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Debt, Propaganda And Now Deflation
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Dorothea Lange Negro woman who has never been out of Mississippi July 1936
Looks I have to return to the deflation topic. I’m a bit hesitant about it, because the discussion always gets distorted by varying definitions and a whole bunch of semi-religious issues. The Automatic Earth has for many years said that an immense bout of deflation is inevitable because of global debt levels, and it’s all only gotten a lot worse since we first said that. Our governments and central banks have ‘fought’ deflation with more debt, and that was always the stupidest idea in human history. Or at least, most of us were stupid for believing it would work, or was even intended to.
Just so we don’t get into yet more confusion, i probably need to explain that the debt deflation we’re talking about here is not some subdivision like consumer inflation or price inflation or cookie inflation, those are just hollow and meaningless terms. Debt deflation is deflation caused by too much debt, and the deleveraging it must and will lead to. Deflation does not equal falling prices, those are merely an effect of it.
The reason this matters is that when you equate inflation and deflation with rising or falling prices, you’re not going to be able to know when you actually have deflation. Because prices can rise for all sorts of reasons. Inflation/deflation is the money/credit supply in an economy multiplied by the speed at which money is spent in that economy, the velocity of money.
It should be obvious that prices for some items can still rise, certainly initially, when deflation sets in. Producers that see less sales can try to raise prices for their remaining buyers. Basic necessities will always be needed. Governments can raise taxes. Rising/falling prices tell us only part of the story, and with a considerable time delay.
Ergo: rising/falling prices are a lagging factor, and if you look at them only, you will have missed the point where deflation has set in. What follows, obviously, is that you can’t measure deflation by looking at consumer prices (CPI) or production prices (PPI) numbers. You’d be way behind the curve. CPI and PPI tell you something, but they don’t tell what causes falling or rising prices. And that is a valuable thing to know.
I see even John Mauldin in this week’s The Last Argument of Central Banks talk about ‘good deflation’, but that doesn’t exist any more than cookie inflation, sorry, John. Prices for some items may fall due to innovation etc. while an economy booms, but if you call that deflation, you’ll miss what’s really deflation when it arrives.
Deflation is always bad. It either occurs when money/credit is so short that people can not get their hands on it no matter how hard and productive they work, and how much demand there is for their products, or it occurs when people are too poor, too much in debt or too reluctant to part with what they have.
In a deflation, people spend only what they absolutely must, provided even that they can afford to, which leads to large swaths of an economy being liquidated. Falling prices lead to falling wages lead to ever further falling prices lead to factory closings lead to more people who can’t afford to spend which leads to closings which leads to less spending which leads to faling prices etc. This continues until the debt has been deleveraged. Governments will lose tax revenue and raise taxes, but soon enough they will in quick succession disband and be replaced, rinse and repeat until even essential services can no longer be provided.
Until recently, a shrinking money/credit supply was very clearly not in the cards. Central banks have gone absolutely nuts in their stimulus plans, and this has artificially kept price levels up somewhat, though far less than they, and scores of ‘experts’ had hoped and expected. Now that game, too, is up. Japan went crazier than ever the other day out of fear that falling oil prices would sink consumer spending even more, but the US Fed has cut QE. That is an admission it has failed to do what it officially was supposed to, not the sign of triumph it’s made out to be, as in ‘the economy is doing so well, it doesn’t need our support anymore’.
Central banks have spent like maniacs, and consumer spending only keeps falling. Just ask Japan. And while you’re at it, ask them how entrenched deflation can become even in an economy that still has the benefit of growing world market to sell its products in. We won’t have any such benefit. The world has stopped growing, and there’s no massaging of numbers left strong enough to hide it. Not that it won’t be tried. As I said earlier this week, we now live in a world built on debt and propaganda.
Since QE and other ‘plans’ never reached the real economy, most nations’ money supplies have also either fallen or at best remained stagnant. We have the perfect set-up for deflation, and we therefore have deflation. It hasn’t reached the US yet, though we should be careful with that because the numbers being reported are notoriously flaky. But it has reached Europe and Asia. Which means the US is only a matter of time. And people, reluctantly, start taking notice. Steve Hochberg and Pete Kendall penned the following for Bob Prechter’s Elliott Wave:
Deflation Rearing its Ugly Head in Subtle and Not-So-Subtle Ways Around the Globe
According to the latest figures, deflation is now perched on China’s doorstep. In September, China’s consumer price index was up 1.6%, but its producer price index fell 1.8%. The CPI increase was its lowest since 2010. [..] in September, demand for electric power, a “bellwether for China economic activity,” fell 8.4% from the prior month, the second straight monthly decline.
“Deflation is the real risk in China,” stated the chief economist at a Hong Kong bank. In Europe, deflation is no longer a possible risk; it’s reality. In September, eleven of fifteen European Union members experienced lower goods prices, and the latest quarter-over-quarter Eurozone growth in real GDP is zero.
With Alice-in-Wonderland naiveté, U.S. financial media place the United States outside the risk of global deflation. Headlines talk of “Mild Inflation” and insist that the U.S. will gain “From Good Deflation.” On October 14, Bloomberg reported that consumer spending is strong enough “to steer the U.S. economy safely through the shoals of deteriorating global growth and the turbulent financial markets.” In early September, we stated that it was only a matter of time before economic weakness and deflation (which will be anything but good) jump the Atlantic and Pacific oceans and arrive in the U.S.
According to the U.S. Labor Department, real wages for full-time employees averaged $790 a week in the third quarter, about $1 less than in the third quarter of 2007. “There’s been no net gain for workers since 1999.” In recent months, spending has been uneven. Retail sales fell 0.3% in September. Most economists are baffled: “one of the great mysteries is why the U.S. has lacked inflation despite all the money being pumped into the economy.” A study by the St. Louis Fed finds that the answer is “a dramatic increase in the private sector’s willingness to hoard money instead of spend it.”
Note: the ‘hoarding meme’ is habitually used by economists, re: Bernanke and his Chinese savings glut, to point out situations which are more often than not characterized by people being too poor to spend, not sitting on anything at all. For economists, if people don’t spend, it must be because they save, never because they’re poor. I kid you not.

For years now, the Fed along with most economists have anticipated the imminent return of inflation, but it continues stubbornly subdued. This long-term chart above of the CPI shows a succession of lower highs since the early 1980s, as inflation turned into disinflation, which is on the cusp of leading to outright deflation. Some argue that the CPI is rigged to show milder levels of inflation, but the bottom graph shows the same steady move toward the zero line in the Personal Consumption Expenditures Index, an alternate inflation measure favored by the U.S. Fed.
