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Deflation Works!
Submitted by Bill Bonner via Acting-Man.com,
The Coming Resolution
We’ve been exploring how the credit bubble resolves itself. Inflation? Deflation? Are we locked in to a long, long period of stagnation, slump and economic sclerosis?
Yesterday, we shared our research department’s forecast for the short term: Based on simple regression-to-the-mean logic, it suggests that the “most likely” course for US stocks over the next three months is a loss of more than 6%.
Today, we give you our long-term forecast.

Where the global economy is after decades of failed attempts to centrally plan it in order to protect powerful established interests from the consequences of their folly.
Image credit: Sony Pictures Television, Warner Bros. Television, Scott Free Productions
Little by Little or One Savage Blow
“This is the most negative ever,” says our chief number cruncher Stephen Jones. It shows a loss of 9.8% every year for the next 10 years. In other words, our mean-regressing-, debt- and demography-adapted model also seems to be pointing to a long depression.
But an average loss of 9.8% per year over 10 years can happen in a number of different ways. Little by little. Or in one savage blow.

The Bonner&Partners long term market indicator – well into the red zone
A foreshadow of the long depression crossed the planet like a total eclipse of the sun twice in the last 100 years.
The first time was America’s Great Depression. You know that story. Stocks crashed. Businesses went broke. People lost their jobs. Banks failed. Events were following the typical depression script, which probably would have bottomed out and recovered within a couple of years – as happened in the Depression of 1921.
But then, the federal government stepped in. It froze prices, including the price of labor. It cut off trade. It blocked liquidations. It arrested the progress of the correction.
Murray Rothbard analyzed the policies of the Hoover and Roosevelt administrations in his 1963 classic, America’s Great Depression. He showed how government, trying to stop the Depression, actually prevented it from doing its work.
The short, quick deflationary shock – which should have slashed bad debt, bad businesses and bad investments – turned into a long, agonizing slump. The Depression, which should have been over by 1933, continued until the 1940s and was only ended then by the biggest public works spending program in history – World War II.
This, by the way, did not actually make people better off economically, but it “put people to work” and largely disguised the drop in living standards which that war and the Depression had caused.
The second long depression was in Japan, following the crash of its stock market in 1990. It has now been a quarter of a century since that crash. Japanese GDP has scarcely advanced, as you can see in the following chart:

Real GDP growth comparison. We wonder how realistic these data are, as Japan’s GDP was far stronger in dollar than in yen terms. It is certainly difficult to argue that Japan is impoverished, as it remains the world’s largest creditor nation. However, there can be little doubt that the government’s deficit spending and money printing sprees have severely undermined Japan’s economy – a reckoning is undoubtedly on its way.
And the Japanese stock market? From a high of nearly 40,000 in 1990, the Nikkei index now trades at around 20,000. It’s taken 25 years to claw itself back to a 50% loss!
The Nikkei 225 Index: still 50% below its bubble peak of 1989 – click to enlarge.
Japan Is Running Out of Time and Money
The blame for the longevity of the depression can be placed squarely on the government. To this day, it continues to meddle in the economy – essentially forestalling a genuine cleanup of bad debt.
Instead of allowing the bad debt to be written off and reduced, policymakers have added more and more debt over the entire 25-year period so that today, Japan’s government is the most indebted in the world.
And now Japan is running out of time and money. Its aging population is no longer saving for retirement; now retirees expect to spend those savings. This means that the government can no longer count on financing from Japan’s savers. Now it must return their money.
But how? It has no money to give them. Like the US, it has been running budget deficits for years. Japan’s economy is in a crisis. It’s been two years since the Shinzo Abe government began its stimulus program. But wages are actually lower today than they were when it began.
Japan, real incomes as of early 2015. “Abenomics” has so far dramatically lowered the living standards of Japan’s citizens, while inflating the stock market back to “only” a 50% loss since 1989. This is what Keynesians call “success”, judging from the fact that they continue to praise Abe’s hoary inflationism – click to enlarge.
And this is happening against a backdrop of falling labor supply; the labor pool is expected to shrink by 20% over the next 25 years. The main goal of the stimulus program was to raise Japan’s inflation rate. But you could multiply the last 12 months of price increases by nine and still not reach the government’s 2% target.
In the US, too, inflation has been disappearing as fast as good manners. In the last 12-month period, consumer prices were approximately flat. And that is despite a 400% increase in the Fed’s assets – the nation’s money foundation – over the last six years.
If that kind of money printing doesn’t cause an increase in the CPI, what would? We’ll come back to that question in a minute.
