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Jim Grant On Inflation: "There Will Be A Lot Of It Suddenly" Because Our Interest Rate Structure Is "Beyond Strange"
One of our favorite economic commentators - Jim Grant of Grant's Interest Rate Observer - was on Consuelo Mack continuing his ongoing crusade against Ben Bernanke's lunacy, and the monetary central planning of the Federal Reserve, particularly focusing on the topic of pernicious inflation which for good reason has received much attention of the past year. Grant, who unlike Steve Liesman correctly observes that inflation is now rampant (those who need a reminder can do so at the only objective source for actual inflation tracking, MIT's Billion Price Index), is eating away at the standard of living of the bulk of the population, even as this same population can not benefit from anything beyond minimal rates on their saving deposits. "The Fed is unconscionably complacent about the consequences of what it is doing, and let us not blink at what it is doing: it has imposed the lowest money market interest rates anyone remembers, it has expanded its balance sheet into something grotesque all in the space of a couple of years. These are monetary events that have never before been seen, and indeed, never before imagined...The Fed's policies are certainly great for one class of society: the speculative classes.... We have socialized risk, we have privatized gains, much to the relief of Greenwich, CT where our zillionaires live, and the unconscionable and indefensible fallout of this is that savers get zero on their savings balances, and the speculative classes get to borrow in wholesale markets at zero and get to make their zillions all over again... The Chairman is whistling by the graveyard in this manner of 2% inflation rate being harmless." On Grant's expectations for inflation rates: "there will be a lot of suddenly - 4 or 5% let us say...So much of our speculative apparatus is powered on these zero percent interest rates... Think how hard it is to hold back a cash reserve in this economy... Your stupid neighbor who is watching this program is making a lot fo money in the stock market: how hard is it not to participate? You can't do it... But 4% inflation would mean that the party is over... Everything would fall out of bed... Gold and silver would right themselves, because they are money that would come into their own at the end of the cycle of disillusionment but for a time there would be terrific chaos in investment markets."
As for the gold standard: "If I am right about the dynamics of the Federal debt, not only is the mathematics for a gold standard compelling but so are the politics." In other words, and this should be no surprise to anyone, the transition to real money will continue until the fraud that is unbacked fiat is finally eliminated, with or without the Fed's support.
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Anyone that discusses the actions of the Fed like Grant does, to question their efficacy and efficiency in promoting certain goals, just does NOT get it. The Fed is a privately-held institution, CREATED to spark and maintain inflation. The politicians were and are complicit in this scam. Inflation benefits the first people that receive the newly printed dollars - people like banksters and political cronies.
Further, fractional reserve banking allows banks to create money out of thin air and then lend it to the government at infinite gross margins. It's the perfect con to skim money from the taxpayer to the banks (and their executives).
The Fed is a fraud, and is the original sin of our economy. The plan of the creation of the Fed is working perfectly and the transfer of wealth has occurred nicely over 100 years now.
Grant, by taking subscriber money and gently discussing and debating the actions taken by the Fed, actually demonstrates himself to be a banker shill. He wants to tweak the current system, but not collapse it. He argues that a better Fed chairman could presumably be found. As long as privately held companies print our money and loan it to us, there will be no other path then the one we are on.
www.bigeye.com/griffin.htm
The truth. It's good for my sanity to see a post now and then from someone who understands the nature of our monetary system. I suspect that many of the people reading your post will scratch their heads and say "privately held companies print our money and loan it to us? I thought the Fed printed the money?"
I've gone around to my friends, educated adults, businessmen and women, and asked, "Who owns the Fed?"
Most either don't know, or think the .gov owns it. Scary.
But, this is how the banksters set it up. The name itself reveals their intent to deceive. Federal Reserve System. It's not federal, and it's not a reserve.
Wow, you sound a lot more sane and reasonable (not to mention civil) here than over in the recent silver thread.
LOL I'm saying pretty much exactly the same thing, akak. I think you misinterpreted some things I said. We were basically arguing the same point, but you for some reason thought I was taking the side of the banksters and the "status-quo", which is pretty much the opposite of what I said.
I has originally posted a conditional apology to you in this comment, but after you continued to purposefully distort my words and pointlessly attack me in the silver "Sticksave" thread, I retracted it. Even after having tried to make peace with you, you insisted on going back to misrepresent my statements and insult me to no purpose. It is now obvious that you are just a bully who hides behind his keyboard to pick fights with anonymous fellow online posters, a truly pathetic character trait of a lonely and/or unhealthy mind.
You've got clarity in the micro, but missing the macro. The SAME thing applies to civilization as a whole. The Fed et al merely allow us to deceive ourselves in believing that we can grow without bound.
Clearly, perpetually growing interest cannot happen. And interest is basically just growth. We can no more achieve the same thing with REAL physical things (people etc.) than with the virtual game of fiat. As Dr. Albert Bartlett puts it, "the failure to understand the exponential function is mankind's greatest failing."
Check this story out on Bloomberg:
http://www.bloomberg.com/news/2011-04-15/texas-university-endowment-holds-almost-1-billion-in-gold-bars.html
Kyle Bass comment on CB printing is priceless.
They are holding over 600K ozs in a Comex-registered vault in NYC. Oh, thats going to work out well for them. I thought Texans had more sense. What part of "take delivery" did they not understand?
Gives us a perfectly good reason to come and get it in person. Don't you think?
There might be only 20 million, or so, of us, but we are a very "can do" kind of folk.
These are Academics,and they trust the system.
