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Deflation is coming

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Deflation is coming
www.southofwallstreet.com

In going thru old research I found a note from Dave Rosenberg in March of '08, where he discusses Bernanke's decisions on rate cuts and points to his speech from 2002 on deflation as a road map for his options.  At the time, cutting the Fed Funds rate was 'the answer' that rallied markets and substantiated the Fed's ability to maintain confidence in financial markets.  We all know how that ended.

Rosenberg from 3/18/08 at ML:

We believe that Fed Chairman Bernanke is now fully in charge of the FOMC and he likely does not want to take a chance of disappointing the still very fragile financial markets. More importantly he understands that we are simultaneously facing a credit crisis, deepening housing market meltdown, and an unfolding economic recession.  (Sounds a lot like today, doesn't it?)
He goes on to question what Bernanke can do if rate cuts don't work:
Since the last rate cut, the Dow is down more than 500 points and
BBB corporate spreads have widened out an extra 50 basis points. Financial
conditions are actually tightening. So don’t think for a second that Bernanke does not have something up his sleeve – we think the press statement is going to be very key. What other aggressive action can the central bank possibly take?

Today Big Ben sits in a similar, but more nuclear situation.  In this 2002 speech he suggests the ability to buy foreign debt:
The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt, as well as domestic government debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt
We aren't far away from that being our last option, are we?  It will be a sad day if we start buying foreign wallpaper.  Here's the point of my note - if you look at where we are today, markets are becoming more fragile - requiring more 'solutions.'  At the end of the day bad debt can't be subsidized by facilities or coordination.  Debt has to be destroyed, which will cause levered market participants to fail and ripples to spread.  Its not doom and gloom BS - its the only way capital markets become healthy again.  Think of it as a backed up drain that all the Drano (liquidity) in the world can't unclog.  You've got to cut the bad pieces of the pipe out, which may cause you to tear up the whole bathroom - causing your wife (or husband.. or mistress)  to bitch and moan, but you eventually rebuild and move on to the next crisis.  That was pretty lame... sorry.

Bernanke continues in his address on why the Japanese couldn't fight deflation:

The claim that deflation can be ended by sufficiently strong action has no doubt led you to wonder, if that is the case, why has Japan not ended its deflation? The Japanese situation is a complex one that I cannot fully discuss today. I will just make two brief, general points.
First, as you know, Japan's economy faces some significant barriers to growth besides deflation, including massive financial problems in the banking and corporate sectors and a large overhang of government debt. Plausibly, private-sector financial problems have muted the effects of the monetary policies that have been tried in Japan, even as the heavy overhang of government debt has made Japanese policymakers more reluctant to use aggressive fiscal policies (for evidence see, for example, Posen, 1998). Fortunately, the U.S. economy does not share these problems, at least not to anything like the same degree, suggesting that anti-deflationary monetary and fiscal policies would be more potent here than they have been in Japan.
Well, it looks like things have changed from 2002, we aren't much different now from where Japan was.  The US now has a large overhang of government debt and massive financial problems in the banking and corporate sectors muting the effects of monetary policies (ZERO HOUR). 

Deflation appears unavoidable.  I'm renting assets until we see the painful - but necessary bust to rectify imbalances in liabilities.  So, with today's news about increasing liquidity via swap lines - I can't help but sense that Central banks see something developing that guys who stare at blinking screens don't.
 

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Thu, 12/01/2011 - 10:29 | 1934704 Blue Plus Red
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Japan's lost decades had collapsing asset values (RE, stock...) and surging commodity prices (I remember paying 3500 yen for a cantalope and 3000 yen for a cup of coffe.   The price of what you have goes down and what you need goes up.   SQUEEZE

Thu, 12/01/2011 - 10:15 | 1934663 NEOSERF
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I hate to say it but it is avoidable, just as inflation has been avoidable for the last several years...change the statistics and fudge the numbers all in the name of not upsetting the peasants...presto chango ...no deflation...

Thu, 12/01/2011 - 09:52 | 1934586 bugs_
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It feels like someone brought free donuts to the Deflationist's Lounge!  I'm going to print this article and pin it to the Lounge wall next to the 30 year treasury yield chart.

