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Gonzalo Lira Proposes Open Debate With Mish On Topic Of XXflation
From Gonzalo Lira
Recently, there has been a raging discussion about the fate of the U.S. currency, and therefore the fate of the U.S. economy, during this Global Depression.
There are essentially three camps: The Deflationists, who think the US economy will putter along like Japan has done since 1990. The Inflationists, who think Ben Bernanke will succeed in slowly inflating away the massive Federal government debt. And the Hyperinflationists, who think that the US economy will spiral out of control and crash.
Mish Shedlock, a prominent financial blogger, is a Deflationist. Mr. Shedlock appeared the week before last on Michael Hampton's Global Edge Radio. Michael early in the show had made reference to a longish post I wrote, laying out the conditions whereby hyperinflation might appear in the United States, following a run on Treasury bonds.
At minute 20 or so, Shedlock—without any provocation by Michael—went off the rails against me and my arguments, claiming I was "inane" and that my arguments were "too stupid to respond to". It was quite a rant, actually.
I have since then expanded on my ideas that Treasury bonds are in a bubble, fleshing out my thesis that, if there is a run on Treasuries, the cash might flow to commodities, and thereby trigger hyperinflation. I have also appeared on Michael Hampton's podcast, to respond to Shedlock's arguments, though without personalizing this, or making it about Shedlock. Or in fact, even mentioning Mr. Shedlock.
Today, however, I woke up and read in Mr. Shedlock's blog how I am a "flat-earther" for claiming that hyperinflation might happen. He goes on for quite the long rant, about me and my ideas.
Mr. Shedlock, however, does two things in today's rant: Number one, he selectively quotes me, so as to make me sound like a fool. And two, he doesn't lay out my arguments concerning the weakness in the Treasury bond market, and how that might trigger a run up in commodity prices, and therefore hyperinflation. He clips my arguments so that I sound as if I were saying that one day—out of the blue—hyperinflation will come, the sky will fall, and the Mayan prophecy of the end of the world in 2012 will come to pass—save yourselves!
So of course, Mr. Shedlock has set up a straw man argument, which he promptly demolishes, and thereby makes himself look like a superhero—at my expense. He also quotes other people—whom I am not affiliated with and don't even know—and allows his readers to infer that I fully agree with them, and that I am part of some conspiracist, gold-bug cabal.
I have—privately—offered to debate Mr. Shedlock in a public forum. He hasn't responded. That is his prerogative.
However, now, he is publicly attacking me on his blog. He is distorting my views, so as to come off the better for it—while deliberately distorting my views so that I come off looking silly, naive and ignorant.
Compare this treatment I received from Mr. Shedlock, with the treatment I gave him and his ideas, when I wrote about them in this long piece on Treasury bonds: I was courteous towards Mr. Shedlock and his work, but I respectfully disagreed with him. I quoted him accurately, so as to fully show my readers his thinking, and thereby contrast it with my own. But at no point was I dismissive of his ideas—on the contrary, I took them seriously.
And nowhere was I dismissive or belittling of him personally, in any way, shape, or form.
Mr. Shedlock, however, seems to think that courtesy, honesty and accuracy are lesser values. And he seems to have no trouble beating up on me and my ideas—but only when I am not around to defend them or myself.
Therefore, I would like to take the opportunity here on Zero Hedge to formally, publicly ask Mr. Shedlock to debate these issues with me, on Michael Hampton's program, whenever it is convenient for Mr. Shedlock. Michael has already agreed to do such a show.
This is a public calling out of Mr. Shedlock: If he is so confident in his views, he shouldn't be afraid to have a debate.
If he fails to meet this challenge, then maybe he is not so confident in his ideas—maybe he realizes he is wrong. Maybe he is afraid that I am right.
Or—maybe—he's just a coward.
GL
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I do not always agree with you, but I sure as hell agree with you on this. Good post.
You could pretty much put a picture of mish next to the definition of sanctimonious.
Added: That recent post he had up about about the evil unions trying to organise workers earning $3.50/hour at car washes in California was particularly vile.
Exactly.
He's a pompous ass. Perhaps that's why he got the reaction to his 'dissing' GL.
This is the reason i stopped reading Mish's blog. His econ analysis are usually pretty solid, but his obsessive hatred of anything unions is...well, repugnant!
Doesn't he realized that unions are the only solid counterweight to the power of the corporations? And pray tell what is so freaking awesome in having corporations holding so much power?
"Power corrupt, absolute power corrupt absolutely"
From an older blog post of mine
"Every moron bear out there is modeling the USA collapse to that of Japan. Since the end of the gold backed currencies, we have had 100 or so Hyperinflations and 1 Deflation. So all their observations are based on a statistical pool size of 1. Having spent so many years in science, I cannot emphasize how retarded that observation is.
Even those basing their observations on Japan conveniently forget certain relevant facts. For example what was the average P/E of Japanese Stock market over the last 2 decades? When you look that up you will realize that in ZIRP environment stocks can trade at much higher ratios than the 5-6 that people are calling for, for a very long time.
Second, What valuations did USA housing have compared to Japan at the peak? Japan's housing bubble was much much worse.
And finally for a few who say that Gold rises during deflation.... what happened to Gold during the only Fiat currency era deflation, in that currency?Answer: It declined by over 60%."
where did you get that number ?
Look it up,
Gold went from about 67,000 Yen (1988) to about 28000 yen (1999-2000)
http://ispeakofpeak.blogspot.com/2009/09/bull-market-in-gold.html
thats gold priced in dollars though. I wonder what the Yen did with gold priced in pounds or swiss franc then.
Sorry I am not sure what you mean.
Japan was in a deflationary period and the price of Gold in Yen went down
substantially.
What I am saying is that the Yen went down in gold priced in dollars. The US dollar was the reserve currency so gold was by default, priced in dollars.That doesn't necessarily reflect golds value. The only way you could use the dollar price of gold as the reference point, is if the dollar was backed by gold.
I am just wondering if the yen went up or down in gold priced in swiss francs or pounds.
Interesting......
fuck Mish...
i wish his name was "Mitch" so it would rhyme perfectly with "Bitch"...
any individual who disparages one of the only 2 forms of real money should be summarily dismissed and disregarded as a note worthy authoroty on economic/monetary affairs...
punk.....
What does he disparage? He's cool on gold. His site gave me the courage to buy at 800 (my first buy, a big deal to me). He had a post that said "I like gold here." I am not complaining.
You should read EJ every so often also ... He said to buy gold at $270.00.
2001
In 2001, before I expected the deflationary part of the cycle to end, I took a lot of the cash and bought precious metals and some gold stocks. In Questioning Fashionable Financial Advice made the case to iTulip.com readers in the one and only piece I ever wrote about gold, by coincidence near the 20 year bottom of the market. Gold was trading at $270, 13% of its inflation adjusted peak price.
