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The $100 Trillion Reason the Fed is Terrified of Deflation
Over the last few months, Yellen repeatedly stated that lower oil prices were “positive” for the US economy. This is simply astounding because the Fed has repeatedly told us time and again that it was IN-flation NOT DE-flation that was great for the economy.
And yet, repeatedly, the head of the Fed admitted, in public, that deflation can in fact be positive.
How can deflation be both positive for the economy at the same time that the economy needs MORE inflation?
The answer is easy… Yellen doesn’t care about the economy. She cares about the US’s massive debt load AKA the BOND BUBBLE.
Yellen knows deflation is actually very good for consumers. Who doesn’t want cheaper housing or cheaper goods and services? In fact, deflation is actually the general order of things for the world: human innovation and creativity naturally works to increase productivity, which makes goods and services cheaper.
However, DEBT DEFLATION is a nightmare for the Fed because it would almost immediately bankrupt both the US and the Too Big To Fail Wall Street Banks. With the US sporting a Debt to GDP ratio of over 100%... and the Wall Street banks sitting on over $191 TRILLION worth of derivatives trades based on interest rates (bonds), the very last thing the Fed wants is even a WHIFF of debt deflation to hit the bond markets.
This is why the Fed is so obsessed with creating inflation: because it renders these gargantuan debt loads more serviceable. In simplest terms, the Fed must “inflate or die.” It will willingly sacrifice the economy, and Americans’ quality of life in order to stop the bond bubble from popping.
This is also why the Fed happily talks about stocks all the time; it’s a great distraction from the real story: the fact that the bond bubble is the single largest bubble in history and that when it bursts entire countries will go bust.
This is why the Fed NEEDS interest rates to be as low as possible… any slight jump in rates means that the US will rapidly spiral towards bankruptcy. Indeed, every 1% increase in interest rates means between $150-$175 billion more in interest payments on US debt per year.
If you’ve ever wondered how the Fed can claim inflation is a good thing… now you know. Inflation is bad for all of us… but it allows the US Government to spend money it doesn’t have without going bankrupt… YET.
However, this won’t last. All bubbles end. And when the global bond bubble bursts (currently standing at $100 trillion and counting) the entire system will implode.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
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Best Regards
Phoenix Capital Research
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I never understand this stuff.....if the FED wants inflation....why don't they just stock up on GOLD and move the Gold Price up relative to the Dollar?
Phoenix Capital should be broke by now. There is not a single 10% correction in the markets for 3 years now.
"human innovation and creativity naturally works to increase productivity, which makes goods and services cheaper ..."
I wish that I could still believe in that kind of sublime expectation of progress, that was able to deliberately ignore the natural environment, and the NEED for there to EXIST natural resources that can be strip-mined at an exponentially accelerating rate, in order to keep the debt slavery systems going, no matter what level of debt insanity numbers those systems generated.
Basically, MAD Money As Debt systems operate by:
Too much "money" made out of nothing is inflation. &
Too much "money" disappears to nothing is deflation!
The central banks have been picking up the slack in the established systems due to the other banks not being able to find enough "borrowers" who are able and willing to enable those banks to create more "money" out of nothing to "lend" to them. The extremely over-leveraged and rehypothecated bond bubble is significant within the context of the degree of irreconcilable social polarization, due to debt slavery systems driving their numbers to become debt insanities. However, that is relatively trivial compared to the irreparable destruction of the natural world, wherein the ability to "pay" for strip-mining the planet's natural resources with "money" made out of nothing is the spearhead of the overall ways that the human species has become CRIMINALLY INSANE, because human behaviors are controlled by the people who are the best at being dishonest and backing that up with violence, WITHIN the human world, which does not care about the bigger, longer term issues.
Since the established systems are based on the triumph of organized crime controlling governments, that political economy is based on enforced frauds, within which context the debt insanities of sovereign bonds are merely one of the significant symptoms of a terminally sick and insane society, gradually committing collective suicide, due the paradoxical ways that there will be final failure from too much "success" at operating social pyramid systems, such as the debt slavery systems manifested in the so-called "bond market," which is actually an elaborate superstructure built on top of violence, expressed through the language of "debts."
A lot of the previous comments above mine were critical of Phoenix Capital's position, for those commenters' own reasons. I feel somewhat the same way. However, I lean towards expressing that according to my perceptions of the problems that the mainstream of our society is based on the excessive successes of the history of its militarism, so that its money system is based on measurement backed by murder.
It is typical for people who were relatively successful within the established systems to be professional liars and immaculate hypocrites, that tended to be better at doing that to the degree that they believed their own bullshit. That is the way that I regard the view expressed in the article above that: "human innovation and creativity naturally works to increase productivity, which makes goods and services cheaper."