Thu, 12/01/2011 - 09:36 | 1934541 fonzanoon
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Hyperstagflation

Thu, 12/01/2011 - 10:08 | 1934632 WhiteNight123129
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We can agree that debt destruction is inevitable, inflation or bankruptcies is the only choice available, that the only nicety we can debate about. Bernanke, and Romney suicide Iran bomber are giving us the way forward though....

Thu, 12/01/2011 - 09:35 | 1934540 savagegoose
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not much has changed since 2002, except maybe gold was only $300 back then

Thu, 12/01/2011 - 09:28 | 1934523 Keystone Speculator
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Keystone's Inflation-Deflation Indicator provides a means to quantify the continuing inflation-deflation debate.  Nothing fancy, simply divide the CRB index by the 10-year price.  Thus, at this writing, 314.47/98.938 = 3.18

Over 4 is considered Inflation. Between 3 and 4 is Neutral with the Inflationists and Deflationists fighting it out. Between 2.9 and 3.0 is Disinflation.  Under 2.90 is Deflation. Thus, at 3.18, we are currently in Neutral territory but leaning towards Disinflation.

Historical background is provided on K.S.'s site for this indicator. In August, during the waterfall crash, the indicator dropped very briefly, only a day or so, into Deflation before the market bounce occurred.  The commodities top in the summer was marked by a reading of 3.6 so Inflation was never a threat this year; the inflation was transitory just as Chairman Bernanke has stated. The last time Inflation mattered was the commodities bubble that popped in July 2008; the indicator was over 4 back then. In summer of 2010, when Chairman Bernanke stepped in with QE2, we were in Deflation, that is why he had to save the markets with QE2.

Now, after the central bank bazooka yesterday and China easing starting, the threat of falling into Disinflation has subsided slightly. Thus, you can use Keystone's gauge above to measure the ongoing inflation-deflation debate. The Keystone Speculator

Thu, 12/01/2011 - 08:42 | 1934433 Tater Salad
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I love it when I see people throwing hyper in front of inflation.  That's like saying every war is a nuclear war.  Deflation is and will be....

 

Winning!

Thu, 12/01/2011 - 09:51 | 1934581 Chief KnocAHoma
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There are several things happening at once. I am a real estate broker - okay who laughed? -

Our market is somewhat rural with average suburban centers.

Properties are behaiving like this:

Commercial/Retail - down (Medical facilities would be an exception here.)

Residential - down and falling fast

Apartments - Stable to rising

Farm land - Rising rapidly!

This tells me there are two forces at play. Deflation in non essentials - Inflation in essentials.

But what the fuck do I know? Got silver?

And PS - The banks are completely fucking frozen. If your are coming to play, please bring cash. Farm land would be the exception.

www.SouthGaRealEstateReport.com

Thu, 12/01/2011 - 06:11 | 1934254 The Proletariat
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Deflation (D) in land, labor, capital, and utility.......Inflation (I) in monetary policy thinking it will fix it....then WWIII (military style....as passed this week) as last resort.......then sticks and stones (O)

 

D x I1,000,000,000 / WWWIII = 0

 

Thu, 12/01/2011 - 05:08 | 1934228 MiniCooper
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I'm sure we will have deflation first but that will prompt central banks to panic and do unlimited amounts of QE (making yesterday's injection look like chump change).

At first it will not work, just like it isn't working now. Money is/will just be parked back at the central banks as the velocity of money continues to fall even as the quantity of money rises. Eventually though, unlimited QE will be announced along with many other policy measures and sudenly the velocity of money will rise and inflation and then hyper inflation will follow.

The central banks will not withdraw the QE money fast enough once inflation begins to take off - for fear of bringing hyper-deflation back.  

Thu, 12/01/2011 - 09:15 | 1934495 Eeyores Enigma
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inflation/deflation is a participatory event.

 

You must have a majority of the population involved in these monetary actions.

 

Central banks are severely limited in how they can get money out into the broader economy.

 

Debt is currently ubiquitous sooooooooooo...deflation it is.

 

Unless everyone wants to plug their 401k's into the stock market, then the fed could blow a nice big hubba  bubble.

Cheers!

Thu, 12/01/2011 - 03:41 | 1934167 cathrynm
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I just don't see how we get inflation without wage increases.  If the FED makes a trillion dollars and it just sits in the vaults of the super-rich and the large banks, then how does it affect prices?   Retailers can try increasing the cost of a tomato to $5000, but who is going to buy this unless wages go up also. 