2002
In August 2002, in Yes. It's a housing bubble. I made one update to iTulip.com to point out that the housing market was turning into a bunch of regional bubbles. Coincidentally, that was the start of the speculative phase of the real estate market.
That piece left it up to the reader to decide whether to play the speculative housing market or not. As in the case of the Internet Bubble, there was no reason not to speculate in housing as long as you know that's what you're doing and you're not buying into the latest "prices only go up" bullshit and are not over-leveraged.
2004
After Bluesocket while working for venture capital firm Trident Capital, in a piece Housing Bubbles Are Not Like Stock Bubbles originally published by Always-On Network in January 2004, I explained how housing bubbles end, with a collapse in transactions followed by a slow decline in prices versus a sudden collapse in prices as in the case of stock market bubbles.
2005
I wrote a piece Housing Bubble Correction, Fifteeen Years to Revert to the Mean in January 2005 outlining a 15 year downturn in real estate.
Mish used to visit EJ's website but left because of EJ's call on Inflation...
Interesting. I wonder what the value of said "dollar denominated assets" is?
I believe you have identified the real "money on the sidelines" that seems to so confound Husman. It is the selling of the US Treasuries that will bring the decimation of the value of the US dollar. Decimated dollar = higher prices for imports, and everything is imported. As noted, the money is already printed and when no one wants to own it it will have less value. If the Remembi was convertible the dollar would have crashed already.
"Butler and others act as if their issues have not been addressed. Clearly they have been addressed, on multiple occasions in great detail, by many people in addition to the CFTC.
Close scrutiny shows that the preponderance of evidence is solidly in supportive of the fact that there is no conspiracy or collusion between large COMEX traders.
Butler's gun keeps firing, but there is no smoke. It's a blank every time. The Great Gold And Silver Conspiracy Is Easily Explained. There simply is no conspiracy."
anyone who maintains that there does not exist an long standing manipulation of both Gold & Silver by and for the benefit of the manufactures of debt coupons is not a proponent of "real money"...
period....
You clearly have no idea what you are talking about. Maybe you should spend a couple of hours reading his historical posts and then come back and try to make yourself look less foolish.
With a name like Lira, it's hard *not* to be a hyperinflationista.
Come on Mish you big jamtart.
Here Mishy mishy mishy...
Mishy Shedlock, come out to playeeyaa
If you are going to pull this shit, do it right:
http://www.youtube.com/watch?v=u05Qot_yh9c
Actually they are both right....
Inflation
then ....
System fail (Deflation)
And I'm no economist, by any means....
deflation and the subsequent hyperinflation(if) are not accidents.
mish = gate keeper
quit thinking they might do somthing to correct the situation if we keep yelling at them. they know exactly what they are doing.
this is a global takeover and we are being distracted
yup
This is the most disappointing set of comments I've ever seen on a ZH post (except perhaps the ones that devolve to Israeli/Arab arguments). I simply can't understand the vitriol aimed at Mish.
I read Mish every day, just like I read ZH every day. His analysis is generally pretty solid, and long before ZH got into the act, he was one of the mainstay econ bloggers challenging the MSM bullshit (along with Calculated Risk, Naked Capitalism, Denninger, etc.). I also personally love that he beats the shit out of public unions. That has been his major theme over the last year, and if you disagree with him on that topic, I can't really see how you could to subscribe to much of the ZH philosophy.
Mish might be dead wrong on deflation, but he might not. His argument that outstanding credit, which is money and is deflating, far exceeds anything the Fed could ever hope to print is a cogent one. I don't know if its correct, but he has made it repeatedly, and you are insulting him without having considered it seriously, you are a fool. Furthermore, anyone who claims to be certain how the deflation/inflation game is going to settle out is a fool. It is impossible, because it is not a matter of fundamentals, but a matter of politics, and you have to be a Kremlinologist (or Lloyd Blankfein) to understand the signals.
Finally, Mish like gold and hates the Fed. I mean, he hates the Fed. Wants them dead, wants their family dead. He loves Ron Paul. I thought those themes were pretty consistent with ZH, so why is everyone bashing him?
As for the post on Gonzalo, it was a bit smug and careless, and he probably owes Gonzalo an apology. But it is small beans, people. Save the vitriol for the bastards who really deserve it. These two may have different views, but they strike me as two guys on the same team.
Incidentally, I would love to see them debate.
One more quick thought for the childish haters on here, especially the ones bitching about emails. The guy posts several posts a day on his blog and provides his thoughts and analysis for the price of a Zim dollar. I think his blog is like top 20 finance blogs on the Web. So cut the guy some slack if he doesn't dive into a long email conversation. He probably gets a few thousand a day.
Good posts SpeakerFTD. I like Lira's stuff, but I like Mish too. Everyone is so quick to polarize.
+++ SpeakerFTD and MsCreant.
Mish and Lira both publish quality stuff, and they may have more in common if you take the long view.
I read both writers, like them both. Insults are beneath those writing them.
speaker
you post emotional drivel.
I don't think Mish has the mental capacity for a good debate. Why even waste your time?
I think Gonzalo got his definitions mixed up. He was talking about price rises, while Mish was talking about increase of money supply. Inflation is when the money supply increases but goods/services don't. Hyper-inflation can happen when velocity shoots up too.
Hyperinflation can happen at any second. Always could have. It is contingent on the concept of faith in the US government and the will of the people to pay back their debts (and their ability to do so, which we all know is already mathematically IMPOSSIBLE). The weird thing about it, unlike the other possibilities posited here, is that you can't use the charts or fundamentals or anything else to call it necessarily. It is a beauty, a true Black swan.
Edit: I found this about Black Swans. Seems they have a tendency to be gay:
http://www.esquire.com/the-side/gayanimals030707-3
Thanks for nothing now I have to change my avatar ..
Guess we could say your avatar went tits up. Sorry. Gay is not bad you know, just gay.
inflation is when the value of a currency falls. That could be from an increase in supply or a if there is more sellers then buyers of the currency.
mish thinks it can only come from an increase in supply.
wrong
Inflation is an increase in the money supply. hyperinflation is a result of there being no faith in the value of the currency wherby no amout of cash can purchase a tangible item. The printing press reacts to pay for imediate needs but by then its too late.
Mr. Lira,
I understood your piece was meant to be thought provoking more than a certain prediction. Unfortunately, many investors cling to mainstream wisdom because they lack the imagination or intellectual curiosity to understand that when the facts radically change, one must radically change ones strategy. Please keep up the great writing.
Hyperinflation is a loss of faith in a currency as domestic investors flee to a stronger currency. All the recent hyperinflations- ie. Zimbabwe, germany in 1923 etc happened in currencies that could be fled from!!
In 1923 you could flee Reichmarks to the Us Dollar or Pound. in 2009 Zimbabweans could flee to the Dollar or Euro.
