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Guest Post: The Fed's Real Worry - A Pick Up In Deflation

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Submitted by Lance Roberts of Street Talk Live blog,


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Sat, 05/25/2013 - 19:10 | 3598904 barliman
barliman's picture


Economist - derived from the latin Ikonomos - He who is ALWAYS fucking WRONG!!!

Sat, 05/25/2013 - 19:21 | 3598914 I think I need ...
I think I need to buy a gun's picture


i mean who is kidding who

Sat, 05/25/2013 - 19:58 | 3598946 LawsofPhysics
LawsofPhysics's picture

Exactly. When diesel is $1.00 a gallon, we can worry about deflation. No currency or society has ever collapsed because deflation. Morons.

Sat, 05/25/2013 - 20:43 | 3598980 daveO
daveO's picture

But, the thieveing bankers have collapsed! Tapering is smoke screen to slow down the gold buyers. 

Sat, 05/25/2013 - 20:55 | 3598998 RafterManFMJ
RafterManFMJ's picture

Inflation in what you need to survive (gas/food/heating oil/energy) and deflation in things you can no longer afford anyway (new car, house, etc.)

In the new normal those who lose the least will be the winners.

Sat, 05/25/2013 - 21:38 | 3599054 Bay of Pigs
Bay of Pigs's picture

Deflation? I saw a case (24) of Budweiser at $54 in a BC liquor store yesterday. Gas is $5.60 a gallon here too. And new car and housing prices aren't going down either.

Inflation is raging around the world.

Sat, 05/25/2013 - 22:46 | 3599131 Stuck on Zero
Stuck on Zero's picture

The people who run government think deflation is when the assets of the billionaires go down in value.  That's what they worry about. 


Sat, 05/25/2013 - 23:00 | 3599148 Pumpkin
Pumpkin's picture

$54?  You need to fucking move!

Sun, 05/26/2013 - 00:45 | 3599255 flyingcaveman
flyingcaveman's picture

Alot of tax in Cunuck land.  Buttwiper in the states is cheaper than water.

Sun, 05/26/2013 - 03:15 | 3599329 MeelionDollerBogus
MeelionDollerBogus's picture

Ontario (also Canuckland) same product, $33.

Sun, 05/26/2013 - 12:11 | 3599754 tarsubil
tarsubil's picture

Vancouver grows money from pot.

Sun, 05/26/2013 - 09:36 | 3599542 GOSPLAN HERO
GOSPLAN HERO's picture

Bud is lousy beer.

Sun, 05/26/2013 - 02:36 | 3599323 Colonel Klink
Colonel Klink's picture

Yep, Buttwiper is shit beer.  Don't know why you'd even pay that.  Buy a microbrew with some flavor and body.  Fucking lawnmower beer sucks, pisswater.

Sun, 05/26/2013 - 19:34 | 3600289 Bay of Pigs
Bay of Pigs's picture

Who said I bought it? Hell no Col...

Sun, 05/26/2013 - 13:11 | 3599816 Marco
Marco's picture

Spanish civil war?

Sat, 05/25/2013 - 20:35 | 3598972 PiltdownMan
PiltdownMan's picture

The fed is finally creating inflation. And mortgages rates are rising too

Sat, 05/25/2013 - 19:58 | 3598945 daxtonbrown
daxtonbrown's picture

Smart people are overthinkig this. They believe only uber smart manipulation of the money supply can create wealth.

But the Federal Reserve and Central banks produce nada, zilch, zippo. In fact, if money is information (especially in it's current digital form) then ALL monetary intervention can do is introduce uncertainty (i.e. negative information) into the system.

In other words, Bernanke is ALWAYS pushing on a balloon, otherwise he would be a perpetual motion machine able to create free lunches out of thin air. So the only solution is fixed rules and/or gold (or bankers being used as Christmas tree ornaments on lamp posts)..

The reason you need free markets is to ascertain value on a dynamic basis founded on the real world. This is why ZeroHedge paranoia is right on the money. The problem is knowing the timing of the collapse is unknowable.

In short, what we have is a raisin muffin Biflationary Depression.

Sat, 05/25/2013 - 21:45 | 3599062 infinity8
infinity8's picture

I agree but, I also hate raisins.

Sun, 05/26/2013 - 20:26 | 3600345 Milestones
Milestones's picture

Thanks for posting that informative site.           Milestones

Sat, 05/25/2013 - 19:10 | 3598905 Seize Mars
Seize Mars's picture

Ugh. Stop it. There is no such thing as deflation. It's not funny anymore, debunking this kind of crap.

To quote someone wise, noone ever fought a world war because of deflation. No society ever collapsed because of deflation. Ever.

Sat, 05/25/2013 - 19:29 | 3598923 Rustysilver
Rustysilver's picture

Seize Mars,

I am not an economist, but, please tell me what was happening in Japan for the last 20+ years.

I understand that sometimes you don't have one pure from another.

Sat, 05/25/2013 - 19:46 | 3598938 disabledvet
disabledvet's picture

"a misallocation of human resources at both a profound and galactically significant level." it's hard to imagine deflation in the USA with the war effort such as it is...however...this is a rather paltry war effort effort compared to World War II. we definitely had an inflation then do to the massive production and energy consumption needed to "maintain victory." interesting in order to keep inflation up (barely) "the private banks signed off on massive amounts of quantitative easing for a decade." that was TOTAL war back then and included a draft which lasted until 1973. Japan has a massive mis match between productive assets and their debt. same is true for many countries in Europe as well. (remember Greece at 300 percent interest rates? ah, the good old days.) i think if there is any hint of Japan setting off a wave of deflation globally (knock on effects in Great Britain itself?!!! Russia??? South Africa?) then clearly the Fed will stomp on those rates "just in case." we'll see of course but i'm hoping yields on the ten year hit Japanese levels within say...six months.

Sat, 05/25/2013 - 19:47 | 3598939 WAMO556
WAMO556's picture

Uh, inflation?

