Willem Buiter Issues His Most Dire Prediction Yet: Sees "Unprecedented" Fiscal Crises, US Debt Inflation And Fed Monetization
Doomsday scenarios from the establishment periphery always come fast and furious, especially in our day and age when bankrupt sovereigns are the norm, not the exception. And the "faster and furiouser" these come, the more steadfast the core is in refuting that the reality is much, much worse than portrayed on the mainstream media. Which is why we were very surprised when we read Willem Buiter's latest Global Economic View (recall that he works for Citi now). In it the strategist for the firm that defines the core of the establishment could not be more bearish. In fact, at first we thought that David Rosenberg had ghost written this. Once the apocryphal truthsayers such as Buiter become mainstream within the mainstream, it is only a matter of time before the marginal opinion shifts to match that of those who have been prognosticating doom all along (for all the right reasons). In the below piece, Buiter presents a game theory type analysis, which concludes that the US and other sovereigns will soon be forced into fiscal austerity. Among his critical observations (we recommend a careful read of the entire 68 pages), are that the US is highly polarized, and that the Fed, which is "the least independent of leading central banks" would be willing to implement "inflationary monetisation of public debt and deficits than other central banks." The next step of course would be hyperinflation. And Buiter sees America as the one country the most likely to follow this route. Most troublingly, Buiter predicts that a massive crisis is the only thing that can break the political gridlock in the US in order to fix the broken US fiscal situation. Must read.
Key highlights:
- Unless the US, the UK, France, Japan (currently AA rated) and even Germany change course quite radically and sooner rather than later towards a sustained higher degree of fiscal tightening, there may not be a single AAA-rate sovereign left 5 years from now.
- For the US, with a structural primary deficit in 2009 of 7.3 percent of GDP, the arithmetic of solvency indicates the need for at least 7.3 percent of GDP worth of permanent fiscal tightening (not counting the long-term fiscal tightening required to accommodate future age-related public spending ambitions). For the UK, with a structural primary deficit in 2009 of 6.8 percent of GDP, the required permanent fiscal tightening (beyond what is achieved automatically by a cyclical recovery) would be at least 6.8 percent of GDP. In neither country are policy makers debating how to achieve anything like these degrees of fiscal tightening. In the US, beyond the expiration of part of the Bush tax cuts, no additional fiscal tightening has been planned. With the policy makers in denial, the fiscal situation is likely to deteriorate further, with the result that the magnitude of the permanent fiscal tightening that is required, when the markets eventually demand an immediate fiscal adjustment, will keep on rising.
- The US is, in our view, a more polarized and divided society today than at any time since World War II, including the Vietnam war era. Its government institutions are so encumbered by checks and balances that decisive prompt action is only possible during times of national emergencies – times, that is, that are widely recognized across the political spectrum as national emergencies. We don’t believe that the fiscal threat is as yet perceived as a likely candidate for a national emergency. Things will have to get worse, say through the country being put on negative outlook for its sovereign credit rating, or indeed losing its triple-A sovereign credit rating, before a fiscal burden sharing agreement is likely to be achieved. The way things are now, the Republicans will veto all tax increases and the Democrats all public spending cuts.
- As regards motive, a significant share of the US nominally denominated debt is held abroad. Between 55% and 70% of total US currency stock (around $928 bn in circulation at the end of 2009) is estimated to be held abroad. As this is non-interest-bearing, it is eroded by both unanticipated and anticipated inflation. In addition, about 51.4 percent of US Treasuries are held abroad – $3.6 trillion out of $7.0 trillion held outside the Fed and excluding Intragovernmental Holdings - at end of December 2009. Motive is strengthened by a longer maturity or duration of the nominally denominated debt. Here the situation is currently less inviting for the US than it was in 1946, the all-time peak of the US public debt to GDP ratio, as the average maturity of the US Treasury debt is only half of what it was in 1946, falling to around 4 years by the end of 2009. Unanticipated inflation also affects the real burden of servicing private domestic-currency denominated debt: it redistributes resources from private creditors who hold domestic currency denominated private debt to the issuers of that debt. Such intra-private sector redistribution of wealth is not politically neutral (nor is it likely to be devoid of macroeconomic effects). With much US mortgage debt still at fixed rates for long maturities, unanticipated inflation would redistribute wealth towards households owing mortgage debt and away from banks and other mortgage lenders. In the current political climate, this might not be unwelcome to many would-be voters and their representatives.
- There is, we believe, a greater chance of the Fed being cajoled or pushed into inflationary monetisation of public sector debt and deficits than the other leading central banks. For this to happen, it would be necessary that the current majorities on the Board and the FOMC, which would not go along with an inflationary solution to the US public debt problem, be replaced, or for the mandate of the Fed to be changed. In practice this would require either a strongly populist majority in both houses of the Congress and a strongly populist president in the White House, or a sufficiently large populist majority in the Congress to override a presidential veto. Either configuration looks currently unlikely but not impossible – a low-probability event but not a tail event, although were it to occur, it is likely to be at least 3 to 5 years in the future.
- We argued earlier that none of the major industrial countries was likely to choose an inflationary solution to its public debt problems, but that of the US, the Euro Area and the UK, the US was least unlikely to pursue such a course of action. The country also has form as regards using inflation to amortize the real value of the public debt, as is apparent from Figure 10, taken from Reinhart and Rogoff (2009b). It shows that, historically (since 1790), the US has exhibited a tendency to respond to high public debt burdens with high inflation.
- We argued earlier that none of the major industrial countries was likely to choose an inflationary solution to its public debt problems, but that of the US, the Euro Area and the UK, the US was least unlikely to pursue such a course of action. The country also has form as regards using inflation to amortize the real value of the public debt, as is apparent from Figure 10, taken from Reinhart and Rogoff (2009b). It shows that, historically (since 1790), the US has exhibited a tendency to respond to high public debt burdens with high inflation.
- An inflationary solution to the problem of an excessive public debt is all but impossible in the Euro Area and unlikely in all advanced industrial nations. It is least unlikely for the US.
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on Thu, 04/29/2010 - 08:59
#323470
The problem with the "monetization/inflation" argument is that the major benefit programs in this country - social security for example - are tied to inflation. If inflation goes up, the benefit levels go up canceling out any benefit from the inflation. Monetization would be the definition of pushing on a string, we would get all the pain from higher commodity prices but the debt levels would remain stubbornly high.
on Thu, 04/29/2010 - 09:06
#323484
You're of course 100% correct. But the hyperinflation cultists are not known to be open to common sense.
on Thu, 04/29/2010 - 09:22
#323520
That makes 3 of us. I suppose the USG could take over more of the economy, but how would that be positive for long-run GDP, business profits, equity values or bond prices? We have debt saturation. The only answer is default or deflation.
on Thu, 04/29/2010 - 10:03
#323604
Strong inflation (5-20x devaluation) is probably considered the best of the slew of bad choices.
I doubt this will work as it will be too disruptive to world trade. I expect a currency crisis to follow, then a debt repudiation/jubilee, massive reduction in unproductive areas of society (gov't/military/finance), a defacto return of control to local governments, then a worldwide gold (or gold/energy/food) currency.
Then there will be a golden age few expect. I'm betting on or about 2013.
on Thu, 04/29/2010 - 10:55
#323745
Central Governments have a history of not behaving well during economic collapses. I hope you're right, but would suspect the government to centralize more control following a collapse, which would boost government, military, and finance at the expense of local government. (Police State)
on Thu, 04/29/2010 - 12:19
#323955
Pan,
You sir, have nailed it on the head....sad part we are already there, few realize it.
on Thu, 04/29/2010 - 15:32
#324369
Not likely in this country. Too many well armed and pissed off citizens, and the cops and law enforcement tend to be constitutionally conservative.
Also the central government will have a hard time paying people with FRNs, which will cause a defacto return of power to local government.
on Thu, 04/29/2010 - 19:04
#324686
Look at Arizona. Most of the gun toting people I know think 'papers please' is a good idea. (If conservatives can rationalize that they can rationalize anything.) Most of them can be easily manipulated with nationalism. Most of them already believe Mexico is to blame for some of their troubles. If main street gets much worse and people run out of funemployment, they will be happy to blame Mexico for everything... Oh - and the Chinese. If you're a 'Socialist' you already support China!
on Thu, 04/29/2010 - 20:23
#324787
I carry everywhere I go and I don't think it's a good idea (papers please).
I believe you have that exactly backwards regarding gun owners...we don't "tote" guns to kill on a whim...we 'tote" to protect ourselves & family and possibly even you when your "gun toting friends" can't figure out a simple safety catch in time to save you from your preconcieved notion of what a bad "conservative" is or what just a bad guy is.
on Thu, 04/29/2010 - 21:28
#324837
My comment has nothing to do with toting guns really.
I am speaking of conservatives and nationalism and rationalizing the elimination of the liberties of 'others.'
There is always an 'other' we can blame for our troubles. I don't blame conservatives, Mexicans or Chinamen for our troubles. Some people do.
on Thu, 04/29/2010 - 21:47
#324855
i seem to remember the USSR used to make people carry their papers. what is wrong with AZ.
on Fri, 04/30/2010 - 10:27
#325491
Hey, before you go any further down that road, it's called the 4th Amendment: Right to Privacy. No suspicion of crime, no papers. Go catch a real criminal, officer, instead of harrassing law-abiding citizens. I do believe we should have secure borders, and I do believe we should make every attempt to capture criminals, but this legislation is about furthering the police state, not a free state.