So - in order to argue for hyperinflation in the US Dollar one needs to point to an alternative currency that people can flee to. And it needs to be credible relative to the huge size of the US Dollar markets ( so please dont pick Aussie Dollars!!). The only viable candidates are the Euro or the Yen. Thats why Iam not convinced we will have that type of hyperinflation.
Much more likely to have high inflation (1970's style).
As for Deflation - it makes me laugh that so many people are arguing for this. Deflation is a pretty rare beast and it takes a counry with an iron will ( Japan, Hong Kong after the Asian Crisis) - to actually sustain a deflation without giving in to political pressures. It aint gonna happen in the US of A.
No turbo 70's is the likely near term scenario.
Gold and silver.
Personally I'm a little (just a little) burnt out on the "fight club" thing. How about a little "heated debate" action? You know, just for a little while.
Added: My vote - I'd like to see two (respected) individuals get into the ring and hash it out while the crowd (intellectuals) watch.
So how do we trap Ben and Alan to do this "limbs torn off" thing?
You caught that. I fell back into fight club - it's so easy to do.
lira is stoned. can't believe the attention this has gotten. mish is right. no need to waste any more time on this.
go buy them treasuries.
I listened to BOTH discussions, beginning to end (45 min. each) on Global Edge. I thought Mish made a few important points, but I was sickened and disgusted with Mish Shedlock's condescending and derisive comments and his elitist attitude. Until these past few weeks, I had been a regular reader (daily) of Mish' blog as well as this one. Not any more. It's obvious which one I still read by the mere existence of this post.
A few weeks ago, Mish posted another commentary on the deflation/inflation subject. He selectively used ONE chart of nat gas to infer that commodities in general were in a deflationary trend. As a commodity trader myself, I KNOW that is not true. The vast majority of commodities are already rising powerfully. Just look at charts for sugar, cotton, corn, soybeans, wheat, oats, rice, milk, meats (until the past few days), gold, and several others. etc. Corn, sugar, cotton, and gold are near multi-year highs. The only major commodities that are falling are.... cocoa. Even nat gas has now reversed higher!
I was not only disappointed with Mish' disingenuous defense of his deflation opinion, but of his disrespectful and uncivil manner as well. My disdain isn't for his argument, but for his crass belligerence. I've deleted his blog from my regular reading list, and his website from my bookmarks. He is a demogogue, not an economist!
That's an absurd statement- all commodities except for maybe wheat are down over a 5 year trend line. Oil was 140 bucks. nat gas was games by Enron. Rice was guarded by the Thai government. Copper is No where near the mania it was in in 2006.
Gold, in a deflation, has I creased purchasing power against commodities because it is money. silver is working it's way there too.
Saying that because those commodities are up for the year we are inflationary is nonsense.
Shit is cheaper across the board- oil right into property. That's deflation.
Deflation is the collapse of credit and money velocity. inflation is the opposite.
Hoarding and falling prices is deflationary. mish has nothing to defend becaUse the whole fucking trend is working in his direction. Austerity battles, union and public servant gouging, higher taxes, defaults, falling asset values. If your cup of coffee is more expensive it's because the brewer had to make up for a crash in sales with higher prices. That's price inflation and you don't have to pay. And people are not...
If Mish thought, as he stated in the interview, that this subject wasn't worth discussing, then why did he do just that on his blog?
Mish has created a rather viral online persona in the economic blogosphere. Changing his viewpoints would be publicly humiliating and economically disadvantageous. So whether he realizes it or not, he has a tremendous bias. The hositility may be a coping mechanism for what may be inconsistencies in his thoughts.
Stay down Mish, stay down.
.
Why is it that nobody ever asks the most important question about this whole hyperinflation debate? Assume we have this currency crisis you speak of... tell me where on earth people will store their wealth or what will be used to exchange goods and services? The Euro, yen, renminbi??? Their debt and structural problems are greater than the dollars and the likelihood of a crash if far greater for these currencies. I know the next answer... gold. Right, when less than 1% of all households own physical gold, this will suddenly evolve into THE medium of exchange for basic commerce? Real estate... I certainly think the last three years have debunked the myth that property is a sustainable, liquid asset. In a hyperinflationary scenario, there has to be some alternative for storing wealth and I simply don't see it. Until there is a viable alternative, the dollar has to retain its value and be the first choice to store wealth barring some sort of economic catastrophe. I think the only hyperinflationary scenario is a massive shortage of oil (which I think is actually feasible down the line) where oil becomes the chief asset of wealth in a completely collapsed market.
Second, I think a key point is missing in the downright silly Treasury run from Lira's article. My question is why on earth anyone would randomly start offloading Treasuries? Look at the two groups purchasing these assets. The first is foreign governments who have no choice but to purchase them due to massive trade surpluses? So they sell these Treasuries... what would they possibly do with the resulting dollars from this sale??? Personally, I'd take my incredibly small interest over holding the dollars with nothing to purchase. And saying they will just buy commodities is absurd... artificially boosting demand is a sure-fire way to collapse that dollar investment. After all, at the current time we see China purchasing more than they could ever need! The second group are banks with capital sitting on their balance sheet as they wait for additional losses to roll in. Again, they sell Treasuries and buy what exactly? I'll take my 0.13% over zero return any day of the week... that's simple math.
Secondly, asset runs and deflated bubbles are almost always due to a combo of leverage and unjustified price appreciation (some sort of psychological mania). There's a very good reason Treasuries sit at their current rates. However the key point is that nobody is levered up to go buy Treasuries. I think there's much, much better case to be made that we have a run on gold or other commodity holdings than insane idea that everyone will be clamoring to sell the most liquid asset you can purchase.
I at least give Lira credit for pointing out how hyperinflation will occur even though the entire argument is silly. It's the first time anyone has actually given a realistic scenario for hyperinflation instead of the normal babble about how we are printing money so it has to happen. The only scenarios hyperinflation exists is when there is a massive political event (say overthrowing the gov't), Congress decides to do something ridiculous like forgive all debt, or we have a market paralyzing event like an oil shortage. Otherwise, these scenarios are demonstrating ignorance for what is logical in a collapsing credit environment.
+1
The treasury thing is kooky. Anyone trying to preserve capital would not move their money into a volatile sector like oil. They would just go to cash. We all saw oil go to 29 bucks a barrel, despite peak oil fanatics.
That's oil bugs getting gamed at the height of the market.
If treasuries flunk out PEOPLE and investors go to cash. If this was really an inflation, I would have 15 lawnmowers, 5 cars and would be buying real estate- maybe hoarding copper.
A flighty to capital preservation is a huge indicator that we have deflation. The FED cannot control interest rates in treasuries if investors don't buy the trend.
Muwabi said:
Excellent question.
Answer: Two different things.
Gold to store the wealth, and fiat currency (backed by NOTHING) as medium of exchange.
The physical gold must be free to be priced by the market, at whatever level the market requires.
Just solved all your issues. All of them. The implications of this are truly immense.
All the problems have stemmed from attempting to use the same money to perform both functions.