One quadrillion Yen?

Everything costs more.

I was over there when it was 300 yen to the dollar and there shit was expensive. Now it is 100 yen to the dollar.

Can you imagine paying 10,000 dollars for some saki? Yeah, me neither!

Sat, 05/25/2013 - 20:55 | 3598999 Seize Mars
Seize Mars's picture

Yawn. What has happened in Japan is the following: first, the spectacular bubble of the 80's/90's resulted in real estate prices that were insane. Since then the insane prices have come down to be simply crazy. The BOJ and the government have fought this price decline tooth and nail with every policy trick they can think of. Secondly, the cost of living is higher now than it was even back then.

So to answer your question, what they have seen is INFLATION. Inflation is the fake creation of credit.

If the price of stuff goes down in America, I will let you know. That would be great. No wars, no collapse. We would all be getting more prosperous. THAT'S NOT WHAT WE SEE. I see groceries and everything costing more. Society is coming unglued, you don't have to be a critical thinker to see that this country is on the brink. That's inflation.

The Japanese bubble was caused by the same thing that caused America's bubble(s): credit creation. Credit creation.


Paper Money--->Bubble--->Recession--->Stimulus--->Inflation--->Price Controls--->Shortages--->Riots--->Troops on Your Streets.


Sat, 05/25/2013 - 21:02 | 3599010 Dingleberry
Dingleberry's picture

exactly. who the fuck are the retards caling for deflation? 

Sat, 05/25/2013 - 22:26 | 3599107 ponzisaurus
ponzisaurus's picture



There you are!

Where you been boy?

Havnt been chasing the neigbors cat have you?

Sat, 05/25/2013 - 23:51 | 3599212 robertocarlos
robertocarlos's picture

I am one of them. We shall see who is right.

Sun, 05/26/2013 - 12:20 | 3599765 tarsubil
tarsubil's picture

The system continually creates money backed by nothing and charging interest. This gets expanded through fractional reserve banking and this gets expanded through ever higher levels of financialization of everything. There is never enough money in the system to pay off the debts due to the interest being charged up the expanding money system so it requires more and more. Sooner or later the system approaches the realization that there isn't enough money and banking and financials implode (kinda like deflation in 2008) but they will be bailed out with more money as needed (inflation since bailout/QE after 2008). I think deflation and inflation are both inherent in our system and once the bail outs reach escape velocity you will see hyperinflation as people lose faith in FRNs.

Sun, 05/26/2013 - 11:13 | 3599666 Bobbyrib
Bobbyrib's picture

Right now, we are seeing disinflation. The price of gasoline, copper, timber, etc. is coming down. There are certain expenses that are irreversible when their costs go up like taxes, tolls, and any other government created expenses. I think if Bernanke does not raise the amout of asset purchases (insanity), we will continue to see disinflation. The price of food and commodities could continue to drop, but to say we will enter deflation is a little too optimistic (it would actually help the economy).

Sun, 05/26/2013 - 12:24 | 3599770 tarsubil
tarsubil's picture

Gas is not coming down significantly right now. Real deflation in gas would bring it down to below 2 bucks like in the 2008. There was a brief period of real deflation in 2008 but the trend for the last 10 (and 100) years has been inflation in the price of gas.

Sun, 05/26/2013 - 16:09 | 3600030 Bobbyrib
Bobbyrib's picture


A slowing in the rate of price inflation. Disinflation is used to describe instances when the inflation rate has reduced marginally over the short term. Although it is used to describe periods of slowing inflation, disinflation should not be confused with deflation.

Sun, 05/26/2013 - 17:43 | 3600164 tarsubil
tarsubil's picture

Cool. Read you wrong. Sorry about that.

Sat, 05/25/2013 - 20:36 | 3598974 Iank35
Iank35's picture

Ugh indeed. You have this the wrong way around.

Hyperinflation suggests that a government is willing to print money to pay off its debts.

When this stops working and no one is willing to lend to an inflating government any longer they increase taxes and seize the assets of their citizens...both very very deflationary.

In the 20's Germany didn't disappear because there were other currencies the Germans could get hold of to maintain some sort of an economy....likewise in Zimbabwe now. They have a black economy fueled by dollars.

People can work around hyperinflation but total deflation is the killer of empires. 

Sat, 05/25/2013 - 20:46 | 3598984 daveO
daveO's picture

Bankers kill Empires. They promote all the gov. spending funded by debt. Debt is what's killing this Empire, just like every other one. Deflation is just that debt going bad.

Sat, 05/25/2013 - 21:14 | 3599021 Iank35
Iank35's picture

You're not wrong. As the cost of big government increases exponentially they, with the help of bankers (or bankers with the help of governments) inflate currency to their own their mutual benefit, subversively stealing the wealth of Joe public.

They increase the debt bubble until it POPS leading to rapid deflation....the ultimate killer.

I don't actually agree that the Dollar will get weaker, quite the opposite in fact.

As Japan, China and Europe become increasing unstable big money will rush into the last (perceived) safe haven that is the dollar......Just before this final bubble pops.

Sun, 05/26/2013 - 03:12 | 3599326 MeelionDollerBogus
MeelionDollerBogus's picture

"They increase the debt bubble until it POPS leading to rapid deflation....the ultimate killer."

This doesn't happen. Hasn't happened. Prices go up for good or the currency ceases to exist (that is not deflation).

Sun, 05/26/2013 - 08:39 | 3599483 yogibear
yogibear's picture

You can have a collapse in demand from  individuals. You just meed more slaves/consumers with lower wages, higher taxes to make up the difference. Opposite of production (lower costs by producing more).

The slaves/consumers will take out more loans/debt and die in debt. 

Make goods cheap enough to get by with, but saddle them with debt. 

It seems like the ideal bankster plan.

Sun, 05/26/2013 - 13:21 | 3599823 e-recep
e-recep's picture

yep, and that's why the kings and emperors have expelled the usurers from their realms. every time the parasites nested in a new country, the local economy went into the shitters in the long run and their host died or the host got rid of the parasites.

