\nback up to where they were before the crisis. I used to buy houses and
\napartment buildings for 5 times rental income. That was a good deal. But
\nnow, I can’t get those deals. Too many buyers in the market.<\/em><\/p>\n
But Delray is special. It’s a very strong market.<\/em><\/p>\n The second rationale for a stock market boom was announced by Ben Bernanke. He’ll keep printing money<\/strong><\/a>, he told the Senate, come Hell or High Water, whichever comes first.<\/p>\n With the Fed behind it, stock market bulls felt sure the Dow would Why?<\/p>\n When Congress passed the Budget Control Act of 2011, it kicked the To hear some in the press and the government describe it, this … and worst of all… the Zombie Apocalypse will begin… with Well, you know that this is nonsense. But you may not realize how For Krugman, Bernanke, Stiglitz et al. the worst thing that can The sequester<\/strong><\/a> Result? The depression was over within two years. Full employment was restored. GDP roared ahead.<\/p>\n But today’s leading economists are convinced that they know better. Meanwhile, on the front page of The Wall Street Journal<\/em>, more mushy thinking. Describing Japan’s economic problem:<\/p>\n … the country’s economy is stagnating because prices are stuck at 1980s levels.<\/em><\/p>\n Come again?<\/p>\n Prices are “stuck.” Is that any different from saying prices are Oh dear, dear reader… only a person who has studied economics could When prices go up, people don’t want to save… and don’t want to Rising prices also mislead investors and households on the other side Anyone who thinks about it seriously knows that there is more to a Demand is what you get as a result of saving and investment… not But if you try to push up demand without adding real wealth you are Which brings us back to prices that are “stuck.” Stable prices are a Sequester? Bring it on!<\/p>\n Regards,<\/p>\n Bill<\/p>\nThe End Is Near<\/h3>\n
\nhit a new record yesterday. But it didn’t. Instead, it backed away from
\nWednesday’s gains. Yesterday, the Dow went down 20 points in
\nanticipation. Gold dropped too… adding to the confusion.<\/p>\n
\ncan down the road… to the first of March 2013. That’s when the dreaded
\n“sequester” was supposed to happen. Automatic U.S. government budget
\ncuts are meant to be triggered… cutting off “demand” for certain
\npublic and private services.<\/p>\n
\nsequester will be the end of life as we have known it. The feds will
\nlack money for the basic services that maintain civilized life. After
\ntomorrow, the borders will be opened… terrorists will launch an
\nassault on Washington… old people will drop dead in hospitals…
\ncancer cures will be abandoned… troops won’t be fed…<\/p>\n
\nmillions of zombies marching on Washington in search of money they never
\nearned.<\/p>\n
\npreposterous it is. Even with the sequester, spending still goes up. The
\ndifference between the sequestered budget and the non-sequestered
\nbudget is trivial.<\/p>\n
\nhappen to an economy is a fall in “demand.” And they see it coming
\ntoday!<\/p>\n
\nreduces “demand” from the federal government. But that is a good thing.
\nWhen the depression of 1920-21 struck, Presidents Warren Harding and
\nCalvin Coolidge had no Nobel Prize-winning neo-Keynesian economists to
\nhelp them. So they had to use common sense. They simply cut the burden
\nof government \u2013 reducing taxes and cutting (sequestering) government
\nspending.<\/p>\n
\nThey believe “sequester” means less demand. And less demand is bad.<\/p>\nMushy Thinking<\/h3>\n
\nstable? No, it isn’t. In Japan, consumer prices are about the same today
\nas they were 30 years ago. According to the sages at the WSJ<\/em>, that too is a bad thing; it causes economic stagnation. Why? Because it cuts demand!<\/p>\n
\nbelieve such a silly thing. In America especially, the economics
\nprofession has led itself into mush. It believes that what really
\nmatters is “demand” and that rising prices encourage it. It also
\nbelieves that the role of policymakers<\/strong><\/a> is essentially demand management.<\/p>\n
\nwait. They know they’ll get their best deal now. So, they spend. Demand
\nincreases.<\/p>\n
\nof the ledger. They see their investments going up. They see their
\nincome rising. They figure they can spend more. Demand increases.<\/p>\n
\ngood economy than just demand. Spending isn’t what makes a healthy
\neconomy. It’s saving. Building capital. And using the capital to earn
\nprofits and pay wages.<\/p>\n
\nthe other way around. There is no real demand, in other words, until you
\nhave wealth. Wealth allows you to spend. Real demand goes up.<\/p>\n
\njust wasting your time. Or worse, you’re tricking everyone in the
\neconomy and causing them to make mistakes.<\/p>\n
\ngood thing. They make it easy to tell where you are and where you’re
\ngoing. If, for example, your income is “stuck” and your wealth is
\n“stuck”… then you should be stuck too. Spending more money you don’t
\nhave is not the way to unstick yourself.<\/p>\n![\"Bill](\"https:\/\/www.insidersstrategygroup.com\/images\/web\/bbonner-sig.gif\" "\\"Bill")
<\/p>\n