Guest Post: It's The Debt, Dummy

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Sat, 06/11/2011 - 22:02 | 1362174 I am Jobe
I am Jobe's picture

Tyler,
need to cover this one

 

Illinois Insanity: State Spend $365K Taxpayer Dollars to Teach People How to Fish; Hands Out $4 Million in Free Tuition to AFSCME Public Union Workers

http://globaleconomicanalysis.blogspot.com/

Sat, 06/11/2011 - 22:22 | 1362196 swissinv
swissinv's picture

fishing may be a very useful skill in the near future...

Sat, 06/11/2011 - 22:58 | 1362243 johnnynaps
johnnynaps's picture

sure, if only the commercial fishermen didn't destroy the supply

Sat, 06/11/2011 - 23:01 | 1362247 HungrySeagull
HungrySeagull's picture

They cannot get thier boats that far up the navigatable river system. Flat bottoms rule in our area. I am a ocean going man myself and retain faith in the big fish, if your line is strong enough to reel em.

Now where did I leave that damn VISA to get the boat chartered and provisioned for that run?

Sun, 06/12/2011 - 10:31 | 1362909 Alpha Monkey
Alpha Monkey's picture

I suggest you check this out: http://www.ted.com/talks/jeremy_jackson.html

Esp. around the 5 minute mark about sport fishing champion fish sizes, now and then.

Then come back and tell us about that faith in big fish, VISA or not.

Sun, 06/12/2011 - 09:48 | 1362847 ibjamming
ibjamming's picture

I can see it now...everyone in Chicago previously on food stamps fishing every day for their supper along lakeshore drive.

Sun, 06/12/2011 - 13:16 | 1363158 mr. mirbach
mr. mirbach's picture

Sure but the waters in the Illinois area are so polluted that the fish are not safe to eat. 

Sat, 06/11/2011 - 22:40 | 1362210 anynonmous
anynonmous's picture

no, it's not the debt nor is it the fish

it's the diapers

 

http://www.myfoxhouston.com/dpp/news/national/TSA-Admits-Bad-Judgment-Af...

 

and toddlers too

http://www.youtube.com/watch?v=ba030UmbkCo

 

Sun, 06/12/2011 - 16:06 | 1363407 FIAT_FixItAgainTony
FIAT_FixItAgainTony's picture

sick freakin bastards.  i'd have a real scene going on if that was my child.

that was completely uncalled for.

"Refuse to participate in the charade"

Sat, 06/11/2011 - 22:04 | 1362176 CoolClo
CoolClo's picture

Can we say "Deflationary Depression"....

Sat, 06/11/2011 - 22:23 | 1362198 Rational Psycho
Rational Psycho's picture

Only if they stop printing. My gold's on helicopter Ben and QE3.

Sat, 06/11/2011 - 22:38 | 1362209 CoolClo
CoolClo's picture

Not barely enough private Federal Reserve Notes  available in the world to cover the tremendous debt pile denominated in said FRNs.

Sat, 06/11/2011 - 23:12 | 1362272 Rational Psycho
Rational Psycho's picture

Which is why I'm betting they'll print more. I expect falling prices measured in gold and rising prices in FRNs.

Sat, 06/11/2011 - 23:48 | 1362321 Sam Clemons
Sam Clemons's picture

Very true.  That is why they loan more "money" into existence in the form of FRNs.

Debt ceiling will be raised.  Just wait.

Sat, 06/11/2011 - 23:20 | 1362283 Caviar Emptor
Caviar Emptor's picture

Make that "Inflationary Depression" aka Biflation.

The Biflation meme got lots of coverage this morning in financial blogs. It's growing. Because it's real. 

Sat, 06/11/2011 - 23:41 | 1362311 DoChenRollingBearing
DoChenRollingBearing's picture

Caviar, you always have interesting things to say.  If you would like a link to my blog send me a gmail.  130 Zh-ers (so far and counting) can't be wrong!

Sat, 06/11/2011 - 23:52 | 1362327 Sam Clemons
Sam Clemons's picture

Nice.  Yeah, I don't see why people always think that each current situation will look like something of the past.  Maybe it is the desire to assume one understands something enormously complex by stamping a word on it.

Hasn't the Shadowstats guy been saying this for years now?

Sat, 06/11/2011 - 22:10 | 1362179 I am Jobe
I am Jobe's picture

Beyond deflation. Is there a word for that?

