Guest Post: A “Hyper-Depressionary” State. Is It Really Coming?

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Wed, 09/22/2010 - 12:19 | 597514 cougar_w
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The hell -- I'm hyper-depressed just thinking about it.

Wed, 09/22/2010 - 13:10 | 597665 Jason T
Jason T's picture

ok that was funny!

Wed, 09/22/2010 - 13:28 | 597711 RockyRacoon
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I have been in Starbucks 2 times in my entire life.  Once in Vancouver but it was tough picking which of the 3 stores on the 4 corners of the intersection to go into.  The other one was local where I met a guy who bought the "coffee" and bought 4 ounces of gold from me as well. 

Wed, 09/22/2010 - 15:05 | 598021 rosiescenario
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....Starbucks where a small coffee is a "grande"...where the totally unsophisticated can believe they have attained a new level of sophistication....sophistry at its finest....

Wed, 09/22/2010 - 19:20 | 598764 NoVolumeMeltup
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True. But if you want to mess with the barista (or sandinista or whatever) then order a "short cappuccino". It seems to freak out everyone in the store.

Wed, 09/22/2010 - 12:33 | 597557 RobD
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"I personally do not believe this will happen, as there would eventually be enough opposition to quantitative easing to cease it, due to fear that it may result in destroying the savings or our baby boomer population and the financially prudent (the people who are actually important towards having a healthy and sustainable economy). "

Most of the baby boomers don't even know what quantitative easing is so why would the try to stop it?

Wed, 09/22/2010 - 12:56 | 597595 hedgeless_horseman
hedgeless_horseman's picture there would eventually be enough opposition to quantitative easing to cease it, due to fear that it may result in destroying the savings or our baby boomer population and the financially prudent (the people who are actually important towards having a healthy and sustainable economy).

May?  It is already too late.  Politicians are busy preparing their excuses as we read this. 

Wed, 09/22/2010 - 12:45 | 597601 Xedus129
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And like they would say no to a "free" stimulus check sent in the mail.  Courtesy of Helicopter Ben.

Wed, 09/22/2010 - 13:04 | 597651 Citxmech
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Something like 90% or more of the country was completely and vocally oppossed to the first bailout - IMHO, the f*kers in charge will just continue to do whatever they want in spite of public opinion.

I'm siding with Williams and Faber that we will see some form of hyper-inflationary scenerio...  Just not sure when.

Wed, 09/22/2010 - 13:21 | 597696 RobD
RobD's picture

You are right, they were opposed to the bailout but the bailout(tarp and stimulas) were seperate from what the FED did and called "easing". Most have no clue what you are talking about when you mention the "easing".

Wed, 09/22/2010 - 15:25 | 598098 FEDstidius
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The Fabians are at it again! Of course they don't care what the public thinks, this is all part of the plan. When I re-read The Creature from Jekyl Island I was shocked at how close this fits thier playbook. This won;t end until we are on our kness beggin for FEDeral salvation.

Wed, 09/22/2010 - 14:03 | 597802 dussasr
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"I personally do not believe this will happen, as there would eventually be enough opposition to quantitative easing to cease it, due to fear that it may result in destroying the savings or our baby boomer population and the financially prudent (the people who are actually important towards having a healthy and sustainable economy). "


If this were true, wouldn't that have prevented almost all of history's hyperinflationary events?  Yet, they still happened and people's savings were destroyed.  To me, this is an example of "It couldn't happen here" thinking with little basis to back that assumption up.

Wed, 09/22/2010 - 12:36 | 597567 Bluntly Put
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It seems to me that the Fed is stepping up to become the buyer of last resort for all formerly based capital structures. If the Fed owns say all treasury bonds (mass sell off Fed buys all Treasuries) interest paid by the treasury (taxes) is recyled by the Fed back to the treasury at the end of the year. Essentially, this eliminates capital formation in the private economy forcing the creation of a credit based eCONomy on the back of the Federal Reserve system. In this system debt as it was formerly known or evolved will be meaningless, debt has no meaning if it is not paid off by capital formation with interest. I suppose the end game becomes a purely credit driven eCONomy perhaps based in energy credits extended by the central planning authority, oh wait that is Agenda 21 global currency communitarian claptrap. Conspiracy theorists are all nut balls right?

Wed, 09/22/2010 - 12:43 | 597593 cougar_w
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You might be onto something. In which case the only way out would be complete default. The only way to cover for a default would be a very large war.

So either you are right and we get eCONomics (heh) and 500 years of a kind of debt-based Feudalism, or you are wrong and we get a very destructive modern, mechanized global war.

I do not sense that there is a middle road here. Though BB would disagree with this entire assessment and most strenuously, of course.

Wed, 09/22/2010 - 13:51 | 597772 Millennial
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you are wrong and we get a very destructive modern, mechanized global war.