When outright deflation hits, recognition of it will play an important role. Once its presence becomes widely observed, investors and the debt markets will belatedly take defensive action. Eventually, notes Conquer the Crash, “default and fear of default exacerbate the trend as it causes creditors to reduce lending. A downward ‘spiral’ begins feeding on pessimism just as the previous boom fed on optimism.”
Moving from theory to practice, we end up with our old friend Ambrose. Though he confuses inflation and consumer prices, and thinks they’re one and the same thing, he does have useful numbers:
Spreading Deflation Across East Asia Threatens Fresh Debt Crisis
Deflation is becoming lodged in all the economic strongholds of East Asia. It is happening faster and going deeper than almost anybody expected just months ago, and is likely to find its way to Europe through currency warfare in short order. Factory gate prices are falling in China, Korea, Thailand, the Philippines, Taiwan and Singapore. Some 82% of the items in the producer price basket are deflating in China. The figures is 90% in Thailand, and 97% in Singapore.
These include machinery, telecommunications, and electrical equipment, as well as commodities. Chetan Ahya from Morgan Stanley says deflationary forces are “getting entrenched” across much of Asia. This risks a “rapid worsening of the debt dynamic” for a string of countries that allowed their debt ratios to reach record highs during the era of Fed largesse. Debt levels for the region as a whole (ex-Japan) have jumped from 147% to 207% of GDP in six years.
These countries face a Sisyphean Task. They are trying to deleverage, but the slowdown in nominal GDP caused by falling inflation is always one step ahead of them. “Debt to GDP has risen despite these efforts,” he said. If this sounds familiar, it should be. It is exactly what is happening in Italy, France, the Netherlands, and much of the eurozone. Data from Nomura show that the composite PPI index for the whole of emerging Asia – including India – turned negative in September.
China itself is now one shock away from a deflation trap. Chinese PPI has been negative for 32 months as the economy grapples with overcapacity in everything from steel, cement, glass, chemicals, and shipbuilding, to solar panels. It dropped to minus 2.2% in October. The sheer scale of over-investment is epic.
The country funnelled $5 trillion into new plant and fixed capital last year – as much as Europe and the US combined – even after the Communist Party vowed to clear away excess capacity in its Third Plenum reforms. Old habits die hard. Consumer prices are starting to track factory prices with a long delay. Headline inflation dropped to 1.6% in October. This is so far below the 3.5% target of the People’s Bank of China that it looks increasingly like a policy mistake. Core inflation is down to 1.4%.
China has flirted with deflation before: during its banking crisis in the late 1990s, and again during the West’s dotcom recession from 2001-2002. Both episodes proved manageable. This time the level of debt is greater by orders of magnitude, with a large chunk in trusts, wealth products, and other parts of the shadow banking nexus, and a further $1.2 trillion in “carry trade” loans from Hong Kong.
Standard Chartered thinks total debt has reached 250% of GDP. This is roughly $26 trillion, the same size as the US and Japanese commercial banking systems put together, and therefore a headache for us all. Larry Brainard from Trusted Sources says China is sliding towards a European debt-compound trap. “It’s arithmetic.Deflation will kill you if you’re leveraged. It is just a question of how quickly. We don’t know how big the problem is because China is playing a game of three-card Monte and moving the debt to different buckets,” he said.
Asia is not yet in a full-blown currency war, but no country can stand idly by as neighbours dump toxic deflationary waste on their front lawn. Korea has threatened to force down the won, pari passu with the yen. The central bank of Taiwan has been intervening. These skirmishes are happening in a region of festering grievances and territorial disputes, with no Nato-style security structure – or for that matter EU-style soft governance – to damp down fires.
[Chinese] purchases of foreign bonds have dropped to zero, down from $35bn a month at the start of the year. The yuan has appreciated 22% against the yen since June, and 50% since mid-2012. It is up 12% against the euro since the early summer. China is in effect strapped to the rocketing dollar through its quasi-peg, increasingly a torture machine.
George Magnus from UBS says this cannot continue. “What is happening in the property market is the tip of the iceberg for the whole economy. China will have to resort to monetary reflation over the winter, and I think this will include a lower yuan. We are heading into a currency war,” he said.
We have the debt. And we recognize it. Still, the line politics and media feed us is that more debt can be a good thing, that we need more debt in order to attain what they like to call ‘escape velocity’ from the financial crisis caused by that same debt. Oil on fire.
We have the propaganda. We don’t always recognize it for what it is, but the, that’s the idea, isn’t it? It’s to make people think that things are not really what they really are. That we need to spend more public funds on saving banks, not saving people, or else armageddon. There’s hardly a news story left today that is not to an extent phrased by propaganda.
And now we have deflation. Which is not the falling prices, though they are a – delayed – symptom. Still, other symptoms are as valid, as nobody is spending. Mass unemployment in southern Europe is a symptom. West Texas oil at $74 dollars today is one. The Chinese economy, allegedly still growing at $7.5%, but at 250% debt-to-GDP, is another. Throw in 207% debt-to-GDP debt levels across southeast Asia.
With deflation becoming a daily topic in our propagandistic media, despite the fact that governments and central banks are vehemently allergic to it (for good reasons), rest assured that we are entering a next phase of the crisis. Just not one that they would like you to think we are. When debt starts being deleveraged for real, deflation cannot be avoided. And debt must be deleveraged, we can’t sit on it till Kingdom Come and keep adding more while we’re at it. That was never in the cards. And we’ve accumulated too much of it to ever outgrow it. We simply can’t sell or make enough iPhones to accomplish that. Or eat enough burgers, hard as we try.
Our world, our life, has been built on debt and propaganda for many years. They have kept us from noticing how poorly we are doing. But now a third element has entered the foundation of our societies, and it’s set to eat away at everything that has – barely – kept the entire edifice from crumbling apart. Deflation.
It’s time to check where your basic needs will come from when it becomes first harder and them impossible to obtain them from the sources you have been used to. And please, get out of debt. Debt during deflation is a cruel and unforgiving mistress. Think of deflation as a biblical plague.
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With US debt at $17.9 trillion and rising at $1 trillion a year, and unfunded liabilities at $130 trillion and rising at $7 trillion a year, interest rates have to be near zero forever ensuring deflation. If interest rates were to normalize, it would add $600 billion to $800 billion a year to the US deficit.
But at least the Fed's constant interventions in the US stock markets have ensured a high rate of inflation. Apple is now worth more than the entire Russian stock market. Being able to manipulate markets has its advantages. Corruption has always been the fastest, easiest way to a temporary, faux prosperity.
