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Is The Fed TRYING To Force A Surge In Commodity Prices And Input Costs? Diapason Explains Why Hyperinflation Is Blackhawk Ben's End Goal
A Fed paper released in September, which we luckily missed as otherwise it would have led to the collective death through uncontrollable foaming in the mouth of the entire Zero Hedge staff, was "Oil Shocks and the Zero Bound on Nominal Interest Rates", in which author Martin Bodenstein (an econ Ph.D.) argues that oil price shocks (i.e., surges in the price of oil such as the one we are about to experience courtesy of a fresh trillion in liquidity about to be unleashed by the Fed) are... wait for it... beneficial to GDP and stimulative to the interest-rate sensitive parts of the economy. To wit: "In fact, if the increase in oil prices is gradual, the persistent rise in inflation can cause a GDP expansion.". Yes you read that right. The Fed is stealthily floating the idea that a surge in oil prices will be for the greater good. In essence, the Fed is telegraphing that while it acknowledges that oil is about to jump to over $100, it won't be as bad as those with a functioning brain dare to claim. And, as we show below, it will actually be a very good thing! While we would probably get a massive lethal subdural hemorrhage if told to argue a view so blatantly and stupefyingly demented, insane and, simply said, wrong, as that espoused by Bodenstein, we are glad that Sean Corrigan of Diapason has gone the extra mile to not only expose the Fed charlatans for their voodoo gimmickry in this narrow topic, and brings up an even more critical idea, which is that the Fed "actually welcomes the current surge in the prices of many of the staples of everyday life; that it actually exults in the drain being exerted on family budgets; that it revels in the squeeze on profit margins being suffered by already-struggling small businesses, because it imagines this will serve to lower the reckoning of the ethereal construct of a generalized, future real interest rate and that this alone will serve to shower riches upon all who are presently suffering, in comparison for the present woes."
That nobody has reached this conclusion before is explainable - it is something only the brain of an illogical, demented, perverted genocidal madman's brain can come up with. Which is why we are now convinced the Fed is hoping for not only mild inflation, but an outright surge in prices. And since the Fed is confident that it can stop hyperinflation (as did that other idiot Rudy von Havenstein), the only logical outcome is that real, prevailing hyperinflation is what is imminent as this is precisely what the intermediate goal of Fed policy ultimately is!
From Sean Corrigan's Material Evidence October 28 note.
In a self-immolating exercise in reductio ad absurdum, this superficial reasoning has led the Fed right up against the so-called 'zero-bound" in nominal rates (one which a dedicated inflationist could, in any case, make a great deal less constraining if $1 trillion in excess bank reserves did not accrued positive interest). Ergo, the only way the Doves feel they can deliver more "stimulus" via lower real rates is (a) to force down yields at longer and longer maturities - and rational capital allocation and return on invested income, go hang! - or (b) to push up either the rate of price appreciation itself, or, at the least, expectations thereof. Nominal rates down and/or prices up = real rates down -> spending up is the alpha and omega of their plan.
This last has even been taken to the ludicrous extremes that an FRB discussion paper last month, entitled 'Oil shocks and the Zero Bound, purports to argue that while higher oil prices normally lower output by pushing up inflation, once under conditions of ZIRP, the higher oil price raises inflation expectations, reduces the prospective real interest rate, and therefore stimulates the interest-rate sensitive parts of the economy!!!!
Oh, Brave New World! Here we are supposed to concur in the notion that a man whose job is at risk because his employer can no longer afford the dearer diesel he needs to run the factory, and whose commute to that work has suddenly become that much more expensive, too, will be inspired both by this heightened anxiety for his livelihood, as well as by his shrunken disposable cash flow, to take out a loan - which he would otherwise never have countenanced contracting - in order to buy a newly-built house at his lower real yield!!!!Additionally, in this Bread from Stones scenario, we are supposed to imagine that an erstwhile despairing entrepreneur gets out of bed one morning and cries, "Hallelujah! The cost of coffee is up, cotton prices are surging, copper wire has just become exorbitant - I better go start a business before it's too late!"
Well, yes, perhaps in those particular industries assuming he has the aptitude, the means, and the ability to persuade someone to finance his eureka moment - but in any other line of business? Really?!?
Here we must force ourselves to pass over the objection that oil-driven inflation and lowered output are not necessarily such unfailingly automatic bed-fellows (see the late Boom) with only the brief observation that this confluence generally originates from either the second-order effects of a prolonged, frictional price disco-ordination, or from CB action to rein in a generalized price rise which only its own, previously over-accommodative policy could ever have allowed to occur in the first place (Hint: with an unchanged supply of money, more spent on one item implies less spent on another).
Instead, we return our focus to this Laputan piece of pseudo-scientific mumbo-jumbo for what it reveals about the muddle-headedness which informs both the ineffable Bernanke Fed and its far too numerous counterparts elsewhere.
In confounding cause with effect, in sacrificing the micro to the macro, in falling victim to any number of category errors and logical non sequiturs; in pursuing, with unthinking mathematical rigour, a set of utterly unreasonable premises to the point of an untenable - indeed, a highly damaging-conclusion, we have a prime example of everything that is wrong in mainstream economics and a glaring illumination of why the state interference which this typically seeks to justify has proven so counter-productive to this-or, indeed, to any other recovery of the past 80 years.
Perniciously, Mssrs Bodenstein, Guerrieri, and Gust even argue that the increasing material scarcity of an oil "shock" can be even more effective at dissolving the 'zero-bound'-and so-err-lessening the general material scarcity being suffered in the slump- if the price rise progresses at such a steady pace that people expect it to continue for some fairly protracted period and if the monetary authority now makes it unequivocally clear that it will not respond to this rise in its habitual manner.
