Yes, I’ve already tore him a new logic hole in another post. But if he get’s to write a 2nd column on Yahoo Finance on the same retarded topic, I should get to write a 2nd post on why he’s still a worthless piece of crap. If you don’t feeling like reading the whole thing, just skip down to the last few paragraphs and you’ll get the jest of my beef.
Rich Today, Poor Tomorrow
“this week I’ll explain why deflation will severely punish the upper middle class. These are the people who think they’re rich because their houses and stocks have gone up in value — that is, because of inflation.”
Inflation is disadvantageous to lenders and those on fixed incomes. If something goes up in value, it isn’t because of inflation. That would just cause something to go up in price. Value and price are not interchangeable, I explained this all last time in my Dollars/Cadillac’s/Girl Scout Cookies analogy. Lil’ Bobby apparently hasn’t learned his lesson.
“People concerned about inflation today tend to buy big houses and nice cars. They believe that the purchasing power of the dollar is going down. But what happens if cash becomes king?”
People concerned with inflation today tend to buy gold or oil or other commodities that retain their intrinsic value regardless of what’s happening with currency. It’s not a matter of belief; inflation is defined as the rate at which the purchasing power of the dollar is going down. Your brash stupidity makes me want to physically hurt you.
“Today, nationwide savings are low and debt per household is up. Most of us know the following equation from Economics 101:
cash + credit = the economy”
Well, I didn’t take Economics 101. While in college at KU I took Econ 144 (Introduction to Macro Economics) and we didn’t have any equation like that. Most of us don’t know that equation, because much like yourself Robby; it is a worthless piece of crap. In fact I don’t think you ever took Economics 101, because if you had you’d be able to understand the fundamental definition of inflation.
First off, to describe something as all encompassing as the sum of all human monetary interactions, you’re going to need a hell of a lot more than 2 variables. The only thing cash + credit would equal is total purchasing power.
(On an aside, the most absurd “equations” I’ve ever seen, complete with pretty orange arrows, like he’s trying to be profound or something, it’s good for a laugh to anyone who passed 7th grade algebra, check it out)
“Ever since 2000, there’s been an oversupply of credit. When the Y2K threat loomed, the Federal Reserve flooded the market with credit. After the terrorist attacks of 9/11 and the stock market downturn in 2002, the market was again flooded with easy credit. Excessive credit and lower interest rates kept the economy afloat.”
The Federal Reserve is responsible for promoting “full employment, low long-term interest rates, and reasonable price stability.” (from the Full Employment and Balanced Growth Act in 1978) by regulating certain kinds of financial transactions. The most well-known of which is the interest rate that banks change one-another for overnight loans, this trickles up and eventually affects the interest rates of all loans executed within the US (although indirectly.) The Federal Reserve does not issue credit, as anyone who’s ever passed Economics 101 could tell you.
“In the first five years of his presidency, President Bush borrowed nearly a trillion dollars, more money than all of our previous 43 presidents combined”
Most. Wrong. Sentence. Ever.
Firstly, no president “borrows” money. The citizenry “borrows” If you’re looking for a government entity to blame, constitutionally, the responsibility lies with Congress in the House of Representatives.
Secondly, from 2000-2005, the national debt increased 2.2 trillion dollars. Also, the previous 43 presidents combined for a national debt of 5.6 trillion dollars.
Thirdly, it’s a record of abysmal fiscal stewardship of the citizenry’s money. By the end of President Bush’s term, it will likely be the worst record ever. These are the facts; there is no need to lie about them for effect. It’s dishonest and a sign of a rotten soul.
“If the credit markets bust, there could be millions of couples… who seemed rich but are suddenly poor. This could send the lending rate of the dollar higher, making the value of the dollar higher as well — essentially causing a deflation.”
‘Could send the lending rate higher?’ how else would the market ‘bust’? Seriously Bob, I’m tired of having to correct you all the time…
“I don’t want the U.S. economy to go into a short squeeze, and I hope the credit bubble doesn’t burst. Deflation isn’t good, and inflation is easier to cure than deflation.”
…but I keep having to. Deflation is fairly simple to fix, just go down to the basement of the treasury building to the printing press and press the big button labeled “ON” Bam! Instant increase in the money supply. The cure for self-perpetuating inflation is for the Federal Reserve to jack up the prime interest rate to the stratosphere. Ask anyone who got a mortgage in the late 70’s how “easy” their 17% interest rates were.
“If the credit bubble bursts, not only will credit disappear, but people will stop spending and start hoarding cash, and savings will increase. Money is fuel for the economy, so when credit is gone and money is in hiding, the economy slows and a recession — or worse, a depression — can occur.”
Money is NOT fuel for the economy. Money (currency) is simply the medium through which the economy uses. Much like paint, or marble, or sound isn’t the fuel for art, it is merely the medium through which the artist conveys the emotion of their mind.
Productivity is the fuel of the economy. Exchanging goods or services for mutual benefit is its foundation. Why are we better off, as a society, then our grandparents, or their grandparents? Is it because we printed billions of pieces of paper with pictures of dead people on them? Is it because there are more people on the planet? Is it because we pulled more shiny metal out of the ground? I don’t think so.
Over our history we have observed the world around us. We have learned to do things better. We have used our minds to shape the world around us. We can make things faster, better, cheaper than ever before. We can serve one another with added convenience. We are better off because we are the sum of human knowledge. We are better off because we are more productive.
Productivity is the lynch pin to societal evolution. Without it we’d nothing but a clan of hunters and gatherers. With it, just look around at what we can do.
So you tell me Bob, where is the redeeming quality of your work? Your fundamental understanding of economics is wrong; you misuse and abuse the basic English language; you out-and-out lie to make a point that isn’t even valid in the first place; you discourage the most vulnerable of your brothers and sisters through fictional stories of woe; and you serve to distract everyone who reads your work from the better aspects of life.
There is no redemption available from you, Robert Kiyosaki. You were, and still are, a worthless piece of crap.