"Being able to manipulate markets has its advantages."
Until it doesn't.
So get ready while there's still time:
52 weeks to preparedness pdf
The elites can rig the markets in either direction when they want and how they want. Think about it---they can simply add or subtract zeros and it is all in line with what Thomas Jefferson warned us about:
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered."
Of course, that "Warning" is too late---they control what is left of the republic. Hang it up folks and don't try to analyze anything---just know that everything is rigged and the crime syndicate will do what they want when they want how they want to whom they want and to what it extent they want. They control us we are their slaves like it or not----game over we lost because all we were willing to do was talk and talk isn't worth the geoengineered air we breathe!
Are you and TJ implying that perhaps this has gone too far to be fixed with a simple beer summit....?
Race relations in America were fixed with a beer summit
"Deflation is always bad". Jockeying for a position on Kuroda's staff are you?
How DARE you suggest that citizens' purchasing power increase. These "deflation death spiral" bullshit articles just keep adding fuel to the central planners' fire. Tyler, please.
Also, thank God this guy is here to weigh in on the topic of deflation, since no one else is intelligent enough to figure it out. His real calling should be working at the Bureau of Labor Statistics in the Bullshit Hedonic Quality Adjustment Department.
This clown reminds me of Gonzalo Lira back before his blog went on deathwatch and he disappeared from ZH. Stridently wrong but never in doubt. Take him for what you think he's worth and enjoy the black and white pics he posts with every redundant article.
PS: I actually liked Gonzo and even threw his blog a few bucks back in the day. Can't say the same for Raul, but YMMV.
I would love to see your actual rebuttal to the piece, but I'm also aware that this is Zero Hedge.
My actual rebuttal to this piece is in the form of a very easy to read book called Economics in One Lesson Spas, written by a gentleman named Henry Hazlitt well before I was born (I'm good at delegating, y'see?). It's available online for free, and if you have a limited attention span just skip to Chapter 23, "The Mirage of Inflation". Whenever I see such a crushingly idiotic sweeping statement such as "deflation is always bad", as above, I feel quite comfortable in summarily disregarding anything else coming out of the author's mouth. Glad you're aware this is Zero Hedge, though.
Better than nothing, so a well above average Zero Hedge comment.
Thanks, I'll take a look.
You know, every time I go out to buy something, I find myself thinking that a nice dose of deflation would be a very welcome thing. Frankly, Fuck the Central Banks who created this mess in the first place.
Incidentally, this is the same idiot who believes that all of the present economic problems are caused by the older generation having saved and not spent and/or gone into debt for the good of society. All that capital needs to be re-distributed you see...Fucking self-righteous left-wing prick:
http://www.zerohedge.com/news/2014-11-13/most-destructive-generation-ever
As with this piece, only the comments are worth reading.
Here's the problem with deflation. Your $ may buy more, but if your suppliers are "leveraged", they go BK and shut down. Now where do you use those $$?
Simple. With the new suppliers who will enter the market to replace the old BK players...
New suppliers will take a while, especially in industries with few competitors. In the meantime, there will be civil unrest. Your $ in the bank will be bailed in.
Most likely, you'll be issued ration cards and $ won't mean much.
There are very few industries with only a few players and those are not likely to be of much relevance to the avaerage consumer. And my cash is all in PM's stored outside the banking system. If you have your money in any of the TBTF Banks you are even more stupid than I originallly imagined. None of which, incidentally, has anything to do with deflation...
You buy up the IP and designs and make your own, if you have the bucks. If you don't, you raise funds from the crowd until you get the funds. You build out capacity without going into debt until you match demand.
The banksters, the 0.01%, the poltically connected who have cash and are not in debt, they'll swoop in to buy at firesale prices. Suppliers will exist.
Here's the problem with deflation. Your $ may buy more, but if your suppliers are "leveraged", they go BK and shut down. Now where do you use those $$?
The "real problem" with deflation is not letting the owners inflate their own assets to the moon before they impose it.
As Marcello Truzzi put it, "Extraordinary claims require extraordinary proof." This is why his declaration of "deflation is always bad" requires extraordinary proof, which I don't believe he presents in this piece.
Additionally, let me quote him near the beginning:
I would ask the author to demonstrate how a business that sees "less sales" would succeed by raising prices. Their remaining buyers would simply leave. This would especially be the case in a deflationary environment, where prices are presumably falling. All I can take away from this line of thinking is that the author has never managed a business, employed anyone, or sold anything.
From the author's LinkedIn Skills section:
"Extraordinary allegations require extraordinary evidence"
- Lance Armstrong
There is no correlation between inflation/deflation and the economic growth. If there is any, it's negative as inflation makes people poorer.
http://www.devilsdictionaries.com/blog/deflation-spiral-is-nonsense
Oh. My. God. You really said this. And with a masonic avatar.
So let me tell you how deflation really works. Yes, you are correct, your CASH will purchase more stuff, because with deflation prices will drop. So, I ask you, how much of your net worth do you keep in cash form? When I say cash, I do not mean cash equivalents. I mean muthafuckin' CASH. Folding green. Benjies.
If most of your net worth is in the following categories, be prepared to get royally fucked in a deflation:
Bank accounts
Stocks
Bonds
Real estate
Commodities
Capital goods, such as manufacturing plants and machinery
Inventory
Precious metals
All of the above types of assets will decline in value in a deflation. Since most people keep most of their wealth in these types of assets, they will be in for a world of hurt. All this cascading wealth destruction leads to even more wealth destruction, until all of the debt overhang is wiped out, along with thousands or even millions of people, who die of starvation, or in the inevitable deflationary wars.
If however, you have a big fat wad of cash stuffed in your mattress, you will make out like a bandit during deflation.
Most wars have been caused by or are a cause of inflation, not deflation. Deflation does not change the value of most of the assets you mentioned. The dollar value changes and that is only made up nonsense anyway.
You need to get out of your brainwashed fiat mode and think about the real world.
Good point.
Mllions of people would die of starvation? I would be willing to accept this idea if you can provide proof. Also, not sure what a masonic avatar has to do with my argument.
My uncle Louie has taken Obama's lead and does a beer summit to fix every problem he has had for the last five years..
Debt, Propaganda And Now Deflation
Should have read : Debt, Propaganda And Now More Propaganda
When the world is already over-saturated in economy crushing and wealth confiscating debt... only a fool would call the inevitable collapse of debt based consumerism DEFLATION.
Makes about as much sense as calling ebola a weight loss program...