In other words, this strongly insinuates that the Bernanke Fed actually welcomes the current surge in the prices of many of the staples of everyday life; that it actually exults in the drain being exerted on family budgets; that it revels in the squeeze on profit margins being suffered by already-struggling small businesses, because it imagines this will serve to lower the reckoning of the ethereal construct of a generalized, future real real interest rate and that this alone will serve to shower riches upon all who are presently suffering, in comparison for the present woes.
Pushing this line of argument up to the hilt, it also leads to the idea that the Fed-having already stretched credulity by consulting the less than disinterested counsel of the primary dealers regarding the size of its next assault on the free market-should also start buying baskets of commodities! Truly, that way madness lies-the madness of Wallace and Warren and Roosevelt's depression-prolonging circus of restrictionist and inflationist cranks.
Never mind that it is not the general, but the specific estimation that his own, uniquely-determined, residual entrepreneurial income (i.e., the one left to him after deducting the costs of, e.g., his now pricier commodity inputs, Mr Bernanke) will exceed his tangible, pecuniary interest costs (not his airy-fairy, abstract, modelled ones) which incentivises the business leader to act, but even under Blackhawk Ben's own, Neo-Keynesian framework, there is something of a paradox at work here.This lies in the fact that, however implicit it may be in the obscurantism of the Beelzebub of Bloomsbury's magnum opus, in an economy locked into partial idleness (and a rather more widespread wastefulness) by the vicissitudes of a market-hindering institutional and political setting, the lubricative effect of a monetary debasement only comes about when that inflation is unanticipated.
Put another way, it is only when people who have been withholding previously saleable supplies of goods and labor from a now inconducive marketplace are tricked into releasing them at unchanged nominal-but lower real-prices that a purposeful dose of inflation can hope to offer any palliative effect. Conversely, if they do recognize what is afoot; if they do not succumb to so-called 'money illusion', then they will simply seek to reprice their services to offset the change and so no discernible impact on output or employment will result.Yet here we have Bernanke and his breathless battalions of banknote bundlers about to embark upon the perilously disruptive process of engaging in a gross manipulation of asset values, interest rate settings, and currency parities by telling people explicitly that prices will both rise and rise more rapidly and for longer, and all with the Fed's unreserved blessing and encouragement!
In other less poetic words, hyperinflation is coming, and Bernanke is welcoming it with open arms.
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I'll add my comment to the rest. It's only 2 words from the ole Cheekster, but welcome nonetheless.
I am just so happy that we will have no net deficit this year and into the future and likely no debt after a few years, as the Fed monetizes everything. How silly of me to be worried about deficits!
You know the Fed probably wants PM prices to rise, hell they might even buy some themselves,Whohoooo!!!
Allegedly they don't need to buy any. They say they own more Au than anyone. Therein, if true, may lie the endgame.
Rocketing consumer names seem to be discounting an ongoing "permanent tax cut" to the consumer thanks to persistently low energy prices.
Seems like the retail sector would be rolling over now if the market was looking ahead at higher energy prices caused by Fed policies.
Maybe the Fed is banking on its trillions unleashed to flood directly into wage and salary inflation....
Somewhat on the order of what the Google nerds are getting paid.
LOL....
Very interesting.
I am a good student.
Research has found that Liberalism is caused by a genetic defect.
http://patriotupdate.com/stories/read/5733/Liberalism-is-a-Genetic-Defec...
The Christian church could be defind as a Liberal institution, one that was perfected by social Marxist. Liberalism has been used by the lesser nations, and wealthy industrialist to gain market share. It will all end in a shocking revelation that reality and idealism are not one and the same.
There is a difference between the free will to give on a voluntary basis (as in a church or charity) and being extorted and/or punished via government for same.
"It will all end in a shocking revelation that reality and idealism are not one and the same."
Agreed.
Well, if that's the case, much as I fear what we'll learn, at least we will then indisputably know. WRT charity, that is.
The Christian Church, Hmmmm,and which one would that be?.( Liberal), and in what regard.
Liberal Institution?., Uh, no way.................real Christians are no way Liberals or Marxists in their beliefs.
They are Capitalists.
If a man will not work, neither shall he eat.(sound like Liberals,or Commies?).
Support yourself, and help those who are TOTALLY unable to care for themselves(Widows & Orphans).
No where will you see where scripture advocates giving to anyone that refuses, and is able to work, free goods.( Except in hospitality, and in gifts).
Even Paul made tents for his living, though as an Apostle he had every right to be supported financially by the Church for his work for Christ.
He who shares the things of GOD spirtiually with you, ought to be supported materially by you......full time ministry,( Pastor, Evangelist) is no way to make a living.
Broad brush there amigo.
I used the word' could' for a reason. The modern Liberal doctrine of tolerance and equality , is idealistically akin to Christian teachings , and even later Marxism. The teaching of Christ and Paul may espouse the virtues of self relience , independence, but in our modern world the ideas of tolerance has been used for many political gains and bloody revolutions.
The " if a man won't work he shall not eat " has a context. The body of believers Paul was addressing were expecting their emminent "rapture" ( escape from the worlds troubles?) . They thought it was so near that they stopped working - and were waiting . (Like those who are stashing food in their bunkers and ready to hide in the mountains . I think a believers job is only to be an ambassador ( among people not hiding ) for Christ . Showing forth the Gospel of simple salvation through belief in his death on the cross as FULL PAYMENT for our sins, that he died , was buried , and rose again - Done - thats it - no hocus pocus . Just believe that - that is all . All the rest after that is God's work in us - One on One !! The church is an organism - Not an institution or a fancy spired crystal tower or Bizantine structure - Church is people .
