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Why Deflation Is Unlikely
Submitted by Alasdair Macleod via GoldMoney.com,
Financial markets are becoming aware that the US economy is stalling, so investors increasingly take the view that with demand likely to stagnate or even fall, prices for goods and services will soften. This is already threatening to be the situation in a number of other advanced nations, with negative interest rates to combat it becoming commonplace. For this reason, gold and silver priced in dollars are expected by many traders to drift lower.
Putting the prices of precious metals to one side for a moment, there are some serious issues with this analysis. Let us assume for a moment that the US economy does stall; the text-books tell us supply and demand for goods and services will rebalance at lower prices. This was what effectively happened in the wake of the Lehman Crisis, when energy, metals and precious metal prices all fell sharply and large discounts for manufactured capital goods became available. This does not mean that second time round (and a sliding US economy could create the sort of financial strains that make Lehman look like a walk in the park), the same thing will happen again. Indeed, for next time the central banks already have a plan to contain the situation based on their experience in the Lehman Crisis. It involves the rapid expansion of money, which to the Federal Reserve System ("Fed") at least has been proven on recent experience to have little or no inflationary consequences whatever.
We therefore know something we did not know in the wake of August 2008, when the imminent collapse of the global banking system drove everyone to increase their cash balances. This time we know that last time's guarantees of $13 trillion, or whatever sum you care to think of, will yet again be provided by the Fed, backed by hard cash on demand. Forget bail-ins; they are for dealing with one-off bank insolvencies, not a wider systemic crisis.
Of course it's tempting to think that a new financial and economic crisis will drive us towards selling anything we can for cash. However, this has not necessarily been the experience of previous monetary inflations: after printing money fails to raise the animal spirits, the consensus often expects a fall in prices, only for the opposite to happen. This was certainly the case in Germany and Austria after the First World War, when economic burdens from the combined destruction of infrastructure and wealth, the loss of productive lives, the end of military spending and the burden of reparations were all expected to overwhelm their respective economies. The result was people briefly preferred to hold onto their savings rather than spend. How wrong they were.
The political situation then was very different from that of today, but there was an important economic similarity. The rapid acceleration of growth in money supply failed to stimulate the Germanic economies in the preceding seven years. It's the same today. The mistake is the one identified by Frederik Bastiat nearly 200 years ago with his fallacy of the broken window. We see the dynamics of a failing economy and draw our conclusions from that observation alone. We disregard the previous monetary inflation, and we have yet to see the more rapid expansion of money and credit to come. This is why we do not anticipate the growing certainty that the purchasing power of money will fall and not increase, embarking on the same value-path as the German mark and Austrian crown in 1920-23.
If a financial crisis is to be averted, the best we can hope for is an economy moving sideways rather than expanding. But there are dangers to this hope, partly from markets that are dangerously over-valued, and partly from the limitations on further private sector debt creation. In short, we are living with a situation that is highly vulnerable to an exogenous shock.
Meanwhile, the prices of gold and silver reflect the deflationary view to the exclusion of the likely outcome. There is no doubt that many dealers believe that gold and silver are merely commodities, otherwise they would be chasing their prices upwards in a dash for cash. Future historians should be puzzled. Perhaps someone will write a history with a snappy title, such as "Extraordinary Popular Delusions and the Madness of Crowds."
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So many people ruining their lives with the barbaric metal.
If you listen to the constant pumping of gold & silver by the likes of Eric King and Jim Sinclair, I agree about people ruining their lives.
I'm glad I ruined my life buying in at $375 an ounce.
hopefully you've stacked enough to buy your way out of the gulag...
If you have allowed yourself to be incarcerated in the FEMA fun camp, you have already lost everything.
WAR is this ugly supply-sided narco-rabid capialism's broken window fallacy personified and in action.
Like clockwork in known history. First locally now attempted planet-wide.
Deflation would enrich the have-nots, thus not only unlikely, but now impossible. Big squeeze is on in the US on the middle class. Death by a thousand cuts.
