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The Beauty Of Deflation: It Reinstates Lost Liberty
Submitted by Claudio Grass via Acting-Man blog,
Deflation Paranoia
The euro zone’s consumer price inflation rate declined below 1% in early 2014, getting closer to zero during 2014, nowhere near the ambitious 2% benchmark set by central banks. A further small downward adjustment in the inflation rate has put it into negative territory, so harmonized euro area consumer prices are now declining. Western monetary authorities and economists appear genuinely fearful of deflation. Headlines in leading papers reflect this fear very strongly, describing deflation as “the world’s biggest economic problem”, or a “nightmare that stalks Europe” that could lead to its “demise and collapse”.
Photo credit: Yuya Shino / Reuters
The real question is though, why do our governments fear deflation? Why do they perceive it as a chronic disease that could infect the economy and why do they go to such great lengths to avoid this “taboo” event? The mainstream argument is that we should avoid deflation because it causes a drop in overall demand and hence lowers economic growth (Germany and other European countries have experienced a slowdown recently which has resulted in a downgrade of 2014 and 2015 growth expectations). Also, deflation implies lower corporate earnings and asset prices, particularly real estate prices.
The euro area’s harmonized index of consumer prices has recently dipped slightly into negative territory, which is excellent news for European consumers – click to enlarge.
But the greatest concern to governments is not deflation itself; the real concern is the impact of deflation on the already over-indebted governments of Europe. Seven euro zone countries are projected to have public debt to GDP ratios of over 100% next year! The worry is quite legitimate from the perspective of indebted governments. With deflation, the burden of debt increases, making defaults more likely. So what are policymakers doing to tackle this problem?
2-year inflation expectations (derived from the spread between nominal and inflation-indexed government bond yields), US, euro area and UK – click to enlarge.
As usual, policymakers are opting for the easy way out. Interestingly enough, they expect a turnaround in economic growth in 2015, driven by ECB President Mario Draghi’s quantitative easing (QE) policy. Instead of questioning this policy, analysts expect it to have a positive impact. The ECB’s current priority is obviously to stimulate growth the American way by engaging in bond purchases with newly created money.
On its website, the ECB states:
“In a deflationary environment monetary policy may thus not be able to sufficiently stimulate aggregate demand by using its interest rate instrument. This makes it more difficult for monetary policy to fight deflation than to fight inflation.”
Unfortunately, all this means is that the ECB is convinced that standard monetary policy is not enough, and believes in implementing further interventionist measures to avoid deflation at all costs. The direction that the ECB has taken throughout last year strongly reflects this – negative interest rates on its deposit facility are just one symptom. But how much further into negative territory can interest rates go? Mr. Draghi has asserted his commitment to consider all available options to redress the alleged threat of deflation, including structural adjustments – but these are too time consuming. The easy way out is more debt and more money printing.
The Delusion that is Inflation
Before he became chairman of the Federal Reserve, Ben Bernanke claimed in 2002 that “…sufficient injections of money will ultimately always reverse deflation”. Unfortunately for Bernanke, the Japanese cannot confirm this assessment. Japan has gone through intermittent bouts of concumer price deflation since the early 1990s and it has been “trapped” there up until recently, when its authorities once again chose to attempt to “reflate” rather than reform the economy. The BoJ has implemented several QE programs over time, to no avail. It is living proof that monetary easing only perpetuates the crisis and does nothing to repair the damage. So why would anyone want to go down that path again?
In our view and as highlighted by Austrian School economists, a bust is inevitable once an inflationary boom has run its course. The bust allows the market to correct the maladjustments of the boom; deflation is simply a normal feature of the bust phase of the business cycle. Intervention in the economy, particularly through monetary expansion, will only prolong the time span until the bubble bursts, and the bust will be more severe the longer it is delayed.
Austrian School economist Jörg Guido Hülsmann, a senior fellow at the Mises Institute and Professor of Economics at the University of Angers in France has made great contributions on this topic over the years. Hülsmann argues that deflation souldn’t be feared and could actually be our savior. As he puts it:
“We should not be afraid of deflation. We should love it as much as our liberties.”
Deflation goes hand in hand with releasing the individual from the debt enslavement that was created with the monetary policies of the past 100 years. Nigh unlimited printing of money has become the orthodox strategy to avoid deflation. Hülsmann points out that deflation was made the scapegoat for all sorts of economic ills in a century of pro-inflation propaganda.
Austrian economists such as Mises and Rothbard did not take as strong a pro-deflation stance as Hülsmann. According to Hülsmann, Mises and Rothbard “championed deflation only to the extent it accelerated the readjustment of the economy in a bust that followed a period of inflationary boom.” Rothbard pointed out that deflation has a beneficial role in speeding up the readjustment of the economy’s production structure during an economic crisis. Clearly, deflation plays an important part in the readjustment of the economy to its natural “equilibrium”. As Mises famously said in this context:
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Deflation Reinstates Lost Liberty
Hülsmann is strongly opposed to inflation and government intervention in the economy. For deflation to happen government interference in money and the economy needs to stop. Anything short of instituting laissez faire, such as structural adjustments or reforms, means the government will remain in control. However, what is the connection between inflationary policy and state intervention and the loss of our liberties? Here is a brief list:
- Unlimited printing of money to support the welfare state created a sense of dependency of the individual on state services.
