This page has been archived and commenting is disabled.
Deflation Is Crushing QE Right Now
Investors are focused on the possible tapering of U.S. stimulus and starting to take some money off the table after a strong equities rally year-to-date. Less attention is being paid to the biggest source of risk at present: deflation in the developed world. All of the past week's data point to heightened deflationary risks. Paltry U.S. consumer price index (CPI) figures, German producer prices undershooting and another bout of weakness in commodity prices, particularly oil, suggest deflation is winning the battle over central bank stimulus. Which is something that Asia Confidential has been forecasting for some time.
It's no coincidence that at the same time, the Japanese yen has reached four month lows versus the U.S. dollar. Japan is printing an enormous amount of money in a bid to end its 20-year affair with deflation. It wants inflation at all costs and the yen is collateral damage. Lowering the yen increases the competitiveness of Japanese exporters, resulting in more cars, robots and flat-panel TVs being shipped abroad. And that means Japan is exporting deflation, and resultant lower prices in these goods, to the rest of the world. Key competitors in China and South Korea are starting to fight back but are being hampered by their strong currencies versus the yen.
There's increasing talk that Europe will resort to more stimulus soon to wade off deflation. The euro has been remarkably strong compared to other currencies, making the region's exporters increasingly un-competitive. Across the Atlantic, Bernanke and co. have been further hinting at QE tapering, but with rising deflation risks, any tapering seems unlikely. If Japan succeeds in weakening the yen further, you can be sure that other countries will start to complain and print money to lower their own currencies. The phrase "currency wars" may come back in vogue soon enough.
What does all this mean for markets? Well, it increases the odds of a further stock market correction before year-end. And a bond rally would seem overdue. But more broadly, it means the tussle between deflation and central bank stimulus should continue. That means more money printing and low interest rates for the foreseeable future. Which could push asset prices higher from already elevated levels, raising the odds of a major correction down the track.
Disinflation reigns
I've spoken of deflation so far, but it's really disinflation (falling inflation) that's occurring. A host of recent data suggests that this remains the primary threat to global economies, including:
1) The U.S. inflation rate fell to 1% annualised in October, the lowest figure in almost 50 years, excluding the 2008 financial crisis. Inflation in America peaked in 2011 and remains way below the Fed's 2% target rate. The chart below is courtesy of Business Insider.
2) U.S. bank loan growth is showing a similar slowdown. Stimulus isn't resulting in increased lending and therefore isn't filtering through to the real economy. There's just not enough end-demand for loans as businesses and consumers remain cautious about taking on debt.
3) The German producer price index (PPI) fell 0.2% month-on-month in October, more than expected. On an annualised basis, the PPI fell 0.7%. It points to slower inflation ahead.
4) The trend of slowing inflation is a Europe-wide issue. No wonder the European Central Bank cited falling inflation as a factor in its decision to cut rates earlier this month.
5) It's not data as such, but softening commodity prices also point to falling inflation. The correction in oil prices is particularly pertinent.
These are just a few of the signs that deflation remains firmly in charge.
Why Japan's largely to blame
Japan is back on the radar of investors given a breakout in its stock market and the yen reaching a four-month low. There's a larger story brewing though. And that's growing evidence that the grand experiment of Abenomics has been a complete and utter failure.
Recent third quarter GDP of 1.9% was half the level of the second quarter. More importantly, personal incomes have barely budged while the cost of living has soared, thanks to the falling yen. This week's trade figures showed imports surging 26% year-on-year (YoY) in October, versus 19% expected, due to soaring fuel imports. This overshadowed exports rising 19% YoY, more than analyst forecasts. Consequently, Japan's trade balance (difference between exports and imports) fell to the third lowest level on record.
Why does this matter? Well, Japan runs a budget deficit of close to 10%. It used to run a major trade surplus, which has now turned into a trade deficit. If you run budget and trade deficits, you need to plug the gap either via private savings or the central bank printing massive amounts of money. The problem with the former is that using private savings to finance the gap means there'll be less savings for private investment, a key growth driver for the economy. This means that you can expect Japan to print increasing amounts of money and for the yen to weaken further.
Besides the yen, the other point of interest will be Japanese government bonds. If Japan accelerates the monetisation of debt (central bank buying bonds to finance government), that'll crowd out private players in the bond market. In fact, this is already happening. The so-called crowding out effect will almost certainly lead to increased volatility as private players are marginalised.