Should make it life by a thousand tax-cuts, what?
https://www.youtube.com/watch?v=gTot6Wcz3-g
ive had this suspicion slowly becoming a conviction that the suppression of gold and silver prices is the singlemost deflationary force aside from ZIRP.
And these toolbags openly state that they are trying to create inflation - while monkey hammering the base of exeters pyramid
Gold and slver, money for millenia, will buy more goods in a deflationary crash where money becomes stronger.
The rise in the buying power of gold and silver can therefore be read as a sign of deflation or inflation.
Gold and silver are not rising strongly now in dollars as the price of gold and silver is set by trading paper so no real coclusion can be drawn from the paper prices until physical shortage breaks the paper market.
John Exter warned that a deflationary crash would be followed by currency failure (hyperinflation) if dollar redeemability for gold iwas severed, as it was in 1971.
"You best start believin' in Deflation; you're in it..."
The answer is simple, because the greed isn't going to end until everyone on this earth realizes they are working for NOTHING!!!!
Aside from the obvious Wall Street quote, the real world works under the concepts of greed and fear, and the colors in between.
THAT is pure capitalism and that is the best we've got. Allow me to give you an example. I need money and someone that lives 2 hours away in another county requests my services for the minimum price. Do I give it to him for the minimum price (greed) or do I ask for more because of the time to drive and the risk of being shafted and sueing & traveling to a far away court? (Fear).
In the 1930s, the response to the global systemic financial crisis was to outlaw gold as money. This came down by executive order and was eventually codified into public policy, i.e. it was against public policy (not law, there's a difference) to use gold for the consumation of contracts.
I forecast the same will be repeated in the next crisis, except it will be hard currency of any kind that will be made against public policy. Everything will go digital, and cryptocurrency will come back with a vengeance, because it's time will truly have arrived. Further, I forecast the controllers of this world will ultimately fail in capturing all commerce through digital currency.
I am Chumbawamba.
Sure, pal, sure. Meanwhile, imagine the bagholders thanks to your busom buddies King and Sinclair, et al., who bought Au at $1700/oz.
silver is surging tonite.......up 3 pennies as of 6:11pm
Fuck you and fuck the horse you rode in on.
He was just making a bang the headline joke at ZH' expense. Relax, tiger.
"Meanwhile, imagine the bagholders thanks to your busom buddies King and Sinclair, et al., who bought Au at $1700/oz."
I sure hope you didn't listen to them.
Fucking Sinclair, Eric King, Rick Rule, Sprott, all lying self serving only motherfuckers.
... too bad about that incident with the boat ..
Buy low, sell high ... rinse and repeat. It's what we all should do.
Preferably without pretending we're Galts though. Speculative games don't become any more productive for being done with shiny metals.
If you're buying to sell, you're trading confetti, not metals.
Thanks for not buying!
Exactly. Why would you choose something which has been solid as a rock for six thousand years and not TWTR?
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://goo.gl/e4mV9C
I suck cock for Crispy Cream doughnuts. THAT has totally changed my life.
Damn really?? How much do you make?
He's probably getting only the "cream." The doughnuts are sure to follow, though.
all the sour-heads bitch about the price of PMs. they want them to pay off like their stocks and bonds. they want quick turnover and profit because money is their god.
I hold PMs primarily as insurance and as a protest. Watch the whole world go mad for the love of money. it's sickening. is it any wonder the Diamonds and the Blankfeins of the world pull their puppet strings?
doesn't anyone understand that ones values determine ones character? but character matters for little when you choose to swim in the pool of greed while complaining about the central banker's urine.
Jews in Germany who had gold were able to escape to safe countries - Jews without gold got gassed.
Have you ever met a Jew without gold?
bernanke?
LOL. He probably has a big secret stash. He's a proven good liar.
I'd love to know how much Au Bernanke owns. I'll bet it's quite a bit. I think I saw the Bernank on one of those Alaskan gold dredges, the Eroica as I recall.