How can the savers save when their storage vehicle is constantly diluted? They can't.
A good starting point for a little more detail: Just Another Hyperinflation Post - Part 3
Mish is an insufferable douchebag. I stopped reading his POS blog after his jealous attack on Peter Schiff. At the end of that rant he tried selling his services. Pretty transparent, and pathetic.
Mish is an insufferable douchebag. I stopped reading his POS blog after his jealous attack on Peter Schiff. At the end of that rant he tried selling his services. Pretty transparent, and pathetic.
*************************
lol--I doubt you would want to try taking Mish on in a debate-he would hand your heart to you-while its still beating-
We have created a complex and unstable system. No one can predict the path it will take back to stability. All we know for sure is that there are too many claims on future real wealth. And it is likely that this imbalance will worsen as more claims on future wealth are created to maintain BAU, at the same time that net energy and the real wealth it generates is declining. We should value all intelligent opinions like those of Mish and GL so that we can prepare for many different outcomes.
GL misses an important camp in this debate - people who believe in severe deflation that will be nothing like Japan's lost decades, much worse than GD1 in fact. These people also tend to believe that the deflation and/or peak oil will set up a currency crisis down the line (probably within 10 years). I would put people like Stoneleigh and Illargi from TAE into this camp, and I think they have made the best arguments so far.
There are also people who believe all of these other people are way too confident in their ability to specifically predict how this collapse will play out. We should realize there are always limits to our predictive abilities in such a complex global economy, and many other environmental factors are coming into play as well. I'm all for open debates, but let's not completely miss the bigger picture while we're bitterly arguing about deflation or hyperinflation (I'm sorry but regular inflationists are just a camp with no good arguments).
http://peakcomplexity.blogspot.com/2010/09/limits-to-complexity.html
For the record
1. I am a Libertarian not a Republican
2. The only candidates I have backed on my blog are Libertarians masquerading as Republicans
3. I have since I started blogging in 2005 been a fan of gold, posting (correctly) a couple times I thought gold was a particularly good buy. It amazes me that people here have no idea my position on gold. People mistakenly assume all deflationists hate gold. They don't.
4. Lira sent me an email, "throwing a gauntlet" challenging me to respond. I did. He got what he asked for.
5. There is no point in further debating the flat earth society. I responded with how and why Lira's arguments make no sense.There is nothing to debate. He had his say, he asked me to respond, I did.
6. All we have to do is wait another year to see how silly this is given his statement "I’m guessing if it doesn’t happen this fall, it’ll happen next fall, without question before the end of 2011."
7. There is a lot of debate among Austrians on the inflatiuon deflation debate. Those predicting hyperinflation or strong inflation (like Schiff) blew it. Credit rules in a Fiat based credit economy.
8. I called for deflation, we got it, we are in it, by credit. Unlike hyperinflationists still "waiting for Godot", I have the liberty of changing my position at any time. It is the hyperinflationists who are stuck, not me. I fully intend to switch positions at the right time.
9. My call was and still is "the US will go in and out of recession and in and out of deflation for a number of years just like Japan." 2008 was a deflation year, 2009 was an inflation year, and via credit contraction I believe we are back in deflation. I think we are headed back in recession soon enough. We will see about Lira's call soon enough.
10. I correctly warned against shorting treasuries in 2007-2008 and in December of 2008 advised people to take treasuries off the table. After a runup in yields I liked them again and still do now although they are not the bargain they were when the 10-year was at 4%
11. The equity runup in 2009 was far greater than I thought. No one is perfect. I am far from perfect and readily admit when I am wrong.
12. At this stage of the game hyperinflation is a hyperinflationst's wet dream. We are years (and massive amouts of credit destruction away from serious inflation threats. Again credit is the key. Those professing to be "austrians" without attempting to understand the role of credit are not Austrian but rather fools.
13. In this thread, most of the serious replies discussed what was said. Those posts tended to side with me. All of the ad hominum attacks, sided with Lira and not one of them refuted anything I said.
14. I am not afraid to debate anyone. I debated Marc Faber on Market Ticker and afterword he came to my house. We are friends. But there is no point in debating anyone whose arguments are so full of holes they are tantamount to debating the flat earth society. I did so once - not because of a gauntlet but because ZH misquoted me (an accident I am sure) and I am not blaming him for it.
Actually I thank him for it, because I trashed a viral post that despertately needed trashing.
Mish
Thanks for posting, I think your wrong but you showed up to the fight club.!!
Where the fuck is Lira' or Tyler ... ? Fights on .... Ding,ding,ding ...
Do you still think Eric Jansen is wrong?
EJ's inflation forcast.
The Fed does not need to go on a printing binge to produce the kind of inflation that the theory predicts. All the dollars that are needed to produce the inflationary "Poom" have already been printed and reside outside the U.S. as dollar denominated assets owned by individuals, institutions and central banks. In fact, if the Fed were to completely stop issuing new money -- stop the printing presses tomorrow -- the U.S. economy would fall into crushing recession, foreign investors would flee and the dollar money supply and inflation in the U.S. would rapidly rise. Why? Because every time a foreign holder of dollar denominated assets sells, they have to sell dollars and buy their own currency. If the Chinese, Japanese and Brits were to panic and all do so at once, suddenly demand for yuan, yen and pounds increases and demand for dollars falls; the price of the former rises and the price of the latter declines. If this happens in an uncontrolled fashion, you get "Poom," a cycle of a declining dollar, rising interest rates, a slowing U.S. economy, a declining dollar, and so on, until a free market valuation of U.S. interest rates and the dollar valuation is restored.
Mish, this leaves a ton of grey,wishy washy,flip-flop room ....
Yeah, Mish is ready to change his position at any time, but he may have a window of only a couple of hours to do so when the shit really hits the fan one day... Normal people who don't sit in front of a terminal will have no chance at all to react.
I'd say that Gonzalo's 2011 prediction is quite a bit off though. It could just as well take another 10 years of 'disinflationary' depression before an event triggers a run on the USD. On the other hand, it could also happen next week.
As a side note, I actually prefer reading non-economists' blogs, such as Dmitry Orlov or Charles Hugh Smith. Also, I very much like some of FOFOA's posts, especially about debt. He is also spot on in saying that economists view our economies as too much like machinery and not enough like ecosystems.
Actually your "Credit Stress" theories and that of Gold going up in deflation are complete joke.
http://ispeakofpeak.blogspot.com/2009/09/bull-market-in-gold.html
I have followed Mish and Peter Schiff for 2 years now.
After much reading it becomes clear they are not really contradicting each other, it's just that Peter is taking the long term view and Mish the much shorter term view. Mish just stated "I have the liberty of changing my position at any time." In essence Mish says he will manage to call the right time, and then also be able to get out of certain markets, pretty much unharmed. Peter Schiff on the other hand says prepare yourself NOW, and buy gold as well as dividend-paying stocks from resource-rich and/or growing countries at the dips, but keep some cash for taking advantage of possible bigger dips.