HSBC?,color it gone.
wonder if they have fire insurance on those "bars(?)"
fukushimad bars...best protection as its sparkles
That always seems to me to be a top tick...
also just released Jim Grant interview with Eric King: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/16_James_Grant.html
Biology has an interesting correlate, called the steal phenomenon which occurs in cerebral vascular beds when ischemia ( lack of blood supply ) produces vasoconstriction in the ischemic area ( 0 interest rates, decreased wages,unemployment ) and vasodilatation ( increased supply of cheap money, increased profit margins ) to the healthy areas ( the rich). Of course the end result is an infarct ( Disability or death) resulting in the death of the individual ( The Country's economy.). Interestingly Nature has a mechanism by which either administering barbiturates or inhalational anesthetics, or thru hyperventilation ( increased rate and depth of breathing) one can induce what has been called an inverse steal or Robin Hood effect, which results in increased blood flow ( more employment, higher interest rates, normalization of market dynamics) to the diseased areas ( The poor and unemployed) and decreased blood flow to the nonaffected areas ( decreased supply of cheap money). This also results in decreases in intracranial pressure ( Inflation) therefore improving overall cerebral blood flow ( Healthy economy) which eventually leads to the survival of what was a very sick individual.
Maybe the Bernanke could take a lesson from nature.
Haha. Love this. I do research on the cerebral vasculature for a living so I find your analogy particularly apt. You make a very persuasive argument for changing Bernanke's current monetary policies (ample evidence that the "patient" is dying) =) We sure could use a macroeconomic Robin Hood Effect at this point. If the principle works in one complex system, odds are that it may very well work in a (larger scale) similarly complex system. Very cool Pepe.
Similar idea here (though I refuse to pay for the article):
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V65-45K0G5J-76&_user=10&_coverDate=05%2F31%2F1993&_rdoc=1&_fmt=high&_orig=gateway&_origin=gateway&_sort=d&_docanchor=&view=c&_searchStrId=1720558039&_rerunOrigin=google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=8d69b5471cae3a21bac4c9093f30886e&searchtype=a
Nice analogy but you have it backwards. The initial ischemic event usually vasoconstriction or lack of blood supply causes a vasodilation in the immediate area and close proximal areas and vasoconstriction in the healthy areas causing the steal syndrome because the blood is being shunted away quickly.
GRANT DEC 2009
GRANT: I think the Fed will raise rates for reasons that we will see in retrospect were not the right ones. It will do it at the wrong time. I have faith that the Fed will do the wrong thing at the wrong time. That has served me well over the years.
KANGAS: What is your current investment strategy? I guess you touched on it already.
GRANT: Fear. The risk is that there is -- that there are -- that so few things are cheap. We live in the Fed's alternate universe, zero interest rates and zero interest rates begets an inflation. There's an inflation fear and now not at the checkout counter, but in the stock market and the commodity markets and the debt markets. So these are kind of treacherous times for investors. I think they're going to be OK times for the economy.
This guy has been sing the same song for a long time. WOLF
I'm not sure I understand your point. We shouldn't listen to him because he saw this coming a little over a year ago?
yes, that's how long it took him to tell the difference between inflation and deflation.
Way to selectively pick quotes:
GRANT: I think the Fed will raise rates for reasons that we will see in retrospect were not the right ones. It will do it at the wrong time. I have faith that the Fed will do the wrong thing at the wrong time. That has served me well over the years.
KANGAS: What is your current investment strategy? I guess you touched on it already.
GRANT: Fear. The risk is that there is -- that there are -- that so few things are cheap. We live in the Fed's alternate universe, zero interest rates and zero interest rates begets an inflation. There's an inflation fear and now not at the checkout counter, but in the stock market and the commodity markets and the debt markets. So these are kind of treacherous times for investors. I think they're going to be OK times for the economy.
KANGAS: OK. Let's have a look at how the two stock recommendations you gave our viewers last July have fared since that time. I can tell you as you well know CB Richard Ellison (CBG) and Olin Corps (OLN), which you said will rely on the recovery in the economy would do well and boy, they are just huge gains. I compliment you on great picks.
GRANT: Well, thank you, Paul.
KANGAS: Well, we'd like some more recommendations like that.
GRANT: Exactly like that, OK. I have a fairly modest one, Paul. It is called Redwood Trust, RWT as in Tom as a symbol on the New York Stock Exchange. It's a mortgage real estate investment trust. It invests in typically non-agency jumbo mortgages, that is to say mortgages on bigger properties not backed by Fannie and Freddie. It buys them mainly with equity. It steers clear of what they call leverage on Wall Street. It yields a little less than 7 percent. It's priced to move (ph) less than 1.3 times book value means it's pretty cheap. What is I think especially interesting about Redwood is that it's holding a lot of cash. It I think is opportunistic and it is waiting for new supply that is likely to be coming from downgrades by Moody's and others.
We ae SO lucky Jim Grant didn't decide to spend his life making as much money as possible...
CBG in July 2009 $8.4 - $10.4 range when Grant called it. Today it is $28.91.
OLN in July 2009 11.50-13.79 range when Grant called it. Today $25.16.
RWT in Dec. 24th 2009 $14.48 when he called it. Has hit a high of 17.17 on May 3rd 2010 and again this year. Presently at $15.17.
Pretty good calls.
No kidding. By way of comparison:
Gold in July 2009: $820 - 900. Now it's $1486.
Silver in July 2009: $10.50 - 12.00. Now it's $43.
Not many fund managers fare well against the PMs over the last five years. Ask Warren Buffett (8.7% annualized during that span)--he got creamed by them.
The only guy who I think beat metals is David Tepper, who looks like Secretariat right now in the 5-year race against the likes of fat Koolaid drunks like Buffett.
Banks do not have cash. They have it delivered every day like bread. Banks have set up various bucket shop barriers towithdrawing funds. If you want a big withdrawal of your cash (over $3,000) they have to order more from the factory, and report you. Robot tellers only cough up $600 a day. Old style bank runs will be contained to those not quick or clever enough to spend money online.
Bank runs will take new forms because of modern internet commerce. Online shopping is the most rapid way to convert magnetic droplets into useful things. Spontaneous mass emptying of bank accounts via online purchases will cause instantaneous Ultra-inflation. The whole economy can then blow up like an out of control beanie baby auction on e-bay as retailers abandon normal rigid pricing and sell to the highest bidder.
This will be promoted in the corporate media as exhuberant spending recovery until people realize it is not consumption but defensive and survival hoarding. Then TPTB probably will hurl accusations of "price gouging" and throw the internet kill switch.
Then we party.