Mmm, she has a great rack, crazy though..
I had a Vietnamese friend who was a young girl when Saigon fell in 1975. Her father was an officer in the South Vietnamese officer and had invested in real estate. His wife always believed they should have stockpiled their wealth in gold, not land and buildings. When they fled, they were dead broke.
Lesson to be learned.
This is a results oriented economic cycle.
There will be a short period of deflation resulting in panic amongst the central bankers resulting in huge money expansion resulting in inflation at double digit levels.
"Indeed, for next time the central banks already have a plan to contain the situation based on their experience in the Lehman Crisis. It involves the rapid expansion of money, which to the Federal Reserve System ("Fed") at least has been proven on recent experience to have little or no inflationary consequences whatever."
Of course there were no inflationary consequences, none of the money made it into the economy. It went into bank vaults, stocks and bonds. derrr...
Exactly.
All the printed dollars went to stop all of the TBTF entities from calling each others debts to one another (AIG would have rippled through all of them). They now had access to all the free FED cash to keep paying the interest, they owed each other, while at the same time they sure as hell went after the loans that they made to main street (you see if you lose money for the year, there usually is loan covenant allowing the bank to call your loan even if you can the interest for years to come). Main streeters either failed, or paid them back, and now are reluctant to get in the same position to these parasites. So now you get low capex from Main Street, and QE money keeps stacking up at the institutions that have access to the Fed money. Now what to do.....well better do something with all that money acting as an asset on the balance sheet, so might as well buy stocks or loan it to Fortune 500 firms for pennies on the dollar, and let them buy back their own stocks or perform M/A activity.
I guess to sum up, I am getting really tired of these financial circle jerkers and their games!!!
Thanks for clarifying that. LOL
I think you're exactly right.
Since 2008 my main goal is to eliminate debt as quickly as possible. And I mean ALL debt. It took some doing; first I had to make sure we had plenty of food and water on hand, then started doubling the lowest payment. Once it was gone I started to apply that money to the nexty lowest payment. Then that was combined to the next.
I'm at the point where I'm paying my mortgage on a bi-weekly basis. My schedule says it should be paid off in April 2018 if the world lasts that long.
I did stash up on silver back when it was $4 and kick myself for not buying enough gold when it was $300. At that time I was earning enough to be able to buy pounds of it. But I didn't, and I regret it.
To me, paying off debt is the equivilent of making a return on that interest rate. My car was at 11%, so I made 11% interest by clearing it out. My home is at 7.5%...so now I'm making 7.5% interest on my money by paying it down. And my hoime is the last debt instrument I'm involved in. Once it's paid off ALL dollars are mine and I can significantly invest in gold/silver/tin cans of food/full metal jacket lead.
I'm so looking forward to the day I don't owe anything to anyone (other than normal bills).
Man - that's a tough call - debt (CHEAP debt, that is) is your friend when inflation (let alone hyperflation!) hits.
3% debt is a beautiful thing when your earnings, interest rates, and value of tangible things are rising at double digits.
Just sayin'...........
Bilbert some truth here. If the debt is held in the inflating currency. Some Argentines in the 90's inflation, refinanced paid off property, immediately converted the pesos to USD and paid off the mortgage with a profit 2 years later.
Hey Old-- I think you'd be better off holding onto some of that debt and buy ounces. I'd say equal dollar amounts in Au and Ag. There will probably be a brief period, as in Argentina, when you can pay off that debt from the ounces and be way ahead.
Not that I have been able to do that...
Kudos OP. Try doing that when you have kids back from college that can't find a job.
Actually, I do have one living here currently.
He is some sort of coffee king to bazillions of freeway afficiondos. I don't undestand it, he rejects modern life to brew one owns coffee, tl pay five dolars for a shitty coffee.
Hail, Fogers.