Also: http://www.youtube.com/watch?v=knv6nDZX1mc
We the People allow the police to enforce the law and protect our rights.
on Fri, 04/30/2010 - 11:22
#325653
Preach on WW. The blame lies with the fedgov who left the border porous in order to allow tons of cheap labor to flow in.
SECURE THE BORDER.
on Fri, 04/30/2010 - 11:56
#325700
Arizona's law gives no grounds for the idea of "papers please." Instead, only someone who is already suspected of a crime and in custody can be asked about their immigration status if there is a reasonable suspicion that said suspect may be an illegal alien.
There are numerous arguments against AZ's law, and some may even be reasonable, but let's drop the strawman that the law amounts to, "papers please," at any officer's whim.
on Sun, 05/02/2010 - 16:56
#328227
Now, I have heard the bill has been amended, so this statement no longer be true; but the standard to ask for papers is not suspicion of crime, but any law contact with a police officer. That is almost any interaction. "Officer, do you know where there is a 7-11?" "Why yes I do, but I suspect you are illegal, I'm going to need proof of residency status"
This law is unconstitutional due to vagueness.
on Thu, 04/29/2010 - 10:58
#323753
Don't touch gasoline prices or the suburbians will turn into cannibals.
on Fri, 04/30/2010 - 02:30
#325013
I like gold right now, but anyone who thinks we're moving to a global "gold backed currency" needs to put down the crackpipe.
A global gold-backed currency is simply *not* in the interests of the powers that be (ie: the world's rich and political classes). While a gold backed currency is certainly a responsible solution -- it has far too few fans among global powerbrokers for very obvious reasons.
Will a commodity-backed (basket approach) currency ever happen? Probably, yes. But gold is certainly not "it".
With that having been said -- gold is going to $5000 without question. It's a great play right now.
on Thu, 04/29/2010 - 10:56
#323747
You guys don't understand hyperinflation. Hyperinflation is not really, really, really bad inflation, just like hypertension isn't really, really, really bad tension.
Hyperinflation is a psychological affair. It's when the players in an economy begin to reject the currency. When the time comes, i.e. when it becomes plainly obvious to even the dumbest amongst us that the dollar is losing value, investors and savers will begin to dump any assets denominated in dollars. Once the market is flooded with dollars that nobody wants, that's hyperinflation.
I am Chumbawamba.
on Thu, 04/29/2010 - 11:41
#323858
Absolutely. Hyperinflation occurs when the populace loses faith in the currency and will exchange that currency for anything rather than hold on to the cash. This inevitably creates shortages which exacerbates the situation. How people are paid can also make a significant difference. In Weimar Germany the norm was to be paid in cash on either a weekly or daily basis. The shorter the pay cycle the faster the velocity of money, and the greater the number of opportunities to get rid of the worthless cash for something of value. With monthly pay cycles being the norm in most modern economies there would be a significant break on the hyperinlationay process but no doubt the Central Banks will manage to trigger it somehow.
on Thu, 04/29/2010 - 13:46
#324197
Near the end of the Weimar hyperinflation, workers were being paid three times A DAY, and a member of the family had to rush from the factory with the pay to the store to buy food, before prices rose out of reach of the money in hand.
on Thu, 04/29/2010 - 16:21
#324465
Madness
on Thu, 04/29/2010 - 11:53
#323880
+1
Chumbawamba's explanation is better. Let me also state, but not as well: Inflation results from distortions in the money-supply/goods-and-services ratio, with a little bit of risk-adjusted-return thrown in. In contrast, hyperinflation results from a confidence crisis regarding the currency itself, resulting in a re-making of government and society.
on Thu, 04/29/2010 - 16:36
#324489
+1+1
Sometimes less is more.
on Thu, 04/29/2010 - 12:57
#324076
Hyperinflation is a psychological affair, and like all affairs, the trust is gone forever.
on Thu, 04/29/2010 - 14:40
#324306
People are missing the point. As Mr John Williams noted there are more USDs outside the US than within, in the form of savings and used in trade. Once this paradigm shifts and foreigners say enough, then the chickens come home to roost. And the people living inside the US won't understand what hit them.
on Thu, 04/29/2010 - 10:18
#323644
One thing to consider, social security and other programs were enacted by law and can be eliminated by law. If we have high enough inflation what is to stop the politicians from scaling back these types of social programs. Answer: Nothing. What are most pundits calling for now? Reform of SSI and Medicare, etc, our unfunded liabilities. When Bernanke says inflation will not be effective due to social spending being indexed to inflation he is essentially telling congress to get to work on un-indexing it. SSI is toast and is the least of our worries in the face of hyperinflation.
on Thu, 04/29/2010 - 10:40
#323708
The answer to your question is wrong.
It is not "Nothing."
The correct answer is "B. The voters would stop the politicians because the politicians' yearn to have long careers as elected officials."
on Thu, 04/29/2010 - 11:07
#323773
I agree the people are not going to let the politicians make the cuts to ssi, but reality with clash the wants of people and the desires of our politicians.
"With the policy makers in denial, the fiscal situation is likely to deteriorate further, with the result that the magnitude of the permanent fiscal tightening that is required, when the markets eventually demand an immediate fiscal adjustment, will keep on rising."
The market will demand the opposite of what citizens and politicians want.
on Thu, 04/29/2010 - 12:41
#324026
No. This is reality. . .
The boomers are going to be, by far, the largest voting block out there for some time to come. They are not going to let go of their social security benefits period Ain't going to happen. For many of them, it's going to be the only thing between them and destitution. Same with the Federal medical programs.
on Thu, 04/29/2010 - 21:22
#324831
The Boomers have already given up half of their socialist security benefit and didn't notice. Socialist security isn't tied to real inflation. It's tied to the CPI which has been distorted for a couple decades now. Real inflation has been roughly double the CPI. Socialist security recipients would now be receiving double their current benefit if the CPI had been properly calculated.
on Thu, 04/29/2010 - 22:35
#324899
exactly.
www.shadowstats.com
on Wed, 05/05/2010 - 16:09
#333267
When you say us boomers aren't going to "let go" of the Social Security funds we and our employers paid in (and some of us paid in for you snot nosed whiners parents and your grandparents and our employees so they could have a retirement they earned) just WTF do you mean, child?
on Thu, 04/29/2010 - 12:24
#323974
Carl,
You assume we will have POLITICIANS, as we have known them from inception...........something wicked this way comes.
The likes of which, no one has seen ever..............
on Thu, 04/29/2010 - 23:29
#324943
- something wicked this way comes.
http://www.youtube.com/watch?v=_CnGRnz9Fi4
on Thu, 04/29/2010 - 10:41
#323712
I'm a boomer nearing retirement. The vibe I get from young people is that they aren't very fond of us old geezers, and they certainly aren't happy with the notion of working their asses off so we can enjoy comfy "golden years" of leisure, relaxing and eating bon-bons.
Final Soultion II?
on Thu, 04/29/2010 - 10:58
#323750
Soylent Green
on Thu, 04/29/2010 - 10:59
#323756
When you are no longer capable of contributing, I'd think you'd make the decision that is best of all of us.
(Moving in with a child and transferring your wealth to them before you blow it all on medical bills late in life.)
on Thu, 04/29/2010 - 11:11
#323768
RW,
I'm in the younger crowd, and I used to blame the older crowd. But we are all in this boat together - we have all been lied to by the gov't. "So what's new?", many ask.
THAT. That, right there. Complacency. Apathy. No matter what socioeconomic background you come from if those words come off your lips YOU are to blame. Not just any Boomer - and you have Boomers blaming Boomers. No, it's the selfish among us, in all age categories. The ones that would rather lay under tank treads than to take back their birthright.
And I'm surrounded by them, these slaves, "What's new?"
It makes me very angry. They are too intellectually lazy to realize they are the problem and are looking for a scapegoat so they can feel better. Bullshit. Doesn't matter the age. They are the ones that would turn you in for a reward if one was offered - and they are many.
on Thu, 04/29/2010 - 11:48
#323869
I am of the "younger" generation, and while the baby boomers make me sick, it is less for their own greed and avarice then it was for trasnferring their greed and entitlement to the next generation. I am 32, I don't think everyone my age is a braindead zombie consumer, but a lot are.
I do notice that the 25 and younger crowd (seems to have been a shift after Columbine) grew up being told they were special by every parent and teacher, they deserve to be rich, not to work hard, so on and so forth. These special, gold star on the homework earning punks will be our downfall. Their materialism/consumerism is beyond disgusting.
That being said, I am sure there are plenty of good, down to earth kids out there. But the whole suburban-soccer mom driving hummers complex needs to go away.
on Thu, 04/29/2010 - 11:54
#323881
Can't we all just get along?
Boomers have kids, young adults have parents.
Lotta talk around here of jubilee and resets, not really fair to people who've saved all their lives, now retiring.
And retirees, please agree to reduce your pensions to 5 times minimum wage.
Let's not let TPTB divide and conquer us all.
on Thu, 04/29/2010 - 12:00
#323896
Just b/c I dislike them, doesn't mean if they are willing to work to solv things I would disdain them. They will just be taught harsh lessons. They will extend the extend and pretend.
on Thu, 04/29/2010 - 12:48
#324048
I wish even half of the Americans your age were as open-minded and clued-in as you are.