My personal risk profile has lead me to follow Peter's approach.
Everybody should make that choice for himself.
Gonzalo Lira has just refuted one single -but way too often quoted- argument why hyperinflation cannot happen. I agree with him.
But in the end the discussion how hyperinflation can start and how not is moot, as we likely misgauge details today that will suddenly become important. What I do believe Mish, Peter, and Gonzalo actually completely agree on, is that we are living in a Ponzi-scheme of credit and fiat money, which will fail some day. That is the most important statement for me.
Mish has an attitude and acts like a bully on a school yard.
There is never a reason to be abusive; it just means he never had an education.
Ignore him.
Mish writes,
In other words, Mish will debate anyone—unless they disagree with him. If anyone disagrees with him, then he won't debate them—because "[they're] arguments are so full of holes".
Mm-hmm . . .
By my posts and my interview with Michael Hampton, I don't think anyone doubts that I'm fairly rational and knowledgeable about the subject. Many people here have said that they'd enjoy a lively debate. I would too, frankly. I'm not afraid of having my ideas and logic challenged.
But hey, if Mish is afraid . . . Oh, excuse me: If Mish thinks that there's "no point" in debating me, well, then I guess we have the answer as to what sort of man Mish Shedlock really is.
(BTW, has anyone wondered why "Dungeon Master Mish" would post such a long, tedious comment on this thread, if he really thought that I and everyone else here were members of the flat-earth society? Just a random, silly thought of mine.)
GL
GL
Thank's for showing up...
Mish-
No shit credits going to fall/deflation at first after a 28 year old credit bubble.
We the inflationist are wrong because no sign of inflation yet???But you can change your view point when the time comes, so your like a weather vane ....we already had the fed panic about deflation in 2002 and dropped rates, so your call for it a few years later is suppose to be impresive? Big deal ....
More wishy washy crap ...
Long time lurker here. I've been reading Mish's debates with various inflation proponents from when he posted on Russ Winter's page at Silicon Investor and Daily Reckoning Forums back in 2004 and 2005. While the back story is always interesting between parties I can safely say my education wouldn't be be as robust, though far from complete, without listening to various contributors on both sides of the question. For that I am thankful.
Vertical Drop
This may be the 1st time in history we have witnessed both inflation and deflation RAGING at the same time. Even the so-called heavy weights (Krugman v. Marc Faber or Jim Rogers) have their own version of reality and different prognostications. So it might make for good blood sport, there nothing a "registered investment advisor representative" (a snake oil salesman) has that's of interest for me. At least Gonzalo has lived thru and seen the devastation of HyperInflation.
So for PPV, bring on Faber or Rogers to witness a knock-out uppercut to the salon monkey Krugman.
Semper Paratus!
Gonzalo,
This is incorrect.
First Japan didn't see overall credit deflation since 1990, but noflation (more or less zero inflation of credit since 1990 since private credit deflation was compensated by public credit inflation).
Second one can be a deflationist, ie that the US will see overall credit deflation for the years to come, and a hyperinflationist, ie that there is a risk that a protracted deflation increases the risk of a crisis of confidence in the US Govt's credit and eventually a run on treasuries, the dollar and a hyperinflatonary collapse.
It's perfectly logical to be a deflationist and believe that the end game will be hyperinflation.
What you don't seem to understand is that it is still far too early to predict whether a protracted credit deflation as we are going to see will end in a bang (hyperinflationary collapse) or a whimper (decades of deflationary depression). Both are possible.
As to what could possibly trigger a run on treasuries in the midst of a credit deflation, t's obvious it can't be a blip in the price of oil. This doesn't mean that something else couldn't trigger such a run : I have explained on another post that for instance a trade war US-China could be sufficient for China to decide to dump its treasury holdings and cause such a run.
I agree with what Michael writes, but I'm talking of something completely different.
Not a scenario where PBoC diversifies its holdings (which has no effect on the treasuries prices as we have seen so far), nor one where it switches from dollars to other currencies (ie stops acrueing reserves in treasuries) which would causes trade tensions.
But the following scenario (not a gradual one as above but a real trade war that is politically instigated):
a populist US govt slaps tarriffs on Chinese imports, China dumps all its treasuries, Fed is forced to buy them to keep rates low, dollar depreciates, other foreign holders loose confidence and follow suit, Fed continues buying, and eventually the dollar stops being accepted internationally.
Now I don't think such scenario has any chance of happening in the short or medium term, as it is clearly not in the US or China's interest to start this war in view of the current conditions.
But further down the road? This scenario could possibly happen after a protracted deflationary depression in the US, say 6 to 10 years down the road. When the US consumer, who has become ferociously anti-china and is not profitable enough for Chinese businesses, that China has sufficiently developped its domestic market, and that they have succesfully diversified their reserves in a load of more tangible assets.
That's why I say, it's theoretically possible that hyperinflation ends the game, is it likely, maybe, but certainly not in the short or medium term.
And I don't think Gonzalo's scenario, that a spike in the price of oil in 2011 could cause hyperinflation in the US, is realistic. We saw oil surge to $147 two years ago, did that cause a hyperinflationary collapse? So why would a blip in the price of oil cause one in 2011? Why would a blip in the price of oil cause a complete loss of confidence in the dollar? You need that for the run on the dollar to hold, otherwise you'd just see, as we've seen so far, a minimal temporary effect that reverts back to its previous stage.
I maintain that hyperinflation is a risk, that this risk will increase with time as the deflationary depression takes its toll, but whether it will be politically decided to end the game that way is far too early to say and is not realistically going to happen in the short or medium term.
I think we will need a heck of a lot more political tension between China and the US before we can reach that stage.
Sadly I am not surprised. Its not the first time Mish does this.
What will happen when a majority of people and countries realize that peak oil is real? Then what will happen when they learn that there is no short or medium term substitute for oil? Then what will happen when they understand the tight correlation between energy use and wealth creation? Then what will happen when they learn that our money is a claim on future wealth? Would this result in deflation, inflation, or hyperinflation?
Rosenberg's views on the deflation/inflation debate, for the time being, are not that dissimilar to Shedlock's. There is no question Rosenberg was canonized long ago by Zerohedge yet Shedlock is treated like a pariah for his deflation viewpoint by so many commentators. Go figure....
I think Shedlock's mistake was to call Gonzalo an inane flat earther... Rosenberg didn't.
I agree with the Shedlock/Rosenberg/Automatic Earth/Steve Keen view of things, but that's not a reason to call someone who made a genuine (and IMHO very valuable) effort to present a scenario with such vitriol.
To summarize the view I agree with:
All in all, I don't think Gonzalo's scenario is likely to happen in 2011 or even in the medium term, but I think he did a great job starting a brainstorm on what could possibly trigger a hyperinflationary collapse. We need to continue this dicussion as it is of paramount importance for the future.
And maybe Mish should refrain from showing too much of his ego and calling people with names as this is clearly not beneficial for any of us.
