We're Just Gonna Inflate Our Way Out Of It! (Or Are We...)

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Sun, 03/06/2011 - 13:07 | 1023600 Long-John-Silver
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Reality is rapidly approaching.

Sun, 03/06/2011 - 13:12 | 1023610 Michael
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No one could have seen it coming.

Sun, 03/06/2011 - 13:18 | 1023625 Rainman
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" How could we have known ? " will be revised to " How could they have been so stupid ? "

Sun, 03/06/2011 - 13:26 | 1023643 Temporalist
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WTFK?  Whothefuckknew?

Based on the information we had at the time there were WMDs but upon further review...it was just opium...errr...I mean oil...

Sun, 03/06/2011 - 13:29 | 1023653 Michael
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Pot cures cancer.

Cancer Gate Rick Simpson Cure Medicinal Studies Cannnabis Marijuana CBD CBN THC Cannabinoid


Sun, 03/06/2011 - 14:12 | 1023752 Clint Liquor
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Reality is the antidote for hope.

Sun, 03/06/2011 - 14:23 | 1023774 Bicycle Repairman
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"We personally believe it will not be long before the global capital markets "recognize" and price in the reality of fiscal and monetary circumstances in Japan".

Really?  The 'facts' have (seemingly) been in plain view for years.  Can the market really be that stupid or is there something else?

If history is any indicator, "Instant Karma" is not going to hit Japan or anyone else in the short run.  In the long run ............

Sun, 03/06/2011 - 16:54 | 1024168 RockyRacoon
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Last ditch effort to loot the country by the folks who don't need any more.

Not really hard to figger out.   Tragedy of the Commons.

Sun, 03/06/2011 - 20:40 | 1024699 Bicycle Repairman
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They need our military.  And will for some time.

Sun, 03/06/2011 - 13:10 | 1023608 Oh regional Indian
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A few observations and questions:

1) Whatever happened to the Yen carry trade. Did it unwind in an orderly fashion? It was going to blow the financial world apart a couple of years ago. As it should. No news of it at all for the past 18 or so months.

2) Repeated use of artifical inflation devices is said to cause terminal limpness. Is that the desired outcome of proposed inflation?

3) How do you inflate in a zero-bound environment? Is there other stealth ways, unknown to me/us?

4) Across the board inflation? How can that cure anything at all? Bi-flation I can see. BUt that is a twin-squeeze. A double whammy.

5) "We" will inflate "our" way....etc... Who is this we and our? Banks or peeps or Everyone, praise the Lord?




Sun, 03/06/2011 - 13:28 | 1023645 Oracle of Kypseli
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Governments are running out of other people's money, so they print their own. Why not then repeal taxation and spark consumerism? If that is what jump starts the economy.

The government can print its own money for spending. (As they now do anyway.)

Instead of giving it all to the banks, just share with the people.

Oh! yea. That's a bold experiment, they will say.

Yes! But it is more equitable experiment than the government's.

Sun, 03/06/2011 - 13:51 | 1023705 Bob
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That appears to be  the problem with anything that remotely resembles actual "socialism." 

Sun, 03/06/2011 - 15:22 | 1023904 cxl9
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Why not then repeal taxation and spark consumerism?

Because without taxation there is no fundamental demand for dollars. You'd also be giving people back 40-50% of their lives, and you know they would just spend that extra time getting into all sorts of mischief.

Sun, 03/06/2011 - 13:28 | 1023649 Long-John-Silver
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RE: How do you inflate in a zero-bound environment?

Simple; you add a zero to the price of everything just like Jimmy Carter.

Sun, 03/06/2011 - 13:49 | 1023698 Oh regional Indian
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Easy as that, eh?




Sun, 03/06/2011 - 13:58 | 1023718 Orly
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1) Whatever happened to the Yen carry trade.

It moved to Australia and is about to catch a major, major unwind.

3) How do you inflate in a zero-bound environment? Is there other stealth ways, unknown to me/us?

You simply allow unlimited speculation in the commodity markets.

How can that cure anything at all?

It allows deflation to be quenched in the hopes that consumers must pick up the ball, go back to work and gripe about paying higher prices.  Overall and in the grand scheme, it does nothing in the end.

