The Lost Art of Economics - A challenge

I'll admit it, I'm not an economist. I do understand economics like I understand how to walk, sit and speak. If you live it, you understand it, unless you aren't paying attention.

I have 4 major disagreements with current economic forecasting theory in the mainstream media and politicians.

MY THESIS:

Inflation isn't caused by high prices. High prices aren't even a harbinger or indicator of inflation. In fact high prices often can be a deflationary influence. Yet, every time I hear a report about oil prices, diesel prices, gas prices, home heating prices and steel prices it's always followed by the statement that this could lead to higher inflation. Then worse, politicians push on Greenspan and the Fed to do something about inflation (by raising interest rates).

MY FRUSTRATION:

How dumb can you get and still breathe? Sorry to be so blunt but I wish one cogent person on the planet would help me understand where this grand delusion comes from. Don't they teach economics in high school anymore?

MY ARGUMENTS:

1. High prices for inelastic demand goods (Gasoline, diesel, home heating in some part steel) act as a TAX on the economy. (the word taxing has nothing to do with IRS and everything to do with negative stress). If I have to pay more for things I MUST buy I will have less money to buy things I would LIKE to buy (discretionary income). I an expert on having too little discretionary income.

2. Inflation comes from shortages. Shortages? Oil, nope. Gasoline, Temporary. Diesel ditto. Steel. All of the above has to do with interruptions in logistics, not from core scarceness. We have little genuine scarceness. Oh, those prices will be higher for a while, but they aren't inflationary. Not inflationary because there far too much capacity for everything else. Name me ONE item that is short (for real). Milk, bread, rental property, automobiles, clothing, food in general, tires, name ONE. Every item in our economy is in abundance or surplus. I thought about this long and hard. I can't come up with one thing you can't buy all of that you want at whatever price you are willing to pay. That's a harbinger of deflation not inflation. Too many goods chasing scarce dollars. That brings me to #3.

3. Real inflation comes from too much money chasing too few goods. Look in your heart of hearts. Even among wealthy friends. Does anyone have so much money they are chasing too few goods? Do you? The big problem we have in our economy is liquidity. People have too little money. Real incomes in America on average adjusted to 1970's dollars basis is DOWN, a great deal. I (and you) are making less money than you did then in real dollars. In 1972 I knew many people who were making $50,000 per year and it wasn't considered big money. The shop workers we had then in our factory during that time were making $15 per hour and they tried to organize for more money. UPS workers in 1985 used to start at $18 per hour to load trucks, today it is HALF of that! Too much money. Not on your life.

4. High priced inputs only impacts profit not selling price. This is the issue I have the biggest argument with the MSM on. If it costs me more to produce a widget because of fuel prices I can NOT automatically pass on that higher cost to the consumer. I can try. But, the buyer who looks at my goods, prices them and makes a decision based on reduced discretionary income to buy or not at a higher price decides if I will be allowed by the market to sell at a higher price. The real price anyone can get is what I am willing to sell it for paired with what you are willing to buy it for. If we agree to that transaction that's the price. Not what I asked and not what you thought you were willing to pay. The actual price is after the transaction has taken place. So, for inflation to begin means lots of people willingly pay higher prices for discretionary goods. I don't see that happening any time soon. Discretionary goods are the only source of inflation, inelastic demand items higher priced are a drag on inflation pressures.

MY CHALLENGE:

I would hear anyone out who thinks I'm all wet. Your experiences might trump my theories. I need you to do more than tell about old aunt Helen, what happened to her, poor soul. Give me sound economic rationale that supports your argument. I, like many of you, lived thru and learned well from a rampant inflationary cycle that ended up with interest rates of 20% as normative. I see NOTHING like this in our economy at all today. AND?

MY CONCLUSION:

The biggest concern I have is an Illiquidity in the money supply as happened after 9-11 that causes a near miss with deflation and potential depression. We are tottering on that today.

THERE IS NO INFLATION!

The Terminator Terminates the Courts and Dumb Politicians

I love the fact that AHNOLD had the courage to do what the people of California wanted.

They voted fair and square in Prop 22, no gay marriage in CA

Legislators and Courts said, uh uh, you can't do that, we know better. They passed a law that said Gay Marriage is OK. Take that you voters. We know better than you..

SO, the legislator's petulance?
.

Arnold vetoed it.

Good on him!

The courts and the legislators, Oh, They'll be Back. They know better than the vote of the people, So let's have prop 33. Vote all over again. The the courts will rule against the vote of the people and spineless politicos will cover their butts by voting PC and on and on.

Hang in there Mr. World. The courts don't make law except in Iran. (and sometimes Californaya)

Frustration with FEMA

I watched the news tonight. People are frustrated with FEMA. No answers. No answerers. If you get a human on the phone they have another phone number you have to call. I hate to say it, typical government. But that's what you get when you recite the 23rd PALM (as in handout) The Government is my Shepherd, I shall not want..

