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Why It's Going To Be A Whole Lot Worse Than In The 1930s
As Mike Maloney forecast in the mid-2000s, the roller-coaster ride continues in world markets and economies. His - so far - spot on projection that "first the threat of deflation (1), followed by a helicopter drop (2), followed by big reflation (3), followed by a real deflation (4), and then followed by hyperinflation (5)," appears to be rotating from stage 3 to stage 4 (as we noted here). However, as Maloney explains in this brief clip, while we have seen great deflations before, in the '30s one-third of the monetary base was backed by gold, now we virtually nothing as "people do not understand the scale of the emergency that's going on right now."
Five brief minutes on a Sunday... watch!
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You are so wrong! Every Macro textbook states DEFLATION is the fall in asset values! Deflation is not CPI or gasoline. No one gives a shit if gasoline rises .50 a gallon when their home value fell 100k!
And you are so very head-up-the-anus.
"Every macro textbook" ALSO spouts Krugmanesque, Keynesian bullshit, such as deficit-spending-fueled "pump priming" during economic downturns, as if it were both factual and logical, when it is nothing but insidious pro-statist brainwashing, as well as apologies for, and the enabling of, the endless growth of big government. Such Keynesian, statist bullshit is as laughably wrong, and as destructive, as all the "Marxist Economics" formerly taught at the PhD level in the Soviet Union as well.
Your 'argument from authority' is rather revealing of the state of your intellectual (and moral) integrity, however.
Yes, akak, your premise is correct.
We need to distinguish between "price deflation" and "monetary deflation."
Ludwig von Mises argued that falling prices due to growth in the economy (technological innovations, productivity improvements, increases in the supplies of the factors of production, etc.) that lowered costs of production and expanded the general supply of goods and services in the market was not in anyway harmful. Indeed, this could be considered one indicator of economic progress. It enables consumers to buy more with their given money incomes as a result of the increased purchasing power of the monetary unit.
Mises, however, was not in favor of an active government policy of contracting the money supply (a monetary deflation). His writings make it very clear that he was not a monetary deflationist.
A monetary inflation generates a series of distortions and imbalances in the market. These distortions and imbalances are not set right by then intentionally contracting the money supply. In Mises' view, this merely, and inescapably, superimposes a new series of distortions and imbalances as a result of the monetary deflation.
Richard Ebeling, the letters from the Cambridge vs LSE debates
Akak...To be a little more accurate it is Milton Friedman Monetarist Bullshit out of that damned abomination of the Chicago Business School that is prevalent in today's indoctrination texts and "Research Papers" published in Journals, otherwise known as Doctorial Thesis.
True Keynesianism is not practised, Neo-Keynesianism is practised, and Krugman is a Friedman Monetarist. (He is a devout believer in Monetary Policy and Planned Economics.)
Unfortunately many graduates out of the Business Schools at our Universities have no clue as to what Economics is about. So the "Argument from Authority" Logical Fallacy is not a measure of a lack of integrity but a measure of the outright ignorance as a result of the indoctrination.
His sources are blatantly incorrect. He is promoting an argument from faulty information. So what do you expect him to report? Accurate conclusions from faulty information? Isn't that a little unreasonable?
But even this guy should have learned when Milton Friedman said, "Inflation is always a Monetary Event" There is no excuse for that type of ignorance as that is what he was supposed to learn.
As Inflation is a Monetary Event, so is Deflation, as they are just both the same Event on Opposite sides of the Same Coin. It is relative to the Frame of Reference which an Observer chooses. That is the flaw in his reasoning. That is what NEEDED to be pointed out.
I despise that Marxist bullshit as much as you do. But I do consider the source. It is not their fault when they know no better.
That is the reason why that some are here. They know that something is terribly wrong. So they have a lot of Cognitive Dissonance to process. It does not seem to me as if he is trolling as he writes what is a standard belief, however erroneous.
If I believe him to be ingenuine then I will lay the wrath of God upon him...or...as you would write...the wrath of the Great Flying Spaghetti Monster.
Right now I will yield a Benefit of the Doubt. You can do as you please.
@ Landrew:
I posit a scenario for you.