 

Sat, 06/11/2011 - 22:22 | 1362195 CoolClo
CoolClo's picture

Deflation= The destruction of capitol (wealth)...

Sat, 06/11/2011 - 23:10 | 1362265 False Capital
False Capital's picture

Paper money is not wealth. An accounting ledger at best.

Sun, 06/12/2011 - 00:04 | 1362347 jeff montanye
jeff montanye's picture

u.s. paper money was pretty good 1934 to 1945 and not bad 1985 to 2000 but yours is the way to bet it.

Sun, 06/12/2011 - 05:41 | 1362638 Matto
Matto's picture

Wealth destruction + rising prices. The paper/digital money in existance is not eradicted by default but is now representative of a smaller economy.

Sat, 06/11/2011 - 23:01 | 1362240 The Limerick King
The Limerick King's picture

Deadflation!

Sat, 06/11/2011 - 23:07 | 1362252 bigwavedave
bigwavedave's picture

implosion

Sat, 06/11/2011 - 23:34 | 1362299 Michael Victory
Michael Victory's picture

infression

flashback: 100 Years of Government vs. The Economy

 

Sun, 06/12/2011 - 15:12 | 1363332 Zero Govt
Zero Govt's picture

Hyper-Deflation . . . . . Vall Haller

Sun, 06/12/2011 - 09:25 | 1362812 snowball777
snowball777's picture

Beyond deflation. Is there a word for that?

Collapse.

Sun, 06/12/2011 - 13:23 | 1363167 mr. mirbach
mr. mirbach's picture

Profligation = the destruction of an economy through .gov/banker corruption.

Sat, 06/11/2011 - 22:10 | 1362182 Pure Evil
Pure Evil's picture

Does one need a better reason to hold PM's?

Sat, 06/11/2011 - 22:26 | 1362193 Fancy Bear
Fancy Bear's picture

Shorting the market is much higher yield near term.

Burn baby burn!

Sat, 06/11/2011 - 23:13 | 1362256 The Profit Prophet
The Profit Prophet's picture

Don't be a fool!!!  Prepare for the end....which does not involve paper in any form except currency "in hand". Trying to profit from this tragedy is of the same moral fibre as Goldman's Timberwolf play. I expect better from this community......(except for the paid shills of course!!!!!)

T.E.I.N. everyone!

Sat, 06/11/2011 - 22:17 | 1362185 FullFaithAndCretin
FullFaithAndCretin's picture

Ah thats a bit more like it Jimbo. Another red faced tirade against the boomer generation has been long overdue. I had started to think you were going soft.

Sat, 06/11/2011 - 23:49 | 1362318 RockyRacoon
RockyRacoon's picture

I guess I missed the demographic graphs.   It's comforting to know that nobody under the age of 50 has a mortgage.

Sun, 06/12/2011 - 01:40 | 1362494 FullFaithAndCretin
FullFaithAndCretin's picture

Well its all my fault I guess. Climate change is my fault too. And Fukushima.

Sun, 06/12/2011 - 11:26 | 1362991 Misery Index
Misery Index's picture

Can I junk someone more than once?

 

Just sayin', I have a whole bunch of Gen X'ers that would say that "Yes, you are the problem".

Sun, 06/12/2011 - 13:06 | 1363144 Misstrial
Misstrial's picture

Agree, please see my post below.

~Misstrial

Mon, 06/13/2011 - 03:14 | 1364185 Ben Dover
Ben Dover's picture

Awesome. You manned up and took responsibility. :D

Sun, 06/12/2011 - 03:10 | 1362565 Mec-sick-o
Mec-sick-o's picture

Good catch.  Boomers, sons of boomers and grandsons of boomers are about to go BOOM!  Each generation sieged under its own debt burden.

Sat, 06/11/2011 - 22:25 | 1362188 Bazooka
Bazooka's picture

DEFLATION!!!!

Credit implodes because debt becomes too heavy and needs to collapse. The above graphs point to a deflationary tsunami that's dead ahead. The March 2009 to present rally was a temporary relation, a natural rally (ABC form) following a huge collapse in S&P 500.

The next leg down will be left translated and hard and fast! Debt destruction (bankruptcy, foreclosures, etc) will make credit disappear. Credit not being available, many transactions will resort to becoming cash transactions. Can you imagine the house price if mortgage credit is decimated and cash is the only transactional medium? An average American has what....$2k in the bank....can you imagine the resulting price? I believe housing will fall 90% from current levels. This will probably piss alot of people off but once house purchases become cash mediated....price compression will be like never before.