I have dealt with another Governmental agency I-S which shall go nameless, for the last year. When I call the (no) Service Center I get either a person who's retired, does this part time and knows little about his or her job or someone who, how can I say this properly, is there in part because of an equal opportunity employment policy (not that there's anything wrong with that).

I understand these people I saw on TV. I have compassion.

Where's General Honere. He'll kick some butt! (and take some names)

I'm calling my congressman next, who just happens to be Denny Hastert, my close personal friend. Between those two bulldogs maybe something will happen.

Now you can put your money where your MOUTH is!

I love Chicago. I came here as part of the Trading Establishment 20 years ago. You know, soybeans, pork bellies, bonds and gentlemen don't trade oats.

Some enterprising traders have put together a real life environment to allow you to trade on events, their probability and outcomes.

If you have an opinion and you got the guts you can trade for real money.

You take a position and at some point it either happens as you predict or it doesn't. It all works against a clock. If it happens it goes off the board at 100, if it doesn't it goes off at zero.

So, now if you believe whatever you can put your money down. The site is a little hairy but I'll bet you can find your way around it. Click on markets. You'll find it.

I will have Compassion on whom I will have Compassion - God

Many people with a poor understanding of the nature of God is that he always blesses everyone, that everyone gets an unlimited measure of mercy and compassion, that God is just a big sugar daddy looking for ways to make your life better. This misunderstanding usually is parroted by people without much depth who criticize others with statements of the following preface:

• How can you call yourself a Christian if
• Jesus only spoke about Love and Forgiveness
• If God is a God of Love howcome
• and my all time un-favorites, Jesus said, don't be judgmental toward sin
  
• and he said: let he who without sin cast the first stone so we aren't supposed to be ____________

So, we are supposed to be as un-wise and indiscrimating as this god they have in their imaginations. It suits their purposes of course, don't question my motives, just give and close a blind eye to what I do. We used to call that being an enabler. Too harsh? OK, read on.

I'm not going to try to help you understand the Holy nature of God. I don't myself. But if you believe any of the above, I need you to think about this verse. God says to Moses in exodus 33:19. "" I will have mercy on those I will have mercy and compassion on those on whom I will have compassion"". Paul the Apostle reiterates this in Romans 9:15. Read all of Romans 9 and you will get a big picture of the situation.

The essence of these verses is simply this, God is no respecter of persons, we are not to ask why. God is not injust but he's not just according to human measurements. He does discriminate in his mercies, judgments and compassions.

So should we.

Julie Neidlinger (I will stop promoting her when she gets boring which may not be anytime soon) writes a brilliant essay on Compassion. I think everyone who struggles with wise giving needs to read this. I have forwarded it to several pastor friends and have found it to be pretty sound theology. They agree.

In The Chronicles of Narnia, an allegory by C. S. Lewis, the author has two girls, Susan and Lucy, getting ready to meet Aslan the lion, who represents Christ. Two talking animals, Mr. and Mrs. Beaver, prepare the children for the encounter.

"“Ooh,"” said Susan, "“I thought he was a man. Is he quite safe? I shall feel rather nervous about meeting a lion."”

"“That you will, dearie," said Mrs. Beaver. "“And make no mistake, if there'’s anyone who can appear before Aslan without their knees knocking, they'’re either braver than most or else just silly."

"Then isn'’t he safe?"” said Lucy.

"“Safe?"” said Mr. Beaver. "“Don'’t you hear what Mrs. Beaver tells you? Who said anything about safe? Of course he isn'’t safe. But he'’s good. He'’s the king, I tell you!"”

We have a King, Jesus, he isn't safe, but you can trust him.

Rehnquist and Me

Everyone has a double, a doppelganger, a un-genetic twin.

There are people who make a living impersonating famous people because they look just like them. I never cashed in.

My double just died. Chief Justice William Rehnquist.

20 years ago when I moved to Chicago I was always amazed at people who would look at me funny, who would comment they knew who I was, and some would outright ask me. Walking thru airports particularly on the east coast was a hoot. Here'’s the strange part. I didn'’t know what it was all about until one day a man stopped me on the streets of downtown, asked me, then said, ""“You look exactly like the Chief Justice of the Supreme Court""”.

Of course, that'’ll get your attention. So, I found pictures. Sure enough. He had the temerity to look like me. The rascal.

Remember the movie Dave? The President of the United States has a stroke, they find a man that looks just like him, he impersonates the President. Does pretty well. Falls in love with the soon to be widowed first lady. Happy endings all around. I liked the movie. Thought it might mean that someday I would get a call to sit on the supreme court in lieu of the Chief Justice. My phone never rang. I guess my shot at power is gone. Pity, I would have been good at it. HEH!

I gained a pound or two. He got older. It was always interesting to see him age. I kept thinking, maybe I'’ll look that good 20 years from now. When he was 60 and I was 40, he looked young and I looked, well like I look now. We Redlins have this habit of hitting an age and stopping.

I hope the Chief Justice rests in peace.







He always was a good looking fellow.