@will work for food; Am I an asshole? I paid for college for my two boys on the condition they get science degrees (they have known since junior high that I would not pay diddly squat for a liberal arts degree) . One is now a physicist and the other a food scientist (also a teamster). Neither one had a chance of following the lies of a college counselor. Parents ignorance and gullibility set many up to become parasite lunch.
In any future crisis investors could be locked into the asset classes by central banks imposing penalties on holding cash on current accounts. Any rate of negative interest on current accounts could be theoretically possible creating a powerful new class of taxes akin to an outright confiscation of cash. I am not so sure that it will be any longer possible in a future crisis to convert assets into cash. Central planning may have arrived in the investors world.
If you could actually print wealth, we could all be fabulously wealthy forever without ever having to work again.
It is precisely for this reason that fiat money has a 100% failure rate.
When "certain countries" have a national debt of $18 trillion, it's no wonder currencies fail; or, confidence in said currency whithers away.
Therin lies the inflation, hyper. All deflationary speak is short sighted.
For all important asset classes hyperinflation has already happened. 100+ year charts prove this for U$D, gold, crude oil, coffee, US bonds, etc.
You might be right but I get the feeling we ain't seen nuthin' yet.
Yes, but it is only 100% failure rate...this time is different...........
<<< Deflation, defaults, and depression
<<< Further inflation, MOAR Cont+P, hyperinflation
Either way, a bust (or woar) is on the way. Which route will we take?
Both.
How about both? Deflation, then inflation? I can see things breaking, a credit crunch starts to set in, then they print like the wind. Anyway, I've been getting beds ready today for the garden. It's time to plant!
Exactly.
It's called: "Ka-Poom" Theory...
May you live in interesting times.
It's going to be a fun year.
The US economy IS stalling; people are buying less as overcapacity and oversupply ramp up. Many big box companies are in decline. The Fed stopped a banking crisis, something it didn't do in the 1930's which led to a large number of bank failures taking with them everybody's money. And then depression. Right now we ( and the world ) are in uncharted territory. The Fed will get either praised or pummelled depending on the outcome. IMO, the forces of deflation have been slowed and confused but demographics trends are depressing and deflation is here to stay. The Fed's actions over the past few years slowed the destructive deflationary impulse but the basics haven't changed. Fed stimulus was directed toward speculation, a lot in real estate.
Look at a chart of the Fed funds rate over the past 50 years. The cycle peaks occurred on a sharp downtrend line and then hit zero. So, other than tinkering with the real economy what has the fed accomplished, outher than slowing deflation ?
Stalled and stalling indeed. M2V @ hisoric lows
https://research.stlouisfed.org/fred2/series/M2V/
Unless you live in the financial sector of course
We are not in uncharted territory, we are in the territory established by the market crash of 1922; which was "fixed" by easy money policy and rapid speculative credit expansion -which led seven years later to the 1929 market crash of even more epic proportions and finally caused the bank failures of the '30's.
So, this new generation of 'brain trusts' proclaims "we dodged a great depression" by misdiagnosing the issues and enacting the same policies that actually Caused that depression in the first place. And oh look, here we are seven years later....
Fed policy after the 1922 crash led directly to a worse crisis in 1929; this time it is unimaginably worse, backed by a tidal wave of fiat and a cradle to grave (do not pass Go) welfare culture.
Please, please! Such negativity.
The economy, like Gaia Mother Earth, is RESTING, before the GREEN SHOOTS burst forth! Any minute now!
Aggressive waiting would appear to be the best strategy here.
At least we have from Mr MacLeod a counter to James G. Ricktards's statement that the Fed will not be able to double its balance sheet next time and will defer to the the IMF who has the only "clean one". Both absurd notions IMO- As A.M says they can print all the ****ing money they want.
Deflation will hit first when the big bubbles are finally popped. Businesses carrying record high inventories will need to sell them at fire sale prices to cover the massive amount of debt they took on in stock buybacks. The same for the banks who will need to cover their huge derivative bets. The fed will rush in with free money, but this time they will have a hard time quelling the fire - which will reach main street.