TECHNOLOGY IS NOT A SOURCE OF ENERGY.
TECHNOLOGY IS NOT A NATURAL RESOURCE.
Since our financial system is based on enforced frauds, which are successful within human society by being able to apparently get away with deliberately ignoring the basic laws of nature, such as that "money" should NOT be created out of nothing, nor disappear back to nothing, because that is actually due to being able to back up lies with violence, everything that the human economy does is pretty well totally based upon deliberately ignoring the natural environment, since that political economy deliberately ignores the principle of the conservation of energy, since it makes "money" out of nothing, which can also disappear back to nothing. Instead of that being obviously perceived as being an enforced fraud, that manages to dominate our political economy, as enforced frauds, surrounded so thoroughly by bullshit as to be almost totally protected from the radical truths that that system is FRAUDULENT.
Most people who successfully make "money" within the established monetary systems are willing and able to play the game of criminally insane attitudes towards "economics" that deliberately ignore the limits of the natural environment as much as possible ... As long as the human species had a fresh planet to plunder and rape, that was working, and pretty well everyone took that for granted, while those who tend to be old and rich take that most for granted.
The ability to strip-mine the planet still exists at the present time. Doing that is still making people "rich" within that context, while it destroys the future for younger and poorer people, and future generations, more than we can currently imagine or fully comprehend. In my view, many of the people who post comments on Zero Hedge also like to indulge in those attitudes, which enable them to rationalize and justify themselves continuing to participate in strip-mining the planet.
The great paradox that the human species faces is that the social successes of operating systems of legalized lies backed by legalized violence, to develop the economy, has a hidden and disregarded flip side, where those fundamentally fraudulent accounting systems promoted ridiculous bullshit about how the economy can continue to operate as if the natural environment does not matter, and does not count in the calculations regarding what anything is worth, since the system is set up to privatize the profits, while the losses are socialized. The real costs of everything are not assessed (or deferred onto future generations), despite that accumulating to levels that are will be impossible to cope with.
The series of articles by Phoenix Capital continue to be relatively correct, within their own frame of reference, or when considered only upon their own level. HOWEVER, the most important problems are not merely the runaway social polarization driven by the established debt slavery systems. The most important problems are the ways that enforced frauds have controlled civilization to behave in criminally insane ways. The view that: "human innovation and creativity naturally works to increase productivity, which makes goods and services cheaper," deliberately ignores that what the established economic system actually does is run a debt treadmill turning natural resources into garbage and pollution as fast as possible.
Since the production of destruction controlled production, the established systems are dominated by the people who can turn the most natural resources into garbage and pollution the fastest. Those who make the most "money" inside of the established systems are able and willing to turn even more natural resources into garbage and pollution, faster. None of those people fully face those facts, because they are thoroughly able to rationalize and justify their bullshit world view that they were being "productive," when all of their so-called "productivity" was actually inside of a context controlled by deceits backed by destruction, enabling enforced frauds.
Of course, I was born and raised inside that system, and there is nothing I can do about that. I may point out that "we should" develop better environmental ecologies, which do not deliberately ignore the laws of nature as much as the established systems of enforced frauds routinely get away with doing. However, those who are most occupied with turning the most natural resources into garbage and pollution as fast as possible, are thereby making the most "money" within the established systems, and that is what they care about, WITHIN those human systems.
Meanwhile, relatively speaking, I too am like most other relatively rich, older, people, who were benefiting from being able to indulge in doing that, throughout my life, and may well be possibly able to continue to do so for as long as the rest of my natural life span will probably last. But nevertheless, I regard it as tragic that the human species appears to be preparing to commit collective suicide. Thus, there seems to be no practical point behind my mentioning this, because those concerns are obviously NOT going to stop the planet from continuing to be plundered and raped. There does not currently look like there can be any longer term survival for the human species, because of the degree to which our current civilization is almost totally dominated by systems of enforced frauds, which are able to maintain attitudes of evil deliberate ignorance towards everything outside of that frame of reference.
What Phoenix Capital expresses concerns about are valid points. However, those points are relatively trivial symptoms of the bigger picture, that our economy is based on strip-mining the planet, while developing any better integrated human, industrial and natural ecologies is currently a politically impossible thing to imagine, given that everything we are doing now is directed by entrenched systems of enforced frauds, which maintain attitudes of the maximum possible evil deliberate ignorance to what they are doing, as relatively objective environmental facts, outside of the human systems of enforced frauds that pretend to account for what is supposed to be happening.