This is important because Japan desperately needs bond yields to stay low. The government's enormous debt load (nearing 245% of GDP) means that just a small increase in bond yields and interest rates would lead to interest expenses on government debt reaching intolerable levels (a 2% rate would have interest expenses covering 80% of government revenues).
As Asia Confidential has highlighted on several occasions, Japan is in a desperate situation where there are no happy endings. There are only bad and worse outcomes. The government has chosen an extraordinary experiment which could well pave the way for the worst outcome to occur.
But this isn't just a Japan issue. Other countries aren't going to sit idly by and watch Japan steal market share due to the softening yen. At some point, they're going to hit back with currency devaluations of their own. And then the real currency wars will begin in earnest. History shows these wars never end well as global trade suffers from the tit-for-tat between countries.
Are bonds set to come back?
Markets have largely ignored deflationary risks thus far. Stocks have surged, with few corrections, while bonds have spluttered. Given stagnant to falling GDP in the developed world and declining inflation, the bond market action has been particularly puzzling. Usually, government bond yields closely correlate with nominal (real plus inflation) GDP. If nominal GDP is falling, then so too should government bond yields.
This is why you should expect government bond yields in the developed world to head lower given the current deflationary threats. And it should also mean stocks have a further correction in the near future.
Short-term market action is always difficult to call though. Long-term trends are easier to distinguish. And on this front, little has changed. You have an ongoing battle between deflation and central bank government efforts to prevent it via QE. Deflation is winning right now, which is why you should expect more QE, not less, going forward.
If that's right, stimulus and low interest rates could be with us for some time yet. Asset prices may be bid up further. And the market bears may have to wait before a more serious correction happens. The catalyst for that is likely to be a loss of faith in central bank stimulus.
This post was originally published at Asia Confidential:
http://asiaconf.com/2013/11/21/deflation-is-crushing-qe/
- advertisements -








Deflation and inflation are working through the economy on the micro level at different points. Real estate, for instance, is being inflated by pressure from the Fed via low interest rates, but it's not working because incomes are not keeping pace. That's why the shadow inventory is enormous and still growing, foreclosures are stuck in neutral (banks don't want them, people are happy to live in FC'd homes and not pay taxes, etc.).
Retail has limited pricing power presently. Look at Target's results. Horrid. Margins are being squeezed. Watch the holiday season SALES. Retailers will discount everything sooner. Inventories are high because demand is so low.
Seems to me that the only inflation is in artificially-controlled segments, like credit card interest and government taxes, fees and regulations. As for energy, solar is becoming almost an affordable alternative and probably will be, some day. 4 100-watt panels with converter and batteries can be had for around $600. At 5 hours a day, that's 2 Kwhrs per day or 60 per month. The average family uses much more than that, so we're not there yet, but getting closer.
Not to get off the track, but it seems deflation is winning, and the author may be right, though not necessarily for the reasons stated.
First of all, I would argue that overhead costs (bank interst and fees, taxes, law and administration, insurance, health education) all continue to climb at a rapid rate. Also, the cost of food, housing and energy net of material costs continue to rise because of the self-same overhead drain. Sure, the elitists may have decided to lower some commodity costs, such as oil ... but that is only because it is in their best interest to do so. They will make commodity costs as high as possible whenever they can. The net effect of the overhead costs of living is that productive people continue to get squeezed.
REAL deflation that helps the world would have to address the soaring overhead costs, and not just commodities, existing property or stocks. To get helpful deflation there would have to be e concentrated effort to reduce elitist parasitism which goes directly into increasing overhead costs... parasitic banking, parasitic government, parasitic insurance, parasitic legal, parasitic military adventurism, parasitic control systems. Reduce the number of parasites and the host can be healthy. Increase the number of parasites and the host dies.
What is actually crushing QE right now?
1. Non-poducttive use of capital. BIDDING UP THE FUCKING PRICE PRODUCES NOTHING BUT INFLATION. Will the banks be buying all assets when it is time for retirees to cash out so that they can maintain some semblance of a lifestyle or will their greed produce a globe full of fraud and broken promises?
2. Importing everything from overseas pumps money out of the country instead of improving in-country conditions. It is great for global companies that squirrel their assets away in tax haven countries, but has a negative impact on the country. Pumping money out of the country to maintain the dollar as the reserve currency does not benefit the US population.
3. Banking slight of hand is completely nonproductive. The accounting of dollars and all measurements related to dollars become completely meaningless because there is no solid base, just foo foo accounting.