Sadly, most of them of ANY age are not.
on Thu, 04/29/2010 - 13:00
#324088
Well said, along with your previous comment. I have to say, though, that the boomers at least have a clue how to deal with hard times. They will be pissed to see their "promised benefits" turn into fairy tales, but they at least know things for the most part. They may be able to reach way back into their memories of childhood and remember tilling a garden, or building a shed for example. Members of my generation (I'm 28)? Not a chance. The leechfuck mentality is large and in charge, and when SHTF, they will be the first to totally lose it and start eating each other. My $0.02, adjusted for inflation.
on Thu, 04/29/2010 - 13:27
#324148
When I was in my early teens we were listening to Jim Morrison sing things like "Your ballroom days are over baby night is drawing near" whereas now the youngsters are listening to like Miley Cyrus singing "It's a party in the USA." Boomers like myself sensed when we were young that a huge trainwreck was on the horizon, although many of them forgot about it during the credit expansion which just ended. The kids around today don't seem to have any sense of the monster lurking around the corner. Perhaps it's better that way.
on Thu, 04/29/2010 - 13:39
#324182
The Doors: American Night
on Thu, 04/29/2010 - 21:50
#324858
becuase their boomer parents spoiled them and didn't teach them a damn thing about resisting or anything else valuable from the 60's. WORST PARENTS EVER
on Fri, 04/30/2010 - 01:51
#324997
I would disagree. Depression is up highly along with drug abuse and other forms of abuse amongst my generation. Its a symptom of what I like to think is a sense or feeling that something isn't right but having to pretend that it everything is ok while being spoon feed double speak in the media and at school.
My generation is the one that is going to wake up, at least the ones of us that don't kill ourselves first.
on Thu, 04/29/2010 - 13:35
#324156
= mass starvation
I'm 30, don't plan on ever "retiring", and trying to stay sober enough to read books that will help me run a goat farm I can pass on to my future kids.
Who knows if I'll even be alive in a year. It's not a deathwish I'm talking about, but Mako's tanks. Economic collapse = war.
ZHers will see Au go parabolic and think "Oh shit!"
Less than a week later gas will be $5+ and your average slave will think "Aw shit."
---
Check out our own Galileo:
http://armstrongeconomics.files.wordpress.com/2010/04/armstrongeconomics...
I'll be long gone before then. Anyone else watch Au price Sundays @ 1800 Eastern when the Asian markets open? I've read that's when Asia will scramble before the Euro/American markets can react.
on Thu, 04/29/2010 - 16:32
#324483
"Anyone else watch Au price Sundays @ 1800 Eastern when the Asian markets open? I've read that's when Asia will scramble before the Euro/American markets can react."
Gold Run!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! to the moon, Alice! to the Moon!!!!!!!!!!!!!!!!!!!!!!
The end is near... Repent and Spread the Word!!!!! the rapture is upon us!!!!!!!!!!!!!
on Thu, 04/29/2010 - 21:09
#324819
I have a weekly alarm set on my cell for 4:50 pm Sunday (EST) for that exact reason. I'm pretty surprised others partake in the same "Sabbath Ritual" that I do...
on Thu, 04/29/2010 - 22:40
#324905
...you are not alone. i am an auddict...
on Thu, 04/29/2010 - 21:55
#324860
ww, chill a little bit. things suck and may go to shit, but don't give up. hell i got laid off today, and i thought, nice, now i have more time to agitate. the fact i hated my job and my wife is doing ok helps.
i hope we all can move from simply blogging to action shortly. civil disobediance, and it will take years. if that doesn't work, we can bring it to the next level.
on Fri, 04/30/2010 - 11:50
#325590
LOL. "Hands in the air! Step away from the keyboard...slowly!"
I'm praying for a sharp collapse as opposed to gulag and watching the skies for predator drones.
http://publicintelligence.net/drone-aircraft-are-patrolling-u-s-cities/
on Fri, 04/30/2010 - 00:04
#324957
I too am among the younger posters on ZH (27), and for what it's worth there seems to have been a paradigm shift among some (~25%) of my "critically-thinking" peers. If 10% realized that hard work --> luck before, the fact that many of us are (i) "underemployed" and (ii) not qualified to suck on the gov't teat has put us in a tough spot; the sort of tough spot those who survivied the 30s adapted to; where any opportunity to apply hard work and reap success was welcome ... I've shed my "entitlement" mentality and am fucking ready to work, it's just too bad there don't seem to be many opportunities in our collective future. And that I don't have $hundreds of thousands to buy sacks o' PM and go all survivalist.
Any chance we just have 20% interest rates for 10 years and muddle through somehow?
on Fri, 04/30/2010 - 11:06
#325602
Get a 1 year food supply (#10 cans), a Berkey water filter, and a good rifle before worrying about PMs.
www.waltonfeed.com
www.berkeyfilters.com
www.bushmaster.com/index.asp
---
I'm ready to work too; more sun and enjoying the sweat of my brow.
on Thu, 04/29/2010 - 12:33
#324002
Roger,
Been retired for 6yrs,(not real close to SSI age yet) paid in for 35 yrs, same as you, more/less.
Did we LIKE it?.No...............but,we being law abiding, and patriots did what was done before us.We paid for our parents, and some of our Grandparents.........SSI/Medicare.........even illegals.
NO ONE who is younger has any right to bitch..............we ALL paid some, A LOT, as a matter of fact,depending on your income years.
Final Solution II IF it doesn't get overturned, has already happened, the Health Care Bill.
We got Fucked.
on Thu, 04/29/2010 - 16:39
#324497
When you pay 7 figures or more... 2007 forward (as well as prior, I guess) in taxes a year... well lets just say I have every right to bitch. You old fucks didnt reign in the Lobby or Government Spending.... but now, you have a plan? balme the younger generation(s) becuase ya'll didnt do a fucking thing to stave off the print and spend cluture...
The young people came after you... and shit was fucked up because of your generations in-action... becuase of your generations ignorance.... becuase of the entitlement programs ya'll had to have....
How is it the Young Whipper Snappers fault? Ya'll where driving the fucking car when it went off the road? Being locked in a child seat in the backseat while you fuckers had the steering wheel in your hands does not make it our fault you old fart!
on Thu, 04/29/2010 - 19:15
#324702
you really have that much room to judge all old folks? Alot of us had our nose to the grindstone. You would not be alive today were it not for YOUR own old folks. 59, paid in and dont expect to get it back. What would you have the average man do different considering his education and cultural conformity and add a touch of lies and manipulation from the TV.
on Thu, 04/29/2010 - 21:58
#324863
hahaha.
for real, all these hippies changed to yuppies and taught their children to be brainless consumers.
boomers, save your children by choosing to become fertilizer when you drain our country dry with entitlements.
on Thu, 04/29/2010 - 22:32
#324894
I am (barely) one of those Boomers as well, and believe me, the mindless consumerism and shallow materialism disgusts me at least as much as it disgusts you, probably even more, and I simply cannot relate to that lifestyle or most of my "peers". It was partly for that reason that I moved to Alaska years ago, to at least somewhat get away from the soccer-mom-commute-three-hours-daily-McMansion-stressful-office-cubicle-job-vacation-in-Las-Vegas-and-Disneyworld-keep-up-with-the-overmortgaged-Jones-BUY-BUY-BUY! kind of lifestyle. To me, it is not living at all.
on Wed, 05/05/2010 - 16:22
#333288
hahaha, for real: c'mon over to Chiangmai and just try to make me into fertilzer you little turdmouth piece of dung.
This old san Francisco hippie/Biolermaker will haul you out into the airport parking lot, spank your little bottom and put you right back on the plane.
And I don't collect SS yet, fool. And I'm a middle boomer smack dab. More than a decade away from collecting, since they changed the laws on us agter we paid in.
You have any clue the amount of money for matching SS funds for young assholes like you?????
It's just like you going to your bank and trying to withdraw money from your savings and having some kindergartner tell you "sorry you old 25 year old, we spent it on diapers and bottles, now FU off and die."
Trust Fund, look it up. What kind of people are you? Your parents did a wonderful job.
on Thu, 04/29/2010 - 12:37
#324014
Obamacare. LOL
Seriously, I don't think many of us actually expect to collect SS anyways.
on Wed, 05/05/2010 - 16:25
#333293
Then you are stupid with a capital S. Sure, just let the honest bankers and politicians take away your money. Jebus.
Meanwhile I suppose you just lurve those thousand or so golf courses world-wide you support for DOD???
Cut the damn DOD budget, keep your filthy claws off MY money. "Cindy.'
on Thu, 04/29/2010 - 12:42
#324028
RW they young uns need to look at their selves the computer geeks the financial 30 years olds and their derivatives spawned in hell .
these know it all raised on a meal of Keynesian mush , litter the countryside.
they still do not get it. . case in point the couple yappers zit faced unemployed ... that monologue a script of fancy here on zero hedge .
the young uns have feed themselves to the lions
on Thu, 04/29/2010 - 16:26
#324472
Yep! "CASH ON DELIVERY!" for everything... we should not change our fiat monies to gold backed currency... we should all just use Gold as money.. use the physical as money, like in the good old days...
***** "There is about $829 billion dollars of U.S. currency in circulation; the majority is held outside the United States." *****
http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html
$829b equals 75 million ounces of Gold (ish)...