Costs can go up if the banks bid up the cost of raw materials, but then  companies costs go up, but prices still remain low because of low wages.  But then wages go even lower because the spread between raw material costs and the value of manufactured good decreases.  In this case companies become unprofitable and all commerce ends.

Thu, 12/01/2011 - 04:17 | 1934195 akak
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You're totally missing the point.

Yes, consumer costs will rise, and yes, wages will NOT rise, or even fall.  It is called "a falling standard of living", and it has been seen countless times under similar economic and political-financial circumstances.  I don't recall anybody ever making me a guarantee that my income has to, or will, keep pace with rising prices, and in fact, that is historically almost always NOT the case

Thu, 12/01/2011 - 10:22 | 1934692 Eeyores Enigma
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akak - If prices increase while wages decrease that has to be due to scarcity only, not inflation.

 

inflation means an increase in the amount of available money people have driving up the price of things through competition for the purchase of those things.

Thu, 12/01/2011 - 12:28 | 1934968 DaveyJones
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we are dealing with scarcity of course, scarcity of the one thing that drives the modern economy, that drives the cost of war, and that drives what's parked in your driveway. That's not going away, it's getting worse, and the whole world is in dramatic competition. A debt based economy and economic theories based on infinite growth are dying. The best investment we can possibly make is new energy and transportation methods while we still have the old energy to build it. For some reason, probably corruption, we're blowing that opportunity  

“If society consumed no energy, civilization would be worthless. It is only by consuming energy that civilization is able to maintain the activities that give it economic value. This means that if we ever start to run out of energy, then the value of civilization is going to fall and even collapse absent discovery of new energy sources.”

~ Dr. Tim Garrett

Thu, 12/01/2011 - 07:58 | 1934347 blindfaith
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more true than true...last night NPR was on this subject.  The current average wage vs the cost of living is the lowest on record in the USA.  Right now the purchasing power of the dollar is for the average person is equal to 1919 wages.  On the other hand, the profits of corporations is the highest on record, and the taxes paid by the well to is the lowest on record. David Stockman a few months ago was speaking the same thing, and what did the media do...why ignore him of course.

Since most men don't like to shop and have the littlelady write the monthly checks, most men don't see the damage that money printing does.  But you can rest assured that the 11 ounce bag of chips that was 13 two months ago, that was 16 ounces 12 months ago IS inflation that people live with and economist ignore.

This is a reciepe for slavery nothing more nothing less. 

Thu, 12/01/2011 - 09:05 | 1934475 Old Poor Richard
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We bring home less even from the discount supermarket.  Bags of chips really are full of air as you mention, meat is spoiled in the rack, they're re-stickering it with a new experiation date.   Scandalous behavior in retail which is getting nobody's attention.  While people are being gouged for fuel, electricity and staples, they riot to get their hands on $2 towels.  Toy stores want $50 for toys that used to be $25 and have added bargain bins stocked with $1 'specials' of lead-paint toxic broken crap they paid 5c a piece for.

The economy is a stinking pile of shit.

Thu, 12/01/2011 - 09:51 | 1934571 LawsofPhysics
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Yes, and I will only add that if you really think you can't get inflation without wage increases you need to talk to someone who lived in Russia during the collapse of communism.  When real capitalism comes back and fundamentals matter once again then you will wake up to realize that things like supply and demand do really matter in the finite world.  Basically, cost will be irrelevant and whether or not you can even get what you are looking for will be the issue.  Gonna be a bitch for many when what they are looking for is food, water, or fuel.  Fucking pods.

Thu, 12/01/2011 - 02:17 | 1934040 ActionFive
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They can show deflation by shorting "markets" with printing- whatever. Exponential cash injection needed for system - but they hide/cook the books.

They made pump prices go lower while crude went higher- whatever. Distortions and lies.

Deflation should have started years ago.

Thu, 12/01/2011 - 02:16 | 1934037 Lester
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No deflation with a fiat money system.

Essentials and inherently valuable commodities and some rarities will continue to appreciate more a function of limited supply unless a "life's essential".

All the shit that no one needs or wants when funds are tight will be marked down til it brings the owner something, if they have to sell...

This is already happening.  There are just so few buyers out there that the imbeciles think lowering prices will bring them business.  If you want to give away your inventory, lower the price; or find your buyers, however few of them there may be.