The political economy problems regarding how much "money" gets made out of nothing as debts, and how much of that "money" disappears back to nothing (and thus, how much inflation or deflation there may be) are TRIVIAL compared to that making "money" out of nothing is IMPOSSIBLE TO RECONCILE WITH THE REAL ENERGY SYSTEMS THAT FLOW THROUGH THE REAL ENVIRONMENT.
All of the social successes that are based on being able to back up lies with violence, in ways whereby the social debt controls were backed up by the social death controls, ONLY "WORKED" WITHIN A SOCIETY WHICH WAS OVERALL CRIMINALLY INSANE. Of course, as soon as we define human beings as separate from their environment, then they must operate through systems of organized lies operating robberies, and hence, the people who were the best at doing that have dominated social pyramid system civilizations, which have been plundering and raping the whole planet, at an exponentially accelerating rate for thousands of years.
HUMAN BEINGS ARE NEVER SEPARATE FROM THEIR ENVIRONMENT, HOWEVER, THEY HAVE BEEN ACTING LIKE THEY WERE, MORE AND MORE, DUE TO THE WAYS THAT LIES COULD BE SUCCESSFULLY BACKED UP BY VIOLENCE, SUCH AS HOW OUR POLITICAL ECONOMY IS BASED UPON ENFORCING FRAUDS.
Running into objective limits of diminishing returns from being able to continue to strip-mine the planet at an exponentially accelerating rate is going to first and foremost manifest its consequences through fraudulent financial accounting, that controlled those activities. First and foremost amongst those are going to be in the bond markets, and especially the bonds based upon sovereign counties, as the biggest forms of organized crime, taken advantage of by the best organized gangs of criminals.
Of course, all of the people who were the most successfully taking advantage of those systems are the best professional liars and immaculate hypocrites, who are the least willing and able to face the real facts about what they were doing, but rather, are the most able to continue to indulge in believing in the bullshit about what they were supposed to be doing. The global bond bubble popping is merely another significant symptom of the ways that society has become terminally sick and insane. In theory, we would need to face much more radical truths about ourselves, so that we could correct the awesome, astronomically amplified, ERRORS regarding how we perceive the world. However, there are no reasons whatsoever to believe that we are going to do that, until it is way too late, and so, we will be doing way too little, in ways which will not matter much then anyway.
A political economy in which "money" is made out nothing, and can disappear back to nothing, is operating with attitudes of the maximum possible deliberate ignorance toward the basic laws of nature, in ways which direct people to behave in the most psychotic ways possible. However, since everyone has lived their entire lives inside of fundamentally fraudulent financial accounting systems, and so, always made and spent "money" inside of those MAD systems, for enough people to achieve enough of a paradigm shift in the ways that they perceive political economy, so that became consistent with the basic laws of nature, is practically impossible to imagine. Instead, one expects to read articles like the one above, which are superficially correct, while, at the same time PROFOUNDLY WRONG!
And this is probably why any 'advanced civilizations' have yet to be found elsewhere in our galaxy. As they say - good riddance to bad rubbish. If we can make it another few hundred thousand years, maybe our 'human nature' will evolve to the point where we are able to live without being a collective parasite on the planet we live and towards one another. But I have a feeling we'll either destroy ourselves or our host.
Chambawamba has been working on this, has been working, pulling together the data from our news sites. He will have an update soon.
Replace "inflate or die" with "inflate, then die". Just a matter of when, not if.
The whole war in Syria is dirty, Serena Shim had proof and they killed her.
New Anonymous op as White House still ignores murder of American reporter Serena Shim in Turkey
Wtrfly. Thanks for the link.
FED afraid?? Terrified???
What, you think these black-hearted, black eyed jews are scared of anything??? They have all personally amassed trillions of highly negotiable FRNs for the next thousands of years, with no heavy lifting.
They are immune to the frailty, failures, and mistakes of ordinary human beans.
IF this is what it means to be afraid, then I welcome many hairs standing tall on the back of my neck, and a deathly chill down my back.
A shrivelling of my nuts.
This is a business plan. A covert war. There were many warnings from many people who were MURDERED after attempting to tell their country the banks were the enemy and they were killing anyone in their way. I do not know why the military was not informed. Traitors with dual citizenship status should be banned from govt for this reason. One bank is the goal. One government is what I hear Bill Gates singing. If that ever comes to fruition, it certainly would not be a gang of thugs, thieves and murders, Bill Gates, who we give the world to.
Yellen/Clinton will wreck America - hang them
They are stooges and not the power.
No one in finance wants to see the bubble deflate. But their hand will, I believe, be forced ultimately, by the governments currently working with them.