Sun, 05/26/2013 - 03:11 | 3599325 MeelionDollerBogus
MeelionDollerBogus's picture

History says this has never happened. Not one empire died in deflation. Ever.

Sun, 05/26/2013 - 05:59 | 3599390 PowerPlayer
PowerPlayer's picture

The Great Depression is one obvious example of deflation.  Everything Bernanke has done has been to avoid a Great Depression type scenario.   

Don't get me wrong.  Who wouldn't love less expensive prices, but I don't know anyone anyone who wants lower wages?  Since wages don't usually get reduced in actuality, people are laid off or given less hours instead.  Companies defer investments because they don't want to invest in assets or people when they can buy them or hire them at cheaper prices in the future.  While I have been worried about inflation for the last 4 years like many people, I'm starting to become much more concerned about a deflationary scenario.       

Sun, 05/26/2013 - 08:29 | 3599479 BidnessMan
BidnessMan's picture

Prices down 10% are not a win when your income goes down 100% if you are laid off. 

Certainly not a win for the millions of prudent saver retirees who expected to get 5% on their savings who now get .1%.  Their income is down 98%.  Dog food being 10% cheaper does not help.

Sun, 05/26/2013 - 08:41 | 3599488 yogibear
yogibear's picture

The bankster cartel increase costs enough so the consumers become perpetual debt slaves.

Their spending decreases.

Make up the difference with more consumers in other parts of the world. More and more debt slaves. 

Sun, 05/26/2013 - 11:22 | 3599680 Bobbyrib
Bobbyrib's picture

So you think wages are being held up by Bernanke's Quantative Easing despite the fact that supply and demand decide wages (number of workers to job available). All employers have to do is pay more than unemployment (if they really need workers) and more than other countries willing to import foreign workers. It's not Bernanke that is propping up wages, he is completely fucking the middle class over by hiking expenses. Your account is only a month old, you should continue to read the articles. I hope you haven't been reading the article all along and believe in what Ben is doing (no offense).

Sun, 05/26/2013 - 19:32 | 3600286 PowerPlayer
PowerPlayer's picture


I have been a constant critic of QE.  Personally, I would have preferred that we accept short term pain for long term sustainable growth, but unfortunately the Fed chose to create this mess instead.  They have to know that the equity and housing markets aren't reflecting the underlying fundamentals.  What do they do now?  Pop the asset bubbles and watch the two bright spots, equity markets and housing prices turn south along with worsening the already weak employment and production figures.   

The fact is there are a lot more wars that have started from deflation and/or unempoyment than inflation.  We have seen Iraq, Venezuela, and Argentina all experience tremendous inflation and no wars.  On the other hand, look at places with tremendous amounts of unemployment, places like Libya, Egypt, Syria, Spain, and Greece.  It isn't a good formula to have half your youth unemployed and broke.  They start protesting, which sometimes turns to riots, which occasionally leads to revolution.

Think about it.  World War II was the perfect cure for the Great Depression.  When you have no economic activity, a war is a great way to create economic activity.  When you have inflation a war that increases economic activity is the last thing you really want.   

I hate the QE path that we have gone down, but my only point is that anyone that claims deflation doesn't exist or isn't a problem isn't looking at history.

Personally, if I was Bernanke I would get out of town and let Yellen sink with this ship either way, after all she contributed significantly to this mess.     

Sun, 05/26/2013 - 08:45 | 3599472 Urban Redneck
Urban Redneck's picture

They have been fighting the deflation of shadow money supply quite vigorously, but until excess reserves exceed the size the of both the required shadow banking de-leverage and net derivatives exposure-- there is a real threat of deflation, which they continue to battle by inflating the money supply- which unfortunately does trickle-down to the peasants and their little slice of the economic pie...

Sat, 05/25/2013 - 19:13 | 3598910 Seasmoke
Seasmoke's picture

I think they are much more afraid of bring hanged.

Sat, 05/25/2013 - 21:28 | 3599047 ponzisaurus
ponzisaurus's picture

Mlord the rabble have breached the perimeter.

I see. activate the first z43k4 combat robot.

Yes mlord.

And bring me my box of cubans!

Sun, 05/26/2013 - 11:23 | 3599682 Bobbyrib
Bobbyrib's picture

Mlord requesting the cubans, of course being a champagne liberal.

Sat, 05/25/2013 - 19:17 | 3598912 bugs_
bugs_'s picture

Deflation is our friend

Wouldn't you like to drive a 100 dollar car?

Smoke a 75 cent cigar?

I know I would!

Sat, 05/25/2013 - 20:48 | 3598989 daveO
daveO's picture

Store your savings outside the banking system, or Fed Notes. If not, you'll wake up in 1933 or 1971, with a dollar worth considerably less.

Sun, 05/26/2013 - 00:42 | 3599254 flyingcaveman
flyingcaveman's picture

What about $5.00 prostitutes?

Sun, 05/26/2013 - 08:20 | 3599471 BidnessMan
BidnessMan's picture

Available in Greece today

Sun, 05/26/2013 - 08:37 | 3599480 Urban Redneck
Urban Redneck's picture

$100 cars and $.75 cigars aren't deflation.  Deflation is when the bankster holding a trillion dollars in interest rate derivatives is in the money on his position and has a competing claim on your bank deposits for money which can either be used to buy cars, cigars,or otherwise generate activity in the real economy, or be hoarded on his balance sheets which only exist in the financial unterverse/andereverse, and generate no real economic activity.


Sun, 05/26/2013 - 09:06 | 3599511 mess nonster
mess nonster's picture

So far, all the comments I've read are idiotic, but yours goes all the way to fucking stupid.

Yes, there is some price inflation, caused by banksters using their free lucre from the Fed to speculate in the commodities market. However...