Gold supply & demand balance, tones Supply2008 2009 2010 Mine supply2,356 2,432 2,435 Scrap recycling1,185 1,408 1,500 Hedging33 38 20 Central Bank sales298 351 260 Total supply3,871 4,229 4,215 Demand Jewellery fabrication1,976 1,798 1,600 Legal tender coins201 215 201 Electronics422 366 390 Other end uses313 284 250 ETFs320 576 700 Central Bank purchases191 380 250 De-hedging374 229 120 Total demand3,796 3,848 3,511 Residual (Surplus/Deficit)75 397 704
Thanks be too... "Dr. O" over at seeking alpha for the quick numbers (not sourced and sited I might add, but whatever that does not seem to move most people here, there or anywhere..).
http://seekingalpha.com/instablog/282191-dr-o/46394-gold-2010-projected-supply-and-demand-a-tough-call
on Thu, 04/29/2010 - 20:23
#324448
Rw:
i had a dream.
it took place sometime in the future when all of this ugly stuff was coming to pass. old folks, unless they had a huge hidden stash of cash, were in big trouble. done in by failing body parts and rising prices, they had become the most vulnerable part of a destitute, angst ridden vox populi.
for those dependent on the govt's entitlement programs for their needs, all of the choices were bad. their social security payments barely covered the cost of the cat food they were forced to eat and the disgracefully expensive, inefficient soviet style health care system available to them solved none of their medical problems and only prolonged the suffering and pain. for many, life wasn't worth living.
fortunately, entreprenurial capitalism had a solution and a dynamic, wildly profitable, new era industry was born.
it was called VE, or, virtual euthanasia.
technologiccally complex, yet simple at the same time, it made tons of money and solved a bunch of difficult problems by offering old folks, or even young folks with terminal health problems, a quick, simple, painless way out. there were many versions of the same business model but the most successful catered to those who had some disposable assets.
the process was very simple. a "cruise" was booked, and a destination chosen. not a port of call, mind you, but instead a very personal path to the other side. you could go out in ancient rome, or the city of lights, or in hawaii or tahiti, or on the space station, or a himalayan trek, or as a famous celebrity or a dissolute, pampered paris hilton-type in a ritzy penthouse suite with liveried servants, or with st paul on the road to damascus, or in the company of the buddha or mohammed or at an x-files party on the mother ship with marilyn and elvis and jfk.
all you had to do was have the money and the choice was yours. after that licensed, trained personnel took care of everything. once the cd was loaded, the head set on and the iv drip inserted, the outbound patient simply had to lay back and enjoy the ride.
of course the govt in it's wisdom, having realized the need being filled and the magnitude of the problems solved, finally succumbed to the enticements of industry lobbyist's and agreed to susbsidize the enormous costs associated with the disposal of the last remains of millions of morts.
thankfully, via that decision, yet another new era profit center was born
on Wed, 05/05/2010 - 16:26
#333298
I had a dream too: your lips, my ass.
on Thu, 04/29/2010 - 17:23
#324572
Hayek predicted the same thing back in 1960 in "Constitution of Liberty". He said, combine a pyramid welfare scheme with not enough new workers paying in, then imagine the older folks trying to legislatively squeeze the blood and sweat out of fewer but younger and stronger people who make up the police and military, and you're looking at concentration camps for the elderly.
on Thu, 04/29/2010 - 22:25
#324886
I raised my kids to be pro life because it's the right thing to do, and, because I said to them: "If we had the right to dump any one of you down the hospital garbage disposal or put your remains in a hospital trash bag, then one day, since we taught you that life is perilous and capricious, your generation will thinking nothing of pushing usinto the incinerataors. You, dear children, will not do this. You will defend life."
And, they do. Thank God.
on Wed, 05/05/2010 - 16:13
#333273
Funny. Where were you hiding when Reagan tripled our FICA so their grandparents and parents could collect SS they never paid into?
Ain't asking any of you clowns to give me anything. Just return what I paid in, and keep the damn interest to buy your damn Starbucks, okay little ones?
Don't want shit from you, ever. And don't come looking for more handouts. Or jobs. Whiners, the lot of ya..
on Thu, 04/29/2010 - 21:27
#324836
Any program that is tagged to inflation, ie. SS benefits are based on an annual basis. Hyperinflation is daily, therefore, any adjustment in benefits will sorely lag the effect of hyperinflation.
By the time adjustments are made, the whole economy will be in shambles.
on Thu, 04/29/2010 - 12:44
#324037
someone who sees hyperinflation is not a cultist, but see reality ,
and buys some gold and silver
on Thu, 04/29/2010 - 16:15
#324443
http://thisis.peakdoom.com/content/hyperinflation-debt-repudiation-device-no-according-ubs-yes-according-recently-declassified-
They stole this from Tyler... immitation is the most sincere from of lying to people about the content not being yours... I mean flatery...
The end is near! ...... The end is near!! .......... The end is near!!!
Spread the word the rapture is upon us... buy gold, cause Jesus would!!!!
But seriously?! ummmmmmm.... peak afforadable oil, will cause a rise in all things... with that said, inflation is a coming.... or would it be just a world wide market adjustment?
This one is great too....
U.S. Army Trains To Confront Tea Party ‘Terrorists’
Military personnel blow the whistle on exercise which involved troops taking protesters to concentration camps
http://www.prisonplanet.com/u-s-army-trains-to-confront-tea-party-terrorists.html
How many troops do we have at home now? enough to take control of a tea party? Palin could swim to Russia, its right across from her house... Too get away.
on Thu, 04/29/2010 - 18:51
#324679
Silly government cultist, CPI is for tricks. If you believe that CPI actually reflects any true measure of price inflation then I have some Alt-A Option Only Arms that I can sell you.
CPI is regularly and overtly manipulated in its composition. CPI in no way reflects the overall reality of price inflation of the line item expenses the crowd drawing social security relies upon. Increases in the social security payments are tied directly to this government rose-colored glass measurement. To say that wages of the social security crowd will keep up with true price inflation is like claiming that we are fighting over in Iraq to secure our freedoms while our freedoms are being taken away because of the war in Iraq.
Let’s not forget about that little issue called insolvency in the originally proposed “voluntary” (now mandatory) government sponsored, deferred payment retirement plan.
Now if you excuse me, I have some Monte Calme Yellow and Virginia Gold #1 tobacco seedlings to tend to. You should apologize for irritating me enough to respond to such ignorance. It is a baseless attack against those that believe the expansion in money supply is just about being done abused by the cronies of capital hill. That money just may well make it into the hands of those serfs chasing after the last goods of any value to them, like food and energy.
on Thu, 04/29/2010 - 09:10
#323496
I thought it was tied to an index that is complete bullsh*t. Am I incorrect?
on Thu, 04/29/2010 - 09:10
#323498
That's what Rogoff argues about in his book as well: that despite very high inflation that is supposed to reduce debt burden, public debt actually grows. Yes, monetization isn't a solution, but that unfotunately doesn't stop policy makers from trying. That's why hyperinflation is just another form of bankruptcy, only a hidden one.
on Thu, 04/29/2010 - 09:28
#323530
Not if you mess with the inflation numbers...which is already being done. We all know that inflation is a lot higher than 2% (or whatever other fictional number is given) which the gov't claims right now. So no, inflating wouldn't be "pushing on a string"...
on Thu, 04/29/2010 - 09:55
#323588
Indeed. But how to check?
on Thu, 04/29/2010 - 10:54
#323741
www.shadowstats.com
Well worth the subscription.
on Thu, 04/29/2010 - 09:41
#323555
They are tied to "official" inflation, which excludes most of the things that are most subject to inflation, namely food and fuel. Remember, in a hyperinflationary environment, 90% of incomes go to food. What good will "inflation" indexing be to seniors at that point?
on Thu, 04/29/2010 - 09:45
#323571
2 things: CPI is under-reported, and Treasury could do a dollar devaluation (Christine Rohmer is on record being in favor of a devaluation in cases as this). I think we'll probably see both obviously.
See that's the thing where the deflationary people are nutty, all it takes is Timmy to come out and devalue the currency by 75% one Saturday morning. Deflation is a myth so long as you have a printing press or control of the currency.
on Thu, 04/29/2010 - 11:03
#323748
Yours is a common mistake made by inflationistas. Why hasn't the Fed pursued even higher inflation before this to completely avoid this problem in the first place? The answer lies in the role of the dollar. The dollar is the world's reserve currency and it earned that status by presenting itself to the world by being relatively more stable than other currencies. As the world's reserve currency, it confers special powers upon the bankers who control it over the entire world. Inflation allows these bankers to impose a subtle tax on the entire planet.
But hyperinflation or even just extreme normal inflation brings out all those other countries who want to move off the dollar standard. Moving off the dollar standard destroys the access of those bankers to their "free" money imposed by being the world's reserve currency.
There is a reason that the Fed "aims" at a 2%-3% inflation rate. That has been tested and found to be the rate most acceptable to the rest of the world before the level of unrest gets so high that they throw out the dollar as the global reserve currency.
So the Fed is stuck between a rock and a hard place. This is why the Fed has been unable to devalue faster than its competitors already. To do so would force the issue, cause the loss of global reserve currency status, and end this hidden benefit to the bankers who control the Fed.
The question I ask inflationistas is this - do you really expect these bankers to hyperinflate the dollar just to allow the very people who owe them money (us) off the hook more easily? The inflationists believe that the government is in control of the money supply. Nothing could be further from the truth. The US government ceded its control of its currency to the banking cartel that essentially wrote the Federal Reserve Act. Geithner, and Paulson before him, and others before him are all part of the financial class, not the elected political class. And the elected political class in the United States now clearly serves at the discretion of its financial masters.
This is why the few outspoken politicians who really understand the issue, like Ron Paul, keep demanding we audit and then abolish the Fed. And yet the Fed has, for nearly a century, avoided any sort of audit by us, the people of the United States. Even the Dodd financial "reform" bill contains language that would neuter the recent House bill sponsored by Ron Paul and others to audit the Fed. You don't hear the mainstream media talk about that though, do you? Only places like ZH or other financial bloggers who see through the mess.