Hey Head...you always know how to land the arrow in the heart of these jackasses.
Why is Zerohedge...aka...Tyler...printing this sort of pure crap????? Tyler...a comment please!
Lower prices is NOT deflation. Price wars...IS NOT deflation. MANULIPATED prices is NOT deflation. Propraganda IS NOT deflation!!!
GOD I do WISh there really was real DEFLATION and not propraganda like this this story from a paid to dum-you-down banker. YOU are a Banker...YES????? Not you Zerohead but the worthless BS artist 'author'.
Now, you use your head all you Zerohedge readers....who in their right mind would dish/condems/abhor lower prices? WHO???? NO please sir...make me pay more for the same thing that was less yesterday...please I beg you!!!!
Is a computer that is not the size of a office building and costs $500 deflation? NO. Is a lower energy bill from solar, deflation? NO. Is a car that gets 20 mpg not 8 deflation? NO... I could go on and on. Is waterNOW the first ingredient in almost everything I pick up at the grocery and read the lable...deflation..no it is inflation from printed worthless dollars.
WHY IS INFLATION good? Why? Good for whom? We are brainwashed to believe inflation is to our benefit...who does this come from but the 1% and money printer central bankers who DO deflate the value of our fiat currency daily so everything we touch costs more. Yep, that is good for us alright...and bad for them.
You on a fixed income? You in a company that cries like a baby that the CEO can't buy his new Learjet because buiness is down $3.00 from last year and you can't have a raise?
DEFLATION is the enemy of the rich, friend of the masses. Inflation is the friend of the rich and the starving childern can tell you that this is truth...real truth.
Deflation is not just falling prices, dumb-ass, it's a shrinkage in the money supply. Yes, if you had the same amount of money and prices fell, that would be good. In a deflation you will have a radically reduced supply of money. As I said above, you would wake up to discover that deflation had destroyed all of your "money" overnight.
I can't fucking believe I have to lay this out, because this is an economics blog, but some people have to learn sometime.
In today's world, debt is money. The more debt there is, the greater the money supply. (Look up terms you don't understand on Investopedia.) But debt makes an unstable supply of money, because the more debt there is, the greater the chance of default.(Look it up) If there is a general idea that debts will not be repaid, that "money" disappears as magically as it appeared (research "fractional reserve banking" you f-ing moron). If enough people begin to believe debts will not be repaid, they will rush to place their money in cash. There will not be enough cash to go around. As the defaults multiply, the supply of new money (debt) dries up. Otherwise known as "capital", this new debt is what makes the industrial system function. As credit (debt by another name) seizes up, businesses go bankrupt. People get laid off, meaning they default on their debts. The debt default dynamic spirals. Soon, there is no more money except cold-hard cash. The industrial machine grinds to a halt. That means no food, since agriculture is an industrial, capital-intensive process, like everything else.
There are lots of scenarios in which debt-creation seizes up, but I will respect your attention span and call this simplified version good.
I could go on, but you get the picture. Yes, inflation sucks, buying stuff that costs more all the time. But in an inflation, there is at least capital, and at least everything still functions, meaning you get to at least eat FUCKING FOOD.
Oh well, why do I bother?
Enlightening us for 19 weeks and counting. Where would we be without you? Glad you have it figured out that is is an "economics blog". (Protip: it isn't). Go back to Investopedia or Krugman's blog.
Look this is about Empire & Dynasty Building.
Look at the Roman Empire or British Empire.
#1 they have to take resources and use human labor either for production or military service, Empires must find ways to manipulate the system to come out on top, accounting fraud, theft, use of debt to force government officials to grant lands or monopolies
#2 there are many kinds of debt that can be brought up, our understanding of economics was that banks too in deposits, lent out dollars from the local economy to create capital, originally we thought this was debt free money being used to stimulate the economy
#3 Fractional Reserve Debt takes Fiat and create debt and money out of thin air for loans & investments, not only does this inflate the dollar (devalue USD), it means if the bank takes over the assets due to failure... the bank becomes richer since it now owns the assets that it created from thin air!!!
This is Financial War against Government, Households, and Businesses.
QE has enabled this process, ZIRP is Oppression, TARP is Oppression as they bailed out the Irresponsible Elite Bankers... but deeper you see the Banks don't serve the people or the government. Banks are disconnected from the Country, Government Ideals, Accounting Integrity... they only have to turn over financial transaction or create securities, buy stocks, buy bonds, buy and encourage buying of Real Estate... and they get promotions & bonuses.
Wealth has shift from Creating Capital (the old way)... now wealth is created through financializing real estate, stocks, bonds, derivatives.
Decapitalization of Industry is Key to understanding this, but also wage declines also indicate... we shifted from Industrial Capital Wealth to Bull Shit.
Michael Hudson: Finances vs Economy, Credit vs Money [3/18 ENG] ...Sounds like lots of ZH people agree with him on Greece & Financialization of Debt & Government in order to steal the assets.
http://www.youtube.com/watch?v=JZQqrxHGcoQ Whole thing is good!
Predatory Capitalism is action, List of the Many Banking/Financial Beta Tests;
- Bail Out
- Bail In
- QE & 5 years of ZIRP
- Ninja Loans & foreclosures
- Rehypothicated mortgages
- US Financial Schemes Damaged International Faith in USA, US Financial Markets, US Petro Dollar, and Damaged European Investors
- Retirement savings & Pension Funds Quantifiably Damaged
- No investment Interest for Savings Accounts
- US Municipalities & Counties & University Trusts Damaged
- High Gas Prices 6 years from 2008 Surplus
- EU & Euro
- Price Fixing commodities & LIBOR
- Detroit Bankruptcy was the Beta Test.
- Post Office Liabilities to Heath Care
- Sub-Prime Loans
- S&L Crisis
Reminds me of the US Bank Memes
Started way back, but just going back to like 1880:
- Silver Certificates are no good, say the bankers
- Gold Certificates are no good, say the bankers
- US needs Central bank to keep the government from spending too much, moral hazard
- 1913 Federal Reserve Central Bank Created
- Stock Market is good, US Industry can rise forever
- After Crash and Depression, banks say the economy is not good, can't invest
- Public Banking is bad, Private Banking is the way out of Depression
- Government should stay out of banking
- Only Private Bankers have the skill to rate businesses
- Only Private Banks have the Skills needed to determine money policy for the people
- US needs a Fiat Currency
Haha. We know how that all worked out in 2008 Financial Crisis. Boom & Bust. But the damage is no longer even transparent with non-standard accounting & non-standard financial instruments... and financial ratings firms are not reliable.