You live in a home, which is paid for fully (for the sake of argument). This home is the same structure that it was when you purchased it some years ago. It has the same number of rooms, the same square footage, and the same ability to shield you from cold winters and warm summers. You like your home, and that's why you bought it, and you own it outright (theoretically. I guess you're over 100, and don't have to pay taxes anymore, for the sake of argument).
NOW: SOME say this home has gone up in 'value' over the years, and others, at different times, have told you that the value of your home has 'dropped', but to YOU, it's still the same house (assuming that you still live there). Therefore, 'inflation' and 'deflation' in the value of this home are irrelevant to you (those 'macro' books never describe 'intrinsic value'; but only Kensyean theory, by the way, as it MIGHT relate to this factor).
SO, your 'described' value as stated dropped by 100K, but you don't really need to worry, because you own it, and are content with it. Theoretically.
NOW, one day, you need to drive to the store to buy some 'consumables' in order to sustain yourself. You notice that the prices have risen dramatially across all sectors, such as bread, beef, milk, sugar, coffee, and the GASOLINE it takes to fuel your vehicle for transit. You say to yourself, 'Shit! the INFLATION is getting BAD!.
THEN, later on, some 'economist' tells you on the TEE VEE as you sit in your house, that the value of your house has DROPPED, and the 'CPI' is 'stable', and there IS NO INFLATION, and IN FACT, there is actually DEFLATION, because ASSET VALUES have DECREASED.
AH, you think, that MACRO TEXTBOOK told me about DEFLATION! DEFLATION is BAD I am JOYOUS to pay more for consumable goods because this OFFSETS DEFLATION! Then, you check your bank account...
REALLY, Landrew? are you THAT much of a TOOL of the CORPORATE ELITE?
MontgomeryScott,
I disagreed with you on page one about your critique of CrashIsOptimistic and his view (and mine) of peak oil, but I gotta give you credit where credit is due on page two. You get deflation if I'm reading your comment correctly.
I had a game going with myself just last night about the "price" of the things in my house vs. their true or "intrinsic" value.
Bananas: Easy. Their intrinsic value is the calories. It is very short-lived.
My new dining table set: Not as easy. It has a value as a place to sit and eat. But that's not intrinsic. It's intrinsic value is wood. I can chop it up and build something else, or I can burn it. Also short-lived.
Anyway, Crash (who you earlier derided, and I hope you will take that back) said in another post that the only things that have intrinsic value are bullets, calories, and joules. I completely agree.
Serenity Now wrote, "Anyway, Crash (who you earlier derided, and I hope you will take that back) said in another post that the only things that have intrinsic value are bullets, calories, and joules."
Calories and joules are both measurements of ENERGY. Why be redundant?
The only attribute that has any intrinsic value whatsoever is Life. Bullets have no value other than to sustain LIFE (at the expense of other Life.). Calories have no value other than that to sustain Life.
It is Life that has any value...or...in some cases not. Even Liberty has no value other than that it serves to sustain Life as Enslavement is a living Death.
Get your priorities straight.
Every macro econ textbook says that? No wonder people are such idiots.
Deflation is the decrease in the money supply, which leads to lower prices due to less demand, all else being equal.
Inflation is the increase in the money supply, which leads to higher prices due to more demand, all else being equal.
See, deflation has a downward pressure on demand, NOT prices.
Inflation has an upward pressure on demand, NOT prices.
Demand has an upward or downward pressure on prices. Get it?
But Supply (of goods) has a role to play as well. Money supply and Demand don't act on their own. It's a constant fluctuation of all three.
If prices rise, then you need to analyze why. You don't just scream INFLATION! The price might have risen due to more demand, or less supply.....it might not have anything to do with the money supply increasing (inflation). Sometimes it is due to that, but sometimes it is NOT.
We are on the verge of losing these fundamental economic truths. I am one of only a few here on ZH that understands this. There are a few who get it. The rest of you are idiots.
Milton Friedman, a Neo-Keynesian, taught that Inflation is always a Monetary event. He understood exactly what you wrote.
Since all of those damned Textbooks originate from the Chicago Business School then that is taught at every single accredited Business School in the Nation. Yes Inflation is an expansion of the Money Supply and Deflation is a contraction of the Money Supply.