Timmy won't devalue the US currency unless the dollar loses its global reserve status first. And at that point, the bankers won't care if we devolve into a third world country. They'll be busy trying to "capture" the new global reserve currency in some new web of deceit and we'll be forgotten and left to rot.
Instead the only devaluation of the US dollar will be paced to match the devaluation of other currencies but not to exceed it. And down that path lies deflation for the US (relative to the rest of the world) and hyperinflationary crashes followed by austerity driven depressions for the rest of the world, with the dollar still sitting at the top of the heap.
P.S. I have personal doubts that the bankers can control things in the manner they envision but I do believe that the above describes what they think they can get away with. I doubt the results will turn out quite like they expect though.
on Thu, 04/29/2010 - 11:27
#323830
greyzone, thank you. Well said. I have never before been an activist. But i see a new trend in myself. The willingness to give up what i am and have so my children can have a fair and honest life.
on Wed, 05/05/2010 - 16:39
#333329
Interesting. How very moral and upstanding of you.
Us boomers only dug the well, built the buckets, stored the water, so our grandparents and parents, that didn't pay into SS, could live a decent, human life.
No, having 25% of my take home pay for decades wasn't "sacrifice", oh no. We're "greedy" consumers now. You know what I think?
I think this comment section is full of upper-income children that never worked a day that made them sweat in their entire worthless and unproductive lives. I think I'll call them the Blankfein" generation: worthless conmen and useless eaters.
We worked more than any other country's workers, more productive, less vacation, so our kids (yeah, we have and had small children too, what a shocker) and our communties could have a high standard of living. We. Made. Stuff. The. Entire. World Craved. YOU????
Meanwhile asswipe Yuppies and GenXers sit around playing computer games and whine about having to "support us."
You don't support shit: we dug the well, you only want to drink the water. As usual.
How's that "Free Trade" working for you now, all you unemployed bozos?
Excuse me, I have a 24 year old angel waiting to go have an Erdinger Weibeir and pizza at the Night Bazaar. Have a nice day, children. And yeah, you WILL pay me back the money I paid in, capice? Or you shouldn't have stolen it in the first place. Or allowed your RepublicanDemocrats their filty hands on our Trust Fund. Now, YOU WILL PAY. And pay, and pay.
Bwahahahahahahaha.
on Thu, 04/29/2010 - 11:27
#323834
+1. Well written and I agree with future US deflation.
on Thu, 04/29/2010 - 12:48
#324047
Reinhart and Rogoff's 800 years of financial history argues against deflation. There has not been one instance of sustained deflation in world history. The moment it starts (as in the 30s) it can be immediately stopped in it's tracks through devaluation or printing. Also, any time a government tries to start inflation, it's hard to put that genie back in the bottle. Risk of overshoot is high. M3 has tripled recently; we already have had inflation, it's just a matter of where it finds it's home. I'm not claiming hyperinflation is a foregon conclusion, just that we will have pretty high inflation, even Buffet says that. My money is on historical precident. I just hope we don't end up in a World War or violent revolution over it.
on Thu, 04/29/2010 - 12:54
#324059
I agree with you, SS --- ALL historical precedent is for profligate, heavily-indebted, bankrupt governments to resort to monetary expansion and currency devaluation. And you are correct in pointing out that there have been hundreds if not thousands of examples of inflation and hyperinflation in world history, and maybe ONE example of (short-lived) deflation.
Those who still believe in the chimera of deflation under a fiat currency regime want us to believe that "this time it's different!" Sorry, I am not buying it.
on Fri, 04/30/2010 - 02:34
#325016
Inflation disappears into assets via efficient capital markets. It shows up in China because they do not have them yet. SPY = CPI
on Thu, 04/29/2010 - 12:53
#324064
Interesting perspective on central bank strategy, Greyzone.
I have strong doubts this can be pulled off because of phenomena like "contagion" and "the cascading effect."
on Thu, 04/29/2010 - 13:17
#324126
[I doubt the results will turn out quite like they expect though.]
I like your line of thinking.
So. What do you expect? If the reserve status is maintained through deflation, and the rest of the world gets 50% real inflation, do we trigger massive defaults instead? Does dollar-denominated debt become simply too expensive to maintain?
on Thu, 04/29/2010 - 14:16
#324264
Look back and read what Cecil Rhodes and others like him wanted. They didn't especially try to hide it. I won't spoil the surprise for you but the answer is right there in his own words, I think, stated candidly and bluntly.
on Thu, 04/29/2010 - 14:33
#324294
And there it is. We never really won the Revolutionary War. Well, it didn't last as long as we thought.
on Thu, 04/29/2010 - 13:28
#324152
Yes, the fed is all about the well-being of the big banks. But the big banks need to stop the real estate deflation which is imploding the value of the mortgages which they hold. So the fed will push and push to the limit to stop that deflation. Heck most banks would be insolvent now if they were not marking values to insanity. The problem is that the fed has demonstrated that they are not capable of finding the correct level--they have invariably overshot in the past. With the US now the world's biggest debtor nation, and the populace clamoring for the free lunch, do you think that confidence in the $ will not collapse when we blow by 10% deficit to GDP ratio (which I think we already have if you add Fanny, Freddy and other commitments/losses to the balance sheet.)
on Thu, 04/29/2010 - 14:06
#324240
Hyperinflation is a choice? It was my impression that it was the unintended result of a government trying to slowly debase the money...people lose confidence in the money and off it goes into a hyperinflationary explosion.
on Thu, 04/29/2010 - 10:09
#323620
Are they tied to inflation or the Governtment's inflation numbers? two different things in my mind. In any case, those programs will soon be unpayable, and therefore cancelled in my mind. the remaining debt (90% of GDP now) will be reduced through inflation and high rates, although I would not expect it to be reduced enormously through inflation because the Avg. marurity is so short, and rates will pick up with inflation, wether reported or not.
on Thu, 04/29/2010 - 10:11
#323624
Don't you mean they use core CPI as the metric to increase those programs through inflation. Isn't core CPI wrong?
on Thu, 04/29/2010 - 10:26
#323665
Of course the government determines what is and isn't inflation -- so no worries!
on Thu, 04/29/2010 - 10:29
#323679
. . .so- indexing is carved in stone? Your assumption is that if the USG decided to inflate its way out of its debt problem that it would keep current policies "as is" regarding entitlements. If you accept that the USG "can and will" change laws and programs as deemed critical to survival for the country- then you will see that indexing can be tossed out w/ nary a second thought given
on Thu, 04/29/2010 - 14:29
#324285
+666
on Thu, 04/29/2010 - 10:30
#323681
That is essentially not true, and could very well be even less so in the future as the federal government continues to gimmick and fiddle with the official statistics.
Government benefits are not tied to "inflation" per se, but are actually tied to the B(L)S-generated CPI, which as every pumpkinhead knows does NOT reflect the real, actual rate of rise in the cost of living, and is currently reflecting less than half the real rate of price inflation. Given this, and likely further "hedonic adjustments" and other fudge factors, the government can inflate away while still claiming that "core" inflation or other such spurious statistical contrivances are in fact not galloping out of their control.
on Thu, 04/29/2010 - 15:53
#324393
"You're of course 100% correct. But the hyperinflation cultists are not known to be open to common sense."
Yes, but you are expecting politicians to use reason/deductive logic. To them, the line of thought goes like this:
Need Money=>Borrow Money=>If no one lend us money=>Print money
The long term consequences of such actions will be ignored. The only thing that will matter is NEED MONEY.
It is what I like to call "Cave Man Economics".
on Thu, 04/29/2010 - 19:28
#324723
Nope. Social Security is indexed to CPI, not inflation. So the gubment can inflate it all away and still won't have to increase benefits.
on Wed, 05/05/2010 - 16:42
#333337
Your on the wrong comment board: this is Newt Gringrich fantasyland. Facts don't matter.
on Thu, 04/29/2010 - 19:33
#324729
Keep in mind that social security payments are inflation adjusted, but inflation adjusted per the Bureau of Labor statistics "statistics"! Also keep in mind that if S.S. payments kept pace with the REAL inflation, they would be 70% larger TODAY! Makes one wonder just how far the bureau of labor bullshit can continue to skew the data. Looks like they've been diong a pretty good job of it so far.
on Thu, 04/29/2010 - 22:28
#324890
..."if there is true commodity/staple inflation, but the government says officially there is no inflation, are social security checks still adjusted up for the real inflation?"
answer: ...last year they weren't...
on Thu, 04/29/2010 - 22:35
#324898
ElvisDog - "If inflation goes up, the benefit levels go up canceling out any benefit from the inflation."
Not really ED. I have news for you. The BLS makes up the number. The spread between the real number and the published number will grow and work out great for the PTB until it doesn't.
Watch official inflation jump in September after they put out a "happy" number in August when they set the annual adjustments to indexed entitlements.
What did Elvis say about a dog that can't hunt?
http://www.youtube.com/watch?v=zU4i5gyFK1s
on Thu, 04/29/2010 - 08:59
#323474
We need to roll back budgets to 1980 levels. The pain is here, but politicians are working to ensure there is no gain. We already have the 20% unemployment everyone was so afraid of.
We have to eliminate entire functions of government--imperial legions in Europe, enormous subsidies, chunks of entitlement programs--and share a nice 20-30% haircut in those critical programs that remain.
We need to measure and enforce appropriate levels of government spending and taxes as shares of what GDP REALLY is, net of stimulus and fraud. That's a much lower level of sustainable government activity.