PARTY! i wonder what liquor would be the best to stockpile... my vote is whiskey (red stag mmmmhmm)
All kinds are good. The more the merrier. But more recognizable brands would probably be better for barter. Something like Jack Daniels that is widely recognized would have a well known value and be acceptable trade for many people. Also if it's distilled like whiskey (or vodka, rum, gin, etc), it essentially lasts forever so you don't have to worry about spoilage.
I also like to dabble in unusual liqueurs, bitters, and of course, absinthe!
Yes and no. True, alcoholic liquors and liqueurs will not rot or spoil, but aside from pure vodkas they will lose flavor over time, particularly highly aromatic ones like gin and many liqueurs. Most of them will last pretty well for at least several years if not a decade, though --- and how many people normally keep them longer than that?
if you lived in a nuclear contaminated zone you would want it to last ...to stay tuned to your dreams as the reality would be sterilized for ever...at least it would feel that way. Ask Napoleon he drank cognac at St Helena...until they poisoned him.
Just be sure it is in glass, not plastic. I wonder if anyone has studied the maximum shelf life of a plastic bottle of vodka before it evaporates significantly.
Where is that online hard liquor retailer?
Old Grand Dad for me, or George Dickel.
One of the best whiskeys I've had was a Rye whiskey made in Conneticut (Vermont?) that I would buy in the 1980's. Old distillery, and whiskey made from rye was "real" whiskey.
The corn syrup Jack Daniels (cheaper) corn mash bourbons came along with advertising and bar placement and a lot of the real whiskeys died.
"20 Cases of Kamchatka and Old Crow" would probably be the first order - sell at $20 a bottle to the young 'uns.
One of the best whiskeys I've had was a Rye whiskey made in Conneticut
Seagram's 7?
It was not that one, but a small name old family place.
Thank you though!
I had forgotten about Seagram's 7.
They stock it with the Canadian Whiskey's at my State liquor store (tell me Big Brother does not exist when the state is the only choice for hard liquor...har!).
Anyways, bought some and it is delicious, not a Canadian, and titled an "American" whiskey meaning - in the old sense - a rye or primarily rye with corn mash blend.
Cheers.
Need to get your cash withdrawals at the large downtown bank branch. And keep each withdrawal under $10,000 to avoid IRS reporting.
If you do that consciously, that is 'structuring' to avoid reporting.
They can nail you retroactively as they reconstruct your transactions.
As always when dealing with bureaucrats, you must prove you are not in violation.
Banks make money on transaction fees and penalties. They are not really banks in the traditional sense any more. They are becoming more akin to airport bag checkers where cashing a check requires submitting to TSA type biometric data tracking and surveillance. They are taking the airport model of fear and applying it to your retail banking experience.
Banks are setting themselves up as transaction cops since they left the business of storing client wealth. They make money on the movement of money, not the sound management of money. This is the repercussion of the repeal of Glass-Steagall of 1932.
$9,000 withdrawal every 4-6 weeks should not set off any alarms. But if they do, will deal with it then. Am hoping keeping cash is not a criminal offense.....yet.
*Am hoping keeping cash is not a criminal offense*
Well yes and no, If your stopped by the police, while driving, in many states and you're asked how much cash you have on you, you have a problem. If you tell them $9,000 ( I'm just coming from the bank) then all the cop has to say (without any grounds) is that he believes it is drug money. He can then confiscate your $9,000 and you have to go to court to prove it not. This happens all the time in the U.S.A believe it or not!
*Am hoping keeping cash is not a criminal offense*
Well yes and no, If your stopped by the police, while driving in many states, and you're asked how much cash you have on you, you have a problem. If you tell them $9,000 ( I'm just coming from the bank) then all the cop has to say (without any grounds) is that he believes it is drug money. He can then confiscate your $9,000 and you have to go to court to prove it not. This happens all the time in the U.S.A believe it or not!
Play it safe and go way lower than $9,000. ANY bank teller has the prerogative to report a cash withdrawal at their discretion. $10,000 is only a special number in that reporting is legally required at that point. Anyone who might want to fuck with someone can drop the dime.
Just find an ATM and hit it for $500 every few days if you don't want to attract attention. Sure, you may get tagged for the transaction fee, but for damn sure no one's going to look at amounts that low and give a shit.
Lads, if it's your money you are taking out of the bank, and it got in there in a legal way, just take it out in as high a volume as you please, and get a receipt from the bank in case anyone asks where you got it.
It's the cash going in that they are looking for, not the cash going out.
If you are really paranoid, write a fucking check to your 95 year old great aunt and let her CASH it. Then write a loan agreement on a bar napkin where you lend her the money at zero interest for 50 years in case they ask her what up.
This just isn't true.
If you carry around a "large" amount of cash, you can and will be at the mercy of one of our jackbooted law-enforcement officers who wants to rumble you. What's "large"? Well that's exactly the problem. Some asshole cop who wants to fuck with you can *decide* that. On a WHIM.
Of course, practically speaking: if you're white, drive a nice car, wear decent clothes, whatever, there's a very good chance you'll be left alone if a cop somehow discovers you're walking around with $5,000 cash money.
But don't let the most common experience define your way of thinking about the world. We live in a corrupt totalitarian state, and for the most part, legal authorities DON'T NEED a valid reason to ruin your day, or your life.
There's no reason to live in fear, but it's a good idea to at least try to understand your environment.
Yes it is strange that, if true, one can't carry cash around without risk of it being "confiscated". When you think about it, that's reason enough the spit on your hands and raise the black flag now innit? This however is a separate issue than how financial institutions track transactions for the gov.
We already covered that--they submit transaction reports for all cash withdrawals that seem significantly large to the parties involved. Mandatory reporting is at $10K.
If the guy at the bank wants to report a $4K withdrawal, he does, and the Feds then know about it. If you don't mind Federal law enforcement having this info, then certainly it makes sense to do whatever you like. I see a logic to your post above--is there ever a reason someone might not want the FBI to know they have $8K in personal possession? Whatever for? The mind boggles.