Global public debt to GDP ratios as of the end of 2014, via Statista. Japan is the world’s king of debt – click to enlarge.
Cheap Credit Keeps the Wheels Turning
If inflation can’t be counted on to reduce the world’s debts, what about deflation?
The feds fear it, loathe it and try to prevent it every way they can. But deflation works. It knocks down sales, prices and employment, forcing borrowers into bankruptcy. Then, their debts are worthless.
Alas, in a zero-rate world, the banana peels disappear from the sidewalks. It is almost impossible to go broke, default or fall on your face. Grant’s Interest Rate Observer told the story of one company: Radio Shack. The company lost the plot back in 2007, says Grant’s. The Onion satirized its chief executive, Julian Day, putting the following words in his mouth:
“There must be some business model that enables this company to make money, but I’ll be damned if I know what it is.”
But Radio Shack stayed in business – borrowing ever more money as its credit rating declined from BB- to D (or “junk”) over the following eight years. Finally, it bit the dust in February of this year.

Radio Shack: a case of video killed the radio star.
Photo credit: Coolcaesar
There’s nothing like unlimited cheap credit to keep the wheels turning – slowly. In 2009, a grim year for American business, 60,837 firms declared bankruptcy. In 2014, there were 26,983 bankruptcies.
What is surprising is not that there were so few, but that there were so many. When you can borrow for nothing… or close to nothing… why does anyone ever default? Of course, not all firms have equal access to the free money. The little guys go broke. The big guys stay in business. The economy stays alive, but on life support.
The big limitation of this system is that as the slump worsens, prices fall and real interest rates actually go up. That is, the feds may lend at zero, but if prices are falling, the effective, real borrowing rate may rise. The authorities would be “zero bound,” unable to take nominal rates below zero and unable to keep the real price of money at nothing.
Fed and ECB main central bank base rates (effective federal funds rate and ECB main refinancing rate). According to the central planners, capital is to be priced at zero. These destructive policies will eventually blow up the entire monetary system – click to enlarge.
A War on Cash
Until recently, it had been presumed that rates could not sink below zero. People would not pay for the privilege of holding cash in a bank or a bond; they would just take the cash and hoard it.
But all over the world, central governments have begun a “war on cash” designed to force people to use credit, rather than cash. The feds can monitor, tax and control credit. They can even force you to pay for the privilege of having it.
The European Central Bank and the Swiss National Bank already require depositors to pay for storing money. And beginning this week, JPMorgan Chase began charging depositors a “utilization fee” to hold their money.
Meanwhile, economists are advocating taxing cash or even, like Harvard economics professor Ken Rogoff, making it illegal. France has already made it illegal to pay bills of more than 1,000 euros with cash. And the US requires financial industry workers – such as bank tellers – to rat out customers by filing “suspicious activity reports” on anyone who comes in with what they consider an inappropriately large amount of cash.
Why the “war on cash”? Partly to control you. And partly to control the economy. If they can create a NIRP world – with negative nominal interest rates – they may be able to keep the credit flowing to cronies and zombies, maintaining the economy in a coma for many years.
Businesses that should go broke will have access to credit. Speculators will still make money. Governments will continue to print money and borrow it from themselves. The zombies will throw rocks and bottles every once in a while, but they will still get their cash and the system will survive.
Long, drawn-out depressions are caused by governments.
The politicians respond to today’s capital interests, not tomorrow’s. Today’s retirees vote. Today’s stockholders give campaign contributions. Today’s cronies control the power and money of today’s society. And all of them fear one thing more than any other: the future.
They all know they will die, and that the process of capitalism is creative destruction – today’s wealth owners must be stripped of their money and power so that tomorrow’s generations can take over. And that’s why government’s essential role is to look into the future and prevent it from happening.
This is just another way of saying that governments will always try to stop depressions, because depressions are creative destruction in action. Capitalism chops down today’s trees so that tomorrow’s saplings can get some air and light.
But trying to stop creative destruction does not stop the future. It just changes it. Instead of a dynamic, honest and growing economy, we get stagnation, economic gangrene and financial rigor mortis. Long depressions, in other words.

The end result of economic gangrene and financial rigor mortis: by continually preventing “creative destruction” from taking place, the authorities ensure that nothing will grow anymore. Instead, the comatose economy will slowly but surely transmogrify into the dessicated corpse you see above. The governments of the “free world” in action: looking at the future to prevent it from happening.