Home prices in the US, which is the main deflationary asset, are still overvalued, in most places, by at least 20%.  When wages catch up with the ability to purchase these homes, or when home prices come down to the level of wages, then it will be set straight.  It will probably be a combination of both factors but the equilibrium will take years to achieve.

Sun, 03/06/2011 - 14:30 | 1023785 Bicycle Repairman
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"equilibrium will take years to achieve"

Yes.  Moderate inflation over as many years as it takes.  Wages will lag, living standards will drop slowly.  Negative interest rates.  Savers and J6P pay for all the sins.  No mad max.

History books will read: "Sir B. S. Bernanke Saved the World".  Brings a tear to my eye.

Mon, 03/07/2011 - 08:11 | 1025579 1984
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That's where you're wrong.  History books will say "The Bernank ...".

Sun, 03/06/2011 - 14:32 | 1023796 Tedster
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I hear that now and then - that housing "needs" to reset to some historical formula, e.g. three times avg. annual wage or somesuch. Years ago I read about an old sleepy mining town in Colo. - Telluride. Once the big money moved in for the then-new ski industry, the locals were displaced because they couldn't afford the property taxes, much less the land and housing. The analogy I see in our future is the public being un-assed from
the country. Everuthing seems to point that way - wages stagnant, inflation, loss of property and self defense rights, rule of law, crushing tax hikes in the pipeline, crumbling core infrastructure, etc.

Sun, 03/06/2011 - 14:54 | 1023833 Spalding_Smailes
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Hot money flowing into the emerging markets like water. The speculation in the commodity markets •  currency peg the real reason for run up in prices. Not uncle Ben.


Housing prices down 45% in Arizona. Many , many people questioning " why the fuck did I buy this " during the shadow banking credit orgy, stupid reigned ( keeping up with the joneses • fellow morons ). Many people thought credit was money.

Sun, 03/06/2011 - 15:02 | 1023862 akak
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Many people thought credit was money.

And there are still some deflationary flat-earthers who continue to believe so today, despite the ubiquitous evidence to the contrary in front of their closed eyes.

Sun, 03/06/2011 - 15:13 | 1023878 Spalding_Smailes
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Different argument.


Treasuries are not money, also. So don't look toward that growing pile of paper and thing it's money. But the deflation in a massive asset class like housing does trim some fat and drink down flowing digital bits. Bottomless pit of shadow obligations.

Sun, 03/06/2011 - 17:01 | 1024186 RockyRacoon
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Sure • is • interesting • to • read • your • comments.•••••••

Sun, 03/06/2011 - 17:25 | 1024249 akak
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Autism: It's not just for idiot savants any more!

(Or is it?)

Sun, 03/06/2011 - 22:01 | 1024883 Orly
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If you don't mind, my nine year old son is autistic.  Can we skip the retard jokes, please?

Thanks in advance.

Sun, 03/06/2011 - 22:08 | 1024905 akak
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Will do.

Henceforth, I will stick to mocking just niggers and cripples.

Sun, 03/06/2011 - 22:13 | 1024923 Orly
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I appreciate that.


Oh, and the Irish.

Sun, 03/06/2011 - 22:22 | 1024954 akak
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Oh, and the Irish.

The day that we can't mock pasty-white alcoholic Celts with hideous red hair and freckles is the day that all humor finally dies.

Sun, 03/06/2011 - 23:08 | 1025092 Orly
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All right, all right.  I'll lighten up.

Sorry to be a drag!

Of course, the Irish thing was a reference to Blazin' Saddles.

I'm now gonna occupy myself by singing Camptown Laties...

Sun, 03/06/2011 - 17:44 | 1024292 Spalding_Smailes
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What mac are you running .... Are you in the print industry also, or do you just like apple computers ?

Sun, 03/06/2011 - 19:20 | 1024481 Spitzer
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Treasuries back the dollar. As US debt defaults, the dollar sells off(inflation). Just like the Euro sold off when Greece was in trouble. Using your logic, the Euro should have went up.