+1
It could take 10 years for the hyperinflatory events to unfold... Or there could be a trigger event next month... As FOFOA put it, we just know that an earthquake is now overdue and the more we wait the more damaging it will be.
IM SICK OF THIS DEBATE. THE RESULT IS SIMPLE...
FROM FOFOA
"THERE WILL BE INFLATION IN EVERYTHING PRICED IN DOLLARS AND DEFLATION IN EVERYTHING PRICED IN GOLD"
THAT'S ALL FOLKS.. MOVE ON (AFTER YOU GOT SOME YELLOW (and white)
Everybody getting on Mish , please provide us with your achievements in economics , predicting events trends etc. Truth is that MISH knows what he is talking about , calling him sh***lock , an idiot and other names is a disgrace to everybody resorting to such dirty talk. Stuff like this is hurting this SITE be meritoric please.
Someone mentioned Janszen
Eric is a good debater and writer. I have been in many discussions with him. However, Janszen views inflation as price increases.
By his definition we are not going to have sustained deflation and by his definition he can easily be correct. The problem is one cannot debate or have any kind of reasonable discussion unless there is an agreement on the definition.
Austrian economists (at least most of them) look at inflation as an expansion of money and credit. Schiff's downfall is that he only looks at money supply and he got blown out of the water as did anyone else who followed him.
Rosenberg watches credit all the time, but interestingly talks about deflation in terms of prices. To reconcile that, Rosenberg often says things like "deflationary environment" where I would say "deflation" and Janszen would say "inflation"
However Janszen does mention "debt deflation" quite often. To me - Debt Deflation IS Deflation. In a fiat based credit society - debt deflation is how deflation will manefest itself. Janszen and I are thus often in "violent agreement"
There are many problems with looking at inflation in terms of prices. Prices can rise for many reasons other than expansion of money.
Peak oil is one example. Government regulation is another. Taxes are another. Inflation in another country (China) is another key one.I have to laugh at those who expect the Fed to control rising prices resultant from peak oil or monetary printing in China.
At best prices are a lagging indicator not predictive of anything. Those shorting treasuries when oil hit $140 got their heads blown off. Credit was imploding and it was an easy call to say that all time record lows across the entire yield curve were coming. I know of no one else who made that call except perhaps Prechter who has made that call for two decades.
Prechter's huge mistake is he failed to see forces that would allow the expansion of credit: moving from 1 wage earner family to 2 wage earners, the borrowing power of a huge expansion of PEs during the internent boom, then the housing boom with years of lowering of credit standards - all kept Prechter wrong for decades - until 2007.
The "recovery" in 2009 started with a recovery in the mark-to-market valuation of debt - notably corporate bonds. Corporations priced for extinction got a new lease on life and then some by rolling over corporate bonds at increasingly lower yields.
While that threat may (or may not be) gone, commercial real estate and housing are headed for another spill. Consumers continue to walk away from houses. Credit card debt continues to shrink and the economy is clearly weakening.
One cannot ascertain any of that by looking at the price of food or gasoline.
Yet I have people tell me all the time my definition is wrong and that prices are all that matters. Such thinking is extremely short-sighted.
When credit is contracting, businesses are not hiring. When businesses are not hiring consumers are not spending. Asset prices head for the gutter. The drop of a home in price from $600,000 to $300,000 makes a hell of a lot more difference on consumer spending and attitudes than the price of carrots going up by a dollar or milk going up by 35% or whatever.
What is happening in the credit markets is almost always more important than prices. A focus on the CPI is like looking in the rear view mirror. It says little about what's coming up next.
A huge drop in credit signals bad things about jobs, asset prices, consumer spending, treasury yields etc etc etc - In other words nearly everything one would expect to see in deflation.
I have repeatedly tried to bring this point home, most recently in
Are we "Trending Towards Deflation" or in It?http://globaleconomicanalysis.blogspot.com/2010/07/are-we-trending-towar...
Inflationists might also ponder Bernanke's Deflation Prevention Scorecard in April 2009.
http://globaleconomicanalysis.blogspot.com/2009/04/bernankes-deflation-p...
Bernanke failed and like Japan he will fail again. The most likely thing is we fall in and out of deflation for some time with extremely weak jobs and no recovery in real estate.
Ironically, those predicting hyperinflation ought to buy houses. There has never been a hyperinflation in history where tangible assets or real estate has fallen in price. And Real estate can still be purchased with 5% or 10% down. Huge leverage.
Yet I am not aware of any hyperinflationist saying "buy houses"
Amazingly Schiff called for hyperinflation and a real estate crash. How silly is that? More importantly he advised in his book for people to borrow against their house at 6% and buy foreign equities. Anyone who did that got hammered mercilessly.
That is the kind of nonsense that happens when you fail to take credit into consideration. Schiff pointed to the "printing by the Fed" and still cannot figure out what happened.
What happened is easy - credit, access to credit, and credit on the balance sheets of banks collapsed far faster than the Fed printed.
Conditions changed in 2009 when Bernanke managed to revive the corporate bond market - in turn lifting equities. However, Bernanke did not and cannot revive consumer spending and bernake cannot create jobs.Nor can Bernanke change attitudes. Attitudes are huge: If consumers do not want to borrow or spend there is no way Bernanke can force them to do so.
Thus we are poised to go down the tubes once again. If so, I expect gold to once again outperfom oil. Gold is the only commodity whose long-term trendline was not smashed in 2008.
Gold is not a hedge against ordinary inflation. The fact that it fell from 850 to 250 between 1980 and 2000 with inflation every step of the way is proof enough.
Gold does act well in periods of credit stress and also at extremes - high inflation and deflation in the senior currency.
With treasury yields in the gutter, with credit sinking, etc etc the proper conclusion is gold in not reacting to inflation but to credit stress or deflation.
That is why I like gold.
Can hyperinflation happen? Sure but right now the odds are small. The threat is not the Fed, but rather Congress giving money away. With the upcoming election, we are going to see a more conservative Congress for sure. There will be more stimulus efforts of course, but there is no reason to believe they will stimulate anything other than the price of gold, at least vs other commodities on a relative if not outright basis.
Mish
Mish,
WHY are you still here? Aren't we all "too stupid to debate with"?
GL
And going on and on and on at such LENGTH . . .
GL
Mish wrote:
See, this is the kind of garbage Mish can get away with in print, which he could never get away with in an actual debate.
There has NEVER been a hyperinflationary episode—anywhere—ever—where real estate and assets have NOT fallen: Argentina, Zimbabwe, Weimar, Chile, in every single episode of hyperinflation, real estate prices have collapsed.
These aren't issues of interpretation—these are matters of fact, like "The sky is blue" or "The Himalayas are above sea level".
Mish can get away with his lies because he won't allow himself to be disputed.
That's why he won't debate—because he's afraid. Because he's a coward.