Once confidence in the almighty fed and dollar starts to fail, then we'll see inflation, and plenty of it.
US economy is Stalin.
“Future historians will be puzzled.”
Really, is that all? Their reactions will be many varied-colored: like, dumbfounded, shocked, flummoxed, entertained (in a dark sort of way), ashamed – I mean, if any Americans survive the destruction of their country.
I recently examined a Financial Report of the US Government… did I ever uncover a pile of… well, I found a few confusions and confessions and accounting fairly tales.
I found, for example, that the GDP includes components that subtract from production; that government accountants made 75-year projections as if the government would not pay interest on its debt instruments during that time.
And then there were street gangs and drug cartels, the government’s role in arming, protecting and forming alliances with such gangs and cartels… and a dozen or so other items. They all point to a conclusion that a vast operation is being perpetrated… I began this Part 2 (of my examination) with the question, ‘What financial shock do Judeo-Bolsheviks plan?’ Do they plan to inflate the dollar to zero… repudiate the federal debt… Issue Treasury bank notes… perpetrate a mass genocide of Americans?’… And, how do China’s ghost cities fit into this unprecedented operation?... I would like to think that Americans could stop this horror; but, I don’t think it’s possible. They have been conquered by a lethargy induced my medication, an ignorance molded by indoctrination, and a corruption brought on by a mania for dope, foul language and perverted sex. Please read more…
This is located in Zhengzhou, capital of Hanan; a ghost city (above) within a real city; complete with a penis-like structure rising in the center of it – an object of worship in the religion of Baal, an early version of Judaism. (Image Source: Mysteryoftheiniquity.)
You missed a few reactions:
Gobsmacked
Bulloxed (comes from oxen testicles)
Mindfucked
Looked up history if gold in crisis (gave me American pt of view)
Has good explanations of what gov is doing as prices change over time.
http://useconomy.about.com/od/commoditiesmarketfaq/a/Gold-Price-History.htm
I guess if you believe that the bubbles that have been blown have not and will never need to burst, then you don't need to worry about deflation. A bursting bubble deflates after all.
Not to mention, the only reason gold got to $1900 was due to the incredible amount of money printing we've already experienced (plus some fine pumping and dumping by the likes of Sprott and the other pm pushers).
But those very simple facts are still too complicated for the average stacker, so expect many more ruined lives to come.
A fool and his money are soon parted, as true as it ever was.
In at $600 and $11 yes I'm devastated. I'll sell when I need the money win or lose.
WTF do these central planner clowns measure their "inflation" (price inflation, presumably!?) IN????
Not housing...."no bubble" they say.
Not "education" or "health care"
Not taxes
Not energy or food "too volatile"
Not financial asset prices "no bubble there"
What is it? Apple i-gadgets, fashion clothing and quad bikes and not a hell of a lot else...
"People will resort to putting their money in savings"
What Money? People are living paycheck to paycheck!
@nobody; you said people will put their money into savings. They do not have money, because money (gold and silver) has value as opposed to currency. Money is savings. Currency is a medium of exchange but does not have value. Money and currency are not the same thing. Fractional reserve banking and usury result in inflation and the day faith is lost, hyperinflation begins. Usury used to be a mortal sin but now is not.
The day will (soon) come when a single aluminum beer can has more buying power than a paper US dollar.
Unfortunately, Chase will not let me store crushed beer cans in my safe deposit box.
yeah right, the gold bugs who were screaming from the rooftops that gold was going to $50,000 an ounce and who claimed to be buying every paycheck never bought an ounce at anything higher than the price from 15 years ago. Riiiiight. So you all bought years ago, and have never bought another ounce. Riiiiight.
No need to lie to save face boys, no one belives you anyway.
Typical behaviour from people who make bad trades. Denying reality is a bad way to go through life.