Selling quality stuff is always about identifying and communicating with your buyer.  Price isn't the main concern on a quality item, just competitiveness with premise of added value and service.  People who sell commodity priced items that lack buyer demand will be stuck with their inventory a longtime; and price will not create demand if it is non-existent at already competitive prices.

Crap and marginal luxuries will never sell in a declining market while the stuff you and I need to make daily living possible will continue to skyrocket in price.   Lester's Law...

Thu, 12/01/2011 - 10:43 | 1934762 sessinpo
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"No deflation with a fiat money system."

"All the shit that no one needs or wants when funds are tight will be marked down til it brings the owner something, if they have to sell..."

 

Do you not see that your comments contradict each other?

 

"Crap and marginal luxuries will never sell in a declining market while the stuff you and I need to make daily living possible will continue to skyrocket in price.   Lester's Law..."

 

In an instance of severe deflation, the common people will simply starve and fight for necessities. At this point, price doesn't matter because you simply have no resources to pay for it, even if the price goes down. Inflationist or hyperinflationist are just at bad if not worse then deflationist.

Thu, 12/01/2011 - 01:56 | 1934015 LarryDavis
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If anyone really knew the answer he would be working for goldman sachs and not posting on zero hedge. 

Thu, 12/01/2011 - 10:57 | 1934804 sessinpo
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Or as I hope, some are working to be self sustaining and trying to get others to be the same without a corrupt banking/political system. How about making posts that actually add to the discussion and tries to help others. Is it any wonder you get negative responses?

Thu, 12/01/2011 - 08:33 | 1934416 Dangertime
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Bull$hit.

Not all of the talent works for GS.  Some work for themselves.  Besides, who is to say GS employees do not post here?

 

Thu, 12/01/2011 - 08:38 | 1934424 Ghordius
Ghordius's picture

I hope so, I'd like to be recruited.

Hey, Squiddie, only a corner office and two secretaries! It's all I ask!

And of course lots of LOVE! You know what I mean...

Thu, 12/01/2011 - 09:05 | 1934476 SilverIsKing
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Brutally honest. I can appreciate that. And Squiddie, make it a double.

Thu, 12/01/2011 - 01:40 | 1933999 CapitalistRock
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Germany's hyperinflation 90 years ago actually progressed over 9 years. Only the last few months were a true hyperinflation. The rest of the 9 years was a long period of terrible inflation with bouts of deflation. The German mark rallied for many months at a time during that period.

The reason is that central bank printing does not come with the volatility that forced deleveraging does.

The author is correct that deleveraging may progress rapidly for a short time, but it isn't a long term trend. It's a short run in a very long episode of fed money expansion. Deleveraging can overwhelm fed printing for months or even a couple years, but it absolutely cannot overwhelm the Feds ability to print long term. That is why a dollar buys what 4 cents did back when the fed was created.

ADD version: No fiat currency has experienced price stability for a generation. Japan has the current record at just 20 years. Don't plan on the US breaking Japan's record.

Thu, 12/01/2011 - 11:35 | 1934937 DaveyJones
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well said

Thu, 12/01/2011 - 09:08 | 1934483 SilverIsKing
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Every bout with the deflationary demons will be met with money printing. Panic, CBs to the rescue. Rinse...repeat, over and over again.

Buy commodities during the panic periods.

Thu, 12/01/2011 - 01:11 | 1933955 Frank N. Beans
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you can't have inflation if nobody has any money to buy stuff. 

you can't raise prices if nobody is buying your shit even at lower prices.

if food and fuel prices go up (inflation), it forces prices of everything else (that we don't need) down (deflation).

and if food and fuel go up too much, we starve and/or go to war.

so given all that, the best thing for you and me is to have deflation.

Thu, 12/01/2011 - 13:02 | 1935290 Nels
Nels's picture

FnB - all that is true if the supply of money is down (i.e. nobody at all has money).  However, the FED is trying to fix that.  While you and I and the other schlubs mignt run out of money, the FED is going to make sure the Blankfein and Co., and the government do not run out of money.  There will be inflation, because that has political benefit to the folks who run the money spigot.  It's just that you and I won't get any benefit from it.

Thu, 12/01/2011 - 01:09 | 1933951 Bansters-in-my-...
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Ben.....

Is that you,...?

Thu, 12/01/2011 - 00:54 | 1933932 dolly madison
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I'm keeping my paid off properties, deflation or no. 