- The expansionary monetary policy led to an exponential increase in public and private debt, constraining individuals by the burden of having to service their debts and financial commitments.
- The debasement of currency has led individuals to opt for debt instruments and debt-related financing measures to maintain their standard of living.
- Inflation has led to unfair and unequal redistribution of wealth. The few who have first dibs on newly created money get to benefit at the expense of the general public. First and foremost these are monetary authorities and the banking cartels and financial institutions attached to them.
- Inflation redirects money into refinancing debt facilities and away from investing in production, tying the state (and its citizens) to a never-ending spiral of debt.
The endorsement of deflation goes hand in hand with safeguarding liberty. Does this sound extreme or overly dramatic? Perhaps, but it is true. Monetary history shows that compared to today, individuals were truly “sovereign” in the 19th century. During the era of the gold standard, people were largely free of debt and enjoyed far greater independence.
Precious Metals Safeguard Independence and Liberty
“Paper money has become the technical foundation for the totalitarian menace of our days.” We can’t but agree with Guido Hülsmann on this. Paper money, inflation, and debt all are ingredients of a political project that benefits only certain strata of society, “political entrepreneurs” as Hülsmann calls them, at the expense of individual liberties and independence. These political entrepreneurs have every reason to be afraid of deflation. Deflation would strip them of many of the benefits they have reaped at the expense of the rest of society.
Deflation would liberate us, as it would redistribute wealth by modifying the structure of ownership, thereby restoring distributive justice. The drop in prices and the quantity of money would reinstate the true value of currency and consequently the true wealth of states and persons. Deflation would put an end to the individual’s dependency on debt structures and promote a focus on enhancing production. Wealth is not determined by the quantity of money, but by factors such as productivity and innovation.
We firmly believe that gold and silver are the sole currencies that can safeguard independence and liberty. While we do not know what the future entails when our existing monetary and financial systems break down, we are convinced that gold and silver will (at the very least) offer security in the transition period. If we look at the growing gold purchases by the East, they certainly show that people in many emerging markets have set their minds on gold. This supports our conviction that some form of gold standard could be reinstated one day, although the prevailing monetary experiment in fiat currency is likely to persist for some time to come.
Economist and prolific author Guido Hülsmann – an unorthodox champion of deflation
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Here's an interesting chart for you all to look at - It's the Dow, vs the Dax in absolute terms http://www.ukspreadbet.com/dax_vs_dow
The trend is up for the Dow gaining over the Dax until Draghi announced QE and since then the Dow has lost 2000 points.....
Deflation is absolutely GREAT for the common man. Which is why the media is telling you that we need more inflation.
The result of a functioning free market is falling prices. Remember 4000$ cell phones? And what do you think is more beneficial, a minimum wage hike? or a 50% drop in all consumer prices?
The common man is scum, useless eaters. Who cares about them. THe people at teh top have built a great society, be thankful they let you eat.
Okay now,,, All praise the 1% for 'allowing' us to eat.
Funny thing is, one doesn't see the 1% out plowing up the fields, or making the Limo's on an assembly line or anywhere else real work and thought is required.
Mostly they seem like thieves in the night, stealing everything the useless eaters have made or accomplished.
Yes,,, we are lucky they spare us.
It's not the 1%, it's the .01%.
Whether it is the 0.01% or the 0.001%, the point stands that it is a very small group of oligarchs that benefit from the system to the detriment of everybody below the 1%. The others in the 1% just haven't been eaten by those at the very top yet, and though they have probably benefited from the injustices in the system, are not the problem. This point is something that should be repeated. Not all rich people deserve the guillotine, or even to have their wealth stripped from them. Just those who are stealing opportunity from the masses via regulatory capture and owning congress to benefit themselves.
Sarc detector broken?
How about troll detector not broken.
Do not fuck with us...
https://www.youtube.com/watch?v=xWVxI6XZAuE
3 negs so far... Come on, I am slow but even I see the untyped /s on that comment.
Don't encourage him.
He's just a troll. And not even amusing at that.
Your sarcasm is getting old. Why don't you try a new gig for a while?
I'm not so sure he's very far off the mark when it comes to what and how they think of us useless plebes. His/her sarcasm is a reflection of truth...
Truth is better than a reflection of truth.
To Hitlery's point, the common man keeps obeying the very scum that it keeps voting into power.
...and they call them pewblik "servants."
You Mean Pubic Serpeants Don't You?
Dude you've misspelled Dicktator!
Hitlery:
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... fuck with us..."
Tyler Durden, Fight Club
I understand that deflation is very good for your balls, as well.
Goverment propaganda to get US citizens everywhere to hate deflation. They used the stupid bowl, the NE patriots and deflation as the unconscious prompt to have an adverse reaction to the word deflation. More people are into the super bowl than what is happening in politics or economics. It worked. Much of the country hates the word deflation no matter what. They also hate true patriots for endorsing deflation. Go Patriots! What if this was true
Why wouldn't it be true? Operation Mockingbird began in the 1950's.
The Common Man is a mere debt slave (actually about half the US has negative to zero net worth), and he would be eaten alive by deflation.