Private Bankers & Central Bankers were schemers from the 1900s. Today people are smart enough that many people can judge how to assess their own taxes and look at their own business accounting data.
Solution: Shift 2 million people out of Private Banks into Public Banks. This will help create downward pressure on private banking executive salaries... through downsizing their functions, their processes, and their purpose on Wall Street & London. Then break them down with Glass-Steagal Act and Anti-Trust Law. Then End the Fed.
TeethVillage88s
Your 'solution' left out ending unending wars and the global Pentagon-DHS-MIC
which is paid for with debt, waged to protect the petrodollar (e.g. Libya, Iraq),
enforce IMF debt slavery,facilitate 'drug war' profiteering and corruption,
and establish a military-police-prison state to extract all
manner of theft (e.g. ZIRP, bailouts, bail-ins)
If credit is shrinking why are V and MA at all time highs and PE's
"Being able to manipulate markets has its advantages."
So does lack of transparency. Pretty sure someone once said it has political advantages.
There comes a point where zero interest rates aren't enough. Taxes must go up, or spending must fall, to cover the budget gap. Or, just keep counterfeiting the difference. We've been there for fives years and the author thinks they're going to do somethin' diff'rent? Deflation equals more freedom for the non-indebted. Inflation equals more control for the banksters.
People are playing fast and loose with the words 'inflation' and 'deflation'.
Even ignoring the massive inflation in asset prices we've seen since the CBs have started QE, we've still seen plenty of consumer price inflation too - it just isn't measured accurately by CPI because of statistical legerdemain like hedonics and substitution.
We have deflation in the money supply as commercial mainstreet debt is being paid off faster than new debt is being created, leading to less money in the system (and that makes it harder to pay off existing debts, hence the idea of a deflationary 'spiral'... though people warning of this never seem to realise how it came to be in the first place - an inflationary spiral).
And we have some deflation in prices thanks to technological advances, vast numbers of producers coming online in the East, and declining wages in the West.
So it's a bit of everything at the moment.
The reason TPTB are so concerned about 'deflation' is that it threatens the ability of debtors to meet their obligations, which in turn could lead to systemic collapse.
" it would add $600 billion to $800 billion a year to the US deficit."
Yes you are correct: the taxpayers are fukt.
That extra money would be paid to the owners of Treasury bonds (aka "savers"). But higher interest rates are inflationary because of who they are PAID to, and who spends it, not because of who PAYS them.
Alleged deflation if its actually happening, will be short lived.
I'll put it another way. Whomever holds the most low yield fixed rate debt benefits the most from inflation.
Follow the money.
Each week, I buy a couple of different types of new canned foods to try. I'd rather find out which canned foods are the best bang for the buck now, before things really get ugly.
Social Security Trust Fund will be the big winner along with US Treasury then.
Usausausa go
tax the Fed distribute a dividend to each taxpayer
Vote for me
Good points---I don't know what why everyone has to be so depressing---just put everything in the stock market, borrow money and invest in the stock market, put grandma's money in the stock market and everything will be fine. Afterall, the companies that represent the stock market are all honest, they all have pristine accounting, never lie, never commit fraud, and only have America's best interests in mind when they lobby for taking over the healthcare market or waging war. The elites love us and do not have any evil intentions in mind when they ship our jobs overseas. All of the productivity gains American workers have achieved should go to the .0001% and the rest of us should just be thankful that we can watch rigged football games and dancing with the stars. Isnt' life wonderful now!
Don't worry, be happy!
Deflation, or stuff going on sale, is what is supposed to happen when there is a drop in demand.
Economies have artificially stimulated so much future consumption by artificially low rates and money for all, that there is no more future demand to pull into the current environment.
And with tomorrow's demand already satisfied, what did you expect to happen tomrorrow?
You can't grow yourself out of this mess, comrades.
You are going to have to pay the piper for the failure of Keynesian economics this time.
No worries---the crime syndicate can just print more money up and rearrange who gets what---just flip a coin---heads they win, tails we lose!
The lettered agencies will not take kindly to geting paid in currency they cannot spend. Might as well just load a gun and pay for things by the end of a barrel.
They make loans even at zero the loan is getting to expensive to rollover.
It is a human right for the Government to supply all of our basic needs........
I threw up a little just typing that.
A pure volentary government could. Lots of talent out there who might take a few hours a week to teach others, if you could get the model going. I dont mind teaching to fish i just dont want to do the fishing for you. Im sure many others feel the same way.
Would a 50% 60% or 90% taken cut in your yearly taxes be worth 2 hours a week of your time? Maybe, right you would need a model that works, detalis and so forth.
US monetary base is falling
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BASE&s[1][range]=1yr
None of that means anything---only what the crime syndicate wants---you can analyze all day but in the end what the crime syndicate wants the crime syndicate gets as the average sheeple lemming takes another puff of the geoengineered air that is slow killing us. The rules of economics are completely meaningless in a world where the elites can spray us with toxic metals on a daily basis and nobody cares!
Deflation horrors will be burned by inflation, just to pretend we have a few moar months enjoying the endgame.
Brian Hooker - CDC Cover-up of Vaccine & Autism Link
http://www.redicecreations.com/radio/2014/11/RIR-141110.php
November 10, 2014
Brian Hooker has had a distinguished career as a chemical engineer, managing a large-scale systems biology research program at Batelle/Pacific Northwest National Laboratory in Richland, Washington. Since 1995, he has served that laboratory as a senior research engineer, a staff engineer, and a principle consultant in biotechnology. He also taught chemical engineering for three years at Tri-State University in Indiana and teaches at Walla Walla Community College in Washington in addition to operating his own consulting agency. He has a long list of research grants, scholarly/technical publications, awards, and formal presentations, and is co-owner of several patents. Dr Hooker reveals his relationship to the whistleblower, a top researcher employed by the U.S. Centers for Disease Control (CDC) who came forward, confessing to his participation in actively covering up data that clearly links vaccines to autism. Dr. Hooker is the father of a vaccine-injured child, and is a Ph.D. researcher. He has fought against the CDC for more than 12 years, using the Freedom of Information Act to try and gather as much data as he could from the studies that the CDC has published that claim there is no link between vaccines and autism. He’ll talk about what he discovered when the CDC finally handed over documents so that he could look at the raw data that the CDC used to claim that there was no link between vaccines and autism. He’ll talk about the science behind the study, government corruption and spending, his struggle and what the public isn’t told. Later, we’ll talk about the pressure to get people vaccinated. Brian also shares his own story of an autistic son and the process to help him.
