Weekend Poll: Buffett Or Gross - Inflation Or Deflation? (Or Neither)

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In a world past where currencies were pinned to a commodity - such as Gold, or Silver, a Goat, or a Cow - it was Inflation, Deflation, or Stagflation which played the leading role as a correction to the lopsidedness way in which life was being lived (both were a temporary phenomenon of adjustment)...but in the modern printathon world, those three become slaves not just to a lopsided lifestyle, but also the tendency to run from obligation in the servicing of debt. This is done through nonpayment by default and, inflationary means.

There is give and take in all things (like Newton's Third Law of motion), fore-go the processes of Inflation, Deflation, or Stagflation - ie run from debt obligation - and what will slay a currency is the perception of unjust returns.

Let me give you the definition of Theft and see if QE fits the bill. Theft: Dishonesty, appropriating property, belonging to another, with the intent of permanently depriving the other of it.

When the world wakes-up and realises that QE is nothing more than complex Theft, then what will follow is a correction beyond Inflation, Deflation, or Stagflation...beyond temporary!

It won't be a currency that falls, it will be Trust in the population which holds lifestyle above all else, and/or a population which has lost control of an elite few (the latter can be rectified through revolutionary means, the former is a death sentence).

I think this Poll shows where it's all headed.

Just a thought.

Either way we move from here will result in over reaction by our feared leaders and will send us flying the other direction like a loon shot from the sky!

Updated DOW and SP500 charts:

http://stockmarket618.wordpress.com

As long as there is no GFY option available this poll remains invalid.

Tyler, you are well advised to include the GFY option to this poll and all future polls.

I will now GFM

LMAO

From dead head fed goons mark to fantasy illusion to world wide fiat currency flooding; it's unknown what any asset class has in terms of value!! Fiat currencies backed by nothin but thin air gov goon promises; having zero value in future redemption!!  Stick with historical systemic financial crashes and what people needed to survive when government goons went wild as ours in massive debt creation to failure!!  You don't know what those monetary stores of real value are?  Then learn how to stampede to the front of the line and find nothin left but marrowed out bones for the DIMMS=dumb ignorant mental midget sheople!!  You could research what China has been buying with soon to be worthless reserve USD's!  They know how to survive!!  Much better than the micky D's porkin crowds of AmeriCON'd!

Monetary Inflation: Yes, due to printing, already happened, will continue (Fed, BOJ, BOC..)

Price Inflation: Yes, due to coming supply side crunch (food, energy, commodities..)

Deflation: Yes, due to excess supply & lack of demand (demographics, real estate, fixed assets, manufactured

goods, ...)

Stagnation: Yes (unemployment, loss of workforce skills, shrinking yields, etc.)

There is no suitable economic term for all of the above, but you may call it (systemic) dilapidation.

We are living beyond our means. And our means (oil, food) will be declining soon. It doesn't matter if the result is inflation or deflation. We will become much poorer regardless. Things will stabilize when we are living within our means again. Unfortunately our means will continue to decline for a long long time thanks to physics and nature.

Wrong placement

Hyperstagdeflation with bouts of oil price shocks and food shortages.

Tail scenario that is growing more likely is Mad Max.

Its all about return to the mean.  Countervailing forces always appear when excesses appear. Just as $125 a barrel oil deflated demand thus pushing prices down so goes the credit bubble.  As prices fall to meet demand and ability money velocity will increase.

Extend and pretend isn't just a fairytale its a strategy to slow down the realignment of price discovery with financial stability.   There will be no long term inflation. What the Fed giveth and it can taketh away.  Paul Volker show us that.  Its a fine dances to a broken voiced song but it is what it is.  The global market place could never withstand a collapsing dollar and every nation would out print the dollar before that would ever happen.

The real issue isn't really a Fed money supply or collapse in financial markets its about realigning US GDP to a more balanced and sustainable growth from a reinvestment in industrial production.  Thats going to take more balls than raising interest rates because it means getting tough with foreign trading "partners" and demanding real free trade and a level playing field.  The USA can not continue a one sided export of its wealth to the world anymore.

I'm living on a small pension and I see inflation everywhere.  However, ther is no reality 'out there' nothing to hang your hat on, so to speak.  All I know is the media fairies have all goneto sleep, and that's why Icome here.  Canada is living in a phantasy land, things are falling apart all around us and we seem to be blissfully ignoring it.  I wish I had the money to buy gold and silver, but I blew it travelling around your great country in 2003 and 2004.  I wish I knew then what I know now, but isn't life just like that.

Inflation or Deflation?  Forget, "It doesn't matter..."  I would invest my money very differently if I knew the correct answer.

Now normally I would look for the happy consensus and just do the opposite.  But I am not that sure I understand what the consensus is as of now.  But I think it is for deflation now, and inflation later.  So there it may be. The correct answer is: big inflation spike now and a deflationary knock-out punch later.  I don’t think many people are forecasting that.