Funny reminder. The effects of the story is still known today. Christians have sent many missionaries around the world and nearing 2000, many Christians converted populations accross the world stopped working waiting for Jesus Christ to come back. Another thing is that the ancestors are told to be revived when Jesus Christ comes back so among the converted populations, many sold their assets to welcome their ancestors coming back as the Christian principles want them to.
In the end, you've got populations who stopped working, this in poor countries, and sold their assets. After 2000, as Jesus Christ did not come, well, they were indeed richer in soul but much poorer materially.
Meanwhile, the missionaries had packed up, as happy as they were to have destroyed other religions. As to the welfare of populations, well, that is another story.
The Church, as you wrote, did not exist by Paul's times.
"The Church" only became financially able to support a specific set of their followers after they fleeced out 'heathens' or 'pagans'. This is how 'The Church' financial capacity started.
A genetic defect?........something like being human, right........
What a crock of shit.......liberalism, conservatism, socialism, communism,........ism, and what about the other ism of capitalism.
Predatory capitalism........you must have been lost overboard in the Sea of Bullshit when no one noticed..
Are stupid fuckin' posts on ZH a genetic defect as well?
according to that article, if you're happy-go-lucky and had lots of friends in adolescence, then you're genetically defective ???????????
that's junk
Yea. It's a perfect con. Now that Democrats are officially "disabled" they get government aid.
Now I really see why this man should be the next US President, the unforgettable
candidate Jimmy McMillan of the 'Rent is Too Damn High' political party in New York State.
As Jimmy says so wonderfully, indeed: The Rent is Just Too Damn High.
http://www.youtube.com/watch?v=x4o-TeMHys0
Uh Huh, living on welfare and free rent.................he's a shining example of what we need as a PO US.
Only an economist with no common sense could come to this conclusion. Ben, we know you just want to create housing price inflation, and yes we know you can create inflation with your printing press, but no, you cannot create inflation AND direct where said inflation goes. This paper seems to imply dynamiting the hoover dam can stop a drought in texas.
Honestly, I think this is misinformation. It is just too moronic, even for the fed. Oil over $100 will be catastrophic to the US.
Sure, too moronic for the Fed:
http://www.youtube.com/watch?v=npjOSLCR2hE
Nice one .. as the macro centrists just cannot understand what happens when, through their stupidity of action and ours, society is reduced to "I'll bite your legs off".
http://www.youtube.com/watch?v=dhRUe-gz690
Of course the response would be, oh but this is better than the alternative. Junkie logic
the way i read it was if they can create inflation that outpaces a gradual rise in energy costs then it would add to gdp
when oil is $100 it might seem cheap relatively speaking
my dad used to pay 19 cents a gallon for gas but is far wealthier now
.
all those oil pyramids would collapse without the fed
No question the alphabet soupers would think that forcing up stock & commodity prices while holding interest rates low will force feed inflation through the economy. What remains forgotten is that there is no final demand and this will do nothing to effect wages (the decreased purchasing power excepted) rendering the exercise futile, the churn potential for Wall Street excepted.
Dumb shits serving up more of the same. Why be surprised that the Chefs at Chez Shalom would look to this as an option
+QExxxx
one world, one currency, one passport, bitchez
Great, this means I get to save money at JFK before hopping the pond, right?
I'll be opting for the Wyoming, Montana or Dominica passport - outside the New (one) World Order.
Fortunately, you cannot get All the countries or All the states to agree on a unified front - look at the EU - happy to see it split as it portends the future of US States. Which ever State offers the most freedom/less taxes, that's where I'm headed - if its not a State in the US, there are plenty of countries that offer freedom for a price.
It is a poor dog that's not worth whistling for
Zerohedge rules.
Brazil just found a few billion barrels down the back of the sofa so it's all good yeah?
Relax Israel's got it covered: http://www.youtube.com/watch?v=r80kI20JrVc
I just got out my old textbook from first year at high school.
Now, it says that demand pull inflation is a sign of a healthy economy where interest rates should rise to prevent overheating (take note Bennie)
Cost push inflation and imported inflation though, are fuckers. Remedies in the absence of wage inflation are reduced standards of living, substitution or lower margins.
Now, if 13 years olds know this shit, why doesn't Bennie?
Yes Virgina there really is a Santa Claus. Unfortunately, he exists solely to benefit the kleptocratic class.
Because i have been a very good girl this year, when Ben is done with oil, could he move onto natural gas. Double digits, please.
You've been a very natty girl for a very long time, lizzy, iirc.
& just how does he think unemployed people can afford gasoline ? fucker / get rid of him & his little friends, too ..........
lynny! I was convinced you were the one junking any post with a curse word in it for the last few months.
link to full paper:
http://ec.europa.eu/economy_finance/events/2010/20100723_advances_in_int...
eric sprott wrote about this idea in 2008. at the time he supported govt intervention in commodity markets to support prices. the article is "The Solution" Nov 2008:
http://www.sprott.com/main3.aspx?id=128
This ties in with what Lindsey Williams said last week. His "insider" source said that the oil price would rise to at least $150 and possibly as high as $200 in the next six to eight months. He also said that the rise would be a gradual one.
Never mind the wee fact that energy demand in the U.S. has been tanking. You know, like what happened in the Soviet Union before its collapse?
http://market-ticker.org/akcs-www?singlepost=2224154
I tell my family they should be stocking supplies, food, metals. Not because of a zombie apocolypse, but because basic staples will be climbing soon. They still think I'm crazy.