http://rediceradio.net/radio/2014/RIR-141110-brianhooker.mp3
~//~
Arthur Topham - Hour 1 - “Hate Propaganda” Legislation in Canada
http://www.redicecreations.com/radio/2014/11/RIR-141112.php
November 12, 2014
Canadian born Arthur Topham has a background in Political Science and Education. Since 1999 he has been the Writer, Journalist, Publisher & Editor of RadicalPress.com. Due to the fact that the website has been sabotaged on a number of occasions over the years the information on it only goes back to June of 2006. Arthur will talk about the pressures of Jewish lobbyists in Canada to remove his site, specifically B'nai Brith Canada. Its materials posted sparked two attacks from the lobbyists, the first occurring in 2007 when he was charged with a sec. 13(1) "hate crime" under the legislation contained in Canada's Human Rights Code. The second attack occurred in 2012 when he was charged under the Canadian Criminal Code, sec. 319(2) "Hate Propaganda" legislation with "willfully promoting hatred against an identifiable group, people of the Jewish religion or ethnic origin." He’ll talk about these charges, his arrest and the upcoming trial before the Supreme Court of British Columbia. Arthur discusses the history of such “hate propaganda” laws in Canada and how they came about. He’ll also talk about the former sec. 13 legislation which was used by the lobby groups for decades to stifle criticism of Israel and discussion concerning anything related to Zionism both on and off the internet. In the second hour, we’ll speak more about forced Zionist agendas in Europe, replacement level migration in the west, anti-Europhobia and why people, wherever they are on the political spectrum, should be concerned that freedom of speech and freedom of the press is threatened in Canada.
http://rediceradio.net/radio/2014/RIR-141112-arthurtopham-hr1.mp3
They are setting up the next round of money printing. The US will go full Kuroda. Bank on it.
This guy has absolutely no idea what he's talking about. Just one example,
" Inflation/deflation is the money/credit supply in an economy multiplied by the speed at which money is spent in that economy, the velocity of money."
The equation is M*V = P*Y = nominal GDP. (M = money supply, V= velocity of that money supply, P = price level, Y = real GDP).
So M*V is not inflation/deflation, but nominal GDP.
As a black barefoot and pregnant share cropper, I call racism on the lead photo.
Judy Garland: Lions and tigers and bears! Oh my! (The Wizard Of Oz, 1939)
http://www.youtube.com/watch?v=Etx-nDCZzLo (1:22)
Its all just sad.
"Some men just can't be reasoned with, this is the way he wants it , So he gets it." - cool hand luke.
What happened in my eyes.
1) we designed a scam system (as a country) to steal from the rest of the world, this system was held together with numerous deals with dictators and oligarchs around the world, we would offer them protection and power and weapons and assurances, they would peg the resources of their nations to U.S. Dollars, artificially inflating the value of the U.S. Dollar and making our economy BOOM for DECADES.
2) Over time these deals have eroded due to poor foreign policy and a lack of understanding from the past 3 ~ 5 administrations of the intricate and delicate systems the previous administrations had put in place for more or less our collective benefit.
3) As these deals eroded , so did our power and influence abroad, and thus the dollar became un-hinged and the proverbial vampire squidzilla economy we constructed around the globe began to fall apart.
4) Now in a mad frantic knee-jerk reaction, the system (that no longer understands how it was designed or used to operate) is trying to prop itself up by cannibalizing itself, the people at the top are ignorant, they do not understand the system they are trying to prop up, and they are doing more harm than good.
5) This combined with the fact that other nations around the world (especially Russia and China) have a better grasp of the overall design of the system and its intricacies than our administrations do, they understand our system better than we do, and they see which legs they need to chop off for the whole thing to come crashing down, puts us as a nation at a strategic disadvantage.
6) The intelligence agencies (cia, nsa) and The Fed have been working together closely through fraud and shell corporations and shell governments and shell central banks across the globe to counter the damage the enlightened governments around the globe are doing to our system, buying treasuries and bonds and stocks to artificially portray an image of a robust strong U.S. economy , and to simultaneously de-stabilize foreign governments and economies, (in this regard our agencies are masters of chaos theory and formation), we may not be able to create the most stable system, but one thing we have had a lot of practice with and have perfected is the art of destabilization.
What remains is the end-game, who will win, we are in the final stages of the end-game (6~20 months), at which time we will know effectively whos financial warfare was more effective.
The sad thing is, the victor may very-well be a third-party that both sides completely neglected to take account of.... be-it some corrupt institution such as the WHO, NWO, IMF , British Banking Monarchy and the like....
The most likely candidate for a third party would be a cental bank that has a very healthy balance sheet, because we are talking about a world that is financially destabilized at its core, any healthy balance sheet would o/c stand out as the obvious candidate for a third party that is benefiting from the chaos.
The most likely outcome of all these events is a large-scale war, because no one will lose gracefully imo, there is no incentive to lose gracefully as doing so would essentially send that nation into chaos and anarchy, something no government would allow to happen without a last ditch effort to hold onto power at all costs, and if they can not defeat the enemy abroad, they will enslave the enemy domestically, because in the end what they care about (the people running things) is their own status and power, not that of the nation as a whole.
Allow me to throw something else into your pipe. The US has always exploited people for its own financial gain. By exploitation, I mean forced people to live in poverty while raking in the proceeds of their labor. This happened first within the country, blacks, irish, etc, then moved outside of the country once that was no longer viable, central / south america, asia, etc. Now, it's not so easy to do so, or more specifically, to hide, because communication has changed things. Wars for money are more difficult to wage. Because of this, the US took up financial expoitation, where labor exploitation left off, however, it effectively served the same end. Exploitation through debt and finance is running out. There is only so much blood in that stone.
Dre4dwolf and you have it.
- just posting a video.
Michael Hudson: Finances vs Economy, Credit vs Money [3/18 ENG] ...Sounds like lots of ZH people agree with him on Greece & Financialization of Debt & Government in order to steal the assets.
http://www.youtube.com/watch?v=JZQqrxHGcoQ Whole thing is good!
I'm going to choke a bitch if my EBT card buys MORE food next year than it does this year. The shit should buy less. We need inflation.
Gosh, I've never met an actual, practicing masochist before. Could you send me your autograph?
Here in the Deflationists Lounge we think that Deflation should be the fifth element and not the third element.
Bombs away. Surely that will work now that we've tried everything else.
A very interesting article. If I may be so bold as to quote that noted philosopher Bugs Bunny:
This means war.
Soon.
Elementary .
To influence people to actions against their best short-term interest , but in their long-term interest , use Religion .