1. Oil prices are NOT a sign of inflation. They are a sign that the stuff is getting harder and harder to come by. Thus, high oil prices are a sign of deflation, or, to be more accurate, are pushing a deflationary dynamic. Spend more for oil, you have less to spend on other things.

So far, I haven't heard ANYONE ask what factor high food prices, or the higher cost of other things, is caused by the high  price of oil. Your food is made out of fucking oil, in the sense that it is grown with tractors, pesticides, GMO technology, and fertilizers, al of which need oil.

My guess is that oil costs are driving the apparent "stagflation" we are seeing.

2.Deflation is your friend????  You are a fucking moron. (To all those who say no social upheaval comes with deflation, go study up on your K-wave theory).Here is what happens in a deflationary environment:

    A. First, financial ponzi collapses in a dramatic fashion, destroying the grater part of "money" (ie credit/debt) overnight. When everyone wakes up, the amt of money in the economy has decreased by a massive amt., say 9/10.

   B. No money means everyone holds on to what little of it they have. Velocity comes to a screeching standstill, which has the virtual effect of vaporizing the remaining money supply to close to zero.

   C. Farmers can't get acess to money to buy oil/seed/fertilizer/tractor parts/ make debt payments etc. Food production ceases.

   D. Producers of manufactured goods see sales STOP. They can't pay debts, workers, buy materials, energy inputs, etc. Production ceases.

   E. Prices plummet, which sounds good, but prices fall because no-one has any FUCKING MONEY, because everyone is out of work. There isn't any food to buy, even at reduced prices. If you find a cigar at all, it will be the stub of one you pick up out of the gutter, and you'll be happy for it.

Deflation means hunger, unemployment, aimless wandering, starving orpahaned children in the streets, social upheaval, and war.

The last deflationary epoisode, and all those that preceeded it, were caused entirely by the promiscuous creation of debt by fractional reserve banking.and the embrace of the sin of usury. This cycle is DIFFERENT.

In addition to the prevalence of the above, which is at unprecedented levels,(DERIVATIVES, BITCHEZ!!!) our global economy faces several historic and unprecedented systemic deflationary drivers:

I. Energy shortfalls. Peak oil is a reality.

II.Climate change. When you spend all of your time digging out from the last disaster, you have less time to do productive things.

III. Peak population growth: A declining human population is NOT a good thing, in economic terms (despite being good in environmental terms).

IV. Fukushima and nuclear power in general. Fukushima is killing the North Pacific. You can't kill a fifth of the planet's ocean surface and expect inflation. You just can't. But once deflation really gets going, expect the rest of the world's nuclear reactors to start failing, melting down, leaking, and otherwise spewing radiation all over the fucking place. Why? Simple- no money, no spare parts. Here's how it works: Dumbfuck Power and Light Inc, is run by greedy, incompetent fuckheads. What have they done? Gambled in the markets. All of a sudden they wake up and are broke. The gummy-mint can't bail them out, they're broke. Everyone's broke. But Dumbfuck Power and Light owns a nuclear power plant. It has rusty pipes, sticky servos, leaky valves, etc, etc. DPL has no money to buy parts or hire workers to make repairs. Hell, the companies that MADE the parts are broke and out of business!! What can DPL do? Walk away, that's what.

If you think that a world which becomes essentially uninhabitable by anything more complicated than a cockroach is vulnerable to inflation, I will leave you to your auric fantasy world.

V. Comets. If you're not paying attention to comets, (because you're too busy refreshing your Kitco page every two seconds), you're in for a big and unpleaseant surprise. A deflationary surprise.

To sum up: I will lay odds that every idiot here who claims inflation owns gold. That means you want inflation so bad, you have created your own delusionary reality. It's not my problem, but I don't have to sit back and take the insanity lying down.

Sun, 05/26/2013 - 10:24 | 3599602 kurzdump
kurzdump's picture

Well said. To all inflationists: Wake me up when wages go up.

Sun, 05/26/2013 - 12:58 | 3599798 DosZap
DosZap's picture

Oil prices are NOT a sign of inflation. They are a sign that the stuff is getting harder and harder to come by. Thus, high oil prices are a sign of deflation, or, to be more accurate, are pushing a deflationary dynamic. Spend more for oil, you have less to spend on other things.


The US creates the majority of the oil we use, and contrary to popular belief we export only 8% from the M E.And we Export 28% of all our refined gas & diesel to get higher prices overseas.There is a glut of oil in the US and the pricks keep the prices up, and the Specs just jack the price up of crude(just like the metals, they are paper game manipulated).Coal is once again our main souce of energy used.

Sun, 05/26/2013 - 13:24 | 3599826 e-recep
e-recep's picture

what a naive comment. can you imagine what your wage would be when a car cost $100?!

Sat, 05/25/2013 - 19:18 | 3598913 FreeMktFisherMN
FreeMktFisherMN's picture

A reminder that inflation is the increase in supply of money/credit. Rising prices are a symptom, not inflation itself. Malinvestment due to distortions in price signals is another huge consequence. And prices are more so rising 8-14% and often more, depending on sectors (there is no aggregate stat to gauge because inflation is not homogeneous). But even if say something 'only' went up 3%, in a free market w/o ctrl-p'ing, the price might have fallen 4%. So I look at that as a lot bigger deal than the 'accounting' increase of 3%. It's called opportunity cost/what would have happened. 

Deflation is a healthy thing. Purchasing power goes up and productive people reap the benefits of their productivity gains, as opposed to inflation where parasites closest to the source of new fiat printed gain whereas for everyone else, there's higher prices.

Sun, 05/26/2013 - 12:10 | 3599751 mess nonster
mess nonster's picture

Both inflation and deflation are two sides of the same bankster coin. inflation is the fattening up stage, and deflation is the shearing /slaughtering stage.

To continue the analogy, we're in a unique situation, where the banksters got so greedy they allowed their sheeple to overgraze the range- now the deflation they hoped would be a harvest will be so devastating all they will have will be bleached bones- it will be a deflation that will  take them out too.