Fuck this....i'm going to my island.
in your metals category..you also including ammo? I've become quite the bow peep man myself recently...to channel jimmy ammo is too damn high. get guns for your island too
I'm locked and loaded. Lightning strike rescue ops Bitches.
Your island is about to be inundated by the Polar melt caused by Lib spew.
I tell my family they should be stocking supplies, food, metals. Not because of a zombie apocolypse...
I'm watching Night of the Living Dead on the Wolfman Mac show. Movie was filmed in Western Pennsylvania and they're flashing names of towns near my home on the emergency broadcast which the survivors are watching in the old farm house.
Glad I stocked up.
Why do you think only the FED is responsible? Most hot money is in it now or flowing into it now. All the FED had to do is show their cards. The hot money is why it's moving.
this superficial reasoning has led the Fed right up against the so-called 'zero-bound" in nominal rates (one which a dedicated inflationist could, in any case, make a great deal less constraining if $1 trillion in excess bank reserves did not accrued positive interest...
actually the owners of teh fed like that part. What they bemoan is that they can't charge people interest for keeping their clownbux safe. If they could charge .5% on money markets across the country they would be in hog heaven.
Ergo, the only way the Doves feel they can deliver more "stimulus" via lower real rates is (a) to force down yields at longer and longer maturities - and rational capital allocation and return on invested income, go hang! - or (b) to push up either the rate of price appreciation itself, or, at the least, expectations thereof...
That part is correct. Bernanke = the jawbone of an ass. Go ahead Bernanke, make my millenium!
What the fuck is so complicated about 'the', not teh, moron!
lick mah jizz
i r smarter than u fuckface
Is it your time of the month or something?
You need to get edumacated.
Ceiling Cat iz comn fr U!
The US and its entire banking system is bankrupt, Hence accounting fraud is now legal in US banking, Its not rocket science when the wealth creating part of the US has been offshored to Asia the bills cant be paid, Hence $trn printing default or an honest default by openly not paying its debts, The suppliers of goods food oil etc must raise prices of goods to compensate for the devalued dollar,
I am very supprised Oil hasnt gone way above $100 already it will be over $200 soon for me, The Fed has no choice regarding the default only the way it takes place so to pay the bills so to speak and $200 Oil is like a 50% haircut for the US population,
If you cant afford things you cut down to balance the books, Inflation is the cutting down proces by stealth, The smart money is probably in Oil now,
Inflate or Default both arnt good but hyperinflation is the worst of both options I hope the Fed isnt that stupid and I dont think they are but its a close call,
The real problems arnt being sorted thats the offshoring and until or if that gets sorted things are only going to get worse.
I live in the UK and be rest assured if the Fed wants inflation and a devalued Dollar appoint Ex UK Pm Gordon Brown he would do a very good job.
The Fed is acting on the principle: "I can't be broke, I still have checks left!"
Love it Rocky!.........still have checks left!........lol.
It appears that somebody doesn't like me.... Oh, no!
Looks like I'm being followed around for the drive-by junk.
Make my day... punk.
the oil industry learned that if the price goes through the roof, consumers compensate with less consumption. they turn to solar and wind as competing energies. natgas too.
consumers buy scooters and bicycles and electric cars ... they avoided a real shift in energy source this time.
also, if they allow the price to get too high it crashes the economy and they shoot themselves in the foot.
if they make too much, talk turns to windfall profit tax.
the gulf spill taught us oil is abiotic and not a fossil fuel. they need to keep the price stable or their whole 'oil is running out' gets challenged.
the oil industry has alot at stake in keeping prices stable and they may be the ones seeing margins squeezed in the future. i wouldn't be surprised if they've secretly agreed to this already or be forced to be nationalized.
i wouldn't bet on $200 oil anytime soon
Oil supply is declining. Nothing anyone can do about that.
i think in december petrobras feasibility study for all that oil down there is going to blow a lot of minds
the supply might be controlled but i think we've barely dented what's under the earth's crust. if oil is abiotic, there might be an endless supply.
i read something like when saudi arabia first estimated reserves it was found to be 70 billion barrels. now, years later, they're saying oh guess what, we still got 80 billion barrels left. something like that
i'm not sold on this whole peak oil thing but i leave room for the possibility that you might be right also
Actually all oil based systems (combustion based essentially) are anti-nature.
There are so many way, so much more efficient to do the things we need to do. But they have been ruthlessly and mercilessly suppressed. If you haven't heard about Stanley Miller, you should google him. And many others, who have met strange fates.
One look at the timing here and you can tell that the FED is pretty much the oil economy.
As goes the fed, thus goes the oil econ.
I have many designs that would make cars of today safer, more efficient, more user friendly..... and these are just retro-fits.
I met many people with them and the one to remember is a Mumbai real estate tycoon (one of the biggest of the big) and he said I'll not touch that with a barge-pole. We'll be dead before we know it.
So there you have it l's and g! Oil with all it's attendant problems have been foisted upon us.
The ban on hemp (heard of Ford's Hemp-mobile?). Same thing. Mary jane is banned so that Hemp may die in it's shadow.
It's all a big set-up.
http://aadivaahan.wordpress.com
buddy...you really need to get up to speed on this.
Reserves don't matter. Net energy or rate of production are all that are relevant.
I've written extensively on this throughout every oil topic on ZH. The flow rate of Carioca will be a fraction of what a surface field of the same reserves class would produce.
I don't know why when we are talking about production rates, people like you continually interject something talking about endless supply or abiotic or some other crap like that.
Again, it is irrelevant how much in reserves there are, it is irrelevant where oil comes from; arguendo, it comes from magical fairies.