GL
I'd like to hear your views on his comments on gold:
Your views and insights are appreciated. Thanks for your articles.
Mr. Lira,
This nobody appreciates the cut of your jib.
I agree with everything, except for this :
Let's have a look :
http://research.stlouisfed.org/fred2/graph/?graph_id=29158&category_id=0
Do prices changes lead credit changes, or vice versa?
If house prices are droping, banks see potentially declining collateral value, and grant smaller % of credit/home value.
"There are many problems with looking at inflation in terms of prices. Prices can rise for many reasons other than expansion of money."
"The drop of a home in price from $600,000 to $300,000 makes a hell of a lot more difference on consumer spending and attitudes than the price of carrots going up by a dollar or milk going up by 35% or whatever."
The above statements are very disputable, depending on who you ask. If you ask a low-wage earner who never owned a house, or a guy/lady who owned the same house before and after the bubble, they wouldn't really care too much about housing prices going from 300K going to 600K back to 300K. On the other hand, the soaring prices of essentials such as food, petrol or health insurance can bite pretty darn hard. Anyhow, to me, a non-economist, ignoring consumer prices completely (even though it's true that prices move up or down for various reasons) shows a lack of appreciation of their impact on livelihood and perceptions of the lower and middle income earners. And when I'm talking consumer prices I'm not talking the cooked horseshit figures represented in CPI...
"Ironically, those predicting hyperinflation ought to buy houses. There has never been a hyperinflation in history where tangible assets or real estate has fallen in price. And Real estate can still be purchased with 5% or 10% down. Huge leverage."
This is very true. I'm not an American, or otherwise I'd seriously consider buying a house with 5% down if I could get a bank loan and if I could make the cashflow balance for next 10 years. Gonzalo's prediction of 2011 could turn out to be wildly inaccurate, the 'asset deflationary' depression (aka 'extend and pretend') could easily last another few years. Or it could turn out to be wildly accurate. Here's another scenario that could potentially cause a collapse of currency:
1) means riots, possibility of violent uprisings, various kinds of shitstorms... whereas 2) means temporary lunacy, depression, violence... and with some luck a quick reset to a hard currency
Anyway, you can dismiss this as stupid as well and maybe it is. After all, I'm just a dilletante blog reader, but I'm sure as hell that there are other possible black-swan scenarios that could just as well trigger a massive run on the USD (not just the USD, it could easily involve most of the other currencies too).
Whoops, duplicate post.... bitchez!!
Mish wrote:
Prechter's huge mistake is he failed to see forces that would allow the expansion of credit: moving from 1 wage earner family to 2 wage earners, the borrowing power of a huge expansion of PEs during the internent boom, then the housing boom with years of lowering of credit standards - all kept Prechter wrong for decades - until 2007.
A statement like that is where I always wonder: why doesn't Mish follow through and predicts if the Fed and politicians can come up with another, new method of expanding credit, not just offered to but also happily used by consumers? Or why not?
Can hyperinflation happen? Sure but right now the odds are small.
How long is "right now?" Weeks, months, a few years?
As intellectual as these two may be, they still can't be certain how this will end. Just another battle between egos, which the onlookers use to add to their confirmational bias.
http://maxkeiser.com/
.
KR77] Keiser Report – Markets! Finance! Global Debt Collapse!
September 14th, 2010 by stacyherbertRespond
Stacy Summary: We look at emails from viewers on their “Peak America” moments and then check out the scandals of the Irish choice of being “good Europeans” or “bad Europeans”, as a result of bankers offering only “bad banks”; while Iceland refuses to settle at any price. In the second half of the show, Max goes Down Under to talk to economist Steve Keen about the global debt collapse.
.
minute 18.
Its a shame you don't know of FOFOA (kinda shocking as many of your ideas are basically FOFOA lite), and even more that you would admit to not kowing him yet imply he is a member of a "conspiracist, gold-bug cabal.
"He also quotes other people—whom I am not affiliated with and don't even know—and allows his readers to infer that I fully agree with them, and that I am part of some conspiracist, gold-bug cabal."
Stay on target, Mish is the one throwing stones.
Stay true to yourself and speak your own words, otherwise you just reveal the hollowness of your position and understanding.
John Williams thinks hyperinflation is coming. Mish needs to debate him too!
The Fed and proxies have an unlimited quantity of dollars to buy treasuries. There will be no run on treasuries when you have a guaranteed backstop. This is obvious to anyone who's been following the money. If China dumped 100% of it's treasuries tomorrow, it would cause barely a ripple. Why? Because they'd simply be purchased at or near their current valuation. If China can't catalyze a run on treasuries, who the fuck can?
However, Janszen views inflation as price increases.
You obviously haven't read EJ in any depth, at best.
flat earth society
Sounds like name calling and ridicule from here, rather than real debate
The fact that it fell from 850 to 250 between 1980 and 2000 with inflation every step of the way is proof enough.
And again you assert, but don't address that inflation was actually falling during that period just like during *every* hard vs. paper asset cycle for over a century.
http://www.nowandfutures.com/images/dow_gold_oil_crb1900-current.png
Dollar intervention: Facts versus ideology
http://www.itulip.com/forums/showthread.php/4808-Dollar-intervention-Fac...
etc....
Bart are you insane??? Take any single good or service (minus some sort of technological development) and everything is more expensive today compared to any point during 1980-2006. Not to mention ridiculous asset appreciation, and debt/monetary expansion.
Inflation was falling does not mean that inflation was zero or negative.
Please look again at what Mish said vs. what I said - and look at the chart.
The fact that it fell from 850 to 250 between 1980 and 2000 with inflation every step of the way is proof enough.
And again you assert, but don't address that inflation was actually falling during that period just like during *every* hard vs. paper asset cycle for over a century.
http://www.nowandfutures.com/images/dow_gold_oil_crb1900-current.png
Bottom line - Mish has blinders or similar.
I still don't understand your point... using Mish's inflation definition, it is indisputable that credit and monetary expansion accelerated every year between that timeframe. If you prefer to use prices as a measure of inflation, the price of anything whether housing, commodities, or discretionary goods also accelerated during that time. So what are you using the measure this so called "inflation falling" claim?
As for Mish, if you don't like his opinions or style, don't read him. However, I don't understand the antagonism toward someone who has made broad correct economic analysis. We should be directing the anger at people who didn't predict a very obvious impending disaster and remain in a position of power or the idiots making even worse decisions now. Wasting energy arguing over an extremely unlikely scenario with significant flaws is truly a waste of time. It's like arguing what will happen if the US government decided to join the EU. It's a dumb argument and not worth going through the hypotheticals of a wild theory like that (once the holes in such a theory are clearly articulated as Mish and others have).
I stand by my earlier statement... the only scenario we should be discussing as it pertains to hyperinflation is if the government started a mass hand-out/debt forgiveness policy (highly unlikely) or in an energy shortage/crisis (likely at some point but not necessarily a hyperinflationary event depending on how it occurs). I'll add a major China/US trade war as a possible event (probably wouldn't generate inflation, let alone hyperinflation).
