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The Era of "Growth" is Over… Next Up, the Era of "Inflation"
A strange shift has taken place amongst the global Central Banks… though no one in the mainstream media has noticed it.
That shift has been from “growth” to “inflation.”
From the depths of the Crisis in 2009 until mid-2012, Central Banks were considered the “saviors” of the financial system and Capitalism. The first wave of their interventions (2009-2010) was meant to stop the collapse. The second wave (2010-2012) was meant to get us back on track towards global growth.
But, a funny thing happened in 2012. At that point QE and other extraordinary measures were shown to be what they were: all about rigging the stock market. After all, the first $8 trillion spent by Central Banks had failed to generate any sustained GDP growth or jobs.
So what did the Central Banks do? They stopped talking about growth and began talking about “inflation.”
It started in Japan, where after 30 years of economic flat lining, “economic growth” had become a mythic figure akin to Unicorns. During this period, an entire generation of bureaucrats and economists had grown from young men to the pillars of the establishment without seeing “growth,” so they didn’t even bother mentioning it in their forecasts. Their money printing efforts were about hitting certain “inflation” forecasts and nothing more.
When Shinzo Abe, the Japanese prime minister, took office in December 2012 he made clear his intention to break Japan’s deflation. The Bank of Japan, under a new governor, Haruhiko Kuroda, was ordered to pursue a goal of 2 per cent inflation. But after impressive early progress, the economy slowed, partly dragged down by an increase in sales taxes. Voices can now be heard doubting whether Mr Kuroda can succeed in putting the country back on to a path of rising prices
http://www.ft.com/intl/cms/s/0/3b963032-635a-11e4-8a63-00144feabdc0.html#axzz3IypM4KlB
This type of thinking has become so prevalent in the minds of Japanese Central Bankers, that Haruhiko Kuroda actually boosted Japan’s QE program a few weeks ago simply so that the Bank of Japan’s adjusted forecasts would meet his inflation goals.
From any rational perspective, this is complete madness. But since no one got canned and no riots broke out, this new approach has been seen as a success for Central Banks.
Small wonder then that ECB President Mario Draghi has removed the word “growth” from his vocabulary and is instead hoping to create “inflation”:
European Central Bank President Mario Draghi on Wednesday said the central bank is open to embarking on new measures should its current package of instruments fail to increase inflation.
The ECB has already decided to purchase covered bonds and asset-backed securities, and it is lending funds to banks at very low interest rates at four-year maturities. It expects these measures will help boost its balance sheet back to levels...
http://online.wsj.com/articles/draghi-says-ecb-open-to-new-measures-to-increase-inflation-1415805996
This change in language tells us point blank that Central Bankers are aware they cannot create growth. After all, they’ve spent $10 trillion and all they’ve created is the weakest recovery on record.
And so, they’re not even bothering to engage in the farce of talking about jobs or GDP growth. Instead, they’re simply going to focus on inflation by printing money.
It’s now a race to the bottom from a currency perspective. The outcome will make 2008 look like a joke.
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Falling oil prices is a sign of deflation. I'm also starting to notice falling food prices for some items. How long this goes on is anyone's guess. The FED must print and soon.
How long will Americans believe and trust the value of a dollar? That's our timetable right there. Our money is neither gold nor a representation of a quantity of gold, but rather a belief, on a global level.
looks more like deflation for america via a stronger dollar...and cheaper commodities and imports. This could very well be a long term trend..
as I am in cash, I like it....now if we can just get some of those new apartment buildings completed, that should push down low end home prices so I can buy a retirement home...oh, and a GOP administration that means it on immigration enforcement would also help drive down home prices
The era of growth is not just over, it is gone. Real people are more than broke, they are mined out. New era on the horizon, say hello to deflation. The financialization of the western world has killed the housing market, it has killed the employment market, and now it will kill the market of markets. No one was content to make decent return, everybody had to make a killing, you were either a major player of you lost your shirt and your shit. Now the game is rigged, the rules and enforcement are made up, and the points don't matter. But when all the interlocking debts are called, and all the bonds have crashed to nothing, the money dissolves, and nobody has crap. Collapse will be an ugly thing.
NIRP will be the next ally to kick the kids.
http://i.ytimg.com/vi/QPWZZ4QaSQ0/hqdefault.jpg?w=320&h=192&sigh=Ssm5Cm-...); background-position: 50% 50%;">
I contend the primary reason that inflation has not raised its ugly head to become a major economic issue is because we as a society are pouring such a large percentage of our wealth into intangible products or goods. This includes currencies. If faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar. Like many of those who study the economy I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply.
The timetable on which economic events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment or stop driving the twenty miles to work? Answer, it could be months before your car is repossessed so you buy gas.
It is important to remember that debts can go unpaid and promises be left unfilled. If this happens where does it leave us? Chaos and major disruption would result from such a scenario. As we have seen from the economic crisis of 2008 and following many other unsettling developments legal actions can continue to drag on for years.