Plenty of the regulars here would prefer to keep information like that at least *potentially* private, if not secret. If I'm beating a dead horse and this common knowledge, fine. I figured some folks who'd want to don't already know this stuff.
.
The meme "be careful not to get too much cash out of the Bank or ___________(insert some paranoid bullshit here)____________" is awfully convenient for the skint banks. Just sayin.
Withdrawing money isn't illegal. Cash appearing out of nowhere is what's suspicious.
The bank will report you for a $3000 transaction. (Unless you're a Mexican drug lord, but that's a different thread.) The bank will report you for suspicious activity no matter what the amount.
These rules aren't meant to prevent "stealth" bank runs, you've got a right to withdraw your money.
Why do you want to carry around a suitcase full of fiat in your trunk, anyway? True, people get their cash stolen (literally) by cops all the time, people with legitimate businesses who have a legitimate reason for carrying it besides paranoia about bank runs. So don't carry a bunch a cash around, and don't get pulled over, and don't lie to the cops, just politely assert your rights to not be questioned or searched.
But here's a better idea than withdrawing your fiat and carrying it around in your car: Buy silver. Pay the premium for real coins (US, Canadian) instead of getting rounds for a few bucks cheaper. That silver is real money when TSHTF. I don't think it will, personally. But you'd still have silver, it will still be worth plenty of fiat, so exchange as needed into everyday currency, and dodge the goddamned income tax on the "appreciation" of your "collectible".
Jesus on a flaming motorcycle! Are you channeling Philip K. Dick?
"There Will Be A Lot Of It Suddenly"
It won't be that simple. That's the trouble. Biflation is here and the numbers will simply look tame the worse it gets. The cost of living and doing business will rise alarmingly as the real economy deflates pulling down wages and housing. The causes of deflation remain unaddressed. And inflation is the result of the bloat in the paper economy: too much money printing for too long and too recklessly.
biflation really sounds obscene...like a two headed prick on double duty.
Jim Grant of all people getting bashed by Zero Hedge trolls. Interesting.
They're from the government, here to help us.
I think it's more like 'weekend players'.
Jim Grant has been on the right track for decades.
Interesting indeed.
How many caught his description of what would happen when the "Fed clears its throat and announces in its marble-mouthed way, 'party's over.'" (starts at about 18:15) He suggested on this reconsideration of the end of low rates, commodities and other leveraged bets would fall out of bed (and seemed to include gold and silver here). Though he suggested gold and silver should right themselves in short order. But for a time, there would be chaos as people sold what they otherwise might not.
Maybe that's why JG is not getting the love: He's goring everybody's ox, not just the central banker's and those of the Wall St/Greenwich kleptocracy.
All this worrying and fearmongering over what might (theoretically) happen if the Fed raises interest rates is just so much sterile debate over how many Bernankes can dance on the end of Tim Geithner's pinhead. The fact is, the Fed can NOT meaningfully raise interest rates any longer, not real interest rates particularly, without completely blowing up the federal government's interest payments on its debt and the US dollar in the process. As many others have pointed out, the Fed has literally painted itself into a corner, and there is NO recovery possible going forward under the current financial and monetary status-quo.
Aside from that, hypothetically, rising interest rates are no threat to gold and silver in any event --- if you doubt that, just examine their charts from 2004 through 2006, as the Fed raised rates from 1.0% to 5.25%. Yes, there was the spring 2006 correction, but it is noteworthy that even at their post-correction lows, gold and silver were both significantly higher in price than at any time in 2004 or before.
Last week strong bread flour was 52p/1.5Kg
This week it is 128p/1.5Kg
Obesity crisis...Solved!
Fruits and vegtables, in the last 90 days UP^ 23%, that's not counting the 30% they already had gone up.
Potatos, same time frame UP^ 39%.
Staples of life,and fuel...................two things no ONE can do without.
Question to Jim Grant all the "inflationistas", how are you going to get inflation without wage inflation???? This is more jibberish that everyone is buying hook, line, sinker. Stay long bonds, they will outperform over the next decade as well.
LOL Yeah prices aren't ALREADY moving higher absent wage inflation - how do Bernankes balls feel on your chin?
That comes after they stop banging against Leo's asscheeks.
He's quite an insatiable bottom for the banksters, our little Leo!
Probably the same way that it has happened hundreds of times in the past --- no, this time is NOT different, world reserve currency or no!
Or maybe rapid inflation does not happen --- we all just get poorer and poorer as wages stagnate and prices of all goods and services rise.
Either way, it is a shitstorm for the average Joe, and a bonanza for the financial elite and the well-connected.
Leo, please take your babbling pro-status-quo assclownery elsewhere --- NOBODY listens to it or wants it here.
Leo, come on, you are one smart guy. What the hell are you thinking, it is just America that rules inflation. We are becoming a smaller piece of this rat infested pie every month. Wages are going up worldwide, prices are moving higher because of World Wide demand. Why does anyone think that the only way you have real inflation is if wages move up in this bankrupt country. That may have been true 30 years ago but not anymore. Just watch how it continues to tick up even as we lose more jobs, more homes and add more to the food stamp line. Inflation and stagflation can live together. Man, this will get ugly. Long TBT!!!
You need to modernize your thinking Leo. It is over for us. We will soon not be a "big deal" anymore. Mandarin anyone???
Don Coxe discussed stagflation/inflation co-existing this week, makes too many references to the 70's, but has some interesting perspective.
Highlights of Basic Points also.
http://goldandsilverlinings.com/?p=676
"wage inflation????"
Thanks, I needed a good laugh, btw, what are you smokin?
Leo,
Good gosh man,just go to the store,and the statios for fuel.
How you going to get it/.
Bro, IT's here.
It's pretty evident form Leo's comments that you should just hit the "junk" button and move on.
Everyone on this site know of Leo and his juvenille ramblings...
Same applies to robo-faker, meth head, spalding smells, and now danger mouse. They just spew pollution that we have to navigate around.
Ya - but we all know... and so do that they this is nothing more than entertainment.