Price Inflation happens as a result of an increase in Monetary Velocity and Price Deflation happens as a result of a decrease in Monetary Velocity. That is also taught and is in the Textbooks originating out of the Chicago School.
PV = MT
They use this to JUSTIFY increasing the Money Supply
So you think that the damned Neo Keynesianists, whom actually studied, do not know this? You are sadly mistaken. You underestimate your opponent.
The difference which I have with the Neo Keynesianists is that I DO NOT ASCRIBE TO SOCIALIST PLANNED ECONOMIES.,.In fact I am DIAMETRICALLY OPPOSED TO PLANNED ECONOMIES. So I am inclined towards the Austrian School of thought as I ascribe to LIBERTY and FREEDOM.
Check out this article. And....and...STOP UNDERESTIMATING THE OPPOSITION.
http://www.wnd.com/2012/04/an-austrian-in-the-lions-den/
I think you mean subscribe, not ascribe. I too subscribe to the Austrian view, and I ascribe great confusion to Krugman.
(A description of my ascription may be found in an inscription on my prescription for a subscription.)
Tall Tom
Your comments are awesome! I am so glad that I'm not the only one who gets TRUE economics. Believe me when I tell you that I do not underestimate the other side. They are winning the war against truth. I just post here to try to teach a few basic fundamental concepts. I'm not the smartest person on this forum, and that's okay. I just stick with the truth. Thanks for your reply. :)
The Japanese printed to counter deflation - after the pop of their over inflated economy in the 90s, their economy remained stagnant.
More product than desire to buy the product.
"Stagnant", yes.
"Deflationary", never.
Neither the Japanese monetary supply, nor the Japanese cost of living, ever fell in post-1989 Japan. So to label their situation as "deflation" is to merely swallow the propaganda and lies of the likes of Bernanke hook, line and sinker.
If asset prices fall from some previous level, that equals "asset price deflation". No? That would be the case whatever had caused the previous price levels.
We can 99.9% forget about "consumer price deflation" because it will never happen outside of one or two specific market sectors, eg IT.
for fuck sake people do you have to be so depressing every single day?
You know why it is not going to be worse than the 1930's?
because I couldn't surf porn in the 1930's.
get your priorities straightened out, perma downers. People adapt.
Lol it could be much worse than you anticipate try torment.
A world full of porn and you could never suffer this in the 1930's with no porn - not an issue.
Try being a porn addict and unable to afford the energy to get connected - waaaaaaaaaaaah!
YOU KNOW ALL THAT PORN IS OUT THERE but now starved of the connection to access it.
3 TB drives are cheap. Throw one and an obsolete laptop in a gun safe. EMP proof porn.
jballz wrote, "for fuck sake people do you have to be so depressing every single day?"
First it is not that we are depressing at all. The Economy is in a DEPRESSION. We are just describing the dismal state of affairs. We are writing the Requiem of a Once Great Nation.
You can distract yourself and watch TeeVee if you so choose. But my bet is that it is much too late, for that, for you.
You took the Red Pill. You visited this site. You sought out the truth. They are YOUR FEELINGS. SO OWN IT. Take Personal Responsibility for your own emotions. I am sorry that you do not like the truth. But that will not change it.
So LEARN how to INSULATE YOURSELF from the outcome of the Predicament as it is not a Problem. We are all in this same state of affairs. Many are taking proactive steps. Do what you can proactively and maybe you might survive the onslaught or actually benefit from it. It is not all Doom and Gloom.
If it has no physical worth it can go to ZERO.
Just so you know only bullets and calories and joules have physical value. As long as you understand that, you can feel good about your comment.
And in 99+% of the civilized human existence on this planet, one other item allows access to those which you mentioned....money.
How can it be worst with all the technology we have today.
Most people could probably not even show up to work for a week and probably be fine.
Sure you will have bill collectors calling you and shit.
But you wont die.
People in the 20s and 30s fucking died because of what the bankers did.
The banks acually murdered people back then.
The banks murder far more people today than they ever did in the thirties. They kill them by funding undeclared wars all over the world for nothing more than better balance sheets. They use their dogs (police) to kill people who resist the unjust foreclosure of their homes. They fund companies like Monsanto. And they starve out anyone who does not comply. Not to mention the suicides of people who have lost all hope......All in the name of profit.