You are talking your book.
The people who do relatively well in deflation (since everyone loses money nominally) are the 1%ers (those with significant net savings ownership of productive assets and a mere six figures or more in wealth, not just the elite)
The fact that most folks are debt slaves really just means that they won't be able to help keep the whole thing going for much longer. They aren't going to 'lose' much of anything...since they have so little to begin with.
And all people must have housing, food, water, medicine, etc...these aren't "luxuries" that can be cut, they are necessities-needed for anyone who wishes to keep power.
TPTB see only that there are a LOT of these folks, and cast greedy eyes on the 'wealth' they hold as a GROUP. But they can't be tapped as a "group", and the individuals IN that group don't have enough to 'tap'. So, all that wealth is essentially off-limits-they simply cannot GET to it.
Not without inflation anyway...So there's the reason deflation is the boogey-man for today's "capitalist". When you hit the wall of demographics and basic need, all that's left is to artificially inflate.
The 1% have their assets in fiat-currency...even the hard assets they own are priced in fiat. They will lose much of their phoney wealth in an extended deflation, because although they can BUY stuff cheaper, they have to SELL stuff too, and they're selling into the same deflated market as everyone else.
But the guy without assets doesn't HAVE any losses to take on devalued property, and can shop the market with wages that buy more and more. Or, he can save them, and wait for them to become even more valuable with time. Deflation would give many people an incentive to postpone buying for now...and boost savings. It would help make money MORE valuable over time, and in such a way as to be near-impossible to tap into. Inflation takes that value automatically, with no actions required. DEFLATION would require government to come after the money directly, instead of the value just disappearing over time, they'd have to get individuals to pay up. Retroactive deflation-taxes on your old earned income? Good luck with THAT. You'd be getting richer, and they'd be unable to do much about it.
The only downside to deflation is to those who are sitting on piles of phony wealth. The common man can't be "eaten alive" by deflation, as he simply doesn't have the assets to care. How much more can be taken from folks already so close to the margins? And how much leverage does a person HAVE by threatening to try and TAKE it from them?
Remember...housing, food, water, medicine...ALL necessities that can't be cut, not without armed civil unrest, and it costs way more to put that down than to provide the basics, especially when we're talking about a few hundred million people here in the US alone.
Just a word to any 1%ers who think they will be 'saved' by tapping into all that wealth...wake up and stop dreaming! And run anywhere you WANT...any country you choose will also have its vast armies of 99%ers, and TPTB will have to keep them from rioting in order to hold power. When TSHTF they will opt for maintaining order, NOT for preserving your wealth. If they go after anyone, it'll be YOU, not the 'free shit armies'...They don't have wealth, you DO. What they HAVE is numbers, and you guys aren't even close.
So who do you think will take it in the shorts if this whole thing comes crashing down, for real? Who will TPTB end up siding with? Will they continue to coddle you, and face growing unrest from millions of their citizens? What happens when they realize that they can have it ALL? When it occurs to them that they can confiscate all your wealth AND retain their power?
And when they all come to this understanding, just where do you run? How do you take all your assets with you?
Sleep well, 1%ers...
Here's the oversight in your logic - "But the guy without assets doesn't HAVE any losses to take on devalued property, and can shop the market with wages that buy more and more." Which only holds true, ceteris paribus.
That guy loses the house (and any other assets) he has mortgages on, and his wages will decrease, if not disappear, so his purchasing power does not increase.
Grass is flat wrong when he asserts (and fails to provide any supporting evidence for the claim)- Deflation goes hand in hand with releasing the individual from the debt enslavement. An individual can only escape debt enslavement when the debt is forgiven or repaid.
Hülsmann lists some evils associated with inflation, and the way Grass wrote the article it is very easy for a reader to mistakenly assume that because inflation is the "opposite" of deflation, that the evils Hülsmann associates with inflation are reversed under deflation, but this is not the case.
1) actual dependency is not the opposite of a sense of dependency of the individual on state services
2) that when the exponential increase in public and private debt ends that individuals are relieved of the burden of having to service their debts and financial commitments (even Grass admits the opposite is true earlier in the piece)
3) that deflation would direct money away from debt facilities and towards investing in production, thus alleviating the never ending spiral of debt.
4) My personal favorite, that deflation will lead to a fairer and more equal distribution of wealth. Gross income distribution in a shrinking pie is not a particularly accurate yardstick for measuring wealth inequality. Who gets "richer" in deflation? -- those who already have money and relatively no debt, i.e THE RICH. Look at US history, who benefited the most by the rise in Homestake Mining (because the price of money itself was increasing) during the deflation within the Great Depression? -- the Oligarch, (Yellow Journalism) Press Baron, and Self-financed US Congress Critter William Randolph Hearst. Yes some smaller 1%ers, who managed not be wiped out by margin calls during the 1929 crash, or who entered the market after the crash with cash could ride Hearst's coat tails and the P/E expansion in a money printing business during deflation. Before that, who profited most in Great Deflation - the owners of the MIC, who were cash rich from half a decade of war profiteering (not including "the Continent"). Perhaps the rich perhaps didn't do quite (financially) as well during the great French deflations but there has to be some value associated with keeping one's head, unfortunately the little guy was either conscripted into Napoleon's army where he stood a greater of losing his head, for no wages, or he had to cough up money to facilitate the little man's decimation of the French gene pool, while the Rothschilds got filthy rich financing both sides (since England was paper and France was bi-metallic at that time).