However, physical dollar bills will be hoarded and in great demand. Because, again, without credit, many transactions will become cash. Since there is only $900 billion of USD bills in circulation, you can only imagine the stampede for hoarding once deflation hits the Prechter point of plunge. So, grab all the cash you can now before its too late.

All you Gold and Silver holders....have you noticed that gold and silver move near syn to the equities? Would you consider that if you sell now, better prices could be ahead? Like MUCH better prices: GLD at $490 and Silver at $2.50

Do you realize the most transactions are credit mediated and not physical cash? So, once credit card companies elevate their requirements to get credit cards, force credit limits down ($5,000 to $500), increase interest rates, etc....more and more transactions will become cash and away from credit.

Price decrease on goods is not deflation, it is the result of deflation. So, yes, by 2016, $1 USD can probably by 10x what it does not...perhaps 20x. That means you can buy a mansion ($1 mil today) for $100k or less!

Disclosure: Long VXX, FAZ, UUP

Sat, 06/11/2011 - 22:29 | 1362201 CoolClo
CoolClo's picture

+100.

 

 

Deflation= The destruction of capitol (wealth)...NOT falling prices which is price disinflation.      Long VXX and SPXU.

 

Sat, 06/11/2011 - 23:00 | 1362239 InconvenientCou...
InconvenientCounterParty's picture

buy SPXU and hold your breath. When you exhale, sell that MF'er.

Buy physical silver and sleep right.

Sat, 06/11/2011 - 23:10 | 1362266 CoolClo
CoolClo's picture

I agree that SPXU is not for everyone, but with the use of stop-loses and/or option hedging  it can be a very powerful shorting tool. 

Sun, 06/12/2011 - 10:54 | 1362942 Roger O. Thornhill
Roger O. Thornhill's picture

The only problem with the deflation thesis is that it implies the government will let it all fall down. As we have seen, they will counter every situation with some ridiculous countermeasure to insure cash availability. They also have a bad record with following their own laws - you really have to understand that they will do anything - and I do mean "anything!" That is why there was no reset in 2008.

Inflation is their best way out, it is the stealthiest form of robbery and it is how they will play it, because that is always how they play it. Inflation gives the best money to those at the top and screws everyone further from the discount window.

If there were the rule of law and honesty, I would believe in deflation - but that is not the modus of who we have running the show. Expect inflation - be it bi, stag, or some other ghastly form.

 

Sun, 06/12/2011 - 00:23 | 1362384 QQQBall
QQQBall's picture

I read somewhere recently that like 50% of people  polled could not come up with $2000 WITHIN ONE MONTH! Not to worry, another 25% said they probably could... Talkk about a lack of liquidity? Brutal. Zombies. Walking Dead. Whatever - that was an amazing and scary poll.

Sat, 06/11/2011 - 22:34 | 1362204 Gunther
Gunther's picture

In your scenario, how is the governent paying expenses? If nobody has a lot of money, taxes must sink and the current government debt becomes unpayable.

In case of default the dollar bills will be useful to generate heat or as wallpaper.

 

Sat, 06/11/2011 - 22:37 | 1362213 Bazooka
Bazooka's picture

As I've said in past posts, i believe ultimately the dollar is doomed to hyperinflation.....its coming, but we must first cross the valley of deflation because the great credit bubble unwind is fast at hand. Once this proceeds, then jump into Gold which will be at or near $490; buy up all physical assets (houses, rolex watches, valuabl art, collectibles, vintage wine, Silver coins, etc) as these will all be a pennies on the dollar.

Sat, 06/11/2011 - 22:51 | 1362228 taraxias
taraxias's picture

Under the existing monetary system deflation is a myth.

Sat, 06/11/2011 - 23:04 | 1362246 CoolClo
CoolClo's picture

Really? Just take a look at the destruction of wealth (deflation) that is occuring in the housing market. No amount of printing has helped it. Soon it will spread to ALL markets.

Sat, 06/11/2011 - 23:54 | 1362333 ffart
ffart's picture

If borrowed money is wealth then is it a debt crisis at all? Any contraction in the money supply would lead to mass default and would kill the currency even faster than QE has.

Sun, 06/12/2011 - 20:49 | 1363801 Cleanclog
Cleanclog's picture

Debt does not equal wealth.  It just was thought to for the past 30 years.  Yet another reason we have debt saturation.

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