That is ridiculous. You need to research how many people died in the 1930s and 1940s and the 1950s and the 1960s before you EVER post another comment on the internet again.
12 million in the Thirties... WWII had over 60 million alone and that was a banker war as well as all the wars since including Vietnam, Korea, Panama, the Falklands, Libya, Iraq, Afghanistan. Several wars in Africa.......Cancer, Starvation in Ethiopia and elsewhere.........
The good news is we have a shit ton of deleveraging to do bfore we get to Hyperventilating about hyperinflation. The bad news is in this age of HFT it will only take a few seconds. For fucks sake everyone is leveraged back up to infinity and beyond now thanks to Benny Gotyourback. The dollar will be priceless before it's worthless but only for a very short time and you window to buy up your bazzilion dollar gold coins prior to their confiscation will be small. There are not any good plays but to get fit, get armed and build a community of like minded friends and family.
Joker in the deck: biflation. A scenario under which monetary inflation (printing trillions) is largely masked by offsetting deflation. Monetary expansion has touched off inflation in paper assets and caused a big re-pricing of necessities like oil and food. It would have been even more dramatic had it not been for the demand destruction created by deflating wages, jobs and the buying power of the buck. Debt deflation and delevaraging plus offshoring of jobs keep price inflation under some degree of control.
This can go on for longer than most would predict.
however,
"it can end in tears
in less than
a heart beat" ,
that you don't want to know?
@Caviar;
'BIFLATION'?
Is that like 'METRONOMICS'?
Are you saying that there are some that actually get exited by Yellen as much as Bernanke?
The couple came up to me in a bar one time, both staring at my crotch and smiling. 'Don't worry', I said to them, 'It's not a gun in my pocket. It's just a little BIFLATION in my pants!' Between Janet's fugly face, and Bennie's scratchy beard, the whole situation was a classic case of 'deflation' METRONOMICS for me (in a hurry).
'BIFLATION'...
Why is there no velocity ?
Erm. How fast could you run whilst dragging a container load of debt behind you??
;-)
That might be a valid question, once understanding the ways in which this word 'velocity' may be used.
In a freefall from an airplane, the human body will accelerate at the rate of 32 feet per second/per second. That is, until it reaches the point that air resistence cancels this acceleration (at which time, the body has reached what is called 'TERMINAL VELOCITY'). One fails to feel any more acceleration at that point (thus, questioning the very idea of 'velocity' in the first place). The wind feels the same, the rate of fall seems to stabilize, and one is left with a sense of motionlessness, as the body descends ever further...
Think of it like being on a bus that has gone over a cliff. Once the fall stabilizes, those on board don't notice that they are moving. OR, those who sought a certain death rather than the explosions planted in the upper floors of the Twin Towers before their obvious demolitions...
The earth turns once every day, so that at the Equator, one is actually moving at a thousand miles an hour (just the orbit. This doesn't factor in the travel through the galactic plane). They don't feel it, though. They don't see it. They don't even think about the VELOCITY that is happening around them, and to them.
They turn to others, and wait for others to tell them, 'WHY is there no VELOCITY?'. Once in a while, they stop at night, trying to look at the stars as they hurtle through the galactic plane, telling themselves that other things move, but THEY are stationary.
Great question BNI, simple answer. spend a dollar locally and as long as that dollar circulates in your community you have velocity. go spend it at walmart and send that dollar into the black hole (china), no velocity. that dollar is gone
Dre4dwolf: "How can it be worst with all the technology we have today."
You can't eat technology. How many 20-35 y.o. basement dwelling navel gazers do you think there were in the 30's? How about now? How many family farms in the 1930's? How about now? We got 46% of genpop sucking government dick right now. What percentage chowed down on Fed cock back in the 30's?
Right. Shitload of people already on what would have been breadlines in the 30s
All of this ignores the political reality: The oligarchs who hold 90% of the cash and control the election system will not allow for high inflation.
End of story.
There will be no helicopter drop to help consumers become consumers again because TPTB don't care about helping the consumers or the middle class or poor.