All that matters is the rate at which it can be produced, in net.
All that matters is if "they" want oil to be peaking.
cut the crap!
There is no THEY. Potent directors fallacy!
Oil is peaking whether the reason is "them" or nature. I agree with you that either situation might be true, but there really is no way to absolutely know. Just because you're paranoid, doesn't mean they're NOT after you. Bankers are fuckers and governments enslave.
"the gulf spill taught us oil is abiotic and not a fossil fuel."
Baahahahahahaha, good one.
Joe McCarthy had it right in 1950.
Fight the morons, and put them away.
eat shit dumbass.
Be nice! "eat shit dumbass, please."
I made 20% less last year than the prior year, which was less than that prior year, etc. The last year I had official pension and health benefits was 2002. Gas up. Food up. Low level rent market still very strong, meaning the middle market is again being slaughtered. No more money for my annual cruise, Disneyland, the annual Amsterdam Cannabis Cup that OC Thai Lady-boy Festival. How can helicopter Ben predict and create "hyperinflation" when people don't have money to spend in the first place? Crazy.
Practicing my re-loading. Brass may be the new rare earth element.
Don't forget to practice reloading in the dark.
There are still enough global warming kooks in this administration who would welcome a $200 barrel of oil forcing us to heat our homes with chucks of wood from your neighbor's deck or riding bicycles in the snow. All in the name of a .003% heat savings over 10 years minus solar flares, volcanoes or elephant farts.
No worries, the EPA is all set to sue the sun.
Guess I am supposed to say: "teh EPA", according to the moron posters above.
Heh, funny. Good one.
Believable, too.
you suck iranian cock.
i think only a moron wouldn't recognize teh as one of teh most common typoes. i've seen tyler do it a couple times too.
Indeed Silverhog...There's nothing worse than these environmental religious fanatics. It's as if their own ideas have eaten what's left of their brain tissue.
They are like a nasty rash on humanity. Always figuring out ways they can reach into your pocket tryn' to cop a feel with their perverted sick molesting grubby little environmental slimy hands.They will invent new fears to scare humanity into believing something that isn't true. The next big fear will be water shortage. They are among the worst of the worst that humanity has burped up.
What most people do not know is their reality for humanity is enslavement. I wouldn't give them the sweat of my balls.
Besides I graduated from Nuke'Em High and turned out just fine...
http://www.youtube.com/watch?v=eRtnvvXbG8g
Well, being the new guy here and thoroughly enjoying the intelligence and reasearch that Tyler and company are putting into their posts I offer my first comments.
I think it is first important to realize that the math around this thought process is from the same minds that brought to you the same math that deduced that spreading the risk in toxic lending was a good thing. That CDO's, CDS's and other liar loans could effectievly be safely leveraged with mimimal risk by adopting a bundling strategy where default would be rendered almost null and void even when you lend to a person with no salary and no savings, a 500K mortgage. After all real estate prices go up forever and so inflation is a bankers best friend.
Well we all know how well these algorithms worked under real market conditions and a factor that no one seemed to think was possible...which was a simultaneous contraction of all markets at once. More commonly called deflation. Shortly before this happened was peak oil and its $147.00 per barrel rise. This of course was the sole reason behind the high levels of prosperity that was being enjoyed by the world even as the global economy itself racked up hundreds of trillions of debt derivitives that the world had never seen the likes of before. It is the same mentality that says inflation is a good thing, that lowering your standard of living for asset price increase is good, that buying cheap products manufactured in rogue economies like China is good. Somehow all these things that are good will miraculously cure all that is wrong with the global economy when what is required is deleverage and savings.
"Insanity is doing the same things over and over again expecting different results"
Hi! ...and welcome aboard. You'll note that the definition of insanity reigns supreme amongst the comments here as well. The dumbshits (you know who you are) say the same stupid stuff, still get junked, and still post dumbass comments. Go figger.
Welcome MA...
I believe your Einstein reference of insanity is redundant. ;-)
The inability to recognize the truth is insanity.
Without demand from increasing "real" wage gains this would be a fools game. The lower he pushes rates... The lower will be the velocity of money. Real wages have not risen in years if not a decade.
Here's the thing, 'nana ben said it himself, this is an experiment! They can call and control this shit like an addict can "control" their addiction and quit cold turkey. I liked Nic Lenoir's last piece as it resonates with me ( i like to give the dummies at work the one-liner synposis cuz otherwise they look at me with mouth gaping and drool dripping glazed over nods)...this experiment is like ben tryin' to heat the ocean up (economy) by pissin in it with the wind blowin in his face. take this keynes and bullshit & co. and fuck off..like the power/money elite, elections don't fucking matter..what matters now is how much guns i got and how quick I can draw..everything else is taken care of..fuck the bullshit. my realities of getting my shit jacked is far cry from broad and wall street when shit in this 'nana 'nana republic really heat up.
I so hope this is true. I'm going to make so much when it ultimately crashes (arrogance or irony?).
DavidC
Are they trying to push commodity prices? You've heard of Monsanto, right?
The death trade has a very strong future, according to Mr. Market.
Biflation doesn't seem like an accident to me.
These are great times for traders who skate over corpses.
Booyaaaah.
These are great times for traders who skate over corpses.
Absofuckin'lutely! The churn right now is simply epic. Too bad buried in that pile of corpses are the geese that lay the golden eggs.
Hey, we all know what to do with mass graves: shovel on a few bags of lime.
I don't see a significant pop coming in that market, though.
But there's always http://www.google.com/finance?q=pot .
Thank God the markets enable commerce to exist.