Now I just need to cherry pick some charts and have a frontal lobotomy, to be a real fuckin ECONOMIST!

I think deflation has taken root.

I work for a large financial services company that provides risk management and insurance brokerage services, and every client is negotiating/demanding fee reductions. All decisions by CFO's, risk mangers, etc., seem to be based purely on lowest cost, regardless of enhanced services, demonstrable positive ROI for the fee charged, or the amount of their outsourced work we continue to take on because they have slashed their staff. It sure feels like deflation to me.

Our competitors of all sizes are deeply discounting their fees, far below reasonable costs, which indicates their desperation to add revenue regardless of profitability or longer-term consequences. As one of my colleagues opined at a recent senior staff meeting: "It's a race to the bottom right now!"

I've been at this for many years and I've never seen a business atmosphere like this, where none of our clients express optimism about business conditions. (And we have clients across the country in all major business sectors.) If this isn't deflation, I don't know what is.

I recall a good friend who is much older than I telling me many years ago that the last thing you want to have is deflation. Now I understand what he meant. I don't know how we're going to solve this, but I know the solution is going to involve a tremendous amount of pain. I apologized to my 32 year-old son and his wife today for the role my boomer generation has played in destroying the American Dream. There really is no free lunch, and now we're experiencing the toll for our time at the buffet.

I recall the old saying:

Under Eisenhower if you worked hard, you got it.

Under Kennedy if you drove on down, the government would give it to you.

Under Johnson, you could stay home and the government would bring it to you.

Succesive administrations have only amplified the government dole to their constituencies, be they liberal or conservative, without any real constraint. And now the piper demands his due and we are left holding an empty purse, with no hope of satisfying the debt.

I fear for us all as I have never feared before. Regardless of the amount of gold, guns or faith in God we have; it might not be enough to salvage this Grand Experiment our Founders began when they revolted from these very same circumstances those 250+ years ago. I also hope and pray that war is not the government's solution to this.

Sorry for rambling, but I obviously voted that we are in deflation right now.

Like I said before this is a non issue. We have both happening simultaneously. Inflation in commodities and deflation in real estate, cars, debt.

As weary as I have grown of the 'Bitchez' admonition, I must perforce agree. 

Deflation of major assets appears ongoing and certain to continue--homes, luxuries, paper, commercial real-estate.

And high-importance survival commodities do appear to be increasing in price.

I don't believe that latter effect is "inflation," however.  I suspect we saw artificially maintained low prices on the commodities over the past 20 years (thereabouts) because of the almost justified global belief that the USD was the strongest/hardest/greatest currency.

Now the the dollar is falling from its previous position of zealous global worship, actual real-world resources will tend to cost a bit more.  Unfortunately, much of the US population no longer earns such a vastly superior wage to pay considerably more for these resources.

Interesting times.

The system has to deflate for an extremely short time to liquidate so that the central bankers can get thier hands on everything valuable. Then it inflates rapidly so that no one else can afford to get it back. If they just stick with the inflation side of it. Prices have to go up 3 more times to get to sustainable GDP to debt ratio.

The route to hyper inflation lies in governments printing money in order to stave off a deflationary collapse.  In the US, the Fed does this by buying Treasuries, rather than government raising wages or giving out cheques, which does not initially appear inflationary, but eventually leads to the loss of all faith in the currency, as investors take the money and get the hell out.  Buying long dated debt will probably make a nominal profit, but the real value of your Dollar gain will be far less than if you had bought gold.  The Fed will periodically tighten liquidity, in order to defend the Dollar but they can only do this for limited periods or the banking system will collapse.  

Private deflation into a rising public indebtedness/deficit brings on hyper-inflation.  So all four possible votes are a valid hypothesis, depending on your time-line.

Ironically, inflation may have been the only way possible to save us from hyper-inflation.  Ironically, if UST interest rates were steadily increasing since the 08 crisis(instead of decreasing) it would have probably saved us from hyper-inflation.

I would have preferred to vote all the above.  However "D" will suffice here.

Can't wait for the little I keep in my checking account to be converted into the new and improved FRN.  The new and improved FRN will be backed by paper gold, IMO(until that fails, too).  I sincerely hope that Bernanke's face gets on one of those notes.  I will frame one with my Zimbabwe 100T bill.

Finally, v3 will be fully convertible into physical gold at a flexible exchange rate until they regain power over the system(again).  Hopefully Dr. Paul can get on the v3 gold/silver coins(not the notes, that would be blasphemy). 

 Geez, What a question.

OK, I've been in the deflation camp since the Housing bubble popped.

But. Between now and November I suspect that we may be heading into a kind of stagflation that won't be detectable by the core CPI but may be caused by agflation which is not reported in the index.

Seems to me they are both talking their own books.

OK OK,

I voted for Stagflation but that was mainly because I find the word "Bitchez" irresistible.