The notion that the little guy will do well in deflation and the big guy will suffer in deflation, because the the little guy fairs poorly and the rich guy fairs well during inflation is unfounded.
You misunderstand the article I think. Without deflation from time to time there will be a total collapse. That's what is waiting for us down the road. Will you be better off in a total collapse than in slight deflation? If not you should get yourself prepared because it is coming. No arguments for or against deflation or even for or against inflation are going to change the inevitable. We are already too far gone.
Collapse is inevitable, whenever the natural corrective and regulatory mechanisms in any system are suppressed for an extended period of time (not just in economic systems), but it has nothing special to do with either inflation or deflation. In the current Central Bank planned economy they have pursued a stated goal of inflation (2pct +/-), instead of actual stability (0pct +/-), and suppressed the corrective mechanisms for years, so the collapse will be deflationary. But that collapse will not set anyone free, and the biggest beneficiaries will be cash rich oligarchs who can afford to mop up the blood in the streets (same as last time). The debt-free stackers will relatively profit off their stacks, but if they work, they will lose on the income side. The majority 50% +/- of households with negative to zero net worth and who rely on either income or State handouts will suffer.
You get to either cage or fool the people of what is really going on.
Urban Redneck
The notion that the little guy will do well in deflation is unfounded.
So much said with so few words.
"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." — Charles Mackay
"An individual can only escape debt enslavement when the debt is forgiven or repaid."
You're forgetting the third option...default. Debts do NOT have to be repaid, or forgiven. They can also be walked away from. And that decision does not require the consent of the creditor, it can be done unilaterally.
THAT is why we keep hearing the 'moral hazard' BS...the only way TPTB can ensure the debtors continued cooperation is to create the sense that there is something morally superior to staying enslaved.
The big problem with relying on this is that it simply isn't true. Defaulting on debt may be inconvenient, troublesome, nasty, horrid, unfair, etc...but there IS no morality in economics. If you want morality, go to church.
When a debtor walks away from unpayable debt, he is NOT doing something "wrong". It is only wrong in the eyes of the creditor, and his power-base. For the debtor, it is simply survival, and economics DEMANDS he do it in order to continue functioning.
If the debtor's default causes major problems, then the CREDITORS have made the error in lending the money...it was their duty to verify the credit-worthiness of that debtor before lending him a nickel. Since this is in fact their JOB, it is THEY who bear the brunt of the 'fault'...this is their business, they know how it goes. (Or SHOULD) The debtor cannot and should not be expected to do the lender's job FOR them.
Loans are not simply handed out like Halloween candy, even today. One has to apply for the loan, explain what he wants it for and how he will repay it. It is the LENDERS job to make sure all that info is REAL before releasing a single nickel of loan money. If the lender doesn't use diligence, and the loan goes into default, then the lender LOSES that loan...both principle and interest.
At that point is when your "moral hazard" alarms ought to kick in, and the lender should be told to get into another line of work because he obviously has no clue what he's doing. You can't 'save' him from his losses, then turn and point your moral finger at the debtor...The debtor is just trying to survive, and doing that which ANY over-extended borrower should do. The rule of law may allow you to slap me, but it can't force me to stand there and take it, so give it a shot and see what happens.
The real moral hazard the economy is concerned with here here is NOT the loss of profits to the lender...it is the insistence that the creditor become a non-functioning entity in the economy by using all resources to service debt with no hope of repayment. In a truly capitalist society, loss goes hand in hand with profits. What it CAN'T function with however, is large numbers of people who are NOT contributing, either by choice, or because of debt-enslavement.
How has that debt-enslaved consumer been spending lately? How's the loan market doing? How about those tax receipts? Yeah...not too good. The refusal to face facts and write-off much of this 'debt' is holding everything back. There will BE no recovery without debt-relief. A few bad lenders get paid by force, and the entire economy stalls in the process. All you've done is allow a bad business to remain in business at the expense of everything else. Trouble is, the rest of the economy won't sit around and wait for all the debt to be repaid...it will collapse, and the repayments will have been worthless anyway since they will have been in the currency of the collapsed economy.
Either way, the creditor is going to LOSE...lose the loan amount now, or lose everything later, take your pick. It's a business decision, and 'morality' has nothing to do with it.
If a borrower walks away from a secured debt, the security for that debt (often a house) reverts to the creditor. In the case debt generally, the creditor can take a tax write-off tax write-off for their loss (irrespective of seeking another bailout from their pet Congress critters), and can pursue legal remedies (such as liens or garnishment) against the borrower, which effectively shut the borrower out of the US financial system, and into the grey/black market, until such time that they buy their way out debt slavery, or convince a Court to forgive the debt at the expense of any other assets or savings they own. In the case of unsecured debt (such as credit cards) the industry MO is to jack up the interest rate to say 30% and increase the value of the obligation (or a certificate of manumission) several fold, and then take a write-off on the inflated amount (so the bank comes out ahead at taxpayer expense), and then turn the obligation over to recovery firms for additional Profit! (since bankers don't rely on ??? for step 3).