Hey! Here is a great primer on QE/ZIRP and with hints that our economy needs inflation sometimes.
http://www.economonitor.com/blog/2012/11/zirp-and-qe-central-bankers-narcotics-of-choice/
The one and only purpose of inflation is to make the world borrow more from banks so that people and companies can pay back debts with interest. If money was not a debt instrument, payable with interest and instead, only and exchange mechanism, there would never be any cause to have inflation.
The VERY disturbing thing about it is that elitist parasitic psychopathic criminals get an annual cut of all money in existence on the plant... and they do nothing to deserve it. Seems like a system that needs to be changed.
Don Quixote, let me guess where this is going: "The GOLD STANDARD would fix everything." LOL
Read the article I suggested and get a clue.
Banks are driving equity buying - suckering every last client into the market.
Aside from this, consumers' spending is in the tank.
Spending tanks, prices tank to entice the consumer.
Since effective unemployment in the US is between 15-18%, deflation, which has been here for years, is going to ramp up in the years to come.
And deflation is fugly to manage.
"You have an ongoing battle between deflation and central bank government efforts to prevent it via QE. Deflation is winning right now, which is why you should expect more QE, not less, going forward."
If QE has not worked, more of it won't work. As Denninger noted, QE is deflationary.
"Japan is exporting deflation, and resultant lower prices in these goods, to the rest of the world" Everyone is competing to export deflation.
"I've spoken of deflation so far, but it's really disinflation (falling inflation) that's occurring. A host of recent data suggests that this remains the primary threat to global economies"
The boom CAUSES the bust. The bust is not the primary threat, the boom is. A cycle has two phases. Deflation is the down phase after the inflationary phase of the cycle.
Something has to be inflated before it can deflate.
If I wasn't watching Doctor Who....I would comment.....You either know it or you don't....reality is perseption
The discussion fails to recognize that we are in a liquidity trap.
Money pumped into the top under a assumption that "Trickle Down" economics will work and spur lagging consumption have proven wrong wrong wrong! QE and ZIRP merely pump much needed stimulus into the bank vaults of industry and the financial sectors. As a result, "stimulus" never occurs and the economy is throttled.
Feeding this is the "low inflation" policy that ignores the REAL NEED we have for lowered unemployment and increased wages.
If you are one of those who works for a living, you want to see HIGHER INFLATION. Inflation is a punishment of wealth hoarding which underlies the liquidity trap we are in.
Inflation is the key tool to SCARE money back into the economy.
(Inflation is not always a bad thing...that is just your brainwashing telling you that)
"If you are one of those who works for a living, you want to see HIGHER INFLATION."
Why would you want to see higher inflation? It destroys your purchasing power. Inflation should average out to ZERO. That is the definition of stable prices.
Deflation isn't a problem, debt is.
Earth to moneybots...If you work for a living YOU ARE IN DEBT!
Classic economic theory bares out the truth that higher inflation leads to lower unemployment and higher wages and easier debt repayment.
What planet are you orbiting?
Sure, temporary disinflation is believable, but it will be followed by continuing massive inflation. You completely lost me when you quoted CPI numbers stating inflation is around 1% - you don't really believe inflation is anywhere close to that, do you?
Disinflation is...Oh...I have so much money it doesn't effect me....Oh did I say that out-loud
Deflation? So, my fiat currency has greater purchasing power? Oh the horror! /s
Bullshit, my input costs are way up. No society/currency has ever collapsed/died because their purchasing power was too strong. Another bullshit propaganda piece.
Prices for everything have risen considerably. Gasoline seems to have much bigger fluctuations than in the past. A lot of price increases are hidden in smaller package sizes. Everything that could not get smaller saw price increases immediately. If you want to see the effects of QE, look at any durable goods--are washing machines cheaper? Cars?
For real. Deflation is only a threat to TPTB and central bankers that depend on ever increasing money supply to stack their wallets at the expense of others.
I don’t advocate either side in the “inflation vs deflation” debate (as I don’t think it really matters who turns out to be correct as the bottom line will be that almost everyone will be financially ruined in either eventuality).
But what I’m seeing I would interpret primarily as deflation. Central Banks (U.S. & Japan) are printing insane amounts of money in an effort to prop up asset prices (against deflation). But the effects of all this money printing are mostly just showing up in the equity market. This money printing is partly (but only partly) to blame for the steady rise in oil and food prices that has occurred over the past thirteen years. Much of the increase in oil price is due to the increasing costs of extraction of this resource (which began rising years before the inception of QE). And this increasing cost is being passed on to food prices through all the imbedded energy costs associated with food production; mechanized planting/harvesting, fertilizers, pesticides, processing and transportation.