Leo on the other hand actually believes the shit he spews from his mouth. He's a washed up pension wannabe masquerading as intelligent advice.
They'll outperform on the downside, Leo.
There is not enough money in the entire world to pay the welfare promises of the various governments.
"There is not enough money in the entire world to pay the welfare promises of the various governments."
Actually, it's that there's not enough physical resources or (future) labor to support debt. And this goes for both PUBLIC and PRIVATE sectors.
If only it were as simple as it being just a govt problem/issue (though, as a realist, I see that govts have played themselves out, and I accept their inevitable demise as a logical outcome).
now he comes to life..........
Was their wage inflation in Zimbabwe?
Funny how the deflationists, having had their prechter's pounded for 10+ years still tout the imminent arrival of deflation.
Yes, the average salary in Zimbabwe in 2006 was about Z$1million a day.
Of course the government was about the only employer.
Leo,
Stick to your little sand box - the Canadian pension scene.
You've never been able to answer a single question I've ever put to you, so stop trying to be an expert where you don't have a clue about what you are talking about.
How do you think the stock market is so high already? Gas prices? Commodities? Do you think people suddenly just want to eat more than they did a year ago? Of course not. It's inflation. It's already here.
The fact that there is no wage inflation to go with it just makes it that much more painful for the masses, because the things they need to live all cost more, while they aren't getting paid a penny more.
Still don't get it? Well then watch this: http://www.zerohedge.com/article/inflation-explained
Inflation via cost push inflation from Oil, when dollar falls and EUR and BRICs have no problem buying oil and producing. No need wage inflation.
Leo, you must stop hangin' around all those losers... Wall Street, and the executive class, are making out like bandits... who the hell cares about the poor, or soon to be poor (food at inflated prices is all they'll be able to afford), there's plenty of cash sloshing around at the top to fund inflation.
"how are you going to get inflation without wage inflation????"
Very easily. Just continue current policies which serve to impoverish the middle class, immobilize the poor, and starve the helpless. Was this a trick question????
So Leo wants to know how to inflate?
Leo, stick your left hand down your pants and move it around for awhile... That's about the only form of inflation you can understand Leo.
<troll mode now off>
Wow, someone who still believes in a wage-price spiral. How quaint.
Bonds have been a bull market since the early 80s (in the US anyway), with only a few hiccups along the way. That trend continuing for another 10 years would be against really long odds. Not impossible, but not likely either. Such a prediction does make for nice, neat linear extrapolation however.
"That trend continuing for another 10 years would be against really long odds. Not impossible, but not likely either. Such a prediction does make for nice, neat linear extrapolation however."
Ah yes, they were saying the same thing about JGBs in the late 1990s when I was working at Bank Credit Analyst (BCA Research). Francis Scotland, the then Managing Editor of Global Investment Strategist was sure we were entering into a long bear market for Japanese bonds. A bunch of hedge funds got slaughtered shorting JGBs since then. I stick to my call: on a risk-adjusted basis, bonds will outperform stocks over the next decade even at low interest rates. I know you're all convinced that the US will default. You'll all be dead before that ever happens.
Spoken like the true and stalwart defender of everything status-quo!
Leo, neither you nor I today would even begin to recognize the financial and monetary system ten years from now, no matter what forms they might take. And your beloved bonds of various bankrupt states will be nothing more than windblown litter and museum curiosities long before then. You are so blind and blinkered to the world-shaking events around you, I might almost pity you if you weren't such a completely venal and amoral bastard.
PS: Only 28 junkings so far for your original post above? Wow, you're slipping Leo! You used to be able to get them junked into oblivion within an hour! Well, though, it is a Saturday, after all.
I love how you take these trolls and arguments apart piece by piece. Brilliant.
I'm a refuse collector in real life, so sorting through garbage and recognizing trash is second nature to me, and comes quite effortlessly.
;-)
Stagflation or hyperstagflation are very real potential outcomes. Among other scenarios, we could see either with monetary velocity on our massive excess reserves chasing existing inventory (real estate, etc.) or excess capacity before the almighty sops up liquidity or any one of a series of implosions of trillions of ponzi leverage which would precipitate bank holidays & an inevitable helicopter Ben response.
Jim Grant is great. He's very insightful, but he's postulating Fed reactions that are inconsisent with its stated poisitions and actions- fighting deflation with as many Federal Reserve notes as needed.
I think you can pretty easily enable price inflation on some necessities because 1) the gummit pays 15% of the population's expenses, and 2) the other 85% of the population still have significant non-necessity expenses which can be pruned to pay higher food prices.
It's not so much that "huge inflation" is coming from nowhere all of a sudden. There's a relative equalization occurring between the inflation of leveraged assets which had occurred over the past two decades and the completely non-leveraged survival commodities.
People who can no longer afford the leveraged assets have money to pay increased prices on all the stuff they can't live without. Mini-mortgages would solve this issue. Just let me buy a sack of flour at 4.5% over 30 years, eh?
The financiers will lend us right back into prosperity.
Hey Leo...
You might want to stop posting for a while... until your name becomes one of those "what ever happened to that #uckin ijit, pension wannabe who use to post on here". By then, get a new name like "Leo the Ijit". I'm sure Mr. Akak and I will miss you ... along with the 31 others.
33 Rejects... that 's pretty close to a record.
Not even close! Leo used to be the undisputed master of having his vile, authority-worshipping, elites-pandering, Quisling asskissing comments junked into oblivion inside of an hour! But I think (well, I thought) that he had learned to be a bit more discreet in this forum, and had appeared to have toned down his smug, pro-Establishment, pro-everything-status-quo postings here.
But don't take too much offense at Leo --- he is just the token ZeroHedge Keynesian statist asshole, purposely allowed to post his garbage here to encite rancor and debate. To assume that his posts and his "contributions" here are intended to be taken as serious or honest analysis is to entirely miss the point of Leo's presence on ZeroHedge.
i r junked u
The most important thing about money is to maintain its stability. . . .
You have to choose between trusting the natural stability of gold and
the honesty and intelligence of members of the government. With due
respect for these gentlemen, I advise you, as long as the capitalist
system lasts, to vote for gold.