Markets?! This is what we know about what markets have become here off S. Main now that genuine price discovery and creation of financial alchemy have been pimped off
http://www.youtube.com/watch?v=G1s1BkjLj84
The pop will be provided by Santa..
http://www.youtube.com/watch?v=yHLjr7DJe2k
But, it is all hollows eve... h/t The Fuego Nation, Cheeky Bastard and this fight club thing
http://www.youtube.com/watch?v=-7KXcSn2wBU
That's what I'm talkin about. Thanks for the video. Back to my gin and juice, old skool . . .
I'm glad y'all pointed out that Bodenstein is yet another clueless Ph.D. economist. As someone with a similar degreee, only in something a tad more concrete (Engineering) I have to assert that the econ dopes are doing more to give PhD's a bad name than an army of Womens Studies doctorates could ever hope (and I have precisely no idea how one actually earns a PhD in something like "Womens Studies").
The "dismal science", indeed. Certainly dismal, not seeing much in the way of science, though.
i will go one step further, its not a science at all. In science your hypothesis must be testable and reproduceable. economic "theory" only works when you hold all variables constant except the one you are testing. This is the antithesis of science and almost guarantees you will get the wrong answer to any question under observation. what i cannot understand is why anyone, especially academia, continues to accept econonomics as a subject worthy of consideration. it explains nothing.
As a trained economist amongst other academic and business attributes, I'd take that a step even further. Most of us do not in any way believe economics to be a science, nor even a sound basis upon which to forecast the future.
What we do believe wholeheartedly however, is that politicians are quite adept at sloughing off the product of their own failures, misdeeds, corruption and criminal activities as the responsibility of economists, of economic advisers.
No economist in the nation passed any legislation or financially supported the operations of the Treasury, GSE's or Fed. T'was the politicians, the law makers, the law givers.
No doubt there were economists of counsel, but they were chosen, elevated to exalted positions by the law makers, most often to justify activities with manifestly different intent than "macro economic for the benefit of the public effect." (For example, political contributions in exchange for ethanol subsidies.) To wit, within the last 15 years alone; health care, TARP, GSE (Fannie, Freddie) GM, Chrysler, ethanol, Iraq, AfPak..... just to name a few.
Not policies of an economic orientation, but of social, populist, patriotic orientation generated and directed by politicians, wrapped and spun by PR folk, funded by the same who are to benefit financially, most often directly producing severe and oft foreseen Unintended Consequences.
And no, just because Larry Summers and Ben Bernanke amongst others are often associated by many with the miasmas of the day, they did not place themselves in positions of power, they were not placed in positions of power by economists, but by politicians most often to further, to justify the politicians very own social/political/economic ideals and vested self interests.
I learned more from Money as Debt than 4 semesters of pseudoCONomics.
If economists want respect, they could speak out against corruption, and teach students the mechanics of the current monetary system, not some fantasy keynsian, pre-1967, bogus assumption laden nonsense. As it stands, you and the accountants are running neck to neck for joke of the party.
Heh, guess I pissed-off a "Womens Studies" major.
It will take something on par with a revolution to END the FED. They are helping us dramatically though. Personally, I am hoping for a Krugman fantasy, a 2 trillion burn. Let's get this fucking party over with. Bring on the Coupe De Grace bitchez!
http://thecivillibertarian.blogspot.com/
What the fuck does Princess Grace's car have to do with it?
zzzz
Sure, drive up input prices. What do you think a 10% increase in prices across the board would do?
There is only so much blood to be squeezed from a corpse.
Oil below $70 soon
hmmm...are you a betting man?
Set the opening line so we can all play. Like we used to last year with bank failure Friday. This way the rest of us can get some great 2d and 3rd deriv play outta your fun.
Please don't give away the secret. Who cares about disposable income, it's a lot more fun to post pink moon hyperinflation theories.
Well, like any of the financial institutions they are involved with, the fed clearly doesn't speak with a single voice. If this hairbrained idea were really their avowed mantra, they'd not have waited till now to dump QE 2 on the world. Perhaps though this is one of the bullets they've been saving in case all else failed. Not that it would make it any better of a reason to put the stuffing to the savers whatever the circumstances.
Flat-lined interest rates, bitchez!
your mother is a whore.
you are making an ass of yourself. Have another...junk
I have been purchasing between $80.00 and $100.00 of groceries per day for the last several years, and there has been an obvious creep upward in prices over that time span. And my business is sensitive to material prices and freight prices, all of which have risen steadily over the last several years. Now it seems, rice has increased in price by 50% in the last several months, and it is the staple food for over 3 billion people. I cannot afford the creeping inflation that has been going on (and not likely caught in the numbers), and hyperinflation will kill my business.
Your post is exactly why hyperinflation is NOT coming. Hyperinflation is where people show up with their wheelbarrow of "worthless' money to pay for your goods. The problem is although your customers likely have a wheelbarrow, they have NO money. All Bernanke is doing is squeezing businesses and causing even more deflationary pressures as wages get cut to offset higher input prices.
Remember when oil went to $140? It isn't going to last. The Fed can only get away with this IF people are able to or want to borrow. Otherwise, prices will revert to the amount of money in people's pockets. Since the amount of money in people's pockets consist of wages and credit, and both are declining, the Fed game is over.
Fu$k Bernanke.
Rev 6:5-6 KJV And when he had opened the third seal, I heard the third beast say, Come and see. And I beheld, and lo a black horse; and he that sat on him had a pair of balances in his hand. (v.6) And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.