Why do you think inflation has been so low for so long? Why can you buy a car at Zero% interest? Why are home loans at 4% interest? Who can afford to buy those homes at such good interest rates (Blackstone).
Wake up people. Dust off the Guillotines and join me in storming a gated community near you.
Two points - with 47 million americans on food stamps, how can you assert that "TPTB" don't care about helping the poor? Total up all the tax money that we throw a the poor, the elderly, the single mothers, the long-term unemployed... it's a lot.
Second, whence the assumption that the oligarchs have the power to veto high inflation? In Japan, the "oligarchs" have declared it their aim induce high inflation, and so far they have failed. Maybe it's because "TPTB" don't have control over it?
As for dusting off Guillotines - yeah, right, because that worked out so well for the French.
Stealing money from a working person to give it to "poor" does not help them. It enslaves them. Only a sick, statist mind can imagine such inhumanity.
Secede or die.
Whatever form the revolution comes in, it will arrive, through the wild excesses of the oligarchs and their unrestrained lust for power, since money they have. And Napoleon was a result of the French revolution.
@Nick Jihad and 'novictim':
Yes, they work in PAIRS.
You MUST go back and review the National Anthem:
http://www.youtube.com/watch?v=l46t_nrySg4
They WILL help you!
TPTB care about 'controlling' the worlds population,
controlling their movement, where they sleep and shit.
He who controls their food, controls their lives.
Most likely the worlds poor will be paid by the IMF in bitcoins.
If you don't go along with the program, no FSA for you,
no matter where you are on the face of the earth.
TPTB don't give a flying fuck about the poor beyond the fact that they don't want them coming after their heads. So they throw a few paltry billion dollars monthly at them in the form of food stamps and Obama phones. They also keep them enslaved with the occasional Black Friday sale or the distraction de jour. In the mean time TPTB rape the rest of the country of trillions. 5 billion spent on welfare a month is a small investment to extract 85 billion a month from the middle class and future generations.
Creepy but true. More than one occurance in San Diego of a guy who jumps the gated community fence, goes to a guy in his garage, asks for directions, and stabs him repeatedly.
I don't think this is an answer but I do agree that TPTB are showing extraordinary disreguard for plain folks and there will be consequences.
Deflation? Sure, any day now. And I'm Batman and my girlfriend is Catwoman.
Holy denial, Batman! Is your girlfriend waiting for you at the Batcave?
We've seen deflation in the housing market. Perhaps you forgot that! But that's okay, because deflation of a stock market bubble will bring back your bat-memory quickly enough!
You are simply full of shit.
There have been vanishingly few deflations EVER, in all of monetary history, and NEVER one under a purely fiat monetary regime.
Get this through your obviously ignorant head already: fiat currencies always fall in value --- ALWAYS. They NEVER appreciate in purchasing power. That is the inherent nature and design of fiat currency, to fall in value as more is issued by and to the insiders, to siphon wealth from the masses to the elite.
Stop falling for the propaganda and self-serving lies of your overlords.
Nope. Credit bubbles fail. That's the deflation that we are going through. You don't get this, obviously.
Holy Holocaust Batman. Who's in charge?
The price of an asset class moving up or down is not inflation or deflation. It may be an indicator of inflation or deflation, but it is not the thing itself.
Yep. Prices going up or down are just prices.
Inflation / deflation is about the money supply, which (all other things being equal, such as supply and demand) can lead to prices going up or down.
But that is NOT the definition of inflation / deflation.
Why its CLEAR this is NOT a CYCLE to "wait out"…
• All engines need fuel to run (except zero-point energy engines)
• The fuel (calories expended from labor) is being choked off on purpose
• The "engine" (Monopoly Capitalism) is finite
• After fiat/debt as a monetary loses all credibility (years ago) there are no more "weird tricks" to dangle
• The "clever" reptiles in control are again overconfident
• a "phoenix" will not rise from the ashes…rather a "sword of justice" will rid the planet of those who follow and think as manipulators do
• "real" work and "real" jobs will return to the planet in order to rebuild
• any money-class, doughy readers, will have to get their hands dirty with "real" dirt, not money and murder
We all know that blowing a balloon past its capacity will cause the balloon to explode. So, which breath is it? This one or the next. Everyone watches in expetation.