Why? Because at the end of the day, reality will have to be acknowledged by someone. The banks will keep the Ponzi going as long as possible, but governments don't have that luxury, as they have to face elections, and voters.
Faced with growing threats to THEIR power, they will turn on the big banks, because that's where the money is. Any 'Blankfein-wanna-bees' who think they will somehow extract it from the masses is delusional. The masses don't have it, and they won't risk revolutions and coups trying to get it from them.
The compromise will be to deflate as much of the 'funny-money' debt, like derivatives and swaps, as possible, while preserving as much of the actual asset-debt as can be salvaged. The banks will be told that half a pie is better than none, and ultimately they will agree.
A lot of paper millionaires will be wiped out, but we will be told it was the price that had to be paid to avert disaster. Anyone complaining will be treated scornfully, and be reminded that those 'gains' were never real to begin with. They will be reminded that THEIR debts have also been reduced, so they have 'gained' there.
Things are coming to a head. But TPTB won't go down without a fight. The real fight will be amongst themselves though.
if you are holding debt and you just bought a 10000 car that will be worth 5000 next year, and your wages will be 10 an hour instead of 20, you are screwed trying to pay off a loan for twice what your car is worth while only earning half as much
"yada...yada....All bubbles end."
The known and unknown universe is expanding faster than Kim Kardasahian's ass. Is the Universe Bubble going to burst??
You need to think more about what is not in your purview......
'There are more things in Heaven and Earth, Horatio, than are dreamt of in your philosophy".
Inflation is great if you are staying ahead of it with your investments/wages. When government and Wall Street have pre-empted any chance of that for the vast majority of us not so much. Union busting, off-shoring, temporary foreign workers, ZIRP, etc. were not grass roots programs for you and I.
Deflation may have been the natural outcome of the 2008 banking crisis, and would have allowed for some real small business growth while entrepreneurs filled in the void left by inefficient banks & businesses going under, but that would have cost some really established people their bonuses and positions. Can't have that.
Why deflation scares the FED? Does that need to be explained here? I hope not.
No they aren't!
the fed has 1 agenda devalue the $ i think they will fail so sell your gold
Was going to just comment that you need to introduce the comma into your transmissions, but after I decifered your statement it seems grammar shouldn't be at the top of your list of improvements.
Only 191 Trillion in Derivatives? Huh. I honestly thought the sum was bigger. Maybe I'm thinking world-wide.
That $191T is just interest rate derivatives. That doesn't even count the casino of Credit Default Swaps, naked shorting of commodities or unfunded pension liabilities.
There are several things that can "break the worlds bank", in fact they have papered over some black swans. Now there are even more.
I say we need some hyperinflation.
I have more debt than savings. A lot more!
A few years of rampant inflation to boost salaries would be great. I could get a job at WALMART making $500K and pay those pesky loans of in a month.
Bring it on. I'm only 49. I can recover.
Inflation is the only answer. Most people are in debt and inflation would be good for their bottom line.
You will get whats called stagflation. Inflation combined with stagnet wages.
We have been living through stagflation. I remember that from the 1970's. Wages, eventually went up under the voodoo economics of Reagan.
Starting salaries and hourly wages are way down since 2000.
The increase in productivity since Lehman went down has been paid for by working folk.
Banks used to HATE inflation back in the days when they actually held onto the loans they made. Banks were vehemently opposed to the 'Free Silver' movement BECAUSE it was inflationary. Farmers loved inflation because they could sell their crops at current prices and pay off their mortgages with inflated money.
GOVERNMENTS always loved inflation because governments were usually borrowers. They could borrow money and pay it back far in the future with inflated money.
Now banks are packaging and selling off the loans they make - they don't care about how sound those loans are or what the default rates are. Banks are gambling as much as anyone else these days.
Inflation rewards BAD behavior and now that banks are regularly engaging in bad behavior, they love inflation.
NIRP bitchez! It is the simple way to print to infinity and beyond - dot gov will be paid to hold moar and moar debt!
But, what are the shenanigans possible/available for the world's biggest bank with the world's biggest stick?
The market crash was avoided in 08 by blowing this bubble and handing half the world's money to banks.
What next?
Buy-ins?
War?
Massive asset forfeiture?
I think most zh'rs are beyond this level of writing. Namely in terms of the content. For anyone that's being paying attention for awhile, this article is like going back to kindergarten and reading "See sam Sit". Or back to grade school math when you learned the equation "shit+shit=shit".
shit+shit == 2*shit, get it right.
I actually worded it that way just to see which of you would say something. I would had too , though. LOL.
with zeroshit you're both right.
I love math jokes. Understanding them makes me feel clever!
In this rehypothecated age, you're mostly likely correct.
any bank may rehypothecate that which is in my toilet any time they like.