Food hyperinflation in the worlds future - Barley is the poor mans grain - used today to feed horses - will feed the starving world soon - wheat for the more fortunate - Oil and Wine for the super wealthy - Luxuries for the Uber Rich while the rest starve - Does this seem to be setting up NOW ? IMHO opinion - Yes? FWIW
A few months ago I went on an internal cleansing period and I had a series of seven dreams. In one of them, gasoline was $500 USD a gallon.
Green leader, would you mind sharing the rest of the six?
ORI
http://aadivaahan.wordpress.com
Geez, i hope you changed the sheets the other 6 times
"...once under conditions of ZIRP, the higher oil price raises inflation expectations, reduces the prospective real interest rate, and therefore stimulates the interest-rate sensitive parts of the economy!!!!"
This is crazy talk, or wishful thinking. It has nothing to do with expectations or perceptions, but reality. Paying $3.50 per gal. for gas will put the economy back into recession!!!
maybe not if it's still $3.50 10 years from now.
This is like dropping an Hydrogen Bomb to kill a fist sized hornets nest and for some reason I feel like Bernanke is fisting me with a hornets nest.
Well if you understand that the FED is a European rather then a American entity it makes sense.
There is a limited amount of oil in the world and it is becoming more limited - the FED realises that its vassel state cannot tax American oil consumers much so it will inflate and destroy the currency.
The American lifestyle is no longer profitable to the controllers of capital as the profits lie with effeciency rather then consumption - while I disagree profoundly on their level of capitalisation and therefore their goals towards energy capital formation - to increase their returns they will have too reduce the standard of living of America via energy reduction and any extra profit will come from starving the masses.
For America to achieve a standard of living approaching the present one it will have to accept a level of profitability well below the current mean - I cannot see that happening - the culture is too close to the wild blue yonder dynamic - it will reject conservatism as alien to its lifestyle and legacy , with disastrous results unless there is a breakthrough scientifically.
But what a wounded America will do when it reaches the edge of the Abyss is anyone's guess
TDOC, check it out .. This is what passes for elected American conservatism today from one of the chief acolytes of TBTF, unlimited fed printing and associated crap. Cheers
http://corker.senate.gov/public/?p=america-s-debt-crisis
Double post -
IMVHO, they know or at least have done their best to estimate how high they can take oil before the rivets start to pop out of the slave ship.
$4 gasoline is the highest.
Why not push the slaveship rowers to row ever harder? That's all we are to them.
Work them to their maximum. That's what every business is doing right now, either perforce or just because they can; slowly turn the crank until you have max yield. Cut wages, cut people and those still with jobs are just happy to be working.
If not true at this time , very soon just having a paying job will be worth more than all the Gold one can amass . Paying jobs are gold - 20 % of U.S. population don't have one .
Jobs Bitchez !
Interestingly, he cited:
Bernanke, B., M. Gertler, and M. Watson (1997). Systematic Monetary Policy and theE?ects of Oil Price Shocks.
http://www.brookings.edu/press/Journals/1997/bpea971.aspx
Mayhaps he along with the folks he cited are facing the Paradox of the Un-Full Deck.
Whilst not playing publicly with full ones, they remain in positions of responsible power and authority. Perhaps some of thiseffect is explained in the The Encyclopedia of Human Behavior, under the section dealing with "delusion".
Well-played, Knuckles. The delusion is then shared by the masses, who have collective self-doubt and believe the fidelity of the delusion because of the powerful figureheads that utter these absurd policies of self-destruction. In a strange way, it is a self-fulfilling prophecy: the masses have fear because they have lost the ability to critically think (or at least are too impotent to exercise the ability) and they, therefore, lack the political will to boot the leaders with the power to boot the numbskulls that are leading us blindly down a plank over the great-blue ocean.
Aside: the Jim Cramer ads on this site are pure gold.
Inflation (already here) --> trillions in unfunded liabilities (already here) --> default of USD (some event will happen which quickly grows) --> Hyperinflation (kicks in within weeks) --> tsunami of money pours into PMs (Gold w its cousin Silver) as global defacto currency (for 18 months) --> Hyperinflation destroys debt (to happen) --> US and most western European countries emerge with clean balance sheets and retain their global dominance.
This is truly frightening...
I'm going 100% cash and I don't care what anyone thinks. There is plenty of demand for just about everything in this world, problem is, demand (even for lifes necessities) means nothing without the ability to satisfy it and money will be in short supply when credit becomes completely unobtainable. Remember folks, debt that cannot be repaid, will not be paid and there is nothing of monetary value in this world that credit has not already inflated. We are in orbit around the deflationary blackhole, increasing (speculation driven) energy and commodity prices will only slow our velocity and gravity will win. Unless consumer purchasing power is rising (requires lower real energy/commodity prices and/or rising real income), everything is in a bubble. EVERYFUCKINGTHING!!!
Hey Roach, good to see ya.
I concur
Oh yes there is. What if your definition of money is incorrect?
Concur 100%.
Physical gold is the mass of our monetary system, the exerter of said gravity. It is what everything will deflate against.
But you don't need to take my word for it, I don't think we have a whole lot longer to wait until it is demonstrated.
http://www.youtube.com/watch?v=RGitwApwOX8
I own physical gold and silver but I never intended to hold. It was always a momentum play for me but I'm really starting to get nervous. I will be cashing in my chips this week as I no longer believe pm's will find a sizable new investment market before the ship goes down. It is not that I distrust the monetary value of pm's. I distrust the general publics awareness of pm's historical monetary fundamentals and even more so, I distrust government. I want liquidity when the SHTF and to 95% of the worlds citizens, cash is money and I believe it will remain so for some time to come. This show could go on for years, maybe I will miss the play of the century? But I no longer care, to me this game is now over. Permanently. As a lack of land and storage space is not an issue for me, I'm going to concentrate my savings, income, time and knowledge into investments that have excellent mid/long term fundamentals based upon necessity and practical utility. True emancipation from mental slavery begins with physical self sufficiency. I think Bob would agree with that given our circumstances ;-)...
let me get this straight: you distrust government but you will stockpile their notes?