I'm sorry but this is stupid. A global war would result in the usage of nuclear weapons. No one is that stupid anymore. WW3 will not come because of default. If it ever comes it's because someone crazy decided to make it happen for whatever silly reason. 

The glory days of the US with it's tanks and infantry fighting in trenches with distinguishable lines of battle and territory are well behind us. Predator Drones, Advanced stealth aircraft, submarines, laser missile defense systems, railguns, anti-riot microwave emitters, and the like have largely removed the idea of a WW2 mechanized war scenario.

Anyone invading another country with tanks would be put in their place very quickly by a predator drone. Look at what happened in Kuwait. Saddam at one point sent in 32 tanks and was quickly defeated by 6 Ahbrams and no US deaths. 

Besides all of this, war is no longer large scale. The wars are lasting longer, but deaths are significantly less due to technological advancement. I mean it's not long before we don't have pilots in planes anymore and all we have is predators and derivatives of such.  

Wed, 09/22/2010 - 14:13 | 597834 dussasr
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"A global war would result in the usage of nuclear weapons. "


I always question that assumption.  Before we used nukes to end WWII no one knew we had them.  That was 65 years ago.  Look at all the tech advancements we've had over the last 65 years.  It seems almost silly to me to assume that we don't have a much "better" weapon today that none of the civilians know about. 


This is backed up by how insignificant it is when the US and the Russians reduce their nuke stockpiles.  Why isn't that a big deal?  It's because the "new" weapon makes the nukes almost irrelevant.  I admit this is pure speculation on my part (I don't work for the CIA), but it is almost impossible for me to believe that nukes are the "big" threat anymore.

Wed, 09/22/2010 - 16:38 | 598372 downrodeo
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Good point. Of course, we can only speculate in the realm of black budget projects, but I wouldn't at all be surprised if they have something based on scalar wave technology. Tesla once said he could split the earth in two. I'm not convinced he was speaking in hyperbole.

Wed, 09/22/2010 - 17:18 | 598490 hedgeless_horseman
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Someone else posted this a while ago.  Nukes don't mean Armageddon.  The UK has nuked US soil many times, and The Road Warrior is still just a cool movie.

Thu, 09/23/2010 - 03:11 | 599305 Millennial
Millennial's picture

I can't believe this.


Alright let's hypothetically say that China wanted to invade us. Supposing they surpass our Navy, they come ashore and take over Los Angles. Further assuming the Army or Marines and Air Force cannot defeat the invaders, our best bet would be to either bomb it very heavily and risk losing aircraft and man power, or just one tactical nuke. 

If your smart you know when to cut your loses.

Nukes are the big threat. That's why the intelligent and advanced countries never talk about them nor test them nor dispose of them to "low levels". At the end of the day we have our nukes pointed at our frenemies and they have them pointed at us.

To dismiss our stockpiles and those of our frenemies is nothing short of optimistic arrogance. The US and Russia still have enough bombs to cause a nuclear winter many times over. 

As far as a better weapon is concerned, name a weapon that can wipe millions in an instant that isn't nuclear. You forget the fact that the TSAR Bomb developed by the Soviets would burn you alive from 65 miles away from zero point detention and shook the earth enough to register a 5.6 on the Richter scale. Oh wait Fusion Power (you know the stuff that powers the sun) is outdated and silly. Nevermind that this weapon achieved 1.4% of the total sun's power. I mean I guess we're gonna have to develop medium-star bombs before your satisfied. The technology may be old, so are guns, yet there isn't anything much effective than a gun at a personal level.

I guess your hoping for lasers that can cut the earth in half? ha.


When you find this new weapon that has been hidden for 65 years (unlike our nukes that were hidden for maybe 3 years) you come tell me and I'll retract my statements.


Wed, 09/22/2010 - 15:20 | 598076 cougar_w
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The US was in a global war with the former USSR and communist China for 30 years. No nukes. The US is currently nearly in a global war with Islam. Really hard to say who is winning. But no nukes ... as yet.

'Nuf said.

Thu, 09/23/2010 - 02:53 | 599292 Millennial
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The US was in a global war with the former USSR and communist China for 30 years. No nukes. The US is currently nearly in a global war with Islam. Really hard to say who is winning. But no nukes ... as yet.

'Nuf said.


Are you joking? Global War? Oh so when and where did we invade the Chinese? Oh wait the Russian's invaded the US? Wait no. There has been no full scale total war since WW2. Sorry. You're argument of global war is based on silly idea that tiny little conflicts that spread out across the globe is a global war. 

I'd love to hear a Holocaust survivor or a Army veteran of WW2 tell me the Cold War was a "global war" before I consider your idea as nonsensical. 


Wed, 09/22/2010 - 13:12 | 597678 Raymond K Hessel
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This post might need its own article.