George Bernard Shaw, 1928
DO NOT BEL?VE BERNAKE THE LIAR!
There is no inflation and we will not monetize the debt.
lolol good one flip. Agree
"We will not monetize the debt" = Lying to Congress.
Jim Grant is one of the finest, sharpest observers of interest rates and monetary policy Lets see, do I listen to S. Leisman, who is a clown and a puppet of the advertisers of the idiot channel or a brillant individual such as Jim Grant. Hmmm. maybe you guys can help me decide.
And as a coincidence, long TBT as of yesterday's close. I might be early, but parked it in the cupboard for down the road.
You guys are insane not to listen to this man.
+1
+ another 1
‘Afterward he measured a thousand; and it was a river that I could not pass over: for the waters were risen, waters to swim in, a river that could not be passed over. And he said unto me, Son of man, hast thou seen this?’ – Ezekiel 47:5-6
‘There’s blood in the streets, it’s up to my ankles.’- Jim Morrison
‘The iron never lies to you.’ –Henry Rollins
As I sit here in my new office (purchased at 30% off 1998 prices …viva la recovery!) getting ready to spend a full Saturday perusing charts - for whatever reason - the Spirit is movin’ this fella to a lonely bray into the wilderness of the blogosphere yet again. Please excuse the indulgent and self-centered segue gentle reader but a recent article illuminating the consequence of the ‘manufacture of contempt’ oft-referenced here has left me scratching my curmudgeon keppe.
About a week ago a group called GlobeScan asked 12,884 folks nestled in 25 different countries whither they agreed or disagreed with the statement that ‘the free market is the best system on which to base the future of the world.’
In 2002, despite the tulip er dot-com crash, 80% of Americans stated that they either strongly agreed or somewhat agreed that the free market was the best economic system for the future which, not surprisingly, was the highest percentage of any country.
That percentage is now down to 59%, less than Brazil (68%) and less than China(67%).
But that’s not all!
A majority of our youth, per the American Red Cross, approve of torturing or even killing captured enemies.
And to round out this trifecta of tyranny…
59% of adults, per McClatchy-Marist, believe that those who publish confidential or secret U.S. documents should be prosecuted. 22% think it is a ‘good thing’.
Oh shining city upon a hill whose beacon light guides freedom-loving people everywhere, you knew Daniel Ellsberg, Daniel Ellsberg was a friend of yours… Bradley E. Manning you’re no Daniel Ellsberg.
Life, liberty and the pursuit of justice…you’ve been punked.
How in the frak did we get here? Was it the ideological institualization of stupid… the crazy- hole, Big Lie, co-opting of regular folks’ inner monologues so that they would vote against their self-interests?
Was it the incessant worshipping of all things military? Fly-bys,and medals of honor,and colour presentations at every single sporting event of note, wars of choice with a roulette wheel supporting our ‘tribes with flags’ du jour … Eisenhower no doubt for many years has been convulsing in his tomb.
Was it the full-out psych-ops perpetrated by our solons to keep the shoppers happy? Employment improvement through division causing derision, retail improvement through survivor bias causing folks to contemplate their lyin’ eyes, magical deflators applying Potemkin lipstick to an economy of craters?
Perhaps all to some measure.
Eras have markers, signifying events, as it were, that although part of the scenery at the time become a sentence or two that future history texts are built on.
For my demographic -give or take a couple weeks am the very last of the boomer generation- the snippet of our times is best elucidated by the epigram of ‘ failure to liquidate the insolvent banksters, to apply the acid-bath of price discovery, to effect the principles of capitalism long espoused by the plutocracy, to rich folks’ bad speculative bets… has liquidated a large part of the productive economy.’
It is the wellspring of derision marking the inflection that, to be gentle, will for some future student be seen as the ‘transition’ of the American empire.
The solutions are quite simple hence the arguments made by the aristocracy are by necessity so complex. Failure to stand for, and embrace, the simple is why we fall for the complex.
As an example, if the markets are the dataset of humanity, then given the ridiculous complexity of the latter, theories on the former must be comparably so.
And yet the methodology that generates…
AUDJPY sell
AUDUSD buy
AUDCAD sell
AUDCHF buy/sell
CADCHF buy/sell
CADJPY buy/sell
EURAUD sell
EURGBP buy/sell
EURJPY sell
EURUSD buy/sell
EURCAD sell
EURCHF buy/sell
GBPCHF sell
GBPJPY sell
GBPUSD buy/sell
GBPAUD sell
GBPCAD buy/sell
NZDJPY buy/sell
NZDUSD buy
NZDCHF buy
USDCAD buy/sell
USDJPY buy/sell
ZC buy/sell
CL3 buy
GX buy/sell
YM buy
DX buy/sell
GC3 buy
ES buy
SI3 buy
ZS sell
ZB buy
ZW buy
… with proprietary linked entry stops and exit stops and limits (for next Sunday-Monday trading) works to the utter bafflement of the adherents of the failed-theory of randomwalking.
The Book of Books states that the Kingdom of Heaven belongs to those who are like … children.
Indeed.
My eight year old has a better sense of things then the bloviating publicans and libs.
Unfortunately the simple children will become complex adults. And verily, complexity for complexity’s sake is most certainly the road to perdition.
Although the truths you hold to be most dear are lies told to you by liars, much like Rollins’ iron which never lies… neither do the charts.
So back to ‘em.
AM out.
no such thing as free markets.
our children are the fruit of our loins. they do not know right from wrong. we neglected to show them the way. they could not find jobs so they joined the military where they can be all they want to be. God bless our military, indeed? He will not and I will not ever ask Him to either.
America has no empire and never did nor have we ever wanted one. So I care not about American empire. I just want my government to leave me the hell alone.
truth is not complex but very clear and simple. it always has been. nothing has changed now or ever.
the parable of the rich young ruler.
Luke 18:18-23
18And a certain ruler asked him, saying, Good Master, what shall I do to inherit eternal life?
19And Jesus said unto him, Why callest thou me good? none is good, save one, that is, God.