My understanding of money leads me to conclude that gold actually supplies the liquidity to cash, however I agree wholeheartedly with your sentiment.
... and I chop it down, with the edge of my hand...
And Jesus wept. You went 180 in one thread. Mark the tape.
If you cash in you physical PM's when you believe the tipping point has hit (or will soon hit) then the only settlement medium for that trade is the U.S. Dollar...which will be destroyed when the ship goes down.
I giveth you an emoticon: :-/
Agree. I saw the USSR about to collapse, the writing on the wall, the circling of the black hole, the unpayable debts, the imminent demise of the entire leviathan edifice.
So I ran out and converted EVERYTHING to USSR rubles. Great idea, huh? CASH IS KING!!!!!111
Good one.
"In fact, if the increase in oil prices is gradual, the persistent rise in inflation can cause a GDP expansion."
just when i thought that bernankrupt could not be out fucktarded this evil embecile comes along to take top honors. take from the poor and give to the rich....he who debases the currency is a thief.
Deut 25:15
15 But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have: that thy days may be lengthened in the land which the LORD thy God giveth thee.
16 For all that do such things, and all that do unrighteously, are an abomination unto the LORD thy God. (KJV)
he who debases the currency is a thief.
Have you ever taken out a loan under any debt based monetary system, tony bonn?
Then according to yourself, you are a thief.
Yeah, but 999 out of 1000 people still think the bank is loaning it's own capital from it's vaults.
No, the interest covers that. If the currency wasn't being debased, the interest rate would be much lower.
The Fed is the only thief in the room. Why do you try to blame the victim?
this is just godawfully wrong
I love how you run around telling everyone how wrong they are, or how stupid or myopic, but you consistently fail to offer any explanation as to WHY they are wrong. You just assert that they are.
dude...it's been explained to you already.
And yet you continue to come back and say the same crap again.
Same as on the oil threads; you were shown in gory detail exactly how you were wrong. Then, the next oil thread you were back pretending as if it never happened.
I got no time to explain to you AGAIN why you are in error, ok? Just accept that you are and move on. It ain't gonna change anything, let's be honest about that. You will return the next time and repeat this nonsense about Fed debasing currency and consequent interest rates.
?????? Explain to me, douchebag, how you think the FED is strengthening our currency? You must either be a narc or a retard.
If you explained it to me, I didn't see it.
You can scream about peak oil all you want, but you never want to consider the fact that there might be other factors slowing oil production. The analogy is using water use as a metric for water availability. That might work when all water assets are tapped, but when the government has imposed artificial controls on water usage, then it DOESN'T reflect actual water supply.
If you "got no time", then you can fuck off. All you are achieving with these dumb shit posts is making yourself look like an abrasive ass.
The real problem is that this so called Phd is paid by us.... and how many have already sent letters (hard copy) to the appropriate people (your own sorry ass Congressman) to can his sorry ass ? None ? Oh. what a fucking surprise...
PSTFU
This is what happens when you use linear differential equations which use standardized units of measure as axis, and substitute a unit of measure which is variable and dependent upon that which it measures. Thes PHuckD Ebubblegnomists refuse to think logically about what they do. They construct a set of complex equations and then play with them. Given the variable unit of measure, up is down and left is right. Complete twaddle.
To those who think this is NOT taken seriously by other PHuckeD Ebubblegnomists, you are wrong. After all the mathematical training and nothing else that they receive to get a PHuckeD, this kind of mental masturbation is all they know.
It's sad that regional university education was taken over by a single school of thought. There was a time where elites came from various schools and serious debate and change could actually occur. Now they all practice the same religion, and believe the same nonesence. This is why kick the can was such a guaranteed way to bury the losses and get housing prices a risin' again. All the business, gov't and intemelectuamal elites believed that it would work with nary a voice of any matter saying it wouldn't, where it mattered.
....Meh...we're all screwed at this point. But sometimes I forget this stuff actually gets seriously debated by these idiots.
Thanks TD for showing me where Sean Corrigan is hanging out online these days. I'd lost track of the irrascible Scott.
Cheers,
It's sad that regional university education was taken over by a single school of thought. There was a time where elites came from various schools and serious debate and change could actually occur. Now they all practice the same religion, and believe the same nonsense
No doubt. And some folks still wonder why places are frequented where both the dynamic and absurd can still be found.
it's worse than that.
They fail to understand the basic reality that energy supply growth causes economic growth, interest rates and all this monetary shit DO NOT.
Paper does not cause oil.
Economic growth also comes from increasing efficiency. Free markets introduce new technologies that allow more to be done with less. If this were not the case, all the world's forests would have been gone by 1925 from charcoal production.
you're wrong, as usual.
The oil economy is not more efficient than the coal economy.
Machine power is not more efficient than human power.
This may hurt to hear but nearly everything that you think you know and have come to accept as true is actually FALSE.
How fucking backwards is your thinking? Why aren't we all driving around in steam powered cars, then, jackass?
Machine power isn't more efficient than human power? Then why do we have machines? Just for kicks? Ok, lets set you with a shovel against a guy with a backhoe and see who can dig a longer trench.
Notice how I back up my assertions that you are an idiot with actual arguments backed up by logical thought? Yeah, you don't do that. Because you are an idiot.