Sat, 05/25/2013 - 19:27 | 3598919 Bindar Dundat
Bindar Dundat's picture

My son tells me we can't have inflation without rising salaries. Shit he just got his PHd. in economics so what does he know.

Sat, 05/25/2013 - 20:53 | 3598994 daveO
daveO's picture

Guess he can get a gov. job!

Did he study Mexico after the the Oil Bubble bust in the mid 80's. They had tons and tons of inflation w/o wages keeping up. We are Mexico. Theirs was oil related, ours is China 'slave labor' related.

Sat, 05/25/2013 - 19:31 | 3598925 doggis
doggis's picture

reading all these posted comments below makes me UBER PROUD to be a zerohedger!!  



KMA!!!!! [kiss me arse]


Sat, 05/25/2013 - 22:02 | 3599091 Crisismode
Crisismode's picture



Relax now and take your Prozac.

All-Caps will devour your brain.

Sooth yourself.



Sat, 05/25/2013 - 19:35 | 3598930 criticalreason
criticalreason's picture

if mainstream economists were any good (at forcating etc) we wouldnt b in this mess.


bottom line is rising energy prices make everything dependent on energy more expensive; e.g. food, transport, people hence there is less money to spend on other things, hence recession, expensive energy  equates to lower growth, central bank pump money to compensate for fall in asset values and prevent deflation.

Sat, 05/25/2013 - 20:57 | 3598997 daveO
daveO's picture

As soon as FED policy started driving prices up, it was the same as tigthening. Theft for the Banksters.

Sat, 05/25/2013 - 21:19 | 3599041 petolo
petolo's picture

Those mainstream economists are real good at fornicating us who work for a living. My apologies for using your typo criticalreason in my attemp at levity.Fuck those fornicaters.

Sun, 05/26/2013 - 01:07 | 3599270 chindit13
chindit13's picture

I couldn't tell if your typo meant "forecasting" or "fornicating".  I guess it's right either way, as economists probably aren't much good at either.

Sun, 05/26/2013 - 11:11 | 3599663 translator zero
translator zero's picture

Mainstream economists are good at what they are paid to do: shout the party line.

Maybe fornicating too, who knows.



Sat, 05/25/2013 - 20:05 | 3598954 spanish inquisition
spanish inquisition's picture

So with gold manipulation to keep the price down it has less to fall in comparison with other asset classes in a deflationary enviroment. Win Win any way you look at it.....

Sat, 05/25/2013 - 20:12 | 3598957 q99x2
q99x2's picture

I liked the Humpty-Dumpty part.

Look we don't have the 2% minimum growth rate necessary for the ponzi to continue. We are going ice fucking nine as I type this.

Sat, 05/25/2013 - 23:11 | 3599161 W74
W74's picture

Cat's Cradle?

Sun, 05/26/2013 - 09:17 | 3599522 mess nonster
mess nonster's picture

Kurt Vonnegut's brother was a scientist who studied cloud seeding. He (the brother) investigated silver iodide which has a perfectly hexagonal molecular structure,and therefore is almost perfectly hydrophilic, and makes a perfect cloud-seeding particle.

Every western state has a cloud-seeding budget. Cloud seeding has massively disrupted weather patterns across the west, and, ironically, has exacerbated drought conditions as it has shifted macro-air movements from nonrmal patterns.

Anyway, that's where Kurt got the idea for ice-nine. Trivia, but fun trivia.

Sun, 05/26/2013 - 12:36 | 3599615 Urban Redneck
Urban Redneck's picture

Not funner...

Cloud seeding, loss of ~2% of the of the earth's land surface area to dam reservoirs, and a significantly larger percentage being systematically irrigated to feed billions of additional people over the last century... (not that scientists who ask for money to look into such matters are likely to get it, unless they throw in some boogeymen acceptable to their peers - like CO2). 

Sat, 05/25/2013 - 20:32 | 3598971 maskone909
maskone909's picture

Deflation is only bad for banks.
One argument is that goods will be scarce because peeps wont make money selling them.
I dont think so.
Crazy world we live in when all it takes is an elementery understanding of our financial system to understand its curruptedness. But hey, the kardashians are on!

My fam looked up to my older bro as this wise all-knowing cat. Went to a top school and got an engineering degree ect.
I had to be the one to explain to him that the FED was a private institution and the mechanics behinde its lending. I have a GED. Goes to show what A UC berkely education will get ya..... Fuckin brainwashed.

Sat, 05/25/2013 - 21:07 | 3599017 Seasmoke
Seasmoke's picture

+1600 on the GED and smarts. Fucking book smart assholes.

Sat, 05/25/2013 - 22:38 | 3599117 ponzisaurus
ponzisaurus's picture

There are some book smart ones who have gotten their hands dirty and their ass kicked.  A "education" does not guarantee the absence of critical thinking just ensures a high degree of probability it will be absent.  Many have learned to keep their mouth shut.  Expressed critical thinking is the quicxkest way to fail in the educational system.  On the other hand a semi epsilon moron can get a phd by parroting.

Sun, 05/26/2013 - 00:51 | 3599257 Curiously_Crazy
Curiously_Crazy's picture

"One argument is that goods will be scarce because peeps wont make money selling them. I dont think so."

Yeah it's an argument I've never understood either. I mean, lets look at just a tiny number of things: Computers, TV's, Games consoles, DVD's and BluRay and their associated players, board games, anything using GNSS, Phones and plenty more.

Each of the above will be cheaper next year (if not in the next three months) by as much as 50% yet people still buy them *today* if they have the cash to spare.

" But hey, the kardashians are on!"

It may sound funny but it was only earlier on this yr I actually bothered to see who the fuck the kardashians were. I haven't owned a tv for years yet that name kept popping up (along with booboo-hunny or some shit) so I thought I better google it to see what people were talking about when it was mentioned. In short, I'm bloody glad I got rid of the tv if that's the rubbish that's on it these days.