Image via engineeredfear.com
The Tipping Point Approaches
As we have seen, Japan has already had a 25-year slump. The US is now in Year 8 of its slump, with fragile growth at only half the rate of the last century. They could get better… or worse. Negative rates could keep the cronies in business. The slump itself – combined with peak debt and 500 million Chinese laborers – could keep inflation in check.
But the point comes when investors see that the risk of loss (because something can always go wrong) is greater than the hope of gain. That moment must be approaching in the US stock market. Prices are near record highs, even as the economy flirts with recession.
One day, perhaps soon, we will see stocks falling – as much as 1,000 points in 24 hours. Jacking up the stock market has been the Fed’s singular success. Activism has been its creed. Interventionism is its modus operandi. It will not sit tight as the market falls apart and the economy goes into recession.
Instead, it will announce QE 4. It will try to enforce negative interest rates. And it will move – as will the Japanese – to “direct monetary funding” of government deficits. That is, it will dispense with the fiction of “borrowing” from its own central bank. It will simply print the money it needs.
The US Fed of 1930 was not nearly as ambitious and assertive as the Fed of 2015. In the ‘30s, it watched as the economy chilled into a Great Depression. As Ben Bernanke told Milton Friedman, “We won’t do that again.”
It couldn’t if it wanted to. Back in the ‘30s, consumer debt had barely been invented. Most people still lived on or near farms, where they could take care of themselves even if the economy was in a depression. Few people had credit. Instead, they had savings. There were no food stamps. No disability. No rent assistance. No zombie industries. No student debt. No auto debt. No cash-back mortgages. And cash was real money, backed by gold.
The crash of 1929 – If/when something like this happens again, the Fed will intervene on an even grander scale than it has to date – click to enlarge.
Bogus Rehab and Claptrap Therapy
Today, a long depression in the US would be unbearable. The public couldn’t stand it. Six out of ten households live paycheck to paycheck. Can you imagine what would happen if those paychecks ceased?
Supposedly, the US economy is still growing… with the stock market near record highs. Yet, one out of every five households in America has not a single wage-earner. Among inner-city black men, ages 20-24, only 4 out of 10 have jobs. Half the households in the US count on government money to make ends meet. And 50 million get food stamps. What would happen to the cities – and the suburbs – in a real depression?
Individuals receiving food stamps – in the 6th year of the “recovery”, the number has declined from an all time high of nearly 48 million to 46 million – click to enlarge.
What would Janet Yellen do? Would she rehash the words of Andrew Mellon in 1929 to “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people?”

Fed chair Janet Yellen – certain to inflate all out when push comes to shove – and push will come to shove.
Photo credit: Reuters
Mellon was just suggesting that creative destruction be allowed to do its job. He was the last Treasury secretary to make such a forthright and honest comment. Thenceforth, Treasury secretaries and central bank governors could no longer accept the tough love of a free enterprise economy. They had to offer bogus rehab and claptrap therapy. They had to stop creative destruction. They had to “tell it like it wasn’t” because that’s the way people wanted it. They had to pretend to make a better world by improving the market economy.
Today, a central banker or Treasury secretary who let deflation purge the rottenness from the system would be dismissed before sundown. Too much wealth, too many reputations, too much power and status depend on the continuation of the credit expansion. Instead of a Mellon, we will have a Greenspan, a Bernanke or a Yellen. And we will soon find out whether Mr. Bernanke spoke the truth in 2002 when he said:
“We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”

Ben Bernanke – firmly believes in the quack cure of inflationism. These modern-day monetary cranks are essentially followers of the “John Law School of Economics”. It has never worked anywhere, but they think this means one must just do more of it.
Photo credit: Drew Angerer / The New York Times
Threatened with deflation, the authorities will want to turn the tide in the worst possible way. What’s the worst way to stop deflation? With hyperinflation. Yes, we may suffer a year or two more of sluggish growth… or even deflation. Stocks will crash and people will be desperate for paper dollars. But sooner or later, the feds will find their feet and lose their heads.
Most likely, the credit-drenched world of 2015 will end… not in a whimper of deflation, but in a bang. Hyperinflation will bring the long depression to a dramatic close long before a quarter of a century has passed.

Hyperinflation in Germany, 1918-1923. This is what eventually happens when central bankers “find their feet and lose their heads”.
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Geller/Wilders 2016
you won't make it to 2016
Don't worry, torpedos are Yellen!
Hyperinflation is good for stocks the last time I checked.
What a lot of contributors forget (or misunderstand) is that EVERYthing denominated in USD$ will skyrocket. The market will not crash like it did in 1929 because that graph demonstrates that the USD$ had some value. People were selling and settling in USD$. With hyperinflation the market will exponentially skyrocket because the USD$ wont have a value and everyone will avoid it (has little value).
