"Too much money" chasing too few goods?  That's simple supply and
demand, not inflation.

Inflation occurs when a government manufactures money with nothing to
back it up - each dollar represents a share of wealth, and simply
printing another dollar devalues the rest proportionately.  (maybe a
great way to tax?)

The mortgage debacle was quite predictable, and people who took out
loans on which they couldn't even pay the interest should have known
better than to buy at insane prices.  


> -----Original Message-----
> From: HP-3000 Systems Discussion 
> [mailto:[log in to unmask]] On Behalf Of Ray Shahan
> Sent: Wednesday, January 16, 2008 12:02 PM
> To: [log in to unmask]
> Subject: Re: OT: Economy
> 
> Craig,
> 
> 	As I'm sure you know, there are many things that affect any
> economy, but we can, at times, finger some of the large entities that
> have large affects (effects) on our economy:
> 
> 	As housing prices went through the roof in the last 5/10 years,
> no one was yelling inflation - even though that's exactly 
> what it was -
> too much money chasing too few goods.  We allowed anyone and 
> everyone in
> America to buy a home - even with no money down or proof of 
> income, and
> this drove the price of housing through the roof!!  Of 
> course, everyone
> was ok with housing prices going up because we all then went 
> to the bank
> to get a second mortgage on the inflated value of our home, and spend
> that money on goodies that helped spur the entire world's economy.  
> 
> 	Now, the question is why didn't the cost of consumer goods go up
> when we all had the artificial money to spend from our 
> inflated housing
> prices?  It's because we imported goods that were 
> manufactured overseas
> at a cost that was so much cheaper to produce (low wages, and less
> government mandated controls) that it allowed Wall Street to make a
> killing, while keeping the prices of the consumer goods within easy
> reach.
> 
> 	Ok, up comes the sub-prime/credit bust in America that rocks the
> world's credit.  Now there is less money chasing the same amount of
> consumer goods, so those goods should go down in price (just like the
> housing values in America are). But the consumer goods don't 
> go down in
> price because we have to account for the dramatic increase in the cost
> of the energy used to produce and ship those goods.
> 
> 	That's the view from 60,000 feet, Craig.   8-)
> 
> 	
> 
>   
> 
> 
> 
> -----Original Message-----
> From: HP-3000 Systems Discussion [mailto:[log in to unmask]] On
> Behalf Of Craig Lalley
> Sent: Wednesday, January 16, 2008 12:30 PM
> To: [log in to unmask]
> Subject: [HP3000-L] OT: Economy
> 
> I really don't understand the economy.
>    
>   For the past 15+ years, home prices have been spiraling out of
> control.  People are spending more than they make and the savings rate
> has gone negative.  All that time, inflation was low, if not stagnate.
> Some people even talked about the problem of deflation.
>    
>   And now that home prices have all but collapsed, financial
> institutions are being bailed out by foreign countries.   Defaults on
> mortgages are at record numbers.  The ON thing stopping bankruptcy is
> the recent changes in the laws.   
>   
> So now, now that everyone is cutting expenses and on a 
> budget, now that
> the money system is tight.  Sub-prime mortgages, which really are not
> Sub-Prime... (check THAT one out), are setting records for default..
> with all this happening.
>    
>   Whole Prices Soared Last Year
> http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7z
> AD8U6CQQ80
> If someone can explain this, in layman's terms preferably, I would
> really appreciate it.   (just in case it goes in this direction, I
> already know, "It's all Bush's fault.")   Please leave the 
> politics out
> of the debate.
>    
>   -Craig
>    
> 
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