Love the guys who say they are in at $375. So you either owned from 1970 (and never added an ounce since then), which is a freaking horrible ROR over 45 years, or you claim to have never bought gold before or after the bottom around 2000. Even if true (lol) still a mediocre return over 15 years compared to many other real assets that actually pay income and or dividends.
Fucking laughable. At least try to make your bullshit claims somewhat believeable guys, please.
WTF are you talking about? Gold's rate of return since 1971 beats the stock market even counting reinvestment of dividends.
How much your house worth asshole ? And how much did you pay for it ? I know you bought the FUCKEN dip 30 years ago... Fuvk off already.
$375? I bought gold futures in 1997 for $250. U dont know what your talkin about,.
Govts around the world are doing everything possible to collect more taxes, to pay their own pensions etc. There is just no limit, fatca is the worst Act ever, is destroying the global economy. If fatca doesn't convince you what the future holds, read the stories about cops "confiscating" cash from anyone (even $10 bills if they can get it. All of this hunting for money is deflationary. Gold will go up in price after confidence is lost in govt. It may be awhile.
Deflation is already happening:
http://bpp.mit.edu/usa/
I just stocked up an another Harley for the old lady. I needed to diversify my assets. I probably should have bought more coins and such but I just did that yesterday. I don't know how wise that was but it is the same engine and transmission is so means less parts on hand. It has stock pipes but she is terrified of the sound.LOL Mrs. M was not terrified of buying leather though and that is the part where I got terrified. I like my leather jackets and they last forever so that is an investment too. I didn't buy anything with an HD logo so that helped but still it rocks your wallet. Mrs.M looks good in her leather so that part works. She was the one who told me she didn't want to ride bitch and wanted to ride herself. Alright woman, here is your iron.;-) I scored a good deal on the bike so I figured why not? I hope I don't kill her because I do love her but if if you are going to do somethign then do it right and quit fucking around. The Honda can sit in the garage for a while but I still like that bike too so go figure.
I know that I should not be doing this shit but fuck it. I hate things that have .gov titles but since no one has figured out how to effectively privatize roads we are pretty much forced to deal with the statists and pay for it. A person damn near needs a motorcyle these days so that he/she can weave in between the potholes.
Nothing wrong with some diversity. Just about anything except paper money will cost more in the future.
We went to the local museum parking lot/maze of an entrance which was closed and she drove around and got used the feel of the bike. No traffic. I just sat there an let her practice. Feel the bike and what it was meant to do and don't fight the torque the Evolution engines want to provide. Mrs. M did really well. She can handle that iron. I just sat there on my Harley smoking cigarettes on state property and let her ride around. Every time she came around the loop I would give her a thumbs up. She even got bold and tried second gear.LOL That's pretty good really and it is the right bike for her. Practice, practice, practice.
I hope it works out because you do meet some cool folks when riding. It does not matter what brand of bike per se. It's like a brotherhood or sisterhood, whatever you want to call it. Kind of like ZH in a way. She will learn what it means to come out of a turn/curve and lay that throttle wide open; there is no other feeling or sound like that in the universe.
Someone or bot doesn't like Harleys
So when no one spends, prices go up? Better get KRUGMAN to explain that one. Yellen would also work too.
This is sort of on topic and interesting development. Is the new fee/tax the real motivation?
http://www.marketwatch.com/story/australia-cracks-down-on-foreign-proper...
LOL
Australia is a natural diversification, dollar dumping ground, for Asians, especially the Chinese. The Australian pols, crats and banksters are scared shitless. Rightfully so.
Unfortunately for the Australians, proximity will reign supreme when the west falls a few notches with the dollar collapse and SDR conversion.
Australians better read up on Chinese culture, and get some basic Chinese words into their vocabulary. Better learn to bow as well. West coast of the DC US better do so as well.
Liberty is a demand. Tyranny is submission.
nat'l assoc realtors probably has a class.
Deflation could happen if the US tried to reign in spending and balance the budget. But does anyone think we are ever cutting Welfare or Medicare or Obamacare or defense or payments/interest on the debt? Nope! Because the US will continue to spend, only inflation or devaluation will happen.