Sun, 05/26/2013 - 06:47 | 3599407 smacker
smacker's picture

"Deflation is only bad for banks."

And also for anybody who has debts I believe. Since their true value ceases to decrease over time by price & wage inflation. But for consumers, price disinflation and deflation are good things and are often associated with commercial success. See IT gizmos which have come down in price over the past 20 years. Which also explains why Govts include them disproportionately in their fake CPI measurements.

Sun, 05/26/2013 - 11:25 | 3599686 DosZap
DosZap's picture

Goes to show what A UC berkely education will get ya..... Fuckin brainwashed.

A wasted degree, and a ruined mind.

Sat, 05/25/2013 - 20:37 | 3598976 WTFUD
WTFUD's picture

Can we all agree that this is a Depression and not the run of the mill recession?

Sat, 05/25/2013 - 20:47 | 3598985 maskone909
maskone909's picture

Its not a depression... Fuck that shit. Its a god damn ass rape. And the middle class are gladly asking for second helpings... No need for lube or prophylactics

Sun, 05/26/2013 - 10:18 | 3599591 FreedomCostsaBu...
FreedomCostsaBuck-o-Five's picture

...strongly worded letter to follow...

Sat, 05/25/2013 - 21:19 | 3599040 ponzisaurus
ponzisaurus's picture

What it is is the end of a paradigm.  The paradigm ending is "growth is good".  messy

Sat, 05/25/2013 - 21:05 | 3599014 luna_man
luna_man's picture



Should be clear to all...The "Fed", has not a clue!



Sat, 05/25/2013 - 23:07 | 3599157 el Gallinazo
el Gallinazo's picture

To the contrary, I think the Fed knows exactly what it is doing.  The fact that they are digging the graves for 99% of Americans is not a mark of stupidity.  I think it is really part of their game plan to inculcate this stupidity meme into the alternative media.  Stupid - no.  Evil - yes.

Sat, 05/25/2013 - 21:10 | 3599023 buzzsaw99
buzzsaw99's picture

gasoline will be $10/gal and the cpi will still be sub 2%

Sat, 05/25/2013 - 21:23 | 3599044 AllWorkedUp
AllWorkedUp's picture

No kidding huh? Gasoline was up in my state $.06 LAST WEEK. Beef prices are going nuts. I'd like to experience a little deflation in the things I have to have like food, energy, water, medical costs.

Do they think because they pounded gold and silver that means there's no inflation?

Sat, 05/25/2013 - 23:15 | 3599171 ponzisaurus
ponzisaurus's picture

All those things are going UP UP UP!

Inflation is GOOD!

It means the economy is growing!

Skys the limit.

You do support a healthy economy dont you citizen?

Your salary is going down- to $0 in many cases.

The new i-gadget has 27x the features for only $499 a incredible value!

velocity at zero for all but .guv and corporate (those left after survivor episode 65344.)

However for velocity zero folk consolation prize! snap And SS disability.

Im secreting federal reserve notes about my person and when the time is right I will buy gold and silver.

Silver will be at  50 cents and gold at $22 but none available to buy.

Their low price will however demonstrate that The EVIL deflation is out there.

A loaf of bread a mere $9- and available.

Inflation is GOOD.

It means the economy is growing!

You do support a healthy economy dont you citizen?

Sat, 05/25/2013 - 21:13 | 3599024 ponzisaurus
ponzisaurus's picture

Why wouldnt the fed let a deflationary storm hit, let the banks go kaput and let their real master buy up assets on the cheap just like they always have before? The tightening can be blamed on any of a myriad of reasons many of them mentioned here daily so the fed can maintain its facade of being the protector of the economy and the crisis can be used just like it always is.  The new crop of politicians will be owned by the fed just like the old ones.  Wheres the problem?

Sat, 05/25/2013 - 21:49 | 3599072 chasman
chasman's picture

The last paragraph above is particularly important. The biggest fear of the Federal Reserve has been the deflationary pressures that have continued to depress the domestic economy.......


This fed reserve gives a flying fuck about anybody or anything.....Seniors, savers, middleclass , this president they only care about POWER.......they represent pure 100000000 0percent evil , deception , greed....... at some point God, karma, justice , good will put these evil people in the same place hitler and Mussolini ended up......At that time i will display the american flag with honor

Sat, 05/25/2013 - 21:58 | 3599086 IamtheREALmario
IamtheREALmario's picture

I am having a hard time understanding how making things less expensive will make people buy less. The money the Fed has created is not getting to the people anyway. All it is doing is preventing the banks from writing off loans and recapitalizing. It sure seems that writing off loans and recapitalizing is the better long term solution.

Sat, 05/25/2013 - 23:03 | 3599151 Pumpkin
Pumpkin's picture

Deflation is indeed what would have happened without the intrusions of the central bankers and congress.  But deflation is the worst thing that can happen to bankers, and with the help of congress, Ben ain't gonna let it happen.

Sun, 05/26/2013 - 10:38 | 3599616 kurzdump
kurzdump's picture

Deflation caused by debt overload cant be cured by even more (inflationary) debt. Sure debt can be transferred and maturities can be extended. However, its like streching an elastic band - at some point it will break.

Sat, 05/25/2013 - 23:14 | 3599169 bubblemania
bubblemania's picture

If the dollar collapses, holding gold notes or even the real shiny stuff won't help. The FED and Homeland Security will seize it from you - you can take that to the bank. Then the Fed will give you the new dollar for your gold and you will thank them or be arrested. Better to buy a small farm and have a cow, chickens and perhaps a few pigs.

Hopefully the states will continue to pass laws alowing them to issue currency, like AZ just did. 

I would like to see the dollar backed by a basket of goods; perhaps

20% gold

20% silver

15% copper

15% Paladium

25% energy unit (gas/shale or US Oil)

5% Kentucky Bourbon

US Clearing house will back the dollars with the basket and deliver it upon request. 