Thu, 12/01/2011 - 09:54 | 1934587 LawsofPhysics
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Me too.  ALL things physical from here on out.  It is the only way to put paper-pushing fucknuts back in their place.  Tired of seeing worthless pieces of shit live better than some of my own employees who are delivering real products.

Thu, 12/01/2011 - 00:42 | 1933917 Ron Real
Ron Real's picture

There's banal Robert Frost poem that goes "Some say the world will end in fire,
Some say in ice."

The issue is the world ending, not the temperature at the time.

To prevent the world from ending, wipe out the debt and start over by means of Glass-Steagall. Preliminary to that, one must get the British agent out of 1300.

Thu, 12/01/2011 - 08:14 | 1934376 Optimusprime
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Banal?  Mebbe in a stealth sense. 

 

It is IMHO a concise masterpiece, containing a lot.  Just ponder "But if I had to perish twice" for a while...

Thu, 12/01/2011 - 04:25 | 1934204 buyingsterling
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Global default on all government debt may be the only way to break this cycle for good.

Thu, 12/01/2011 - 00:40 | 1933915 semperfi
semperfi's picture

Yes, after the hyperinflationary blow-out Zimbabwe style.

Thu, 12/01/2011 - 00:36 | 1933912 fourchan
fourchan's picture

we can neither have inflation nor deflartion because

we have sent our inflation (wage) over seas for good, and due to

printing no deflation is possable, we are through the looking glass.

Thu, 12/01/2011 - 09:55 | 1934593 LawsofPhysics
LawsofPhysics's picture

sure, right up until real goods and services have to be delivered and all parties involved decide they are not being paid enough.  fucking pod.

Thu, 12/01/2011 - 02:20 | 1933963 ElTerco
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Interesting pair of opposing forces that only leaves room for revolution (theft from within) or war (theft from outside)... sort of like "The Pinching Theorem" in mathematics.  The key here is that it is the "have nots" that force some form of aggressive action.  The only way to vent pressure is to slowly, over time, cap the ability to create money from nothing (for instance, unwind the ability to create derivitives over time, slowly tighten lending standards, etc.) while at the same time slowly changing the redistribution of wealth (i.e. slowly increasing the rate of progressive taxation over time until there are large differences in wealth among the population/corporations, but not extremes).  It's so easy a child could do it, but paradoxically because our politicians are children, it can't be done at all.

Thu, 12/01/2011 - 00:34 | 1933908 bebopgun
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As long as gold & silver relatively speaking are more valuable than paper, let the metals fall. It'll just mean how much less other assets are worth.

Thu, 12/01/2011 - 00:36 | 1933902 Jumbotron
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You are going to have both hyperinflation and deflation. 

Deflation is what we are having now, due in large part to the global debt overhang and deleveraging.

The Central Banksters, in particular Bernanke, know this and are in the process of either printing like mad, buying up toxic assets to clean the bankster's books or loaning out cheap low to no interest currency worldwide.

Which of course makes any and all currencies from the soveriegns who are doing this worth as much and as nasty as what I use to wipe my ass.

Which then drives up the cost of commodities such as food and energy (which of course is the real key, since energy is needed to do anything in the world, including living).

Now people have less money to spend on housing, clothes, cars, movies, TV's etc, since they are spending more on just living through eating more expensive food and paying more for gas to cart their miserable asses to their ever increasingly meaningless jobs.  Which creates deflation in the retail world through hyperinflation in the commodity world.

And it gets worse as the hyperinflation which will be employed to stave off deflation will burden many businesses who are affected by higher commodity prices such as food and energy.  Which of the course the first thing they will do is either not hire any new employees or start firing the ones they have.  Which of course causes deflation since the now fired employee has no income to spend on anything other than food and housing....if he or she can be so lucky to even keep the house.  Which of course leads to more deflation in the housing market when they can't.

Which in turn....encourages the psychopaths in the Central Banks to do more printing leading to...well...you know.

Deflation begets hyperinflation begets more deflation begets more hyperinflation....until.....

CONFLAGRATION !!!

 

Thu, 12/01/2011 - 11:33 | 1934927 DaveyJones
DaveyJones's picture

you said it better than me. Good post

Thu, 12/01/2011 - 10:09 | 1934638 centerline
centerline's picture

The only correction I would make here is to call it inflation, not hyperinflation.