Yields will spike, equity markets will spike, real-estate will spike (people with loans wont pay their payments because basic goods will be $100,000), MBS will implode, gold will obviously spike. All because everyone is avoiding the paper. AR-15's with the hollow tips will spike as well.
So...skyrocketing prices.
What's the theory on the impact to Corporate Earnings with skyrocketing prices in an over marginalized world?
You think hyperinflation will couple with zero% interest rates?
Just interest rates alone getting jacked will destroy earnings for many of the fortune 500.
Do you think the stock prices will get caught up in an inflation bubble even in a negative earnings environment?
What about energy/fuel?
Is it 'no problem' all costs will just trickle down to consumers who will pay regardless? Where will the over marginalized consumer get their money? Stock profits?
Its not an either/or scenario.
More likely it starts with a crash, and then as the USD loses value hyperinflation sets in (not good timing - capital flight, loss of confidence, just as so many nations are moving away from trade settlements in USD).
Then the people are in the streets and coming through your window - thats how they get their money & goods.
Happy Mother's day. Tell Your mom for mothers day the Central Bankers have guaranteed her enslavement for life. What a nice gift. One day to say thank you and 355 days to fuck her. Thanks Bernanke you Mother Fucker.
long gold marks.
Long Wheelbarrows!
Best Monopoly token ever!
I prefer just cutting to the chase:
What is "The Coming Resolution"?
It's "the biggest public works spending program in history – World War III".
Infinite Energy through PPM is the only answer, we have got to stop the globalist F A S T !!!
Hyperinflation will bring the long depression to a dramatic close long before a quarter of a century has passed.
Y'er kidding ... right???
Hyperinflation will end "it" alright... Permanently!
Those who predict that banks will be obsolete
within 20 years are prescient... in more than one way
when I read lines like that.
That body looks like something out of a scene from the scifi horror-thriller "PREDATORS"
And here's what you do to Berzerker Predators...
... here's what you hafta do.
Got stamina?
If you go back to the 30's and look at the economy it looks a lot our economy right now...except for the markets. All the FED has done is prop up inefficient and incompetent banks and businesses. The real problem is they have badly deformed the entire system, and the longer they do it, the more warped it becomes. Next time, we won't have a crash so much as a collapse.....
The bodies of central bankers shall be hung from the ruins of Wall Street for years to come.
I prefer the methods of Ivan the Impaler.
Yay, the dream of Hyperinflation is back!
After being wrong for 7 years about its imminent onslaught, HI's onset has been moved out another few years. Smart move, it's easier to not look silly moving the goal posts if you leave "a few years" in there.
The expansion of the monetary base will make it's way to higher consumer prices and already has if you actually calculate the cost of goods needed by the broader population. That expanded monetary base has been going into the art market, stawks, and high end real estate. There is inflation everywhere as it relates to the monetary base.
Colonel Janet Yellen won't allow this to happen unless she is expanding her TPP operations.
Isn't transparency grand?
The whole fucking show get started in 1913.
Long live Amerika
Amerwrecka
I think this is closer to our geat depression and we will never see a Weimar Republic type situation as things are much different than that scenario. Things are headed in a bad direction but I just don't see hyperinflation happening because the people dont have the money to create that.
Shh.....you will disturb those who don't know that you need wage inflation and/or consumer credit to go thru the roof to get hyperinflation.
Neither of which is possible.
And you need wheelbarrows, that are filled with FRNs that are not exactly cascading down upon the beleagured heads of the middle classes who fund the 1% and the poor.
Inflation = counterfeiting by the money printer. Hyperinflation = loss of faith in the counterfeit paper. It's a huge mark down of debt. When it becomes apparent that foreign debt holders aren't going to get repaid, hyperinflation happens. Zimbabwe is a good example. They lost farm exports and their ability to repay debts.
http://en.wikipedia.org/wiki/Land_reform_in_Zimbabwe#Impact_on_productio...
http://en.wikipedia.org/wiki/Zimbabwean_dollar
In the US, surrendering its industrial base to China is having the same effect. No way to pay back its debts, except by counterfeiting(no one need get a pay raise). That's why China is slowly dropping US debt. CB's are coordinating their debasement to keep HI from hitting in one location. It will hit Japan first, IMO.When the FED starts printing in earnest and the rest of the world decides it no longer wishes to be the U.S.'s bag holder, the FRN's will be coming home faster than the FED can mop them up. This strain will force prices to rise. Too many FRN's slashing around causes inflationary prices, and incomes will rise to meet it. The FED needs more credit expantion... forever. And interest will forever more be relegated to the wasteheap of NIRP... And in the end, the debt that has been created will no longer be serviceable with the tax revenues at current levels. They will be optimized, but soon too will fail to keep up with the servicing of the debt. More printing will be required. You either inflate the currency to mitigate the debt, or you forgive the debt, thereby revealing the fiat currencies true value... zero.
got the popcorn ready, it's going to be a fun show! people have been saying this for years only to be laughed at and called conspiracy theorists, because "this time, it's different"!!! come on already, bring the fireworks, it's been a long enough wait. reality is a bitch
Or not.