Sat, 05/25/2013 - 23:30 | 3599182 ponzisaurus
ponzisaurus's picture



Fred mgillicuddy here at Citi.

Oh hi fred

We have a few derivitives we would like to trade in on copper and bourbon.

I see, whats the amount?

319 T

Hello?  Hello?

Mr mcgillicddy.


We do have a quanity of ear wax you could have.

How much worth?

At $17,433 a pound half a trillion.

Ill take it!


Sun, 05/26/2013 - 00:04 | 3599223 bubblemania
bubblemania's picture

Ear wax has antibiotic properties

Sun, 05/26/2013 - 01:47 | 3599304 Non Passaran
Non Passaran's picture

Tell me, what's easier; to confiscate a citizen's physical gold (lost in a boating accident of course) or tax his farm?

Sun, 05/26/2013 - 03:04 | 3599324 MeelionDollerBogus
MeelionDollerBogus's picture

-1 :many gold holders are beyond the reach of the USA.

Sat, 05/25/2013 - 23:56 | 3599217 Town Crier
Town Crier's picture

The scene in "Jaws" when the victim's remains are finally officially examined:


Sun, 05/26/2013 - 00:32 | 3599246 Never One Roach
Never One Roach's picture

Clothes is incredibly cheap right not so much...and houses still overpriced due to fed interference.

Sun, 05/26/2013 - 01:03 | 3599263 Bansters-in-my-...
Bansters-in-my- feces's picture

Who ever wrote this article is a LOSER.

Sun, 05/26/2013 - 01:49 | 3599306 dojufitz
dojufitz's picture

Don't debt junkies cop it in the ass with Deflation.....not seeing those inflated dollars....?

Sun, 05/26/2013 - 05:26 | 3599379 ...out of space
...out of space's picture
From Wikipedia, the free encyclopedia


Biflation (sometimes mixflation) is a state of the economy where the processes of inflation and deflation occur simultaneously.[1] The term was first introduced by Dr. F. Osborne Brown, a Senior Financial Analyst for the Phoenix Investment Group.[2] During Biflation, there's a rise in the price of commodity/earnings-based assets (inflation) and a simultaneous fall in the price of debt-based assets (deflation).[3] The price of all assets are based on the demand for them versus the volume of money in circulation to buy them.

With biflation on the one hand, the economy is fueled by an over-abundance of money injected into the economy bycentral banks. Since most essential commodity-based assets (food, energy, clothing) remain in high demand, the price for them rises due to the increased volume of money chasing them. The increasing costs to purchase these essential assets is the price-inflationary arm of Biflation. With biflation on the other hand, the economy is tempered by increasing unemployment and decreasing purchasing power. As a result, a greater amount of money is directed toward buying essential items and directed away from buying non-essential items. Debt-based assets (mega-houses, high-end automobiles and other typically debt based assets) become less essential and increasingly fall into lower demand. As a result, the prices for them fall due to the decreased volume of money chasing them. The decreasing costs to purchase these non-essential assets is the price-deflationary arm of biflation.[4]

Sun, 05/26/2013 - 07:08 | 3599421 gatorengineer
gatorengineer's picture

Winner.... the only thing that is deflating is consumer purchasing power....

Sun, 05/26/2013 - 08:57 | 3599499 yogibear
yogibear's picture

Exactly. Shipping, government taxes, fees, etc are all escalating. look at healthcare.

Other exporting countries are experiencing inflation.

Once the US dollar drops to where it should be it will be painfully obvious.

The Federal Reserve and US government don't want people to understand this.

Mon, 05/27/2013 - 13:28 | 3601355 LooseLee
LooseLee's picture

So how does one reconcile the leveriged stock market inflating when it should be deflating based on this definition?

Sun, 05/26/2013 - 06:36 | 3599402 smacker
smacker's picture


I might understand this essay better if Lance Roberts explained what HE means by "disinflation" and "deflation". These terms are not interchangeable.

Sun, 05/26/2013 - 06:48 | 3599409 eddiebe
eddiebe's picture

You keep paying the 99% less money and funnel more to the 1% and then wonder why the consumer doesnt have the money to drive the economy. Wow!

Sun, 05/26/2013 - 08:07 | 3599461 orangegeek
orangegeek's picture

Deflation is here folks.


Falling prices are the strongest indication - that's why banks are gaming house prices higher by hiding saleable inventory in the foreclosure process.



Sun, 05/26/2013 - 08:15 | 3599465 cnmcdee
cnmcdee's picture

The reality is increasing circulating debt is decoupling from productivity - causing deflationary exconomic activty in the midst of inflationary pricing  The only solution is issued currency from loans or ctrl-ping or whatever must relink to productive creation of real wealth.  In order to accomplish this everyone in the USA who is on benefits or entitlements must have them cut, forccing everybody to produce something of value for the money they earn..secondly the debt must be defaulted on immediately, it should remain in perpeutiy a criminal act to lend *any* government *any* money..  But that is not what will happen at all. The will continue to lend created fiat to the US government as millions on entitlements will spend that money which will continue to buy less and less...  We can wine all we want but in the end it is how the rules are defined and those on the right side of this current structure will profit, prosper, or be guarded..  Everybody is wondering what the 'black swan' event will be - and I am suspecting it will  be a contrived middle-east war with a small nuclear exchange with possible scatters of flag flag terrorism all contrived to crash the markets and switch from the US world  reserve currency to to UN world reserve currency backed by 'digital gold' The purpose of the digital gold is to simply end-run around China, India and the gold holders everwhere to make their prepatory plans null.  Google anglo-saxon agenda for WWIII.  Watch Syria when she falls know an Iranian middle east war is soon to follow.

Sun, 05/26/2013 - 08:52 | 3599493 yogibear
yogibear's picture

"Deflation is here folks."


This is what the Fed and US government want you to believe. Why? Because of the debt. One way is to print out of it while the sheep believe that contrary. It's fantasy.

