, into his pockets.
>  
> Now "Buffet" has to deploy 4 Billion.  He's
> been watching interest rates fall and the real estate market
> activity and takes a good guess that is where the next
> bubble will be.  Heck even the Fed admitted they knew that
> is where the next bubble would be, but they had no intention
> of popping it.  "Buffet" buys a lot of property,
> and developes a lot of condos,,,, and sells them into the
> bubble and gets out of the top.  The bubble goes further
> than his wildest dreams, egged on by Clinton administration
> policies to force bankers to loan to unqualified borrowers
> or be publically called racists and not be able to get money
> from the Fed, etc..  Buffet walks away with a cool $40
> Billion..... right from the pockets of all those first time
> homebuyers and those who invested in lending them money
> (directly and indirectly).
>  
> Meanwhile, as "Buffet" confiscated wealth by been
> saavy about bubbles, he invested in Treasuries and bonds,,,,
> knowing that when the real estate bubble would pop, that
> fear would rule and people would run to bonds.  As their
> buying frenzy escalated,,, Buffet sold and his $40 Billion
> became $80 Billion.  So everyone in the world buying bonds,
> just handed their wealth over to Buffet, they are the new
> and current bagholders (and don't realize it yet...)
>  
> Simultaneously, all this fear and fear mongering is causing
> business owners who have too much credit go out of business,
> employees laid off, employees stop shopping, causing
> further destruction of businesses, private and
> public,,,,,,,,, and yet "Buffet" is buying up $80
> Billion in the stock of businesses,,,,,,,,,,, since he sees
> that as the next bubble unfolding.
>  
> Why?  In hyper-inflations, we go to full employment..... 
> Full employment is "good for business".....  Good
> for business is good for a new bubble - a stock market
> bubble.... and all those who are selling into this dramatic
> stock market fall at huge losses just gave this opportunity
> to the "Buffets" of the world.  With all the Fed
> money printing,,, in time inflation of food and fuel will
> resume forcing people to go to work, even if they thought
> they didn't need to.
>  
> Zero-sum?  In thinking about that for a bit here.
>  
> It probably is zero-sum..... for now at least.  As long as
> fiat currency allows it.  Even if it means that wealth from
> this nation is transferred to other nations and the game
> continues on other continents.  The only thing that I can
> think of that interupts the zero-sum game is barter and
> survivalism,,,, as those people remove themselves from being
> victimized by the wealth transfer game.
>  
>  
> I think I've come to a temporary conclusion that we
> will have depression and hyperinflation simultaneously.
>  
> 1) we can not avoid the inflationary effects of the money
> printing - it will happen 
> 2) wealth destruction at the business level truly is
> happening, and it will be very hard to recover from that, at
> least until banks begin to lend again.
>  
> For those without jobs, depression in terms of their
> income. 
> For those with homes bought in the bubble that are upside
> down, depression in terms of the value of their homes being
> depressed.
> For those who bought bonds at the top here, depression as
> the value of the bonds somewhere in the future will drop.
> For the time being, stock prices are depressed, so those
> who listened to Maria Fartiroma as she nearly had an orgasm
> on TV at Dow 14k, the value of their stocks are depressed.
> For those that bought futures and some currencies,
> depression for now, while prices are low.
>  
> Meanwhile, the stealth inflation will start as imported
> goods start to rise sharply.  
>  
> The masses of people won't be able to sell some assets
> (at break-even or a profit), hence depressed prices,,,,
> while at the same time prices of goods and services rise.  
>  
> After years of reading this is what I've come up with
> at least.... simultaneous, depending how positioned.  
>  
> The truly scary thing is the government.  How many bought
> real estate for rental property?  Just wait til the
> government does rent control.... and screws the rental real
> estate owners.
>  
> and on and on................
>  
> For myself - I'm preparing both ways........ growing
> food for the first time ever is one component.   My
> parents lived thru the depression, one in the city, one on a
> dairy farm... the one in the city wound up having to leave
> the US for 6 years until recovery started.  The other grew
> extra food for delivery to a large city.
>  
> Course I do try to lighten things up --- once in a
> while.... I figure that stockpiling things that will always
> be in demand would be a good idea.......... so here's
> one of my quirky ideas.... name one thing that half the
> population needs (women) every month - no matter what..... 
> LOL.  Now there's a good reason to grow cotton, or at
> least stockpile boxes of supplies !!!
>  
>  
> :-)
>  
>  
> 
> 
> --- On Sat, 12/6/08, bob ford <bobford79 AT yahoo.com>
> wrote:
> 
> From: bob ford <bobford79 AT yahoo.com>
> Subject: Re: [Homestead] National Debt Much > $100
> Trillion & the Bond Market Bubble
> To: cayadopi AT yahoo.com, homestead AT lists.ibiblio.org
> Date: Saturday, December 6, 2008, 12:05 PM
> 
> That was an excellent post Leslie, and I agree with much of
> what you wrote,
> though there is still a way for 'deflation' to tank
> the world economy
> before and without hyper-inflation, though I think it is
> less likely.  Wealth
> can be destroyed.  It is not  a zero-sum game.  The
> decision whether to base
> future movement on a deflationary or hyper-inflationary
> scenario is part of the
> problem , currently, for me.........
> 
> ----------------------------------------------------------------
> 
> 
> 
> --- On Sat, 12/6/08, Leslie <cayadopi AT yahoo.com>
> wrote:
> 
> > From: Leslie <cayadopi AT yahoo.com>
> > Subject: [Homestead] National Debt Much > $100
> Trillion & the Bond
> Market Bubble
> > To: homestead AT lists.ibiblio.org
> > Date: Saturday, December 6, 2008, 9:57 AM
> > There is the published national debt (on-balance sheet
> > >$10 Trillion),,,, and then there is the
> off-balance
> > sheet debt (i.e think Enron)............ 
> >  
> > According the Fed this past spring, the off-balance
> sheet
> > debt was over $99Trillion.  It includes those
> > "unfunded liabilities", like social
> security, the
> > current wars, etc.
> >  
> > This is the speech given by Richard Fisher, the CEO of
> the
> > Dallas Federal Reserve Bank says that the actual
> number was
> > $99.2 trillion back in May of this year.  The
> national
> > debt has to be even higher now,,,, just look at how
> many
> > more bail-outs have occurred since this speech.
> >