Somebody is trying that right now .
Major religious trouble brewing in Ethiopia-MiddleEast .
Think "stealing the Ka'aaba"
All currencies affected .
Raiders of the-not-so-lost Ark . This happened 14 Nov 2014 , two days ago .
http://worldnewsdailyreport.com/ethiopia-ark-of-covenant-reported-stolen...
Somebody is stirring it in a major way .
This theft is going to infuriate Christians , Jews , Islam , North Africa , Saudi's , etc
The fall-out is only just starting .
See
http://andreswhy.blogspot.com/2014/01/fall-of-aksum.html
No, really, please. Stop this silly spamming. If anybody clicks on the blog you keep pimping, they deserve what they get. And reading "worldnewsdailyreport" is like RickRolling yourself. At least "Weekly World News" at the grocery store was funny. Their "Ed Anger" character was Tea Party before we knew it existed.
In the coming petrodollar collapse, this is what is going to happen:
1) Trillions of dollars, domestically, and overseas, will flood the DC US in an effort to get out of dollars and into anything, anything that will hold value better. I call this "supernova-inflation," as it will be sudden, extremely fast, massive, and indescribably destructive.
2) The banksters will force dollar debt be repaid in an SDR type currency, which will further destroy the economy, and the rest of the American society.
3) The banksters, in an effort to continue to support the ponzi-empire, will continue to "print," and inflation will continue unabated.
4) The depression embedded in all of this will turn the DC US into a land of destitution and despair.
5) Foreigners will come in and snap up, what they don't already own, all the property they can. Americans will generally become pheasants and serfs on the DC US' and foreign powers' land.
6) Americans will find themselves starving, as all foreign owned and/or corp. farms will export all food production for "hard currency."
7) Then there are the FEMA camps...
An American, not US subject.
The Four Rs
Rejection: Quit paying, quit obeying , quit playing
Revolution: It is inevitable, so prepare, as they are.
Retribution: The guilty must answer for their crimes against the American people and the Constitution.
Restoration: Restore the American people, country and Constitutional republic.
I tend to agree and think propaganda is still the #1 Thread.
Repost:
Reminds me of the US Bank Memes
Started way back, but just going back to like 1880:
- Silver Certificates are no good, say the bankers
- Gold Certificates are no good, say the bankers
- US needs Central bank to keep the government from spending too much, moral hazard
- 1913 Federal Reserve Central Bank Created
- Stock Market is good, US Industry can rise forever
- After Crash and Depression, banks say the economy is not good, can't invest
- Public Banking is bad, Private Banking is the way out of Depression
- Government should stay out of banking
- Only Private Bankers have the skill to rate businesses
- Only Private Banks have the Skills needed to determine money policy for the people
- US needs a Fiat Currency
Haha. We know how that all worked out in 2008 Financial Crisis. Boom & Bust. But the damage is no longer even transparent with non-standard accounting & non-standard financial instruments... and financial ratings firms are not reliable.
Private Bankers & Central Bankers were schemers from the 1900s. Today people are smart enough that many people can judge how to assess their own taxes and look at their own business accounting data.
Solution: Shift 2 million people out of Private Banks into Public Banks. This will help create downward pressure on private banking executive salaries... through downsizing their functions, their processes, and their purpose on Wall Street & London. Then break them down with Glass-Steagal Act and Anti-Trust Law. Then End the Fed.
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. More in the article below.
http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....
It is because money is lent out with interest expecting that economic activity will pay for the interest. When it doesn't, credit implodes and we get deflation even while the monetary base is expanded to catch it with subsequent inflation. It is simply papering over malinvestment. If capital is constantly being invested in unproductive shit that the market isn't allowed to liquidate, you get a shitty economy even while technologic innovation is occuring. The system is fucked. Arbitrary money printing is the source. Sound money is the only solution but how many people have the slightest fucking clue about this? Not enough.
Bruce worries so much about the massive debt being accumulated by our government that he wants us all to go to his click-bait site and read the rest of his thoughts. Why not just have your say right here and now? This is the internet. There are no length limitations.
Well, because I get no click bait out of it.
Why not think up something new to say rather than misleadingly enticing people into clicking onto old articles? (A major, major bitch of mine, by the way)
Well, because I'm too busy trolling for click bait to write something germane and current.
Have your say and then go away with all the insidious marketing. We're here. We're listening. Tell us what you think-- apart from you think we need to go to your personal blog site to hear your thoughts.
Deflation and ringing the bell in a single story.
Friend got a 114% bonus last year. This year he got 60%. What did he do to make up the difference? Sold stock.
Not sure it's "a Biblical plague"...deflation is a wonderful thing because as they say it "shows you who has been swimming naked".
Deflation will show whose "investing" was flakey and speculative and whose was sound and risk-based. Deflation represents HONESTY: it forces wrong-headed borrowers to "show me the money" and represents honest money. Debt deflation exposes those capital allocations which have no basis in sound investing, reveals misallocations of capital for the waste that they are and reveals REAL supply and demand.
Bring it on!
Mellon was correct.....
Advised President Herbert Hoover to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people,"
The whole reasoning of this article is OK except for the conclusion 'Think of deflation as a biblical plague' which is complete and utter nonsense. Rightfully so the definition of inflation/deflation is made clear related to Money supply and money Velocity. Question is who's Money supply? Furthermore 'inflation' by driving up asset prices is not the same as inflation trough money Velocity which indicates a growing economy.
So while people wages are frozen and lowered because of austerity measures the FED drove up asset prices with printed up money while the Money supply in the real economy consist of (private) debt chasing artificially pushed up prices also trough the zero rate policy. Zero rate policy means capital destruction so insurance companies for example have to higher their fees for the missing interest that they would have received normally. Same goes for pension funds who now miss a great deal of interest rate income.
So if you have stagnating and lower wages but rising prices and then shout, look we have inflation, everything's fine, like the FED does, you clearly miss the point. Together with capital destruction/zero interest rates this is a recipe for disaster. In fact by pushing asset prices higher you create a feeding loop for ever higher debts and thus debt payments which need more debts to pay and so on and so forth.
So instead to let deflation have it's way to get to a market price level which everybody can afford interest rates are lowered which push prices even higher till it can't be sustained anymore. So to say that 'Think of deflation as a biblical plague' is asinine.
As a result of zero interest rate policy private debt has risen to unsustainable levels and need to correct before the economy can go forward. This debt has been created by synthetically pushed up prices by FED's QE policies.