20Thou knowest the commandments, Do not commit adultery, Do not kill, Do not steal, Do not bear false witness, Honour thy father and thy mother.
21And he said, All these have I kept from my youth up.
22Now when Jesus heard these things, he said unto him, Yet lackest thou one thing: sell all that thou hast, and distribute unto the poor, and thou shalt have treasure in heaven: and come, follow me.
23And when he heard this, he was very sorrowful: for he was very rich.
stop reading the bible and start reading good cook books. You stomach growls too often!
Hosea 4
2 There is swearing, deception, murder, stealing and adultery.
They employ violence, so that bloodshed follows bloodshed.
5 So you will stumble by day,
And the prophet also will stumble with you by night;
And I will destroy your mother (America).
LMAO.
Yes! HAHAHAAHAAA
The statistics about "belief in free markets" shouldn't be misinterpreted.
The reason so few 'Merkins believe free markets are a good approach is because they believe that what we've got here in 'Merka is ...free markets.
If we had free markets...OR...if people knew better how our commercial environment operates...the data might show Americans to be a bit more supportive of the concept.
There's hundreds of billions a year spent by a huge industry pushing the notion that our society is running free markets, and there are a few million a year spent by fringe radicals in the alternative press pushing the notion that the US is a fascist totalitarian state.
Gee...who's going to win THAT contest? Who's going to convince a bigger audience?
You know, in a war between two nations, sometimes the nation with the far higher casualty rate wins, just because the population and/or production is so much more vast. The battle for controlling how the majority of your countrymen *think* is rather analgous.
AM, welcome back. Missed your presense here. It's good to have you back.
JG and AM in one day. Time to go long ZH again.
By the way, for those criticizing JG either for appearance, mien or message, he's an athletic 6'7", has been a believer in sound money since money was sound, is more interesting in person than on tape or type, and might be challenging Mark Twain for the number of witticisms produced over the years. There are precious few good people on or associated with Wall Street, but JG is definitely one of those few. Sit back and enjoy.
+100
Can't be inflation.... WE are in deflation mode. You can get an I-Pod 2 that does TWICE as much as an I-Pod 1 does,for the same price,so that means the inflation is NEGATIVE.
I know because thats what the BILL FUCKING DUDD-LEE from the NY Fed told me.....
The piece of fucking shit.
Take a fucking swan dive off a 300 foot cliff you fucking Sach of shit....
I swear to god,him and the likes of him are absolutely fucking delusional.
I like Jim Grant and saw his interview in Podcast, but I think he will be wrong here.
- He says to hold cash for the event when FED raise rates when Inflation suddenly increases
- I don't think FED will raise rates above inflation, they will always trail and follow it and hence Real Interest rates will be negative then also.
- Only then can they keep dollar down and try to inflates US debt and at the same time US can export itself and pay of debts. Hope no currency event happens during this time
- If a currency event happens or made to happen, then we can look forward to a new International monetary system.
- I suspect in such a new Monetary system were to happen, Gold will be a part(Not Silver or copper...etc..)
Worldo Bitchez
The interest rate structure is indeed strange, and I agree we are in uncharted territory. In the 80s, we had 10-17% mortgages, some issued privately. We had the S&L crisis, where credit was scarce. Now we have super cheap credit for super prime customers, but a crushing blow to funding costs, unlike almost any recession in the last 40 years. So what has value? You can buy real estate on leverage if you qualify, but you have to be able to afford the carrying costs (maintenance, property taxes)...but ultimately only one is owner occupied. How many cars can you drive at once? One. Unless you are going to buy diamonds, looks like PMs is the safest place to park money. I just can't see which way equities will go from here (I do not believe in BTFD - many businesses are fundamentally unsound in this economy, and accounting treatment has masked that). I think we also need to focus on community and friends, since ultimately those are the only things that influence happiness, and will come in handy when everything is coming unglued.
what if your friends are banksters and your community is Greenwich?
diamonds
Are not good investments.(IMHO)
DeBeers controls/sets their costs.As bad as the Fed.
Gold is the ONLY asset that is out of the control of men.
Our interest rate structure is beyond strange?
I think our sense of reality is beyond strange, the interest rate structure is just a distant derivative of what we perceive to be as normal.
Bob_D - Are things normal now? Or have we simply gotten used to changed circumstances that still represent a significant departure from equilibrium? And for that matter, when was the last time that human civilization was in any kind of sustainable equilibrium?
Shit son
How are you gonna' come at me like that?
Human civilization is in constant equilibrium in that war is constant with brief intermittent periods of peace. As we evolve we simply develop more efficient ways of killing one another. Other than that, it's a complete crap shoot.
Your stupid neighbor who is watching this program is making a lot fo money in the stock market: how hard is it not to participate? You can't do it...
Sure I can. A lifetime of doing exactly that has let me rest easy and avoid countless snares in life.
The stupid neighbor better not need his money anytime soon, as in before death. The ponzi holds the masses. I hold the mass ponzi in contempt and permanent abeyance.
the transition to real money will continue until the fraud that is unbacked fiat is finally eliminated, with or without the Fed's support.
That's right. And I cannot image it will take years as some claim. I think it's happening RIGHT NOW before our eyes. And then BOOM it will be over - the house of fiat cards will collapse. Get in the pool everybody. Buy Gold and Silver and take possession.
Ok, this is why I hate taxpayer television and radio. I had to sit here and watch and listen to a ton of advertisements before the interview. This is AFTER I paid with my tax money. Where is MY advertisement saying I paid for this show????
"Paid for by viewers like you" is a common refrain on PBS.
Didn't anybody listen to the G20 meeting conclusions?
Inflation has is much worse than they ever imagined possible and will have global implications.
VIX is at a 3 year low
BDI has hit rock bottom
Oil is freakish expensive
ALL THE TELL TALE SIGNS FROM 2007 JUST BEFORE THE MARKETS CRASHED!
AND NOW WE DON'T HAVE ANY SAFETY NETS LEFT!
DOW 6000 HERE WE COME
I really think this could happen this year, somewhere after the summer.
