US on the Verge of Another Economic Boom? Or Bubble?

[CB007]

Sorry, I should have said one of the factors.

See US Federal spending since 1900. http://www.usgovernm..._spending_chart

[CB007]

No site that is credible in my opinion. There were various factors that led to the Great Depression - to pin it on one thing would be inaccurate.

The one thing about the Great Depression that accelerated it was the reaction by the public - that is the hoarding affect. Hoarding, as Marx put it A miser is a captialist gone mad. That is, for a capitlalist economy, the hoarding of money is death. It stops growth and ultimately creates deflation. Deflation is much harder to correct than inflation. Japan serves as a perfect example.

[CB007]

It's happening and IMO it will be before 2017. See monthly chart below of the DJIA from 1981 - today.

Charles Morris' idea of Americas fundamentals changing is tax receipts growing making debts and deficits shrink?

Yes, the fundamentals need to change, but it won't be because of growing tax receipts.

[CanuckClown]

It's generally hard to predict how the stock market is gonna do from looking at historical performance... otherwise, all technical analysts will make a killing all the time. One thing is certain though, what comes up, must come down, eventually - but the overall pattern is up in the longer run.

[CanuckClown]

Its kinda what we have been having over the last few years, except the hoarding is done by large, highly profitable companies, not taking advantage of low interest rates to invest, and banks who refuse to grant loans because they had to repair their damaged balanced sheets from toxic asset write offs.

[CB007]

Agreed. Even then it can be difficult to judge. For example - and maybe you have a better understanding of this: is the Vancouver housing market a bubble, or a mere market correction that will flatten?

[CanuckClown]

I'm in Leafsland, so I don't really know. To accurately analyse using real facts and figures and not guesses I would want detailed industry data which I do not have. I'll say this: people have been saying it's a bubble for like 7 years now, and the latest news says the markets of both cities are still strong this summer.

[CB007]

I've been out of "economics" for quite some time - so your analysis might be the norm - but I find it to be a very interesting take.

From what I have read - albeit limited - deflation occurs when there is a belief that prices in the market will drop: resulting in hoarding in the briefing that a better deal will occur tomorrow.

What you describe appears to be an entirely new phenomena though. It's almost as if faith in the structure of the system causes the lack of investment. Ultimately a contradiction for said companies given their sole motive.

[CB007]

I tend to agree. I don't see it inflating much more aside from the natural rate, but it would be hard to see why it would collapse as well.

[CanuckClown]

Only 50% of my analysis is the norm, the part about the banks needing to get rid of toxic assets is not a well talked about issue:

There are good counter arguments to his thesis, but this is a very good broad-stroke lesson.

Deflation is just general real prices going down. Deflationary Spiral is when prices drop due to lower demand, and companies shrink their payroll (fire people) as a response. Less people working means less demand for products, so companies further drop prices and fire more people.... it's a vicious cycle that has no end. Hoarding is a symptom of deflation which of course doesn't help. EI benefits and monetary policies are in place mostly over the last number of decades to prevent this from happening.

[CanuckClown]

Maybe I'm in error, but I feel like my deflationary analysis only differs from yours in terms of scale. Personal finances, corporate etc. each having profound macro impacts.

For instance, it's ok for a company to hold debt so long as the confidence in the market exists. Once that confidence is gone, it becomes rational to pay off the debt opposed to reinvesting capital.

[CB007]

Max Weber the German Sociologist? The one who wrote "The Protestant Ethic and the Spirit of Capitalism"?

Yes I was also gonna say that you are looking at things on a micro and I on the macro level.

[CanuckClown]

Max Weber the German Sociologist? The one who wrote "The Protestant Ethic and the Spirit of Capitalism"?

Yes I was also gonna say that you are looking at things on a micro and I on the macro level.

[Cyril Sneer]

I think it's set to take off again because of energy development. The article didn't mention the Marcellus and Utica Shale deposits in the Eastern US which not only has natural gas, but oil another 5-10,000 feet below the gas deposits. Early and conservative estimates are that there are 50 years of developable energy in these deposits. It will be very interesting to see how the energy development plays out in the US.

[CanuckClown]

I am a drilling consultant in N Pennsylvaina, and I am obviously pretty familiar with the hype.

The "fluids" found in the Utica shale aren't conventional crude oil like some reports are suggesting, it's a liquid condensate, I have herd rumours that it is so pure that you literally put it in your gas tank and drive.

A similar product is also present in the eagleford in south TX and the potential in the Duvernay shale in NE BC and NW AB.

Very intriguing stuff.

[Cyril Sneer]

Any talk on the methods of extraction? Will it be pipelined out? Too early to say?

[CanuckClown]

I am on the drilling side so I haven't really got into that conversation with anyone, the Utica is much shallower in Ohio and so far it's the only place they have found Fluids, where I am at the Utica is much deeper and it is believed to be "cooked" out because of this. Shell drilled a highly guarded utica well in my area, nobody knows what they found but if they did it I guess there is potential.

The buzz around this fluid is pretty serious and the potential market is endless.

[mdehaan]

Inflation is an increase in the supply of currency.

http://en.wikipedia.org/wiki/Monetary_inflation

Deflation is the decrease in the supply of currency.

Velocity of money is the rate at which currency changes hands. Hoarding cash/currency/dollars is not deflation, rather it is the velocity of money decreasing. Inflation/deflation happens at the central bank level.

[CanuckClown]

Inflation is an increase in the supply of currency.

http://en.wikipedia.org/wiki/Monetary_inflation

Deflation is the decrease in the supply of currency.

Velocity of money is the rate at which currency changes hands. Hoarding cash/currency/dollars is not deflation, rather it is the velocity of money decreasing. Inflation/deflation happens at the central bank level.

[CanuckClown]

Inflation is an increase in the supply of currency.

http://en.wikipedia.org/wiki/Monetary_inflation

Deflation is the decrease in the supply of currency.

Velocity of money is the rate at which currency changes hands. Hoarding cash/currency/dollars is not deflation, rather it is the velocity of money decreasing. Inflation/deflation happens at the central bank level.