I have pondered the possibility that what we have been going through is the "major deflationary period" many people expect if things collapse. More and more often we have seen Central Bankers forced to pull rabbits out of their hats, but when we stand on the abyss central bankers will be forced to print so much worthless paper the money it will act as a cushion to our fall but not change the reality.
Before you discount this possibility consider that hyperinflation paves an easier transition to a replacement currency and a reset of the system. This would include breaking many promises to the masses and those in power rewriting all the rules for the "general good" of the people. Currencies are about to be debased and how individuals fare will depend on how they are invested. More in the article below.
http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....
Yes, Central Banks are blind to the fact that in this globalized world, if we enter in "inflation-on" mode (the moment people hear on the news how much basic stuff is going up in price everywere), well... just do the math if everyone rushes to hedge his individual inflation risks. And it could be faster than anyone is thinking, much much faster. Anyway, the setup now is inflationary by design, in spite of cyclical ups and downs. Also wasinflationary by design in Weimar, by the way, its just that in Weimar they overshoot it a little bit... But that can happen when you make inflation your ally, its a very unstable partner.
What we'll see is a controlled inflation i.e. the Frog in the slowly rising hot water. They'll keep it at a real average of 15% while saying its only 3% and they'll get away with it too. They know that hyperinflation will lead to not only the end of their free money but would probably lead to they and their families early demise.
Inflation cannot be created without a wage-inflation cycle to sustain it. You will not get that with China as a huge leakage on the global economy.
The only way to create inflation in an era when you have added more people (in China) to industrial productive capacity than ever before in global history, is to destroy capacity until goods become short supply.
Even if you imposed 100% sales tax in the USA you would not create inflation, even doubling the minimum wage would not do it. What inflation you have already is in Stock Market and Real-Estate.
The only way to revive these economies is massive redistribution from rich to middle class instead of vice-versa.
I recently read a comment where the writer challenged the curious to "bing" or look up the term "Weimar Inflation", some of what I discovered was surprising. Germany had come out of the first World War with most of its industrial power intact, the speed at which inflation suddenly destroyed the currency dovetails with some of my thoughts on currency trading today.
It is possible that inflation "could stem from the lack of faith in a currency, or all currencies, rather then from a lack of available goods". It was amazing how quickly inflation took root in Germany during the 1920s, we must consider how fast it could happen now that we live in an age of instant communication. For a primer on inflation in Germany in the following WWI and some surprising facts about inflation see the article below.
http://brucewilds.blogspot.com/2013/01/surprising-facts-about-inflation....
Carroll Quigley talks about how a small force with superior weapons can control a large force. However, when the top of the line weapons are cheap, then the small oligarchy is totally fucked.
The current top of the line technology weapons are drones. However, when the general populace can arm themselves with cheap drones or can defeat technologically expensive drones, through other means, as shown by the Iranians, then the oligarchy is dead.
The industrial/military complex will try to add price and value to the same basic technology long after the value added justifies it (believe me, I worked for a defense company, admittedly with no secret clearance, but financial access, for many years). That is history. Can one advanced drone defeat 100 slighly less advanced drones? My guess is no.
How many people can develop a drone with a processor chip, camera chip and communications chip? My guess is A LOT.
The more important question to ask is "why drones?". Yes, they are cheaper, but the more important reason is that you do not need flawed and conflicted humans to operate them. There can be anyone, human or not directing them.
Dude my advice to you is to keep that shit to yourself. You don't want any nailgun accidents now do you ?
Seems like the most likely scenario. Certainly, the inflation / devaluation of the currencies is occuring, despite any and all official anouncements to the contrary; but the era of "inflation"; when it's un-avoidable headline news; yeah, probably. As soon as the oil price wars burn out and somebody gives up and starts restricting supply would be a likely indicator, IMO.
When inflation hits it can drive the stock market up? Should I be on that train?
yes, just get off before the last stop
These desperate attempts to start inflation are like when you click on a link and it doesn't open. So you click it again and it still doesn't open. So you click it like a hundred times in a fit of impatience and nothing happens -- until the screen fills with like a thousand audio pop-up ads for porn and you break the volume knob off trying to turn it down and it's sexual harassment training day at the office.
Popcorn, bitchezzz.
Hoag Futures , anyone ?
Does no one care what God thinks of these shenanigans ?
Look at all the banker deaths .
As for growth , look at
http://data.worldbank.org/indicator/SP.DYN.CBRT.IN/countries/1W?display=...
The global crude birthrate has fallen quite sharply by about 5% in the last 7 years .
Economic growth is fuelled by future expectations for grandchildren .
There is no growth because there is no perceived need of it .
The species seems to be heading for extinction , or maturity (if there is a difference)
See
https://www.academia.edu/9290655/Hows_God_doing_
QE worked great for the 'free shit army,' the gubmint bureacrats, and the top 1% who own stock options...all else be damned!