For the second time, if you actually look at the chart I linked you will see exactly how I defined and used "inflation". But feel free to continue not to look at the facts.
Also feel free to avoid noting the various charts elsewhere on the site that show what real money supply is, per accepted dictionary etc. definitions - not an invented definition created at least partially to defend a lack of undertanding of money (again, per accepted dictionary and all major economic school definitions).
As far as reading or not reading Mish - so what. The basic point is that if someone blows it or is incorrect or spins something or refuses to deal with *all* the data, etc., something needs to be said - and feel free to disagree with that too.
I also remind you that the thread is about a debate, which Mish refused. You may not believe that it indicative, but I do.
Lastly:
The fact that it fell from 850 to 250 between 1980 and 2000 with inflation every step of the way is proof enough.
And again you assert, but don't address that inflation was actually falling during that period just like during *every* hard vs. paper asset cycle for over a century.
http://www.nowandfutures.com/images/dow_gold_oil_crb1900-current.png
Bottom line - Mish has blinders or similar, at the very least.
@mish above
..."Bernanke failed and like Japan he will fail again. The most likely thing is we fall in and out of deflation for some time with extremely weak jobs and no recovery in real estate."
..... "recovery"? you might be into societal masochism, fed fascism?
" If consumers do not want to borrow or spend there is no way Bernanke can force them to do so."
...... hunger can do this, not greed, just plain hunger, a stomach pain associated
with a total lack of sustaining nutritional matter. food.
.
"With treasury yields in the gutter, with credit sinking, etc etc the proper conclusion is gold in not reacting to inflation but to credit stress or deflation."
http://www.docbrown.info/page03/Reactivity.htm
.... gold is inert, it does not react to inflation or deflation. people, investors, players
react. gold just is. "retrieved" by way of cyanide solutions.
http://en.wikipedia.org/wiki/Gold_extraction
and treasuries also perform well at zero yield in deflation. no?
"Can hyperinflation happen? Sure but right now the odds are small. The threat is not the Fed, but rather Congress giving money away." ............
.
additional comment: anyone who claims the fed is not a/the threat, (of giving
money away) but
congress is, does not have any "faith" or allegiance to the constitution or
the idea of the "united states of america". typical and... good for you.
capitulation and capture, we give up as the congress has become
nothing more than the shadow, bad cop, instrument of the bankers.
it is a braver and newer world and we are fucked as this braver newer world will gladly
eat you and me, one at a time, or together it matters not, as there exist
no rights individual or human that need be respected by money. feed this thing your children, perhaps
they will qualify for loans astronomic if you cosign. and their children ?......
indentured servants. yes, fear not the fed? at least the fed does not require
the demands of citizenship, just make the minimum monthly payment,
and pray they don't require a drone bombing of your grand children's wedding
party. or .. "so what"? m.d.
ps. did you say "giving money away" ? keyword: stealing money. it is the rage.
"the only liquidity in the u.s. economy is fraud" max keiser. or something like
that. aka. the fed ... to bankers, it is the system and requires your complete
attention and is, without saying or thought, systemically critical.
sadly, this is our virtual world as we find it. how it will end is of less interest
than that it does end, for the sake of posterity whatever that means.
link to "braver newer world".
.
http://beemp3.com/download.php?file=226110&song=Braver+Newer+World
.
ps. always enjoy, appreciate, your insights.
Of course inflation fell after 1980 off such high levels. Mish's point is that gold can depreciate in an inflationary environment (which by absolutely any measure whether Mish's, yours, or just pure common sense) is proven by how gold performed between 1980-2000. Your charts simply show decreasing inflation but high inflation nonetheless.
Second, show me these charts and definitions where I ignored what real money is. If you think the supply of money didn't increase substantially since 1980, there's really no point in responding further.
Third, Mish did engage in a debate. Go to his website and find the post where he explains exactly why Lira's argument is flawed. Lira is the one not engaging in debate... he has not answered a single of Mish's points or any of the other valid points that I and many other posters on both this site and Mish's site have raised. I wouldn't bother debating either for a scenario that is simply absurd and has been disproven. The example I posted somewhere was if I came up with some scenario where I believe the US will join the European Union. Now is this possible and could I come up with some long string of events where that actually occurs? Sure, probably. However this scenario would rightfully be ripped to shreds by anyone with half a brain. If I suddenly challeneged all these people to a debate without answering their arguments and mocked them for not accepting, I'd look like the clown and not the people unwilling to waste their time debating about something as absurd as that idea. I do wish that Mish would go debate him and make Lira look foolish but considering the inability of some posters on this site to examine the evidence devoid of their own preconceived opinions, Mish probably wouldn't gain much.
Finally, I want to clarify that even though I strongly disagree with Lira and think his scenario has as much chance of occurring as the US joining the EU or pigs flying, I at least give him credit for creatively conjuring a hyperinflation scenario. I'm getting tired of all these hyperinflationsts with no arguments or scenarios beyond, "OH MY GOD LOOK AT ALL THE MONEY WE ARE PRINTING AND HOW BIG OUR DEBT IS!" So for that I give Lira credit
I find it astonishing that so many people are so sure that they know what is going to happen next.
There doesn't seem to be any argument about where we are, and there doesn't really seem to be a lot of argument about where we are going in the end. The argument here is about how we are going to get there. But nobody knows what path we are going to take because we haven't taken it yet. We can hypothesize all we want about how it's going to play out. Mish has an hypothesis that looks modern Japanish, Gonzalo has an hypothesis that looks Weimar Germanyish. Neither of them is right and neither is wrong. One or the other may end up being proven right or wrong -- or they might both end up being proven wrong.
There are plenty of historical precedents for deflation and plenty for hyperinflation. And you can make a plausible argument based on analogies with that history. You can also make a plausible argument based on logic without any reference to historical examples. But no matter how you predict the future, you are neither wrong nor right until it plays.
We can blab endlessly about whose version of coming events we like better, and we can blab endlessly about whose online persona we like better. But everyone (including Mish and Gonzalo) who is claiming that one or the other of them is currently right or wrong is massively deluded.
The level of certainty and the cultic, fundamentalist vitriol associated with that level of certainty in this thread makes me doubt all the more highly Tyler's original premise for Zerohedge; viz. that you can assume that people are smart enough to metabolize un-dumbed-down data and argument. I'll stick with H.L. Mencken.
Harry Schultz
Schultz specializes in big ideas. Currently, he is fascinated by the possibility that hyperinflation might be triggered quickly, by a sort of global financial traffic accident
Schultz devotes a lot of his current letter to summarizing an account of how hyperinflation could happen by Gonzalo Liro on Zerohedge.com
http://jsmineset.com/2010/09/17/in-the-news-today-654/
hey mish.....are you going to take on Harry Schultz
Thank u, i found this for a long time.
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