Good analogy! I will remember that one!
Calamity is certainty! Plan and prepare accordingly!
Obviously these authors don't have to drive the 405 Mulholland Overpass at night.
I'm tired of pussies talking about being in a dangerous situation. I wanna fight.
I did that one after a good rain, once. Had the window down, because it was about 78 degrees, going up the pass at about 70 in the #3 lane. Some prick blew by me at at least 90 in the #4 lane, flooding my windshield (and those of everyone else in front of me). Almost caused the guy 10 cars ahead to crash. Back in about 1982. About 2 miles before the top (going in to the Valley, or for those who don't know, the 'San Fernando Valley', the home of porn, Valley Girls, and smog so thick you could cut it with a knife).
The CHP had him pulled over about a mile after the crest. That was back when pigs weren't quite as fucking evil as they are now.
The Sylmar quake was kind of fun...
http://www.youtube.com/watch?v=lNUWIqjGT5U
The CHP had him pulled over about a mile after the crest. That was back when pigs weren't quite as fucking evil as they are now.
I did love Ponch and John. (CHiPS)
;)
I disagree on the deflation part. I think there will no material deflationary period. The economy will suffer from stagflation instead.
Since we have been in subtle fundamental change mode since that depression, and now on a full court press of fundamental change, it will be much worse in many, many ways.
We no longer are a predominately agricultural and manufacturing nation - people could fend for themselves much better back in the '30's and this country could actually manufacture things. The moral conscience of right and wrong still existed back in the '30's and there was still a sense of community in most areas of the country back then.People were not dependent on 'charity', be it gubmit or private to nearly the same extent back then - in fact most people would rather go without than take charity back in the '30's. People took care of each other to a large extent.
That's only a small sample of some fundamental things that have changed since then.
If we have a collapse like the great depression it will not be pretty. And, it seems pretty inevitable.
It's already worse than the great depression, but long lines at the soup kitchen have been hidden by EBT an SNAP cards.
This almost seems to qualify our monetary policy as a religion - have to take it on faith that creating more and more debt and printing more and more money will make us wealthier.
1930s wasn't the end game for USD.
This is.
We will see deflation and inflation at the same time. All of the over-inflated bubble assets that have been fueled by Ben will get deflated. Meanwhile, everything in use by the masses (like food and energy) will increase in price. Do you really expect Micky D's to bring back a $1.00 double cheeseburger?
"Do you really expect Micky D's to bring back a $1.00 double cheeseburger?"
Yes. I expect it to come out of a vending machine and contain synthetic substitutes for meat and cheese.
Bunch of bunk. Money does not dissapear. It only changes ownership. If masseive amounts of people default then reserves would be crushed and money (digital credit) would dissapear which is why banks are getting bailed out. The reason why fiat money exist is so that money can be creating out of thin air in order to avoid such senarios. This is nothing new.
And when people do finally start to borrow money in mass, then one can simply mandate 100% or more reserves which would also rein in money. Right now most of the money is being consumed by taxes. The whole thing is a bunch of bunk. The whole think exists to inflate the money in order to fund current goverments (via taxes) which cannot be paid for. OThwise things like social security, the military, welfare, and public education cannot be paid for.
The real problem is be the massive debt oblifations of National Governments. Mercantilism is going away and with it many other nations. They cannot be afforded. Without inflation, the illusion fails. They will ether not pay senior obligations or will nationalize central banks, which then will create hyperinflation.
Remember the Batman movie with the Gay from BrokeBack MTN playing the Joker?
"I TOLD YOU BITCOIN WOULD TAKE YOU PLACES, ... I NEVER SAID THEY WOULD BE GOOD PLACES"
The 1930's was tough for the working poor, but not tough for those with GUBMINT jobs, and the 'smart' all went to PARIS and had a 'gay' time all during prohibition->DEPRESSION.
GOD I hate these hack interviewers who interrupt their guest every few words.
Not to dampn an already drenched parade...but the American populace in 1930 was anything but "entitled" and we were a moral people in general. That, more than anything else, is what worries me about the road ahead.
You are so right.
Just imagine the "black Friday" chaos times 1000.