Sun, 03/06/2011 - 19:22 | 1024488 equity_momo
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Greece , and the rest of the PIIGS , still in trouble Spitz. Euro , still doing nicely.

Mon, 03/07/2011 - 04:22 | 1024640 Guy Fawkes Mulder
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Many people thought credit was money.

And there are still some deflationary flat-earthers who continue to believe so today, despite the ubiquitous evidence to the contrary in front of their closed eyes.

I remember you. You like to talk about inflation or deflation purely as a change in money supply (which money supply do you mean, by the way? For that matter, what even is it that you mean by money? It seems like you call dollars, which are credit money, "money" too. Maybe I'm getting you wrong.)

It is meaningful to talk about price inflation, and to talk about inflation in terms of specific currencies or asset values.

The term "deflationary flat-earther" can only come from the mouth of a small mind.

I saw cjbosk make a good case that consumer prices won't be hyper-inflating any time soon, over on this thread:


What happens if Bernanke actually stops QE?

What happens if a US debt default is allowed to occur?

What happens if the market stops rising by Ponzi magic?

These things can happen; they are options on the table. These actions may benefit the infamous powers-that-be, and they may opt for them. I've heard it argued very well before that they have to continue QE, but at the end of the day I think they can still choose to let gravity have its say (to "pull the plug on the ventilator").

If you open your conception of "deflation" to include the loss of purchasing power (for example, Joe-65-Year-Old thinks he has "a million dollars" worth of investments today, but tomorrow the markets are allowed to crash and next week he has nowhere near the amount of purchasing power he had today), then you will realize that deflation is possible and it is serious threat. It's the knife that's at people's back as they Ponzi their way forward.

edit: TLDR = For consumer goods: "money" is fiat paper credit money, and "credit" is credit, and no one could possibly mix up "credit" with "money". The credit money we have now is paper Kool Aid. The bankers are planning to hyperinflate over the longest period possible and set themselves up in the ensuing new monetary order. But if the central bank juice stops flowing... deflation, bitchez.

Sun, 03/06/2011 - 15:20 | 1023894 Nathan Muir
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"currency peg the real reason for run up in prices. Not uncle Ben."


Are you really that ignorant?  You do realize uncle Ben controls the currency these countries are pegged to, right? 


"Many people thought credit was money"


Do you understand credit is money in a fractional reserve banking system?  I always assumed a blind bull like yourself not only understood debt as money, but was all for it.  Whereas the intelligent bears on this sight understood debt as money can never work in the long-run due to laws of exponential math.  Clearly, I gave you undeserved credit.  Here's some advice: critically think before you comment here...your nonsense is getting old.

Sun, 03/06/2011 - 15:29 | 1023911 Spalding_Smailes
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And they can move the peg. Ben can't move the peg. If they did not peg at suppressed rates they would not be drinking inflation.


Credit is not money until it is spent. Please read a book or something before you post. Just like treasuries are not money.


So who's the ignorant one ?

Sun, 03/06/2011 - 15:29 | 1023920 Orly
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It seems he may be correct, Mr. Smailes.  Credit is money (created from thin air or not...).  It has no velocity unless it is spent.

In a sense, you're both correct.  It is just a matter of semantics.

Sun, 03/06/2011 - 15:39 | 1023930 Spalding_Smailes
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Credit is not money. Credit can stay credit until infinity. Credit becomes money when you purchase an asset and then velocity is affected in the existing money supply..

Point being, existing money supply not effected by new credit on the banks books.

Sun, 03/06/2011 - 15:44 | 1023957 Orly
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So if I have a credit limit on my card that is ten grand, that is not money?  Of course it is money.  It may be potential money but it is still money, nonetheless.

When I go to Best Buy and plunk down two grand on a new LCDHDTV (!) and put it on my card, then the "money" takes on velocity.

I do understand your point, though. Which is why the talk of Zimbawaism in the American economy is just silly to me.  As long as the banks hold on to potential money and the velocity of said money (credit...) is not realised, then there can be no hyperinflation from it.  Eventually, the Fed can drain this credit out and it will be no harm, no foul.


Sun, 03/06/2011 - 15:51 | 1023973 Spalding_Smailes
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Yes your credit is not money until its spent on an asset. You can call it money if you want.