But now the FED has painted itself into the corner and can't rase interest rates without the allready massive (non private) debt becoming even more unpayable. That's an other nice mess they've gotten us into now. https://www.youtube.com/watch?v=cIPfEBuA7HY
Endeavor to persevere...... https://www.youtube.com/watch?v=rsL6mKxtOlQ
Coming Back with Wes Moore
Coming Back with Wes Moore | Home | PBS
www.pbs.org/coming-back-with-wes-moore/
Coming Back with Wes Moore, a series executive produced by best-selling author and former Army combat veteran Wes Moore, aired in three parts on ...
video.pbs.org/program/coming-back-wes-moore
Episode 1: Coming Back | Coming Back With Wes Moore | PBS
www.pbs.org/ coming-back-with-wes-moore/ episodes/ episode-1-coming-back/
With 'Coming Back With Wes Moore,' PBS tries to capture modern ...
www.washingtonpost.com/ news/ act-four/ wp/ 2014/ 05/ 13/ with-coming-back-with-wes-moore-pbs-tries-to-capture-modern-veterans- experiences/ -
Deflation occurs when its not worth the money for manufacturers or producers to produce.
Ancilliary, interest rate deflation leads to lending deflation, leads to deflation because its not worth lending money at near zero returns.
Sometimes, you wish the "authors" did their homework before writing. In just two clicks, I debunked at least two of the arguments he puts forward. Try it, you'll see.
"The world has stopped growing, and there’s no massaging of numbers left strong enough to hide it. Not that it won’t be tried. As I said earlier this week, we now live in a world built on debt and propaganda."
Yes, but debt doesn't mean the same in every country, and doesn't always lead to crazy QE or deflation. Depends who you're talking about. Systems can be very different indeed, and only look similar on the surface. China is a good example of country where economics are totally alien to the US system and can't be read through a superficial American lens.
http://www.dw.de/chinas-debt-problems-arent-the-same-as-in-the-west/a-17...
And the plummeting of the price of oil has nothing to do with deflation. Homework, please!
As for "The world has stopped growing", I hope the author refers only to the old tired Western world, that increasingly small crumbling patch where the same Coca Cola, bad TV series, video games, hamburgers, Republicans/Democrats circus, NSA-friendly smartphones and porn are relentlessly peddled, willy nilly, to exhausted consumers who can't buy anything anymore because 1) they have no jobs and 2) they're fat enough as it is.
Never mind, shale oil and marijuana sales are going to save America, yippee!
Just one question. In a deflationary environment what happens to the value of cash. Will I be able to buy more or less services and products with my paper or electronic dollars?
I would love to see some "deflation" here in Thailand. The costs of everything have risen at least 500 to 1000 percent in the last thirty years.
is dat moochelles momma?
The way I look at is that after six yrs the economy still has not expanded which to means that the Fed's action hasn't been effective and that we are close to a deflationary cycle. As long as we don't pay down our debt and delevarage we are stuck in a rut that will be painful if we don't take action!
"Deflation is always bad."
You do not have the slighest idea. There's no deflation out of the blue, there is deflation just in the case of a inflation before. If we'd had money instead of lawful money you may see your error. A deflation set things straight, and if one tries ot opress it it will hit back ever harder.
Biblical Plague...Dream On. You don't live in the pre-Depression period where the real economy is the center. Today the financial economy is the center. You first see the evaporation of paper assets with its effect on the real economy. In tandem with the financial economy, the force of deflation is already unleashed upon the real economy hence you have severly weak effective demand.
Look positively as one of the greatest period of wealth transfer when the bright millenials cross the line in debt reduction and build up in physical possession of physical assets.
Deflation? See US residential real estate crash, for example. You don't need mythology to grasp it.
The politicans worldwide will not allow their insatiable lust for power be thwarted by high levels of debt (public & private) and payments on that debt (public & private) reducing spending (public & private) and slowing economies into social instability.
The politicans will simply write off the debt, just delete some zeros on the right end in the computers and continue the money creation and spending (public & private). The politicans will also invoke "bail-ins", Cypressing all the foools who saved "money", in all its forms, including gold & silver.
As long as "the people" allow politicians, the modern equivalent of monarchy & nobles, to wield power, the direction will continue to be DOWN for everything, because politicians serve ONLY their own insatiable lust for power and will destroy economies with their policies in pursuit of their lust for government power by buying votes with entitlements & populist policies, eg ZIRP, free mortgages, etc.
"It’s time to check where your basic needs will come from when it becomes first harder and them impossible to obtain them from the sources you have been used to. And please, get out of debt. Debt during deflation is a cruel and unforgiving mistress."
The basic needs of cities come from just in time supply chains from detested flyover country. In a crisis how do you think that is going to work out? The people who bother to vote in these cities are electing politicians who are hard at work disrupting these supply chains and the necessary resources to keep them functioning.
these articles are absolute bullshit, and i wish you'd stop running them. inflation is an increase in the monetary supply. deflation is a decrease in the monetary supply. price changes are not inflation or deflation, they are just price changes. a fixed monetary supply is ideal, not inflation, and not deflation. this is as basic to understanding economics as slope and intercept are to understanding algebra, and i'm tired of people arguing otherwise because they paid for some newsletter that told them a lie.
"deflation is a decrease in the monetary supply." seems to me you have forgotten about "Velocity' of the money supply.
If the 01% have all the money, it still in the system...but its not being used.
Correct. Velocity is frequently overlooked but it's crucially important. That's why Infinite QE had nowhere near the impact it would have had were the money supply to be the only factor. And 'deflation' usually represents the reversion of inflated assets to their correct valuation.
deflation = debt collapse. Popcorn ready. Inflation = Currency destruction. Popcorn ready.
woh! It's not just the divergence of opinion thats telling, but the passion in their language. From where i sit, the final comsumer (ie the engine of our economies) is running out of disposable income, and has high debt.
If the consumer cannot buy, then the companies providing goods cannot sell those goods. The spiral begins with companies unable to fund their debt obligations...and so, reducing their workers. ...further reducing the number of consumers ....further reducing companies ability to pay debts....and so on.
My question is how is the debt deleveraged? My guess is that the company goes bankrupt and the debt holders for that company take a bath ...and their debt is is washed from the syste. Likewise, a house is taken back by the bank....but the mortgage is now three times the market worth of the house....the bank takes a bath and that debt is washed from the system.
Is that how it happens? Thoughts anyone?
Attributed to Thomas Jefferson.....
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Andrew Mellon at the onset of The Great Depression......
Advised President Herbert Hoover to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people,"
"Deflation is always bad."
That would mean that inflation is always bad, as inflation causes deflation.