Look at taxes and fees. Some areas increased their tolls, taxes and fees by 100% or more.

Look at the price of gasoline and stamps to prove that theory is wrong.

NOTE: UPS has increased their cost 5%+ every year for last 4 years

Sun, 05/26/2013 - 09:00 | 3599504 eddiebe
eddiebe's picture

I would like to point out something I have been thinking about the bankster ZIRP/ QE policy. They claim it is to stimulate the economy, and it seems most articles I read about the whole issue miss completely what the banksters are accomplishing without anyone noticing.

What they are accomplishing is really fantastic: They are buying up government IOU's and mortgage debt virtually interest free with money they create at will. 

It would be a mistake to think that 'we the people' will be let off the hook on this. They will get paid back. They will be in first position. 

All this is being done 'for our own good' to stimulate the economy, so we can all be employed and live happily ever after. And all the people hang on every word that comes out of these peoples mouth as if they were the prophets of God dispensing manna from heaven. Truely surreal.

Sun, 05/26/2013 - 09:08 | 3599515 cloudybrain
cloudybrain's picture

actual thing what happen is japan facing deflation or stagflation and US worried about  inflation so they try to manipulate gold and silver

Sun, 05/26/2013 - 10:39 | 3599613 Vidar
Vidar's picture

The fiat system is hopelessly corrupt and nothing can be done to save it. The sooner it collapses the better. Deflation is the natural state of a growing economy in a free market as productivity increases result in more goods being chased by a more-slowly growing supply of monetary units. This is bad for debtors, and since the modern state is the ultimate debtor, this aspect of free markets had to be done away with in order for the total state to begin its rise. The association of deflation with economic depression is a creation of Keynesian nonsense used to justify the ever-increasing money printing and debt creation which benefits only the banksters and the statists.

Sun, 05/26/2013 - 10:52 | 3599640 gmak
gmak's picture

One more time:


Prices move before wages. Deflation benefits those who save and live off of income. Inflation benefits those who are leveraged to the 3rd generation's eyeballs and /or own things and productive assets producing what people need.


Inflation benefits the 1%'ers. Deflation benefits the savers. Debt slaves are bitches to everyone.

Sun, 05/26/2013 - 13:50 | 3599841 ponzisaurus
ponzisaurus's picture

Old paradigm thinking.  Its all about resources now.  The 1% ers know their money is ultimatly worthless.  They know this acutely because if they used their money to buy up resources ironically it would cause the event that would render them powerless.  What pisses the 1% off is the that the rabble is consuming THEIR resources.  They are using every tool they have to lower consumption, at the same time not choking the sytem so much it collapses.  When it collapses it will be at a time and in a manner that best suites their desires.

money velocity zero- lowers consumption

lower wages and less jobs-lowers consumption

lower birth rate-lowers consumption

higher prices of commodities-lowers consumption

The ultimate means of lowering consumption will be radical.  If the 1% dont implement it the ratio of humans to resources will.  Inflation vs deflation is smoke and mirrors.  The idea of what benefits who is relative.  Did you consume food today?  Did you consume energy today?  Did you consume water today?  These are vital resources.  If I consume half a liter of water instead of one liter is that inflation or deflation?  If you live in the USA you are the 1% compared to the rest of the world.  Every single human in the USA consumes much more than a human outside of the USA.  Like it or not simple math shows we are the 1%. They are the 1% only by arbitrarily stopping the sample at the borders of the USA to further a argument.   Consumption will be lowered that is a mathmatical certainty.  The question is whether it will be lowered with any degree of compassion and if history provides guidance that is doubtful.

Sun, 05/26/2013 - 11:33 | 3599698 moneybots
moneybots's picture

" Are we experiencing the 1970’s all over again as inflation kills the economy, or in the words of Ben Bernanke, have we entered an era of low inflation and interest rates that will last for some time as the threat of deflation remains a prevalent enemy to the economic recovery? "


The fall guy: Deflation.  Why do bubbles deflate?  Because thery were inflated.  The threat of deflation is not the problem.  The inflation that preceded, is the problem.

Every boom ends in a bust.  The problem is not the bust, the problem is the boom.

If we crashed to the bottom in 2009, instead of papering over, we would have had a recovery already.

It is the papering over that is preventing a recovery, not the threat of deflation.   Once you hit bottom, you have nowhere to go but up.

Sun, 05/26/2013 - 11:42 | 3599708 moneybots
moneybots's picture

"One more time:

 Prices move before wages. Deflation benefits those who save and live off of income. Inflation benefits those who are leveraged to the 3rd generation's eyeballs and /or own things and productive assets producing what people need."


Unless you save cash, you aren't really a saver, you are a creditor.  When banks failed in the 1930's, people lost their savings, as banks had made bad loans with them.



Sun, 05/26/2013 - 11:56 | 3599729 moneybots
moneybots's picture

Why is the FED at all worried about deflation, unless they created a tremendous amount of inflation? In the last 100 years the dollar has lost what, 97% of its value? Stable prices is supposed to be a mandate of the FED.  What are stable prices?  The FED says 2% inflation.  In actuality a stable price is ZERO inflation.  A stable price doesn't change.

At a 2% target, the FED is always inflating, not stablizing prices.  If prices were to stablize, they would have to deflate back to what they were 100 years ago, when the FED started inflating them.

Sun, 05/26/2013 - 13:02 | 3599802 DosZap
DosZap's picture

 The FED says 2% inflation

And they lie,just like the CPI figures are lies by omission(food & fuel) so get the scoop from John Williams, if you really want the skinny.

Sun, 05/26/2013 - 19:30 | 3600277 Monedas
Monedas's picture

Maynard "Fly in the Mayonaise" Keynes .... knew all this shit was coming down .... he just didn't tell anybody ?  LOL     Monedas    1929      Comedy Jihad Engaging In The Inter-Racial Dialogue Our Clean And Articulate "Nigger" President Asked For World Tour

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