Maybe he will stop tossing out insults and turn off the t.v. and read 20 books on finance.


Correcting • educating people like him is very,very tiresome. Lol


Wish the junker would step up. I'll link to volumes of information supporting my thesis.

Sun, 03/06/2011 - 15:51 | 1023989 Orly
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Perhaps but you have posted more times than I have today, Mr. Smailes.  Seems to me you love it more than I!


Sun, 03/06/2011 - 16:18 | 1023995 Spalding_Smailes
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Hey, I hate seeing guys like ( Nathan Muir  )maybe telling friends and family the wrong information. Notice the dead silence on his part after tossing out all the insults in his first post.


Clearly, I gave you undeserved credit.  Here's some advice: critically think before you comment here...your nonsense is getting old.


Fucking Lol' .... Got financial books ??? The Macro View - Roger Miller or Handbook of Financial Markets and Institutions Sixth Edition or The Wealth of Nations - Adam Smith Books I-III Lol

Sun, 03/06/2011 - 19:17 | 1024471 Spitzer
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The peg is just the act of printing that same amount of local currency as what is coming out of the US.

Credit is money.

Sun, 03/06/2011 - 19:48 | 1024529 Spalding_Smailes
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Once again your dead wrong ...

They must print much more than 1 to 1 to suppress.

China M2 over the last 2 years going up at a 25% clip. Construction 70% of GDP trying to print 10% GDP, USA M2 with QE and POMO up 2% last 2 years.

Credit is not money until it is spent • velocity. Economics 101.

Sun, 03/06/2011 - 15:29 | 1023915 cxl9
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Home prices in the US, which is the main deflationary asset, are still overvalued, in most places, by at least 20%.

Just outlaw mortgages entirely. If you can't save up and pay cash for a house, then you shouldn't buy one. Better still, do it Viet Nam style. All real estate purchases must be settled in physical gold. That'll eliminate the whole fraudulent real-estate industry and restore some semblance of sanity to house prices.

Sun, 03/06/2011 - 16:38 | 1024117 Orly
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That may be a bit extreme.

Instead, how about having the homeowner put 20% of the cost of the property down on the loan up front.  That way, they have skin in the game.  Only allow HELOCswhen the value is 20% above the market value and then, only for the amount in excess of the 20%.

Banks get paid, young families can save to purchase a dream home and there is no incentive to rip anyone off.


Works for me!

Mon, 03/07/2011 - 06:23 | 1025531 Oh regional Indian
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Orly, thanks for the responese waaaay up thread. :-) It got busy thereafter.


Sun, 03/06/2011 - 13:20 | 1023630 equity_momo
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The whole idea of being able to "inflate away the debt" is a banker-perpetuated falsehood :it only works if the level of debt isnt growing by an order of magnitude greater than the means to repay it.

the article falls down in the last paragraph - it still paints the US in a position being able to chose. We are no different to Japan. The choice is simple - hyperinflate and then default or just default.


It doesnt matter how proactive the US , it is past the point of no return.  We have no lead time. Japan was able to live through its liquidity trap thus far due to global growth (what was the average price of oil from 1989 to now?)

Globalization is over , and with it comes widescale defaults.



Sun, 03/06/2011 - 13:38 | 1023665 Oracle of Kypseli
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Very true. The threshold has been crossed. US hands are tied. The saying used to be "inflate or die" but I guess there is a way out. Default before you die.

The government's conundrum is how do you know when death is near? And if you default, how can you survive from your creditors?

Is it therefore, the current uprisings US's attempt to create world wide revolutions to destroy its creditors before the US defaults?

Please weigh on this discussion as it appears to me that this may be the only way out.




Sun, 03/06/2011 - 13:44 | 1023683 LawsofPhysics
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"Is it therefore, the current uprisings US's attempt to create world wide revolutions to destroy its creditors before US defaults?"

Quite possible, or at least cause enough damage that U.S. companies can make money rebuilding our creditors countryside.  The debt, and "growth economics" are both fraudulent, either way, now things get interesting.  Possession will go from 9/10 ths of the law, to the law itself, hedge accordingly.

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