I have bullion and cash coming out of my eye balls and no debt - so you know where I am coming from.
Do nothing what the Authorities suggest. Hold everything that the Authorities attack. Most recently, I deposited $2,500 in cash from rents in Warren's bank and was charged $2.50 for the privilege.
Action taken: Changed banks.
Next action to be taken: Retain all cash and substitute a check from savings to cover it.
The newest attack is on cash. Open your wallet and read what is printed on the bill: This note is legal tender for all debts, public and private.
"They" want you to hold only electronic money, which they can tax with negative interest and fees. Get smart. Get out of the system as best you can.
Your ability to liquidate your savings into cash or meaningful kind is going to be restricted.
Have thing to barter, like food and energy and other necessities.
Think this way: If the Internet and the Credit Card System went dark at 12:01 AM, how would you be fixed for survival when you wake up.
When they flip the switch, it'll be everything. All communications of any type (internet, cell phones, landlines, maybe even RF) and large portions of the grid that rely on commercial communications as well.
I have been studying monetary-inflation ("printing" or "expansion") and it's conjoined twin, price-inflation (inflation)--incessant (mild) to hyper--since I was 16. I can assure anyone that thinks the DC US won't have supernova-inflation, is barking up the wrong cactus.
Let me summarize: Inflation, all levels of it, is always caused by "printing." Whether in the form of paper and ink, digital 1's and 0's, bank credit, etc., expanding the money supply against a certain fixed--at the moment--production always creates price-inflation. Always.
"Printing" first leads to, "eats," the economy's productivity gains, then further printing leads to price-inflation. Eventually returns on capital and labor are adversely affected, but most remain unaware of the cause.
Post Bretton Woods, governments cooperate with each other and manipulate exchange and interest rates so as to forestall the effects of inflation. Eventually, like a damn holding back a deluge, the pressures will get to high, and the printed lucre will wash away the damns and flood the valley from whence it came. Only those on high, hard assets, ground will have a chance.
When the dollar damns collapse and inundate the DC US where they originated, the DC US will, like a collapsing star, suck in all the dollars printed over the past many decades, and then explode into a supernova of inflation the world has never seen before.
Liberty is a demand. Tyranny is submission.
How does one price public companies in that scenario?
Inflation and deflation complete a cycle.
Burst credit bubbles are deflationary. 100% of bubbles burst and deflate. It is a mathematical fact.
"Post Bretton Woods, governments cooperate with each other and manipulate exchange and interest rates so as to forestall the effects of inflation. Eventually, like a damn holding back a deluge, the pressures will get too high, and the printed lucre will wash away the damns and flood the valley from whence it came. Only those on high, hard assets, ground will have a chance.
When the dollar damns collapse and inundate the DC US where they originated, the DC US will, like a collapsing star, suck in all the dollars printed over the past many decades, and then explode into a supernova of inflation the world has never seen before."
+ 100
Well done, and with such linguistic flair!!
Wish I could have given you more.
Thanks.
Other than trying to induce people to think, not agree, but think, I am trying to learn how to communicate and write better.
Mostly here, I am able to distill an idea down to its basics, and then when I am talking to some sheeple, the idea comes out well formed and coherent.
But however, I, you or anyone else conveys the message, it above all needs to be conveyed. The American sheeple just have no idea what that light at the end of the tunnel is. It's rather sad.
I do hope that you are out talking and "shaking" people whenever and where ever you can.
Liberty is a demand. Tyranny is submission.
Actually I am - immediate family are all on board and positioned accordingly.
Close friends also informed - it's when it gets to co-workers and neighbors, one has to be clear, and as you say, well focused.
I also start REAL slow - it's unsettling how few even know we are in seriously fucked up times.............
Campaign finance reform (or lack thereof) is a good place to start, as very few are even aware that giving money is now "Free Speech".