We must all put our favorite critical/ideologically favored government activities on the table to be first in line for cuts or elimination, from guns to butter, as the required ante for credible participation in the debate.
There. Real politics, anyone??? Anyone???
Sheesh. It's not that hard.
on Thu, 04/29/2010 - 09:09
#323494
The issue is not that there are no solutions to the problems we face, the issue is that the solutions do not favor the people who are in power.
If TPTB wanted the problems to stop, easy enough, declare a jubilee. They won't do that though because untold countless debt slaves would be able to act freely, and impair their course of empire.
We could talk all day about reasonable fixes and solutions, but it will all come to naught while TPTB keep their boot on the throats of the nations and peoples of this world.
on Thu, 04/29/2010 - 10:24
#323653
To a certain extent I love the naivete. Tyler/Dan, David & Dylan, if representatives of the mainstream view are starting to "grasp" (in actuality, they knew all along) & communicate the true nature of our situation, what does this really mean?
LOL. The power-elite are simply prepping the herd for the next take down, this time in the public debt arena. First, the so-called fringe began whispering, then it entered respectable mainstream quarters while still quietly percolating along. When the underlying facts begin to truly hit the major MSM outlets and seep into public consciousness, you can be sure the appropriate positions have been secured long ago.
We now know for a fact what happened in 2007-2008. Keynesien spending cannot save the public sector - it's just a PR stunt to provide cover & justification for the final tapout of the public side.
As CogDis so rightly notes, question everything that occurs. We are being played by experts. Know the score and you can sing right along with the masters.
on Thu, 04/29/2010 - 12:01
#323897
What key is "Gold, bitches..." in?
on Thu, 04/29/2010 - 21:16
#324824
AAA+
on Thu, 04/29/2010 - 17:07
#324543
A jubilee? Really?
I now better understand why so many people are inclined to depict credit emission as money printing.
on Thu, 04/29/2010 - 22:40
#324906
++ Many Many. This is something a guy like KD can never see.
on Thu, 04/29/2010 - 10:27
#323666
How do you propose to control the enraged government-dependent mob while you are implementing your plan?
on Thu, 04/29/2010 - 10:40
#323704
TV and dope? Same as it ever was.
on Thu, 04/29/2010 - 13:22
#324136
They can roll out the "heavy drugs" on short notice. Notice that Arizona just took the first injection.
on Thu, 04/29/2010 - 12:41
#324027
Jim In Mn,
"We have to eliminate entire functions of government".
That will never happen, not without removal by physical force.
on Thu, 04/29/2010 - 13:24
#324141
Somebody has to say it. I prefer controlled demolition if the building's gonna go anyways....
on Wed, 05/05/2010 - 16:45
#333345
Just pay me back what I paid in, not counting what I paid in for my 12 workers for 10 years, okay? Nothing about "entitlements" there, mister. MY money. Not yours to decide what to do with it.
Keep the interest, I don't need it. But I will collect every dime I paid into this "Trust Fund, count on it. Just like I expect to withdraw every dime in my savings, you? Anyone?
on Thu, 04/29/2010 - 09:01
#323477
If CITI is issuing this report, you can bet that the US Government is now on board with messaging the 'transition.'
They're telegraphing hyperinflation here. Maybe they're finally beginning to tell the truth? (basically alerting the passengers of the Titanic that the ship is sinking). Or, maybe the bankers are trying to trick people into buying assets - one last time - so they can sell their remaining shares before it all blows up.
The bankers, regulators, lobbyists, central bankers, and government officials who created this problem are now in Mauritius, Costa Rica, Monaco, Switzerland, Virgin Islands, Channel Islands, etc ... They're going to watch the USA burn to the ground on CNN.
on Thu, 04/29/2010 - 10:26
#323664
Had the same thought. Can't believe the mafia let him write this. Doubt they're motivated by honesty. Like your reverse psych theory. I know you can't afford this but you aint seen nothing yet
on Thu, 04/29/2010 - 09:01
#323478
What do you think the US (& all other) governments are going to do, sit back & let the current, & impending, depreciation of bank assets take its course? a.k.a. a collapse of the money market?
Anyway, the REAL crisis is in the gold market, so much gold promised, so little to deliver. Look at the gold/UST ratios, about to hit new highs.
Backwardation comes closer. Gold will take NO prisoners.
on Thu, 04/29/2010 - 09:04
#323482
Its all nonsense. Lower interest rates.
As for bullion, a rise in the bullion price is a mitigating factor, as it prices in currency devaluation and soaks up liquidity.
on Thu, 04/29/2010 - 09:07
#323486
Above all else, I still don't understand how we got to the point where failure is unacceptable. That is the real reason why all the central bankers are taking us down the road to ruin. And I don't see how the Fed has any chance to inflate away the problem. We are in a massive deflationary spiral that will stabilize only after the debt overhang is written off and the economy gets back to supply/demand equilibrium. The madness of Fed policy is that they create inflation in isolated places (e.g. look at gas prices) while allowing the rest of the economy to stagnate, with no job or wage growth. That's the problem with ZIRP.
End the Fed!!!
on Thu, 04/29/2010 - 09:24
#323524
+1. End the private banker cabal! End the FED!
on Thu, 04/29/2010 - 09:50
#323576
The private bankers never disappear. Eliminate the Fed will do nothing as long as human lend and borrow at a rate of compounding interest. These systems have been blowing up since the dawn of Man before there were things called banks or central banks.
I can be bank tomorrow, lend 10 gold coins to 10 people at 10% compounding interest. I don't even need a license.
on Thu, 04/29/2010 - 10:11
#323622
Nothing wrong with private bankers, the more of them the better, but when it comes to the Fed, what's wrong is the moral hazard that is created by its status of the lender of last resort. If bank goes bust, it should go bust, not bailed out by the central bank through the multiple liquidity programs. Oh wait, you may not need a central bank in that case.
on Thu, 04/29/2010 - 10:31
#323678
The whole thing is a moral hazard, because at the end of the line someone is going to have to be liquidate once the credit system maxes out and it doesn't have to be the one that started the whole thing. Been like this since the dawn of Man, you don't need a Central Bank, humans have been doing it for 1000s of years.
Build a system where people lend and borrow at a rate compounding interest, it's great until it doesn't... if you are lucky 60-80 years or a generation... unfunded liabilities which are alive at the collapse will have to be liquidated. Rinse and repeat... no central bank is needed and has been doing this since civilization started.
on Thu, 04/29/2010 - 10:47
#323726
So, why DO we have central banks then?
on Thu, 04/29/2010 - 11:13
#323790
Sophisticated highway robbery.
on Thu, 04/29/2010 - 15:14
#324360
Well if you don't have central banks then you get bank runs and failed banks. Like I said before you run a fractional reserve system you get certrain predefined characteristics. First you morph from asset/liability to payment valuation sytem. Either everyone who uses the banking system becomes drasticly horribly poor quickly or the banking system leverages and fractionates as it runs more and more.
If you take 10 pools of 100 lbs of gold and run a interest on loans fractional reserve goldsmith scam on gold money then eventually the pools start folding up as it becomes apparent that the underlying assets have used up all the gold and theres more receipts than there is gold to cover it. One of the pools dies and it makes the participant in the other pools nervous and investigative. When the 1st pool went bust the people behind it leached the real gold and left people with useless receipts. When news hits the other pools there's less ability to steal the pool.
Scams are precious things and can only be run so many times. So you are forced to make it one big world wide scam thats such a big lie nobody questions it because it's so common. Then you only have to face the inquistion of the scam during these downturns and crashes. That's what the IMF wants is one big total lie package so that they can simply throwout untruthful yet "reasonable" answers to systemic questions. Kind of like watching MSNBC all the time forever.
on Thu, 04/29/2010 - 17:29
#324477
The solution is simple: Universal acknowledgement that fractional-reserve ANYTHING is fraud, whether it be banking, currency, or pooled precious metal accounts.
Anyone making promises that they cannot even theoretically keep are criminals and engaging in fraud, pure and simple.
on Thu, 04/29/2010 - 22:51
#324924
++ Criminals
on Wed, 05/05/2010 - 16:48
#333352
Yeah, it's that simple. Compare your comment to the one you are commenting on: gibberish to confuse.
on Thu, 04/29/2010 - 21:58
#324864
so the folks do not go to the suburb banks to cash a check .
they just go to the central bank down town on at lunch time .
on Thu, 04/29/2010 - 11:27
#323833
Mako,
You're correct about the inevitable collapse of a compounding interest based system but the distinction is between one based on fiat currency or one based on a commodity with intrinsic value such as gold. The fiat system will eventually crash to zero, the commodity based system crashes back to the underlying value of the commodity it's based on.
on Thu, 04/29/2010 - 16:49
#324510
Of course, relying on intrinsic value helps a lot to achieve this conclusion.
Value is situational. Nothing like intrinsic value.
on Thu, 04/29/2010 - 23:29
#324942
Bingo. That's the thing. If you are holding a lot of any currency on this planet. You have ZERO safety net. You're assets will not just crash to 1/4 of their original value because they are artificially inflated by fractional reserve fraud and compound interest. You're savings will crash to 0.0 percent.