Yes, I concur. I've got the same feeling. And think about all these Chinese companies and the Chinese RE just crashed. This won't end well.
I think Fed didn't tell you is that if interest rate goes up just 0.25, it will ignite mortgage-rate-reset nuclear bomb and then underlying derivatives thermo bomb. I also think they soon will throw in a deflation to knock down Oil/Gold/Silver, then ask for QE3.
How would they "throw in" deflation? And if deflation did come about I suspect only OIL would decline, after June into July ;)
While Silver and Gold would be largely unaffected and possibly rise even faster. Oh but what do I know?
Good point(s).... I never hear any of the brain-surgeons saying rates "must" and "will" rise explain how the system is supposed to cope with the shock; as you say, even a tiny rise blows everything sky-high. So, as has been from 2008, it's still: PRINT OR DIE. There is no "adjustment" available.
Grant is a tiresome conservative bore.
He should get out more and "chase skirts"
The damage has not been done by QE but by massive private credit creation made possible by Arab oil.
OE is just the medicine - it may have the wrong chemistry for what we need but without it things begin to break down.
Blame the FED for overseeing this credit orgy but not QE unless you want to see banks everywhere going to the wall.
These deposit liabilties created during the credit boom of the last 20 to 30 years cannot now be paid.
QE or default on term deposits - thats the simple choice.
I heard him on King world news that he thinks Gold should reach $2000 a ounce - I am not sure this will even cover the physical cash in the system never mind checking accounts - as regards term deposits.......................................
If he wants a Gold standard it needs to go to $10,000+ unless he wants the misery of deflation
At least FOFOA has the balls to come out and say its going to $50,000 but this guy is deliberately conservative to remain creditable.
The man is a Creeping Jesus
Yes. If only Jim Grant would chase skirt, you retard, (Hangover pronunication).
What world are you looking for? No William Buckley's?
"Creeping Jesus"? I don't know what that means except you are playing with fire.
Try and be respectful to people that are much smarter than you...
Hey Bobby Riggs...you lost to Billie jean king! remember?
I would guess you are a young and stupid kid. You can't even google Reese Bobby?
Let's practice numb-nuts: "would you like fries with that?"
My greatest failing is dealing with idiots who don't know they are idiots...
well, well...mirror mirror on the wall...whose the most idiotic of them all?
don't fail to faint in your greatest way if you hear the response...it will be appropriate as failure is your weak point in front of an idiot! So you're used to it! When you shave and dream of being the shadow of Bobby Riggs...(he did win Wimbledon when he was young, you dumbo!)
You make no sense and I hate the grinding gears sound when you type. "I'm done with this guy."
I have said before FP is a "callow-youth".... but sometimes his post are thoughtful and enjoyable to read, unfortunately consistency is not his forte'.
FP try harder or you might find a someone "busting your chops" with an avatar call Flaccid Penis's Mom.....
lol, "laughing like children...rolling like thunder...under the covers...that's why they call it the blues..."... Don't be so straight laced, its nice to kick your shoes off and let fly your fighting feet...when its fight club time!
crucify him! then Qe-infinity his remains.
Or you could just remain dumb, lazy & harmless... Otherwise you have to get off mom's couch, which let's be honest; that is unlikely...
Actually yes, I would like to see banks everywhere going to the wall, that is those that doled out credit left and right without a second's thought on credit-worthiness of the borrower.
You're afraid your (and anyone elses) deposits, i.e. savings evaporate?
Well you might want to reflect on the following statement:
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." – John Stuart Mill
Dork of Cork,
The damage has not been done by QE but by massive private credit creation made possible by Arab oil.
Isn't that credit creation from Arab oil a result of QE? Oil bought and sold in the ever increasing supply of USDs.
Blame the FED for overseeing this credit orgy but not QE unless you want to see banks everywhere going to the wall. QE or default on term deposits - thats the simple choice.
If banks fell it would mean depositers getting bailed out (up to 250k) instead of the overleveraged amount that we bailed them out at. So the taxpayers would be on the hook for much less. I know this would have been devastating to the economy, but at least we would be on the path of sustainable recovery instead of unsustainable recovery.
"Socialized the risk and privitized the gains" Jim Grant
NO BAILOUTS.
If your business model sucks, then die.
QE is not credit - it is money , when you produce more money on the central bank balance sheet it devalues this currecy.
Commercial banks could produce credit using a currency that was intrinsically overvalued as its worth was not expressed on the Central Bank balance sheet.
In effect the oil that was burned was not expressed as a loss until QE became real.
Sorry I misunderstood your comment. Yes I agree QE was the medicine. As for a massive private credit creation made possible by Arab oil, I will have to think on that one for a while. Any articles you can refer me to?
YOU are a tiresome bore.
Go away and eat a grenade sometime soon.
Thanks.
Thanks Tyler for this.
I'd be interested to know if shorting bonds with TBT as per above is smart move -- I believe so.
Also, thanks to the above am considering putting a chunk of change into Annaly Capital Management, Inc. (NLV). Anyone care to comment on this?
Thanks again!
if you're really ballsy, you an buy TMV....triple
Cosmic: when TMV hits $32 it's a buy!
well, IFFFF I were confident rates will rise (am not, because it's armagedon-ish) I'd be buying all the way down to $32. Your math is extreme: 32 is a 25% drop = 8% rise in bonds = TLT to $100. Treasuries gonna add another 8% to their current rally, then all of a sudden reverse? Somebody help me out here.....
Rates ain't ever going up for the TBTF
buy silverNational Inflation Association
NIA can go to hell.
just a quick link i tossed in there that i had just been reading.
Makes me think stock piling silver and going to the beach is just too easy.
What says you?
no worries. to see the future, look to the past. everything returns to its mean average. only 4 economies in the entire history of mankind.
1) hunter gatherer economy - direct access to food
2) agriculture economy - semi-access to food
3) manufacturing economy - indirect access to food
4) service economy - food supply chain is far far away
- what could ever go wrong?
+111
You nailed it Rusty.
Keep up the good work.