Led Zepplin, When the Levee Breakes
<iframe width="640" height="390" src="https://www.youtube.com/embed/9NaQZojWi6U" frameborder="0" allowfullscreen></iframe>
When the Levee Breakes there aint no place to go.Go down go down.
Led Zepplin, When the Levee Breaks
<iframe width="640" height="390" src="https://www.youtube.com/embed/9NaQZojWi6U" frameborder="0" allowfullscreen></iframe>
When the Levee Breaks there's no place to go.Go down go down.
Deflationists are winning the argument over whether inflation or deflation will collapse the global economy. The biggest credit bubble, probably in the history of the world, is in the process of bursting... and the results will be catastrophic.
http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...
Does anybody really believe it will collapse in a nice orderly fashion?
Default will rip through economies and rather speedily because free trade agreements actually assist contagion.
The derivatives are easy to take care of.. Punk the speculative investors. Anyone that is not 'in-bed' with the FED, directly has no legal right to speculate outside of their 500 hours of labour in that derivative, except the banks that are insured to the FED. Extension of the commodities clauses of the Dodd Frank Act, 2008.. and a slow percentage implementation so the banks can gain control profitably... LoL
From my perspective they are already bankrupt, insolvent.
If all the paper promises were wiped out tomorrow. Life would go on.
evolve or fucking DIE already Graham!
The phys assets would surely remain, just not under the same management.
Correct. As it should be.
What part of "when fraud is the status quo, possesssion is the law", don't people get?
"Phoenix Capital " is main stream media propaganda.
No, Phoenix Capital is a capitalist that uses fear to get business. Phoenix preys on the less intelligent or those that don't do their own homework.
For example, I have been saying deflation will be the problem for 3 years now. Back then Phoenix was trying to get business by scaring people with the typical hyperinflation crap. Now Phoenix is on the deflation wagon, going with whatever seems trendy to get more business.
That is one way you can tell a shuckster. They change their position depending on the wind. My position hasn't changed in years and I've been right just about all the time. I also am not selling anything like Phoenix.
It's not MSM propaganda, it is simply a shuckster trying to separate you with your money
I do not see any evidence of "deflation" in any required for a decent standard of living.
Try again you stupid fuck.
That is because you fail to see the two markets we actually have. There is the real market, where the things you need go up in price. Then there is the fantasy market, where that inflation-thing is breaking down.
It is this fantasy market that it in trouble. The deflation that takes it out may not be translated to your local grocery store, because that market consists of real things that have real costs to produce.
Deflation can hit the one without having the same effect on the other. Deflation can take the value of a non-existent 'asset' to zero, but farmers will still expect to be paid something for their crops, so crops can't go to zero. Transportation costs can't go to zero. These things are REAL, and have a value...there's a definite floor there.
You are another useful idiot. The vast majority of people on the planet do not give a shit about the paper world. or paper prices.
Unfortunately for you, what you fail to understand is that the yeild that those farmers get can drop to a point where they will simple tell you to fuck off, regardless of the "price", and keep the food for themselves in order to survive.
Pull your fucking head out of your ass you dumb fuck and simply try recognize the truth, there is no monetary, fiscal, political or economic solution to scarcity. There never has been. We are never really that far from a fucking can of beans or potable water having great value. The issue is when people demand another asset of equal or greater value in return you dumb fuck.
Currencies most definitely die from time to time, that's what's happening now, this time, globally.
You might want to take a deep breath, and re-read my posts, both here and elsewhere...
In your haste to attack me, you have apparently completely misunderstood my position.
Of course currencies die, and ours is on its deathbed. But they don't just take one in the chest and die quickly on the spot. There is a lot of struggle, denial, and bargaining before it finally breathes its last.
Markets that mis-price assets lead to multiple "markets"...but only the phony one can be manipulated. The manipulations run into the wall of reality when it comes to assets that must actually BE bought and sold. Phony assets CAN and do go to zero. Real goods and services ALWAYS have a value in whatever currency you are using.
THAT's why you don't see deflation in the things you NEED, because those things ARE real things, and you must exchange something of value for them. As long as you are using a currency for that, its value will have a floor. Unlike the value of derivatives and swaps, which can and WILL become totally valueless.
When our currency does die, financial assets will become worth zero, and you can have all you want for free. But you'll still have to exchange something of value for food, medicine, and the things you NEED.
So, the deflation you say you aren't seeing is there, it's just that it is being manipulated for now in the phony market so those 'investors' don't have to take their losses, and is held in restraint by the supply/demand realities of the real market.
And please note that I have refrained from returning your insult, and calling YOU a dumb fuck.