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90% of the Developed World Has Eased … But We’ve Still Got Deflation?
What should we make of the fact that core inflation in the U.S. is just as low as in the Eurozone if measured on the same basis? (Can you say "depression", boys and girls?)
David Rosenberg – former chief economist for Merrill Lynch, and now chief economist for - comments:
I don’t know whether to feel good or uneasy about the fact that 90% of the industrialized world economy is now anchored by near-zero or negative short-term rates. At one level, this should be supportive of risk assets; at another level, it is a symbol of how fixed-income investors and central banks see the world — deflation at a time of ultra-low rates is certainly not a confidence builder.
Remember, quantitative easing actually leads to deflation in the long-run.
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Income correlates with demand
Income correlates with demand
Income correlates with demand
Once you fully understand that virtually ALL MONEY is LOANED into existance you will understand what has happened and what is now happening.
Is there any segment of the economy whos future looks so bright, and more importantly sustainable enough to lend billions or trillions into? Hell no!
Banking/finance has been borrowing/lending to each other in an epic circle jerk in an attempt to make up for lost lending opportunities but that only serves to concentrate "wealth".
War is a great opportunity to make mega loans and that is what will happen if need be.
So to avoid war we must all take out lots of loans and "GO SHOPPING".
Bailouts are coming .... student loans, upside down car lans, Detroit type city bailouts .... backdoor QE cometh
Detroit did not get bailed out they had a city emergency manager who gave creditors haircuts and reduced pensions. You must mean General Motors not the city itself. Obama knows he can count on their votes no matter what -- it's the color of the skin still and not the character
Well, Duh! As the world deflates their currencies, interest rates turn negative, prices rise, and consumers have less disposable income. In the end, demand for everything other than essentials declines, and prices have to drop to maintain sales. The 1% who are benefiting from the currency deflation cannot sustain the economy. Why can the central bankers understand that?
The deflation is the natural course of our monetary system at this point, it wants to destroy itself. The only control the central banks have are in the opposite direction. Eventually they will go to far and velocity will pick up causing inflation. This is the best explaination I've seen:
http://www.debtcrash.report/entry/history-and-introduction
Starts off slow but certainly worth the read.
Saying that quantitative easing leads to deflation is exactly the same as saying that inflation leads to deflation. Quantitative easing IS inflation because inflation is an expansion of the currency supply. A possible effect of that is a greater general or specific increase in prices, but that can only be understood in the context of the alternative, all else equal. In pther words, due to QE, prices are higher than they otherwise would be, and some are more affected than others.
Most of the inflation has flooded into equities and bonds, but it's also visible in food prices (especially beef and corn). Of course, the CPI itself understates the effects of inflation. But deflation and it's effects will occur to the extent that central banks expanding credit, as the Fed (temporarily) has. Deflation would naturally occur in a bust, but the Fed is delaying the progression of the recession and business cycle because prolonged deflation would collapse the debt-based monetary system. They lose their power far quicker that way than through inflation.