I don’t know when, or even if, we will see Weimar type hyperinflation because for that to occur, all the money that has been created will have to find its way onto “Main Street” and I don’t see any way for that to happen. Labor has absolutely zero leverage to raise wages now nor will it have any leverage at any point in the future.
In my opinion, the core problem is rising energy costs (and food costs) due to increasing costs of oil extraction. And I don’t think there is now, nor will be, any solution for this. I believe that soon, the costs of oil extraction will rise sufficiently to drive demand low enough, that the aggregate costs can no longer be supported. At this point, oil production (and oil prices) will crash permanently. This dilemma is essentially deflationary. Whether or not limitations on the key resource of the modern economy trumps infinite money printing, I don’t pretend to know the answer, but I suspect that resource limitations will “win” in the end.
I have come to disagree. At the macro level, you are right. But in all practical examples, there is no deflation of anything, and purchasing power has suffered, if you still have a job. The middle class is being squeezed very hard--income loss, purchasing power loss, investments that may never be redeemable, no returns via interest. It's pretty damn bleak. So the macro trend of deflation? What does that matter?
I'm not sure about your discussion of resource limitations. It may lead to the end of consumerism. Maybe.
They'll lie some more.
If it gets bad enough they'll start a war as a diversion.
The numbers are all b.s. and they lie constantly.
What value are charts or 'economics' theories ? - - - Knowing criminology and the psychology of psychopaths would be more useful.
Velocity is near zero and many sectors are showing serious price plunges like retail, gas and even housing where I live.
Renting is now getting cheaper due to 1) oversupply and 2) deflation. My nephew told his Landlord near his college he wants 15% rent decrease or he is gone and the Landlord complied, no balking at all. That's a first!
IMO people get it wrong regarding 'deflation'. Deflation and inflation are monetary phenomenon and are now the result of the actions of banksters in the central banks of the world.
Prices can drop due to supply & demand. People have less money and don't bid up the prices of goods & services as before. With decreased demand, prices can fall. Banks don't make loans because of the sickness in the Main Street economy which they are ultimately responsible for causing (the money driven boom & bust cycle). People's savings decline, especially retirees - because of artifically low interest rates - enacted for the benefit of the banks. They borrow low and 'invest' high - for a no risk return. Usually their bets are highly leveraged - why not ? They keep the wins & the losses are put on the backs of the public. Their paid off politicians are either too dumb or too corrupted to protect the citizens. - Theyre taking money directly out of the pockets of savers. Retirees have to live off their savings or risk going into markets driven upward by money printing. The banksters don't make loans to the general public & small business because they don't want the inflation of the money supply to be obvious. Thats also the reason they suppress the price of the PMs. They can smack down the paper PM prices in the futures markets, point to that and say "See the economy is improving." or "See there's deflation." A win-win line of cr*p for them.
The banksters keep up the 'deflation' talk because they want to spread b.s. 'justifications' for the printing of money. That newly created 'money' goes into their pockets and is used to steal real wealth from the rest of the people.
Its really quite a clever scam.
Evil . . . but clever.
First comes deflation....then hyperinflation. I think they'll need to buy more than $85 billion a month soon. More like, $85 billion a day.
Not deflation! You mean my money might purchase more than it did the in past. The horror! What will I do if my money doesn't lose purchasing power every year, what if things don't get more expensive. Shiitake!
There is always a mistake made in distinction between macro trends and micro trends. They are talking macro, you are thinking micro. They're pretty much de-coupled from one another. Thus, people can scream "I have no purchasing power" while deflation at the macro level is being combatted via massive money printing that only slowly seeps back into the day to day economy you understand and eats away that purchasing power over time. If it came all at once, we'd be having a civil war. But yes, the underlying cause is deflation because debt is money.
QE = Theft
See Mike Malone's "Hidden Secrets of Money--the biggest scam in history" on Youtube, a slick video that shows how QE is a clever scheme that takes money from you and puts it into the pockets of the owners of the Fed, whoever these mysterious persons may be.
It will be hard not giving in to Schadenfreude when the stock market collapses and takes all those 401k 's with it (again!).
They aren't going to let it collapse. Everyone will be made whole--your 401K will pay out. It just won't buy anything useful! And those shadowy folks will be all "what you want from me? We upheld our side completely!" It's Faustian bargain.
"They aren't going to let it collapse. Everyone will be made whole--your 401K will pay out."