That's going to be the scam. They will demonitize dollar and then try to replace it with silver backed amero. But the euro will crash first which is why it's very important for greece and spain to tell IMF to fuck off, every country tell it's citizens to buy gold and silver. That won't happen. They'll simply try to switch sides. Get us to like gold, get the entire eastern hemisphere to "stop" liking gold and fall in love with fractional paper promises. Then stick their blood funnel back in us on the opposite end of the trade.
on Thu, 04/29/2010 - 14:30
#324288
So then, don't build a system. Decentralize failure.
on Thu, 04/29/2010 - 14:40
#324299
That's pretty much it. Make banking boring again. Take away the vodkatinis and give 'em some knitting supplies.
on Thu, 04/29/2010 - 10:12
#323626
You are right. But they should not be funded by public money. The Fed is the great enabler of the banking casino and they use taxpayer dollars to do it. That should stop.
on Thu, 04/29/2010 - 10:38
#323701
Interest or no interest, that is not the question. There is nothing inherently wrong with openly charging interest to those who openly agree to pay the costs for borrowing.
However, fractional reserve lending, now that's inherently fraudulent. You'll need special permission by the government for this practice.
on Thu, 04/29/2010 - 09:55
#323587
Dude, when was the last time you went shopping for stuff you actually need? Food prices have been climbing steadily for quite some time. I can live without an iPad, but it would be nice to be able to eat once in a while.
on Thu, 04/29/2010 - 10:08
#323618
Why do you want to eat? If you're in the US, you (likely) need to lose weight anyway. Consider this new economy a 'diet.' [/sarcasm]
on Thu, 04/29/2010 - 10:09
#323619
You're right - I have noticed that food costs keep going higher too.
on Thu, 04/29/2010 - 12:52
#324060
casino,
yes he is............
Shadowstats has inflation at approx 10%.
IT might be that LOW, if you take out fuel, and food.
Fuel is up 33%, and food is up (depending on items), 30-75%+,and this is less than a year.
Drop by a Krogers/Tom Thumb, etc, check out eggs, 6mos ago, Grade A Lg were $.89dz, now their a $1.89dz.Bread, up a $1.00 a loaf.
Asswipe?............LOL, any paper goods off the charts....
iPad or eat, indeed...............it's a fiasco.
But we DO have several hundred million SWINE FLU shots left to sell............LOL
on Thu, 04/29/2010 - 11:50
#323876
Please see the newest listings at the ZH approved fundraiser store regarding the FED:
http://www.zazzle.com/ben_bernanke_immoral_hazard_tshirt-235682383284411276
Items are being posted on this topic today. Check out the store. Help support ZH and hey, give me more ideas, graphics, etc. through the Zazzle contact.
All items are customizable to size, color, etc--Men's, womens, kids!
on Thu, 04/29/2010 - 11:53
#323877
Please see the newest listings at the ZH approved fundraiser store regarding the FED:
http://www.zazzle.com/ben_bernanke_immoral_hazard_tshirt-235682383284411276
Shirt reads: IMMORAL HAZARD, AUDIT THE FED with a chilling side view of Bernanke.
Items are being posted on this topic today. Check out the store. Help support ZH and hey, give me ideas, graphics, etc. through the Zazzle contact.
All items are customizable to size, color, etc--Men's, womens, kids and for a damn good cause!
on Thu, 04/29/2010 - 14:42
#324313
Good job, Howard. I'll be making a purchase soon.
It's the righteous thing to do.
on Thu, 04/29/2010 - 21:53
#324859
Creepy how much Benny looks like Krugman in that shot...
on Fri, 04/30/2010 - 02:40
#325018
Just do not look at Natural gas prices, ouch!
on Thu, 04/29/2010 - 09:07
#323487
Great post, Tyler. Thanks ;p
on Thu, 04/29/2010 - 09:08
#323491
Let's be honest, the government should monetize much of these debts. They should be printing money to ameliorate this crisis as I type this.
on Thu, 04/29/2010 - 09:13
#323504
But again, the government monetizes the debt and bread now costs $10 a loaf. The 50 million people (or whatever) on food stamps now can't afford to buy bread. The government raises the monthly food stamp allotment. What do you do now? More monetization? Bread now costs $20 a loaf. Think Newton here. All actions generate reactions. Explain to me how monetization solves our problem?
on Thu, 04/29/2010 - 10:33
#323688
It doesnt solve the problem, but it doesnt stop government from doing it... We are already seeing it with minumum wage and other subsidies. We have been inflating for 100 years now, since the creation of the Fed... Just because its accelerating doesnt mean we havent been doing it.. Our whole economy is based around a steady inflationary growth.
It is our system, and just because we are now realizing the flaws in our system (think exponential growth) doesnt mean we are all of a sudden going to change. We have to inflate to keep the economy going, or default. (inflating away debt is just a back door way of defaulting)
Do you think any of our politicians have the stomach to tell the public, who is now dependant on government programs, that they are going to take it all away in the face of these rising prices?
on Thu, 04/29/2010 - 09:46
#323533
The problem with monetization(higher inflation) is that it effects negatively more the poor and middle class and less the rich. And thus, the divison between rich and poor grows even more, and soon we´re in Latin America.
on Thu, 04/29/2010 - 10:17
#323640
topless beaches and bottomless pits
on Thu, 04/29/2010 - 12:04
#323908
Topless Beaches, Bitches!!!
on Thu, 04/29/2010 - 13:56
#324216
Topless bitches, gold!
on Thu, 04/29/2010 - 14:32
#324292
Topless gold, bitches!
on Thu, 04/29/2010 - 09:40
#323553
EQ they are doing this as we speak,, every thing and the kictchen sink.. will have gold plated handles
so the crises will lead to a greater crises ,
nothing will be ameliorated ,, more debt will not solve debt . thats an oxmoren
on Thu, 04/29/2010 - 10:34
#323691
The main problem with inflation is that you are always behind the curve. Anyone else remember to 70's and that was tame compared to what is being considered here.
on Thu, 04/29/2010 - 09:10
#323495
How can we consider inflation in this debate when a primary driver of it...the consumer...is toast? hyperinflation possibly but 70's style inflation no
on Thu, 04/29/2010 - 09:27
#323528
Hyperinflation doesnt start with the consumer. It starts when people lose faith in the currency and starts dumping the currency and the bonds. The Fed will then be forced to become the lender of last resort and try to prop up the bond market. Once the hyperinflation starts Joe Six pack will see the cost of food and energy sky rocketing and will panic and spend every last dollar he has while he can still buy something with them.
And I think we are much closer to this then most people think. I think April 27, 2010 will go down as the day paper fiat currencies died. There was a monumental shift in thinking in the world. When S&P downgraded Greece to junk and Portugal down, sure the dollar index jumped and the dollar strengthened against other paper currencies, but the dollar itself went down in value also in terms of gold. And this is, I believe, a huge change. It shows people are awakening to what is happening, governments around the world are inflating like crazy and realize all paper currencies are doomed and they know they need to be in real assets now. And I believe this is the first stage of hyperinflation. I expect it by the end of 2011 at the very latest.
on Thu, 04/29/2010 - 10:20
#323649
bingo
(but no one wins a prize)
on Thu, 04/29/2010 - 10:46
#323720
Joe six pack will panic and spend every last dollar he has
Joe six pack is already flat broke, lives hand-to-mouth and is dependent on credit to purchase non-necessities.
In a high inflation environment, that credit becomes unavailable or is prohibitively expensive.
IMHO, any episode of intentionally induced high inflation will be extremely short-lived, fail to substantially ameliorate the debt burden and quickly lead to a deflationary collapse.
on Thu, 04/29/2010 - 12:40
#324022
Didn't that exact thing already happen ($140 oil and Lehman)?
on Thu, 04/29/2010 - 10:53
#323734
Agreed, Mr. Law - we are much closer to hyperinflation than most people think. Food and energy on the rise both generally and specifically, and loss of confidence in both fiat and governments in general.
Stage one is now, the start - the timing of stage two, the actual hyperinflation, should be of importance to you and yours. Do you have what you need to survive - or can you aquire/produce such? Have a plan you believe in and get prepared... whether it's hyperinflation or complete deflation, your actual experience of things will be similar.
on Thu, 04/29/2010 - 09:34
#323543
And also in the 70s economists couldn't explain why we had double digit inflation with double digit unemployment. But I can, when the price of every thing goes up at the same time, the inflation is always a monetary phenomenon.
on Thu, 04/29/2010 - 11:28
#323836
Mr. Law:
You are correct, Friedman and Schwartz did have a great empirically useful insight (i.e., as opposed to theoretical): "inflation is always and everywhere a monetary phenomenon." Also, people tend not to believe something can happen until they actually notice its happening, or especially after it has already happened (that's called 'hindsight bias'). If you know you have hindnsight bias (most of us do) and you don't have faith that the Fed will do the "right thing" you should read Reinhart and Rogoff (with as open a mind as possible) in order to handicap this one (and, as always, keep in mind that inflation is always a monetary phenomenon). I know this, you would be crazy to weight the combined monetary history of the last two hundreds or so years as having zero weight. In fact, there are hundreds of examples of monetary authorities allowing for inflation (or even hyperinflation) and maybe one where defaltion happened (i.e., 1929 U.S.). If I was a betting man, I know where I will place my bets.
Finally, as already pointed out, hyperinflation tends to be more of a mob psychological issue (even Zimbabwe had that component), that is, when people in mass generally lose their faith in a currency it's game over. In fact, Peter Bernholtz (read Monetary Regimes And Inflation: History, Economic And Political Relationships), states that you will get hyperinflation anytime time a government spends 166 percent more than it receives (we are around 170% to 200% now). Sure, as I think Dirty Harry said to all die hard deflationistas, "do you feel lucky punk, well do you?"
on Thu, 04/29/2010 - 11:49
#323874
What about wage inflation as a driver of price inflation?
At that time people had a relatively small debt burden and could send freely and did before prices rose more.