So while default is a theoretical option, and possible in the specific circumstance that creditors choose (or are coerced by Washington) not to impose their legal rights on deficient borrowers- most of the time, for most people, non-participation in the financial system is not going to be a desirable option, and in the case of Student Loans, the legislature has largely stripped the judiciary of the authority to even forgive the debt.
There is a reason Joe Biden is referred to as The Senator from MBNA.
MarketAnarchist,
I'd love to know who voted you down and why...
Whoever it was - fuckwit.
DavidC
I did. (And I downvoted you for ad hominem)
I hate echo chambers.
Especially when they are ringing with lunacy, and "theories" (I'm being generous) that do not comport with historical evidence.
Thank you! Yes!
This is what made me realize that the Democrats were no different from the Repubs when it comes to the economy. They both want the status quo to continue...They PUSH this minimum wage because they know that without money, there can be no discretionary spending, so they just want to get some money into consumers hands...but NOT at the expense of their own portfolios. So, forget about letting deflation strike the balance, that would mean giving up some of their own 'loot'. So the Dems propose having someone else provide them with that extra money, via money-printing and grabbing it from others.
Then they 'spin' this as concern for the consumer, the wage-earner...No different from the Repubs who do the same thing, just in different ways. BOTH parties are desperate to keep the Ponzi going.
Buy the Dow, sell the DAX anyone?
"We firmly believe that gold and silver are the sole currencies that can safeguard independence and liberty. While we do not know what the future entails when our existing monetary and financial systems break down, we are convinced that gold and silver will (at the very least) offer security in the transition period. If we look at the growing gold purchases by the East, they certainly show that people in many emerging markets have set their minds on gold. This supports our conviction that some form of gold standard could be reinstated one day, although the prevailing monetary experiment in fiat currency is likely to persist for some time to come."
https://www.youtube.com/watch?v=yloaBw80fV4
Huerta de Soto on the recent Deflationsit Paranoia (in spanish) :http://youtu.be/CiJrgBH3tMA
The DAX isn't going up; the Euro is going down.
Understood, but in a GBP demoninated account, it's going up
Was this written a 5 year old?
We don't have CAPITALism, we have DEBTism.
Deflation in this economy is nothing short of disastrous.
While true, deflation is in this environment is unavoidable and can't be stopped, which means that disaster is also unavoidable.
Deflation will decimate, but all the waste will go right along with it.
So is gravity once you've jumped off of a cliff.
Which part of "there's no escape" is eluding you?
"First by deflation, then by inflation, your grandchildren will be destitute on the continent that you conquered."
We're in the deflation part right now. Hedge accordingly.
Let's be clear. In reality, "Deflation" is a fucking myth so long as the human populatin is growing. However, in the context of the social "science" of eCONomics, deflation translates into a dangerous loss of control over real resources (which is what this is always about) for the status quo.
Anyone know the current world growth rate? I'd be interested to see the corelation. I'll seearch and see if I can find anything....
Common sense really. So long as there is 7+ billion people competing for a higher standard of living and all the real resources that make that possible, there will be plenty of demand. Would love to see a real analysis done from the perspective of calories that need to be consumed.
You know what a higher standard of living is? It's being able to eat, to have a good roof over your head, a satisfying job, family and friends. Healthcare when you need it, the occasional 'luxury'...
These things really aren't too expensive for all to have. It's when you throw in all the other crap, like the every-six-months new Iphone, the bigger-screen TV, the 5,000 square-foot 'McMansion' for your family of 3, etc, that budgets get strained.
So maybe demand does increase...but demand for WHAT? I have a feeling that the consumer-orgy is over, and everyone is just too hung-over to even THINK about doing it all again tonight. Things are going to be quiet in consumer-land for awhile.
Personally, I like inflation...it means things are going well and that the FED mandates are working. When we get deflation that means all is not well and the FED needs to become more aggressive. I fele like the FED has us in a sweet spot right now. THe dolalr is strong and the markets are healthy. I hope the FED can keep up this winning streak!
Ahh yes. I remember my first huff of gold spray paint also.
The Fed really has nothing to do with it, but okay.
Soooo,,, you like it when your 'money' becomes more worthless day by day? That is a healthy economy?
I make plenty of money in my Government job, they make sure I can keep up with inflation. The private sector is for fools. Not only that but my 401k is doing great. Haters gonna hate.
401K in a government job? WTF kind of shit job is that? No pension?
I love double dipping, 401k and pension, not to mention all the discounts I get at various private establishments. I frequent many pleases that have signs saying "Discounts for Firemen, Policemen and Teachers." We work hard and deserve a break.
People give me dirty looks when I ask for my senior discount!
I still remember that Government shutdown of 2013, and I have nightmares about it. Being furloghed was tough, but thankfully the population realized how important we are to thier way of life. We are now back at full strenth and better then ever, ready to serve you! You can thank me later.
If they don't give you the senior one, ask for the bankster discount. They usually relent and give the senior one.
I assume the fringe benefits are nice, too. Hookers, blow, and authority.
Tastes like chocolate.
LOL! Now that's funny! Now if (IF) I enjoyed sarcasm you'd be at the top.