Math is. They can't prevent it from collapsing.
The cure for higher prices is higher prices. QE is deflationary.
When central banks and governments ramp up their own stock markets and government bond rates by whatever means, it's only to create a cushion for the disasterous fall they know is coming.
It isn't deflation. It is a depression. There is no deflation and it is not the same thing as cruddy economy.
http://www.indexmundi.com/commodities/?commodity=iron-ore&months=180
http://www.indexmundi.com/commodities/?commodity=crude-oil&months=180
http://www.indexmundi.com/commodities/?commodity=commodity-price-index&months=180
http://www.indexmundi.com/commodities/?commodity=food-price-index&months=180
Deflationists are still wrong wrong wrong wrong. I assure you this only ends one way. That is hyperinflation. Just because you personally have no money, does not mean it does not exist and is not bidding up prices. Personal poverty is not a measure of inflation. In hyperinflation almost everyone becomes too poor to even buy food, much less a new TV. It doesn't stop the inflation.
The fact is we are an almost perfect cut out from a template of Weimar. We lost our industry to foreign powers. We have massive debt. We have a horrible economy. We are coming out of a massively expensive war. Our politics are completely corrupted. Our central bank has money creation fetish.
Deflationists are nuts. Stop watching the gold ticker and thinking you understand what it is saying. If we really had deflation they would be rigging the gold price higher.
They're not nuts--since 2008, deflation kicked in at the macro level. Money printing has had to go through the roof to try and combat that event. It is only holding back the inevitable. But it is deflation--the rise in debt adding to GDP. Before 2008, it was private debt fueling the machine. When the housing market crashed, private debt evaporated and was quickly replaced by public debt--the QE mechanism. It's not the same, it's a cargo cult system we have now. But deflation is happening. If QE ended you would see it very fast because everything would crash, but if you had money, your purchasing power would go through the roof.
Here's the kicker. Define GDP in real terms circa 2013 vs. 1983?
How many times have we seen the bar lowered to fit the number(s) they want us to see?
Well said.
The only thing you said that I wish was true is the part about "coming out of a massively expensive war"...
Unfortunately nothing could be further from the truth. I don't believe the assholes at the JCS level of the Pentagon or the Neocon watering holes like Brookings Institute and the Washington Institute for Near East Policy are prepared to round up another 500 to 600 thousand troops for places like Libya, Jordan, Turkey and Saudi Arabia, but a lot of hand wringing is going on to sell moar war and the American people ain't taken the bate -which means only one thing. Another catalyzing event to get the people behind the Commander-in-Thief with a bull horn, or something else?
The scariest and most prophetic of the architects for this disaster that are still allowed to roam D.C. is the comment Bill Kristol made some time ago about the use of nuclear weapons -What good are they if you bought them and don't use 'em?...
If this Country and it's Leaders had there minds intact people like the Kristol's, Pearl's, Wolfowitz, and Clawson's would be behind bars or just missing.
So are you saying we need deflation for the gold and PMs to reverse and move higher? The charts, at least until 2011, seemed to show a high correlation between rising long bonds and rising gold. Now, long T-Bills are falling and so is gold. With taper and further losses by bonds, won't gold/PMs crash through the floor?
No, we need an honest pricing mechanism. There is NO mechanism for true price discovery in the "markets" right now. If there was, inflation would be obvious.
Hyperinflation is nothing but deflation disguised as a 100 million dollar bill.
Of course it all depends on one's definition. Deflation can be (in order of larger perspective scopes): a) a decrease in wages/prices b) a decrease in the money supply, c) a decrease in economic growth and/or production, or d) a decrease in the amt of energy consumed by an economy.
So, let's take your indicators and see if they are inflationary or deflationary:
Loss of industry... a decrease in production cannot lead to an increase in economic growth. Spending without producing only sends money away. Sure, the CB can print money to fill the gap, but debt spending at all levels sucks up that QE like a giant vacuum, before it ever gets into the general economy.
Massive debt: Essentialy deflationary, but deflation deferred until the debt pressure causes a war to break out. As more and more of the money generated by less and less production gets diverted to debt maintenance, there is less and less money available for the general economy.