Your study leaves much to be desired. Hyper Inflation is the product of loss of productivity not printing. Go do some more study.
deflation is already happening
immigrants add to GDP so multiply the number of immigrants in the last (whatever time span) multiply by whatever estimate of GDP per head and then subtract the total from the "growth" figures over the same time span.
all the western economies are in a deflationary spiral already
(and mass immigration makes it worse as after the initial GDP bump from having more people the deflationary effect from the downward pressure on wages kicks in)
actual money supply = nominal money supply * velocity of money
so if the velocity of money is going down fast enough (via the destruction of the middle class) it can outweigh the inflationary effect of printing (for a while).
Could you supply some units for that equation please. It makes little sense to me.
pouring more water into a leaky bucket - deflation and inflation at the same time
I have to dissagree deflation will come!!
"Why Deflation Is Unlikely"
Last time i checked, a cycle had an up phase and a down phase. The down phase of the inflation/deflation cycle, is deflation.
It is never different this time.
Here, the author makes it clear:
"This is why we do not anticipate the growing certainty that the purchasing power of money will fall and not increase, embarking on the same value-path as the German mark and Austrian crown in 1920-23."
Got it?
Go on, be naive, CRIMINALS ain't manipulating the price for nothing!...
No time like this ever!...The Precious, ain't going away!...Watch that dollar though!
gettin it when i can and so should you
"Go on, be naive, CRIMINALS ain't manipulating the price for nothing!..."
ALL commodity prices are dropping. Not just gold. I am not naive. The ones who were naive, were those who thought gold was going to rocket up through $1,900 an ounce and keep going to $5,000.
Gold is not going to drop forever, any more than it went up forever.
"I suck cock for Crispy Cream doughnuts. THAT has totally changed my life."
a thousand thankyou's I was in desparate need of a laugh
"Meanwhile, the prices of gold and silver reflect the deflationary view to the exclusion of the likely outcome. There is no doubt that many dealers believe that gold and silver are merely commodities, otherwise they would be chasing their prices upwards in a dash for cash."
There is nothing that is merely a commodity. Copper goes into power cords and plumbing. Aluminum goes into soda cans.
Demand for commodities has declined, in a deflationary environment. Deflation is the outcome of inflation.
A cycle goes up- inflates, then goes down- deflates.
Gold inflated to $850, then deflated to near $250.
Good Christ, enough of these simpleton goldbugs!
I know, next a really angry piece from some sad hump from Sprott.
Deflation? Not as long as they can creat fiat money with the flick of a switch.
The velocity of money is falling through their destruction of the middle class and as the velocity of money acts as a multiplier their destruction of the middle class is counter-acting the printing.
edit: I'm not saying htis has anything to do with the gold price btw - that's obviously being rigged because if they let it float it would go through the roof and the dollar would die the same day.
"If a financial crisis is to be averted, the best we can hope for is an economy moving sideways rather than expanding"
An economy which is .......moving ?..... sideways.....?
And expanding..... is not so good ?
Great !
Stop the printing money is the only right answer.
Stabilize the Dollar and the euro ( F.A. Hayek).
Buy gold as a collateral for paper, just like Putin is doing !
Its just the next war usa and its vasals are losing.......
The gold price and the presence or otherwise of deflation in the economy aren't currently linked because currently flight to value has become flight to the least anti-value so if the banking mafia let the gold price float it would go through the roof and kill the dollar overnight.
Hence the gold price being rigged.
So there's no need for panicky articles denying deflation.
An article denying deflation by someone trying to sell gold. No conflict of interest there.... The fact is that deflation is exactly what is in store, and anyone who knows a rats ass knows it. In our current monitary system the lions share of money is debt. Whe the economy fails, much of that debt will be defaulted on and as a result huge amounts of money will dissapear... when money disapears it is deflationary. In the last deflationary emergency aka 2008, the FED droped interest rates 4% to stimulate borrowing. Today interest is at 0% and the FED is out of bullets.