He is a government troll that is obvious.
Dude....crainial rectal inversion. Pull your head out.
The problem with real deflation is that it will lead to salary deflation as well. Of course, it is hard for some to grasp that we will never be able to compete with overseas manufacturers and bring those jobs back here without a large dose of wage deflation. Unfortunate but true.
So long as everything else is deflating, this is simply a functioning market. As it should be.
What most people miss is the historical record on just how fast those "low prices" become shortages when corrupt central banks destroy price discovery in the first place. inflation is already here IMO.
Salary deflation is automatic under inflation schemes since purchasing power erodes over time. However, savings will automatically inflate under a deflationary scheme (i.e. gold standard) which leads to faster capital accumulation for the lower and middle classes.
During the deflation of the '30s the 1% went from having 40% of the wealth to about 20%. THAT is why the media despise it.
there was also a mass transfer of wealth (property) from individual hands to corporate ownership. after the next round of deflation there will be probably be no private property left in America. while i would say deflation is syonomous with smaller government, FDR started the New Deal to counter inflation, because government wants to grow its power. ask any economist they will say that bull markets last much longer than bear markets, (they simply ignore history when they say that) thats because the government reaction is to print new money near the bottom of the bear market. however i believe that this BTFD mentality will prove their undoing, because things are simply different this time, and the biggest change is a transaction only currency (bitcoin or its equivalent) so that there is no stored value for paper currency, you must use it only to get from one place to another, and when you want a stored value of money you will buy gold.
Right. The debt plus the absence of gold in US Treasury guarantees a different outcome. The state will lose power this time.
Yes, because deflation functions as a mechanism for transferring wealth BACK to the 99% who have been getting robbed through inflation.
And it does so in a way that is very hard to 'tap into'...Wages are not easily reduced, so can't keep up with declining prices. Politicians can try to raise taxes, but they run into a wall of resistance not easily overcome.
So all that extra purchasing power goes mainly to the 99%, and comes out of the pockets of the 1% until balance is restored.
Then the whole game begins again...but so what? As long as I get to see THIS part, I'm good.
I'm ok with 5 cents for a loaf of bread. That's more important then cheap large screen TV's.
Tom Brady likes deflation too
In the short term, it means bankruptcies and layoffs. But it's the only solution....
Here's the AMERICAN School:
All the money is in the Banks, all the gold is in the Banks, all the Credit is in the Banks.
Does that simplify you "economic thinking"?
Bullshit. Show me a complete audit.
Freedom Bitchez!
You can Goddamn guarantee if it's good for the common folk, it's not going to happen. Prepare to be fleeced. Again!!!!
And the people with the best assets - real assets like gold and silver - have funds to purchase other assets at fair price.
"they" aren't fighting deflation "they" are fighting a stock market decline. it is the only thing "they" care about. they "learned" all the wrong lessons from 2009. zirp and nirp are VERY DEFLATIONARY in general and "they" know it. even retards who have money finally figure out it is better to pay off debts than keep it in the bank. deadbeats realize it is pointless to keep paying. those are the two biggest risks in the bond market, early payment and default, and we can expect that in spades over the next decade.
Waaaay way off topic but funny.
Brian Williams: “I don’t know what screwed up in my mind that caused me to conflate one aircraft with another.”
His mind told him he was on a shot down aircraft not one that landed. Hubris level: politician.
http://www.stripes.com/news/us/nbc-s-brian-williams-recants-iraq-story-after-soldiers-protest-1.327792
He's a card-carrying member of the CFR, thus he has nothing to worry about. Worse case scenario, HBO has to up the ante of his daughter's analingous scene.
"The euro zone’s consumer price inflation rate declined below 1% in early 2014, getting closer to zero during 2014, nowhere near the ambitious 2% benchmark set by central banks."
The only right value for INFLATION is zero ... all the time ... everywhere. There is no such thing as "price" inflation. Prices are only a partial and inconclusive measure of an imbalance between DEFAULTs and INTEREST collections.
INFLATION = DEFAULT - INTEREST. If INTEREST collections don't always and immediately balance DEFAULT experience, there is essentially "counterfeit" money circulating in the marketplace ... and that's bad for in-process trades (which is exactly what money is).
When the Medium of Exchange (MOE) is managed by "someone" rather than by "some process", you have a farming operation (often called the business cycle). Here the manager throttles the creation and restriction of trading promise certification in such a way as to benefit himself.
DEFLATION is just part of the farming operation. Traders who have "leveraged" their trades in the face of inflation (hoping to complete their trades with lower valued dollars) get trapped by the money changers. The money changers first deleverage their own trades. They then force in-process trades to deliver with more valuable money ... forcing in-process trades to unwind at a loss.
The "people" managing the MOE pick up assets for pennies on the dollar. They then reinflate and repeat.
This will go on forever as long as the marketplace allows "people" to manage the MOE rather using a "process" to manage the MOE.
It's really pretty simple folks. No fun, just like playing Monopoly where one player gets to reach into the bank any time he wants ... no fun. Stop playing the game.
Superb.