War: War is deflationary, by definition. Wars destroy things, kill people, and cancel debts. Shattered economies that print money during wars end up with hyperinflation- on this we agree, but I have always wondered... if the hyperinflation was corrected for purchasing power, would things cost more, or less? My guess is less, hence deflation, disguised as hyperinflation. Maybe a real economist can chime in on this point. One final point: The main economic function of war is to act a debt settlement device. The only "positive" thing about war is that everyone (left alive) emerges essentially debt free. That is why WW2 was (economically) a continuation of WW1. The war was not over until debt settlement had actually taken place. Debt cancellation in a debt-based economy is essentially deflationary, hence, war is deflationary.
Corrupt politics: Corruption is a psychological aspect of short-term thinking, "You today, me tomorrow" (as Solsinytzin said). Short-term thinking is survival thinking, in which all sorts of valuable things are jettisoned in an attempt to simply survive. A pilot who ejects from his airplane is destroying wealth in an effort to survive. Corruption is a drag on the economy. It sucks up resources and produces nothing. In what universe (not this one) is this anything but deflationary?
CB money creation fetish: Yes, the Fed creates something like 2.5 billion a day in new money, but where is the inflation? That money is being instantly sucked up by all the deflationary forces just mentioned (and more), and has had no effect on the economy at all, except to increase debt, which simply means that every day, we are 2.5 billion dollars closer to a debt-cancellation war of truly epic scope.
I'll just add one thing: Thermodynamically speaking, you can't have a growing economy if you can't make a bigger fire. US energy consumption is down, and the downward trend only strengthens. Show me one thing you can have that doesn't take an energy input. Even the bytes needed to create 2.5 billion dollars a day have to live on a server somewhere, and that server sucks up energy. No energy, no economy. Now THAT'S deflationary.
Add lobbying to your list of things that are a drag on the economy. Manipulating and engineering outcomes counter to what would naturally take place in a market-based system.
"...the biggest source of risk at present: deflation in the developed world."
What that is saying is that there is a risk that Central Banks in the developed world will stop printing money out of thin air, and sell some of what they have purchased and have on their balance sheets. THAT would decrease the money supply(deflation).
So what are the chances of that actually happening? Oh Please!!
Yep . . . you get . . . the writer of the article doesn't
He probably believes 'QE' is about the 'broad economy'
QE is about handing money over to the big insider banks and offloading their garbage bets onto the people. (Of course those banks also get to use funny 'accounting' so their bankrupt status isn't recognized).
Low interest rates are destroying capital in the real world (grandma's small nest egg that she has to live off the rest of her life) and Main Street isn't getting any loan money
This isn't even about 'economics' - - - its about theft
Guess they didnt have a Theft 101 course at university, so many eggheads can't wrap their heads around that concept
Same as it ever was except that the biggies really did themselves in this time. There is no way they can offload enough garbage because there aren't enough willing suckers left anyplace. So now they use government (via the Fed) to force it on us.
CPG companies are certainly deflating the amount of product that goes into the stores thought the packaging stays the same.
"What does all of this have to do with the current DEPRESSION through a downwarddeflationary spiral? What isn’t allowed to burst due to inordinately high pressure will inevitably deflate by way of a steady and sometimes quickly accelerating downward spiral. All of the major markets are so artificially propped up by hot air that they have only one way to go —>DOWN! So, no matter what anyone else tells you please be acutely aware of the asset deflation which has been plaguing the residential and commercial real estate markets, the equity and bonds markets, the commodity and currency markets.
Severe, unprecedented and permanent asset deflation is the real killer of this faux economy. It’s easy to understand when looked at through the prism of leverage. After all everything – and we mean just about every asset under the sun – is currently being used to leverage another asset, investment or speculation. That’s just the way the financial world has worked during this reign of the Almighty Dollar. Just look at the current official debt of the USA to get a hint of what we speak. Can you imagine how much the debt service alone is on this multi-trillion dollar national debt?!"
.
http://cosmicconvergence.org/?p=1987
According to Martin Armstrong, developed economies can expect to see confiscation of assets rather than hyperinflation, which is what undeveloped countries engage in because there is nothing to confiscate in those countries.
Seems pretty pointless trying to define the current or future market economies, when all the data inputs from governments are fudged and fucking bullshit . The true global economy is far worse than we are led to believe - a whole whack worse. The only question is how much worse ? Would love to know how these bullshitting governments are going to explain all these lies, when TSHTF.
They won't bother, people will be too caught up in just trying to survive. I love that graphic that shows all the massive formations of German soldiers all decked out and it says "propaganda working" and then on the right side, there is a shot of a devastated Berlin, with a Russian waving a flag from the top of a wrecked building with the caption "propaganda not working."
the 'billion prices project" at mit says this about inflation
http://bpp.mit.edu/usa/