Wed, 09/22/2010 - 12:38 | 597576 goldmiddelfinger
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The day/month/year that the Chinese consumer begins to loosen its wallet and see credit as a viable tool, leading towards increased demand will bring about the moment of reckoning.

Just don't see this as part of a doomsday scenairo. Sorry.

Wed, 09/22/2010 - 14:23 | 597865 dussasr
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goldfinger, the question I can't answer is "what event WILL upset the applecart?"  It is agreed that something that can't go on forever won't.  It is also agreed that the deficit spending of the Western countries can't go on forever.  So when will it end?  What will the "trigger" event be?


My opinion is that the reason (almost) no one is panicing is because no one else is panicing.  The herd is very nervous, though.  Anything could conceiveably become the trigger event.  One loud fart could cause the whole herd to stampede.

Wed, 09/22/2010 - 12:41 | 597578 tom
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Yesterday's FOMC statement was very clear in favor of QE "if needed". Only thing still not completely clear is exactly where that "needed" threshold lies.

Home prices down 3.3% y-o-y in July, 0.5% m-o-m. Here it comes your 19th nervous breakdown.

Wed, 09/22/2010 - 12:41 | 597587 CheapKUNGFU
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yes its gonna be a dis-recovery, hyper-stagflationary, jobless-deflationary, hyper-recovery, def-stagflationary, hyper-deflationary, uber-jobless deflationary inflationary stag-soup... mix em up which every way you want to make the soup...




Wed, 09/22/2010 - 12:41 | 597589 Horatio Beanblower
Wed, 09/22/2010 - 13:24 | 597702 DosZap
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US Gv't spends a $1.60 for every $1.00 that comes in.(If my math is correct, that's a 62.5% hole).

Wed, 09/22/2010 - 12:58 | 597590 SDRII
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if you do not expect the fed to continue down the quantitative ease path, and a Volker "tightening" is unmanagable in any way, what is the other alternative? muddle through? Austerity and deflation (default, and ultimately FX evisceration). Either way the reserve currency genie is out of the bottle. Therefore, it isnt really even a monetary question anymore rather a political (geo) one? Why would the US not play out to max advantage in an accelerating fashion as the rest of world increasingly tires of funding the US with its promises of just one more drink? The US economy doesn't and has never had the "earnings" power that the GDP numbers purport. Does the Fed really have a choice - overt notwithstanding - when the world recedes from the US punch bowl? The endgame isn't really in question is it just how we get there.  The ultimate dollar event isn't path dependent but from a timeline perspective. The geopolitical manuevering plays out daily with the US desperately manuevering in Asia/Southeast/Indian Ocean/ME. yen notwithstanding, the fight in Japan internally over US basing and its continuing presence has been now doubly thwarted first by the NK sinking and then by the Ozawa smear job (and appoint of a hawkish foreign minsiter). There must be some reward for in the Fx markets coming for that?

Wed, 09/22/2010 - 12:53 | 597596 ATG
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However, we may very well be in a situation where Fed officials don’t realize what they’re doing until it’s too late.

Rahm Emanuel, Stan McChrystal, Larry Summers, Christine Romer, Peter Orszag and more than a dozen other key appointments know full well what they are doing jumping off a ship of state helmed by a CIA designed Othello who may well resign before his term is finished...

Meanwhile, food far more important than securities, gold, silver or ammo, as banks and debts default and dollars become scarce in the world's largest economy.

Do not know if $1298 gold will be the ultimate top, but it may be the top for some time as the scramble for cash accelerates...


Wed, 09/22/2010 - 13:26 | 597706 DosZap
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It is in Detroit.

Thu, 09/23/2010 - 10:51 | 599785 phat tails
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Great link!  It is sad how our language is devolving. I remember as a teenager, I attended my first dinner at a gourmet restaurant. It was a family dinner and I was so excited to wear my snazzy cocktail dress.  When the waiter brought a bottle of wine to our table my uncle yelled out, "That's a Big-Ass bottle of wine!" I was absolutely mortified and the waiter did not look too impressed either:(  The horrible thing was that other relatives (older) at the table started to copy-cat this "joke" referring to everything on the table as "Big-Ass"...not quite the unforgettable dinner I was expecting! 

Wed, 09/22/2010 - 15:10 | 598040 rosiescenario
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"...CIA designed Othello..."


Wed, 09/22/2010 - 12:51 | 597610 Diogenes
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"I personally do not believe this will happen, as there would eventually be enough opposition to quantitative easing to cease it, due to fear that it may result in destroying the savings or our baby boomer population and the financially prudent"

This is where I stopped reading. This guy obviously has no clue.The Ponzi started to collapse in 2005.