Today is much different. We have wage deflation trying to pay off a crushing debt burden and accounting tricks are used to hide gigantic losses of "money" on bank balance sheets.
How is this inflation going to enter the economy?
on Thu, 04/29/2010 - 12:37
#324016
Bingo.
There has never been a hyperinflation in a credit-dependent economy. It is not possible.
Furthermore, high/hyperinflation DESTROYS the asset side of the banks' balance sheets. Now remind me again who it is that the Federal Reserve works for?
on Thu, 04/29/2010 - 15:58
#324417
That is not true. Of course hyperinflation can and has happened in a credit-dependent economy, especially in one like we have now (I am not personally forecasting hyperinflation, but it is clearly a possibility). Please read Peter Bernholtz's book on the interrelationship between economics and politics and you will see that in virtually every case debt interacted with politics to cause hyperinflation.
While it is true that private debt hitting the proverbial wall tends to cause deflation in prices, government debt expanding is the real key. On that subject, how's that government debt going, it must be contracting with a vengence for anyone to comment that price inflation will be subdued or will turn to deflation. Anyway, all kidding aside, it seems that large budget deficits and the growth of government debt causes the politicians to convince themselves that all will be well and they can stop the printing (actual or electronic) whenever they want. It's just that historically that time never seems to come. In short, it depends if the debt is constrained by private finances or seeming unconstrained by government fiat. History is not kind to governments that paper over economic weakness with debt and then the printing press to pay for that.
Anyway, history surely is a poor guide, I'm sure you have nothing to worry about, "this time will be different."
on Thu, 04/29/2010 - 16:30
#324479
"Wage inflation", are you serious? I suspect you have been reading too many neo-Keynesians, or surely still fondly reflect back upon the age of disco. Either you must be thinking of economies with significant union membership and true wage setting power, as well as the will to use that power now (que crickets chirping), but alas not these here United States. Inflation enters and will enter as it usually enters, that is, it is typically a function of bad monetary policies interacting with bad fiscal policies. We have no shortage of those two kinds of governmental policies these days and just the right people to implement them. This isn't 1929/1930 and those people don't seem to care what happens next as long as they aren't blamed for it (i.e., assuming they even have a clue as to what can happen next).
on Thu, 04/29/2010 - 09:42
#323561
inflation is a monetary event ... it is the printing of monetary units.. faster than the output of gold .. reisman
on Thu, 04/29/2010 - 10:27
#323671
-Inflation- "An increase in the money supply". Funny how everyone thinks inflation has something to do with the price of this or that.
on Thu, 04/29/2010 - 14:29
#324286
Yet what is money in the modern economy? Credit is money. Debt is money because our money is backed by... debt. And the amount of destroyed debt already is still larger than the few measely dollars virtually printed into circulation thus far. How much wealth (money) has been destroyed over the last two years? Tens of trillions of dollars. How much has been printed? A few trillions of dollars. M3 doesn't even begin to tell the entire story. People focusing on M3 are staring at the ass end of the T-Rex from point blank range right before he turns around and decides they are dinner. People who insist that deflation can't happen in a fiat regime also need to explain the last 20+ years in Japan.
on Thu, 04/29/2010 - 17:37
#324485
I don't know if deflation under a fiat currency regime can NOT happen --- it is merely about as likely as monkeys flying out of my ass. But the historical record contains not one case of such a thing ever happening, yet hundreds of cases of INflation under the same conditions. I will place my bets in historical precedent and common sense over some wild-eyed, neo-Keynesian mantra that "this time it's different!"
And as for Japan, they have NOT experienced deflation --- that is just more confused Keynesian misinformation. Consumer prices have risen steadily in Japan all through the 1990s and 2000s --- only real estate and equities have fallen. For the last damned time, the collapse of an asset bubble does not, does NOT equate to "deflation"!
on Thu, 04/29/2010 - 20:32
#324797
"Consumer prices have risen steadily in Japan all through the 1990s and 2000s --- only real estate and equities have fallen."
That's why its correctly called stagflation and economists thought it couldn't happen until it happened in the 70s in the US and then in Japan (and now again in the US) for the last 20 years. Asset prices will all deflate but because populations are increasing and resources becoming more scarce these food/energy will inflate. But technology/productivity changes deflate prices (think cell phones/computer, electronics). So you can have both deflation and inflation at the same time in both good/services and assets like stocks/bonds/RE.
on Thu, 04/29/2010 - 09:11
#323500
Hot damn....Buiter read my email!
on Thu, 04/29/2010 - 09:21
#323515
Weve alrady had hyper inflation. The currency has lost 96% of its value, hard to wring anymore out of it.
Now a collapse of the unit itself? who knows for sure. Certainly not ol virgil.
on Thu, 04/29/2010 - 10:31
#323544
pardon VC, but you do not understand what hyperinflation is. Check Zimbabwe, Weimar Germany, 1993 Yugoslavia, etc. 2 orders of magnitude over 100 years is not hyperinflation. 2 orders of magnitude over a week is. Hyperinflation is followed by repudiation of the fiat unit. Once again check each of the above examples.
on Thu, 04/29/2010 - 09:44
#323565
VC please . what a bone head statement lol
on Thu, 04/29/2010 - 10:08
#323617
Be kind to VC. That's called hyperinflation in slo-mo.
on Thu, 04/29/2010 - 10:30
#323682
Well Virgil, the IMF is saying the currency will collapse, says up next is debt downgrade and austerity measures.
America Is Losing Its Imperial Status, And Global Institutions Such As The IMF, G20 And BIS Are Filling The Void - BlackListed News
on Thu, 04/29/2010 - 09:27
#323527
...Cue Chumbawumba.
on Thu, 04/29/2010 - 09:32
#323537
Dictatorship is coming. Left wing or right? I say right. Dictators need the military. The military is right wing.
on Thu, 04/29/2010 - 12:50
#324055
Here in rural Alabama there are MANY Iraq war vetrans actively training their brothers, uncles, cousins. These aren't the militias of the 90's marching around fields in camos, they are armed clans Their target is not the USG (at the moment) but the expectation of hungry hordes of city-folk about to come a-callin'
on Thu, 04/29/2010 - 14:32
#324290
I am also aware of many native Americans who are actively arming and training for what they see as the white man's final and well-deserved comeuppance, directly due to our own hubris.
on Thu, 04/29/2010 - 14:15
#324263
Consider that the central Government won't hold together in that case, and regional/local governments will rise to file the void.
So, many dictatorships, some larger than others, none trusting the other, but yes mostly right-leaning and bellicose.
The west coast US might stay left- to center-leaning. Indeed, might carry forward the 250 year old ideals of the nation's founders. We can hope, anyway.
on Thu, 04/29/2010 - 09:39
#323550
Mr Buiter mis-points to the "roots" as being everything except fiat, FED, bankrupt nation since 1789, etc. In other words his basis is complete trash and therefore he builds solutions on nonsense.
Personal responsibility, which no one wants, is a very key element in this.
Ohhhh puhlease Uncle Sugar, more cocaine!!!
on Thu, 04/29/2010 - 14:19
#324270
Not a very balanced view.
Blaming your neighbor and letting the bankers skip is what they want you to do.
Don't.
on Thu, 04/29/2010 - 09:52
#323583
Not many people leave the casino happy.
on Thu, 04/29/2010 - 10:00
#323597
But they love the shiny lights and ringing bells and all the "free drinks" and cheap meals they get from their attentive servants while they are there pumping their money into the slots or onto the tables.
Now that I think about it, I think I would rather be governed by casino owners than by the political class -- As a supplier of capital in Vegas, I am rewarded, while in the rest of the land it is the consumers of my capital that are rewarded while I am pilloried for being evil and greedy for actually wanting to enjoy the fruits of my own labor.
on Thu, 04/29/2010 - 11:01
#323760
Fascinating observation...casino management running the government.
Now, I could be a Weisenheimer and say,"That already happens. Everybody knows that Goldman Sachs calls all the shots."
Of course, the real difference is in the inherent powers of both:
- Government can get away with molesting you or beating you over the head to get access to your capital.
- The Casino must lure you in or convince to consciously decide to give them access to your capital. (hence the use of the bells, lights, free cocktails, etc. -- that is simply called "greasing the skids")
on Thu, 04/29/2010 - 14:22
#324274
Heh. And you really think the Gov isn't greasing the skids all the time?
Governance is more like a brothel every day. Pay to play, and the play is great.
on Thu, 04/29/2010 - 12:04
#323910
Hey EB. I thought you were out sailing.
on Thu, 04/29/2010 - 10:01
#323599
Exactly, LeBalance. Once you give, give, give to the masses, fewer and fewer want to work for any gains. They all then get comfortable sucking on the government teet. Take that teet away and they get nasty. Jefferson had it right all along...
“The democracy will cease to exist when you take away from those who are willing to work and give to those who would not"
on Thu, 04/29/2010 - 10:35
#323694
"from those according to their ability to those according to their need." - definition of socialism/communism/vampirism/Squidism/theft
If you are willing to cooperate once you see the game, it's no big deal, but see the big picture.
Its all love anyway.
on Thu, 04/29/2010 - 10:07
#323614
Notice that the Chinese Equity Market is behaving poorly. Isn't China supposed to be the driver of global growth ? The bulls say equity markets are a leading indicator, well that market is indicating trouble in China. But under the bull thesis, it is a given that China has to be the driver of global growth. How can US equities keep going up, while China is down for the year and had a rough couple of weeks. We know Europe can't grow, what if China slows.... it's all deflationary pressure due to credit unwind that has to happen.