"It's really pretty simple folks. No fun, just like playing Monopoly where one player gets to reach into the bank any time he wants ... no fun. Stop playing the game." -- been saying this since 2001, my father since 1971, and my grandfather since 1913. Oh well, grand dad's gold is now mine and still safe. We remain debt-free but know that should we need to expand the company again we have the only collateral banks really want. Meh, run you fucking rats, and jump you fuckers!
Warfare needs to be included anytime welfare is mentioned. The demand for money to finance the Vietnam war is what drove Nixon to sever the dollar from gold entirely.
Saw him at Mises Circle
I propose eliminate all taxes and tax diesel/gasoline into $10/gal. This will increase productivity as people waste less time going out and driving to places instead of working. It will also decrease the fvcking pollution as people stop driving an hour to go to work to save $200 on rent.
^^Maxine Waters has a ZH account? Hookuddaknode?
It's more of a mixed bag than that.
Here's the thing, either inflation or debasing the currency (aka printing) takes money out of locked boxes, you don't need both. Most of the money in locked boxes belongs to the 1%. Inflation/printing also keeps labor jumping, they are always behind the curve, and the government can lie about the CPI and make it worse. Inflation monetizes the debt, printing - does not, but buying the debt and stuffing it in a cabinet is almost as good.
It's a bit odd that the printing has not caused more inflation than it has, but the lack of inflation, like the unemployment numbers, are mostly just government fraud at this point. When they lie about the CPI it means they fail to monetize the debt! Oops.
that only works when the money printed goes to the masses and it has velocity. at present however, it all ends up in the hands of the 1%
deflation is awesome if you have a shitload of cash hidden away. to the peasants (99%) however, wages deflate faster than prices, and when it's over, they inflate slower too.
Wages don't deflate faster than prices...TPTB would LIKE that to be so, but it isn't, which is another reason they fear deflation. Wages are 'stickier' than prices, increases are usually hard-won and not easily reversed. Believe me, if they COULD drive wages down as fast as prices, there wouldn't be such angst over it.
Prices, on the other hand, must react more quickly to market forces. Producers end up in price wars to keep market share, and must respond to competitors.
Deflation allows most workers to stay ahead, for awhile at least. And in a market with rapidly-declining options for 'yield', that money drives them mad with desire...they want to get their hands on it, real bad...But they can't, not in a deflationary environment.
THAT'S why they hate deflation. Because someone (wage earners) are getting a windfall that they can't easily access.
that windfall is temporary however. once the market is not giving you the prices you need, you cut costs... that means jobs and the labor market swells. Any new hires are coming in to replace employees who are "overpaid", and many jobs just flat out vanish as it provides an excuse to make the company more "efficient". Wages drop to $0 faster than food does. Cheap horrible crap remains, anything nice becomes crazy expensive due to low supply, and the middle vanishes along with the associated class. Sound familiar? It's been going on since Reagan.
Everyone knows falling prices are evil.
Inflation provides the 'froth' that enables the banks to skim off of everyone else's productive capacity. It's like a glass that is 3/4 full of chocolate milk. The owner of the glass, seeing it is only 3/4 full, takes care not to lose any.
But the guy next to him (the bank) WANTS some. So he whips the milk into a froth, causing it to spill over the sides...the guy with the glass now mistakenly thinks he has SURPLUS milk, so he doesn't kick up a fuss when the bank takes some...after all, there's plenty left to keep his own glass full, right?
Wrong. As soon as the whipping stops, the liquid settles, and he sees that he actually has LESS than he did before.
The bank, by 'inflating' the asset, was able to steal that which was not his.
The bank now fears the deflation (end of whipping) that will expose his theft.
i drink YOUR milkshake !11111
The place you should study isn’t the bust
It’s the boom that should make you feel leery, that’s the thrust
Of my theory, the capital structure is key.
Malinvestments wreck the economy
The boom gets started with an expansion of credit
The Fed sets rates low, are you starting to get it?
That new money is confused for real loanable funds
But it’s just inflation that’s driving the ones
Who invest in new projects like housing construction
The boom plants the seeds for its future destruction
The savings aren’t real, consumption’s up too
And the grasping for resources reveals there’s too few
So the boom turns to bust as the interest rates rise
With the costs of production, price signals were lies
The boom was a binge that’s a matter of fact
Now its devalued capital that makes up the slack.
Whether it’s the late twenties or two thousand and five
Booming bad investments, seems like they’d thrive
You must save to invest, don’t use the printing press
Or a bust will surely follow, an economy depressed
Your so-called “stimulus” will make things even worse
It’s just more of the same, more incentives perversed
And that credit crunch ain’t a liquidity trap
Just a broke banking system, I’m done, that’s a wr
This is by far the most inane and idiotic post ever on ZH and that is saying a lot. All you dead head freaks praying for the end of the world I want you to remember today your statement today that deflation will set us free. If, and it may happen, we actually deflate we all will rue the day. Nothing is as bad as deflation. Idiots!
You're an assclown. So, when you go to the store to buy food, or clothes, or something else you want to buy - you prefer to pay MORE?
Deflation is the ONLY possible outcome after 100+ years of inflation. COUNT ON IT!
Listen you delusional moron. Read your own comments. A hundred years of inflation? How can you write when you obvious can't or don't read. Deflation is way more harmful to the little people that all you dead enders purport to care about. Get a life, pick a book and stop praying for the world to collapse. Go watch some more zombie movies it is the only speed your mind can work at.