Not only did no one prevent the disastrous policies from being implemented, 5 years after they failed public officials still won't admit they were wrong. It seems obvious by now the country will NEVER come to its senses.

We gave trillions in taxpayer money to the big banks yet the taxpayers remain poor. So let's do the same thing again, harder.



Wed, 09/22/2010 - 13:06 | 597659 zaknick
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I agree. The fascists who run this country have gold and the decisions which determine our present and future were taken decades ago.


Black Eagle Trust and Yamashita's gold.

Wed, 09/22/2010 - 12:51 | 597616 MightyZum
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Best line in this article: The Fed, for all intents and purposes, is becoming a growing national security threat in my view.

Wed, 09/22/2010 - 13:28 | 597709 bugs_
bugs_'s picture

Yes! and toss in "no matter what they chose to do".

Wed, 09/22/2010 - 13:28 | 597710 DosZap
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I agree, except for the BECOMING,it IS.

Wed, 09/22/2010 - 12:51 | 597618 Rotwang
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Hyper-inflation does not occur as an action of government. It occurs when the remaining sane population runs for safety. The mental construct of the parking of wealth is what is at stake. Failing the movement into an ever larger bubble (demanded by compunding), and the ability or vision to delineate this to the larger population, it is increasingly becoming jittery.

A flight to safety (what-ever-that-may-be) is not a top-down design.

QE is, and supposedly with calculated macro-economic outcomes.


We are currently (imo) at hair trigger levels of flight to safety. We are beyond the point of having large 'asset' holders volunteer for slaughter. A flight of the mental (virtual/paper) wealth storage into the physical will by necessity reprice everything at a new equilibrium should it occur. Currently the mental/virtual far exceeds the the availability of physical parking spaces.


Wed, 09/22/2010 - 12:54 | 597622 Silverhog
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I have seen no real constructive effort toward correcting US debt issues or anything else for that matter. The Feds are batting zero as far as I'm concerned. Forcing banks to loan money to people who never could pay it back. A Health-care bill making us the Titanic of welfare states. How can you inject common sense into a bureaucracy that has no moral values anymore. They stand guard of any possible collapse in our economy. Timmy can try, but we know how well goverment does things.   

Wed, 09/22/2010 - 13:16 | 597687 Cheater5
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People are waking up to this.  What do you think the Tea Party movement is all about?  (as a side note I find it very funny that many of the politicians and leaders that facilitated us getting here in a big way consider the Tea Party as "extremist")


The real question in my mind is whether or not it is too late.   Most of the developed world is in a shit-load of trouble with their debt/GDP ratios and its not getting any better as our ass-hat leaders refuse to acknowledge the situation we are in and use additional debt to prevent the markets from correcting.  At the end of the day governments and anyone else who is carrying an unsustainable amount of debt WILL default with the only question being how that default will occur.  The rise of the tea party tells me that at a minimum there is a significant and vocal constituency (15-40%) for sound money and fiscally conservative policies even if that means cutting "popular" programs.  Bernanke has got to know (at least in the back of his mind) that there are a lot of "pitchforks" out there who will react "unfavorably" to any hint of hyperinflation.  My guess is that after the mid-terms, you are going to see some of these new politicians (and existing ones who get scared by the result) come out and start showing the good Chairman a few of those pitchforks.  He will either get the message fast or will be out.   If none of those things work and we do go into hyperinflation in an attempt to extend and pretend, I would hate to be on his security detail....


Wed, 09/22/2010 - 13:39 | 597743 sharonsj
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I like to know if the fiscally concervative policies includes cutting the wastefull defense budget, two disastrously expensive wars, war profiteering, no-bid contracts, etc., rather than "popular" programs such as food stamps and Medicare?  If not, then the Tea Party can go to hell.

Wed, 09/22/2010 - 13:51 | 597769 Cheater5
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If you think that simply cutting defence spending will get us to where we need to be from a budget perspective then you are a delusional idiot, and frankly if there are enough of you and you actually vote, then we, as a country, will be in hell.


Wed, 09/22/2010 - 14:23 | 597863 aerojet
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I wish that the Tea Party folks would do something constructive.  However, the reality is that no matter who gets elected, they become pawns of the banksters.  You can't protect your family from "accidents" after all.

Wed, 09/22/2010 - 15:15 | 598060 Ben Fleeced
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i)Audit the Fed and Dump the Fed signs are comming. We'll join with the libs whipped up by the President to hate banksters after Nov.

ii)Baby steps.

iii) Bring on the "accidents"!

Wed, 09/22/2010 - 12:55 | 597626 Dismal Scientist
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OT: the pump and dump chumps at CNBC are spending far too much time this week discussing gold and other PMs. Short term contra indicator.

Wed, 09/22/2010 - 12:55 | 597628 israhole
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Debasement. You got that right.

Do NOT follow this link or you will be banned from the site!