Inflation is a monetary thing.  This is happening now in spades as a result of central bank actions.

Hyperinflation is a confidence thing.  When widespread confidence is lost in a currency, the central banks loose control of perceived fiat value.  This could happen, but would hasten the end game.  Therefore, it will be avoided at all costs.

Deflation is a physiscal thing.  Yeah, it is part of the monetary circuit and directly tied to inflation (e.g. I wager we already crossed "zero hour," which is why the feedback loop is now producing these results).  But, we "feel" it more than anything else.  It is most noticeable in collapsing standards of living.  So, it is easier to talk about deflation in physical terms rather than monetary.

It is also why PMs alone are not a panacea.  The ride is going to be bumpy.  It could be long ride as well.  People who are unprepared may have to prematurely sell PMs and other hard assets just to get by.   

Anyhow, the primary reason why "physical" deflation is the forward trend is that it is the logical conclusion to an industrial age population explosion fueled by resources (i.e. petroleum) that are finite in nature occurring at a stage of human social evolution that is at best akin to adolescence.

 

Thu, 12/01/2011 - 18:14 | 1936497 Jumbotron
Jumbotron's picture

I would agree technically.  However, just look at the Fed's balance sheet and how much money is also being dumped into the system. 

Technically at that amount we should be having a hyperinflationary event as we speak.  But that only attests to the HYPER-deflationary event that is present now.  No matter the amount the Fed is absorbing in toxc assets and/or money printing, even this hyperinflationary amount is being swallowed in real time by the hyperdeflationary event.

You said that hyperinflation is a confidence thing.  Is the Fed's action along with the other central banks indicative of confidence?  NO.  I understand your viewpoint from a consumer/citizen/investor standpoint.  But eventually as the total lack of confidence in the world banking system forces the Bernanke's of the world to continue doing what is in any other scenario hyperinflationary behaviour, then John Q Public will lose confidence as well.  Then these two psychologies will collide and then it's all over.

Basically Eric Jantzen's KA-POOM theory over at iTulip.com

Thu, 12/01/2011 - 18:19 | 1936518 Jumbotron
Jumbotron's picture

You have to also remember that among all the elephants in the room, the largest is the $700 trillion notational dollars worth of derivatives that supposedly is there to help lubricate and insure the system.

Those contracts CANNOT under any circumstance be activated.

Once they are...as I believe is inevitable....no matter whether you believe in the Bible or not, there will be some Anti-Christ like figure....(A 21st century Hitler, if you like) who will spring up from the world-wide financial apocalypse that will occur when this happens.

That is why these banksters are hell bent trying to blow air underneath a stalled out, crashing 747 called the world economy.  And they will fail and all will perish in the crash.

Thu, 12/01/2011 - 08:07 | 1934361 maddogs
maddogs's picture

The Japanese model is the strongest model of a deflation. The Japanese have the US dollar (someone else-Sovernty has the international currency standard to thank) that has floated the ability to not hyper the Yen(relative to completely destroy). But Japan will hyper, like no other, if America does.

Japan shows a different exchange currency(world) can keep the party going.

What a mix up,or down,if the U.S. dollar looses predominance.

PetroYuan?

IMO, that is the only way a "reset" will not occur... no other currency chosen for currency standard(and dilution for the Bankers)

In every buisness model a retrencment happens, what I think is refererred to as "geting back to basics". Everything for the last 30<> years has really strayed from, for the Banks..Dirivitives are what Banks are thriving on, not what we know as "Bank lending". 

Dirivitives are not "real", Fiat is not "real".

One of two choices, Print more- not "real", quit printing- reset.

 

Thu, 12/01/2011 - 00:18 | 1933859 hedgehog9999
hedgehog9999's picture

If you all go back and review the data in Oct 2008,

1) fed introduced the swap lines just like Yesterday

2) Chinese PMI dropped below 50

3) Subprime solvency/liquidity crunch was in full swing (just like Sovereign Debt crisis is now on full swing).

I've seen this movie before and the SPX dropped over the cliff 600 points in a few weeks after these three conditions were in place!!!  an episode of deflation to purge excesses to a point where more debt could be issued willy nilly.  That's why OIL did not explode Today, a deflation episode is beginning to unfold.

 

 

oisubpr

D`)

 

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