The real question is though, why do our governments fear deflation?
less tax revenues?
forced to lower marginal rates?
governments hate that stuff
Tyler’s, why do you print Mises mind control B.S. that has no connection to real monetary science?
The Great Depression was private debtors gambling in the stock market. When stock market collapsed, the debts were left, but credit money supply vanished. It was public debt, which then created public credit as money, which then flowed into war industry, which then allowed labor wages to pay down private debts.
How about the dark ages? That was a super depression as all of the Gold money was intercepted by Byzantium and locked away. Tons of gold were conscripted and held by the basilica. Silver drained to the east despite slaves dying in the mines of Germany and elsewhere.
There was an East West Mechanism where Silver came from the West, and Gold traveled from the East. Byzantium was situated geographically on Straights of Bosphorous to interdict the metal two way trade. In this way they controlled the ratio and took rents on the populations. Prior to this our Jewish friends controlled the trade.
The dark ages officially were over after the fourth crusades, when Constantiople was sacked and all of the “metal money” was released.
Whenever there is a Creditor/ Debtor contract created, there is a power relation formed.
Creditor can lend out money or goods or services. Debtor may return money, goods, or services at a later date. Creditor is usually over debtor.
Debtor may return goods that multiply by inputs of the sun, earth, or their labor. Debtor may return services in future with more labor.
Debtor cannot return more money in future if the money supply is collapsing. Since goods and services are marked by money, where money is a proxy for value, those goods and services in future cost more.
In other words, depression or deflation reduces the money supply relative to the initial credit creation. This means that debtor has to pay back MUCH MORE, than what original contract declared. This mechanism is unlawful.
This is usury, plain and simple. In the bible it is forbidden as murderous sin. Creditor is screwing over debtor during depressions. Creditor is taking more than was agreed to in the beginning of contract. It is bad enough that we have interest compounding, but to then add deflation is additional gains for a creditor who almost never takes real risk.
That we have to listen to Mises propaganda and bad thinking, tells us just how far gone we are.
Metal money is inflexible and unscientific, it cannot channel properly, its volume cannot flex to the real needs of an economy. It is deflationary as it goes off and hides at the first sign of stress. Labor and goods producers are then caught with their unsalable perishable products while Gold holders laugh into their teeth. This power relationship is totally usurious and our ancient ancestors knew it as sin.
Here is a good book to read by Hoffman. The mortal sin that was, and now is not.
http://www.amazon.com/Usury-Christendom-The-Mortal-that/dp/0970378491
I'm all for deflation, baby, yeah.
But disagree with this:
"Nigh unlimited printing of money has become the orthodox strategy to avoid deflation."
QE is not money printing. Its taking junk assets off of bank's balance sheets at a price that lets banks not take a loss. It is essentially destroying negative money, wiping out bad financial instruments which would otherwise force the banks to admit insolvency.
This is very different than money printing, even though the intial step involved the Fed/Treas. pumping imaginary digits into its 'blank check' account. 'Money printing' is a euphemism which would imply that the money was circulating through the real economy. Its not. It is making Citibank whole, again and again and again and again --- thats all its doing, as far as my understanding of it goes right now.
Steve Keen explains this here:
https://www.youtube.com/watch?v=ryyX8amkFkg&t=12m5s
Its intellectually lazy to refer to this as 'money printing' -- not merely because no physical money is created, but because that shorthand implies a whole downstream cash flow that is definitely not taking place.
"Its taking junk assets off of bank's balance sheets at a price that lets banks not take a loss."
Agreed. But that means the bank has more money to do something with. Many of those somethings are payments to people that would have otherwise been laid off if the QE had never occurred.
The average welfare recipient may not be getting more money in their accounts than they did before due to QE but the transfer payments wouldn't happen at all if the banks that enable them fall down and die.
Therefore, I disagree with you on the idea that QE money doesn't make its way into the hands of the public.
By the time inflated money makes it to the hands of 'the public', all the juice has been sucked out of it, leaving only the dried, deflated husk.
The global economy can't run on peanut shells.
BRAVO!
Now try convincing Brandon Smith of this.
Deflation is going to do what the Liberty movement cannot.
And the deflation, for the most part, is the result of growing too big for our resource base.
The authors of The Limits to Growth were right all along.
" Who gets "richer" in deflation? -- those who already have money and relatively no debt"
If the deflation is happening within an otherwise sound economy, yes.
But if the deflation is because of a looming global crisis, then things may not work that way. People purchase assets with the hope of enjoying them somehow...if things start collapsing, where do you spend that money? Do you buy land, maybe in a country that gets taken over by revolutionaries? Sure...the new government will respect your title, right? Maybe you buy financial assets...but if economies are going under, which economy do you pick to buy into? What currency do you buy into?
And if deflation is global, with a small bunch of rich folks trying to buy certain assets, what's going to happen to the prices of those assets? It won't be deflation, that's for sure! Good thing those guys ARE so rich, cause they're gonna need every penny to snap up those bargain-priced assets...only to lose them all anyway in the end.
All governments, especially those with "progressive" taxes, hate deflation because it not only reduces taxable transactions and the rates those transactions are subjected to.