"One day, perhaps soon, we will see stocks falling – as much as 1,000 points in 24 hours. Jacking up the stock market has been the Fed’s singular success."
Rule 80BEffective April 8, 2013, amended Rule 80B will be in effect. Amended Rule 80B replaces:
7% of the SP500: ~150 points.
13% ~ 274 points
20% ~ 422 points.
Add in the Fed's unlimited liquidity... and this will never happen. Ever. They'll close the exchanges first, and reopen with hyperinflated prices.
print moar, ye scum!
http://www.nytimes.com/2015/05/08/opinion/paul-krugman-triumph-of-the-un...
nothing wrong with deflation.
the model is wrong, not falling prices.
"It couldn’t if it wanted to. Back in the ‘30s, consumer debt had barely been invented. Most people still lived on or near farms, where they could take care of themselves even if the economy was in a depression. Few people had credit. Instead, they had savings. There were no food stamps. No disability. No rent assistance. No zombie industries. No student debt. No auto debt. No cash-back mortgages. And cash was real money, backed by gold."
The only paragraph that really matters...
Today I was at a construction yard where they where building a new refinery, and as I was planning to go to lunch, I passed a hamburger truck. I had healthy food for over 2 weeks so it didn’t take to long todecide it was burger time :)
And there I was standing in line with dozens of construction workers and the guys in front of me where talking about cars.
And their conclusion was pretty clear.
Just buy a big ass car man! What else can you do with your money? Put it under a matress of buy something big, you should be crazy to put you money in the bank right now!
That comming from construction workers... who I thought didn’t have time to follow up on the economy.
It says a lot, spend the money. And it hit me! That is the part before hyperinflation that says: "to much money chasing to few goods"
And than I al remembered that piece about where governments force the economy to overproduce!!
And it fit like a puzzle! They force production to counter that part that triggers hyperinflation!
So what’s going to happen?
A resource shortage.
A resource shortage is the only thing that can blow us to hyperinflation.
Given the sheer level of printing on the part of the Fed, they'd have to overproduce an entire second copy of the US economy to suck the cash up.
But a smaller version of what your'e describing explains the housing market. There's no way to justify current house prices other than freely available money getting stuffed into homes.
I think the bigger thing that's preventing hyperinflation is that -- and this is a real stat -- 76% of people in the US are living paycheck to paycheck and have no savings. They're already spending every dime. You can't stampede them into creating hyperinflation, they're at 100% as it is.
So it's the remaining people with savings that could, in theory, jump out of whatever dollar assets they're in to bid up prices. The top 10% have ~ 70% of wealth, and when you dig into it, they own 98% of securities and 80% of stocks (heavily biased to the top 1% of course.) When it's that concentrated, it's pretty easy to keep hyperinflation from happening -- just make sure those people never liquidate. How to do that? Make sure the assets they're in are always growing more than any others.
Sound familiar?
hm, pretty good.
But I have a problem with the paycheck to paycheck theory.
They just didn’t have the education to qave money.
A few years ago, I started cutting back on luxeries that went unnoticed, and I was spending a shitload on crap I didn’t notice I even had.
I was always puzzled why when I went to the bank and took 300 euro’s that at the end of the week that money was gone without having really done anything or buy anything touchable.And that didn’t include restaurants or stores!
I cut all that and well, I suddenly had way more to put aside.
Than I also spend so much, that when I would get a raise that doubled my salary, I would still have been pretty hard to save money.
I always had lucky shots that brought in big ammounts, bonusses, and ghat where my savings.
People just spend to much on nothing. Now I only spend when I have answered my own question: do I NEED IT, CAN’T I BUY IT BETTER AND CHEAPER? Almost always, the answer is yes.
Now, I’m already that far that I save half my wages. Sure I make good money but I always did and I used to spend A LOT and save only very small amounts.
And I’m constantly studying about something, now I’m studying food. Supplements to be exactly and man... it’s actually so easy to create new products... I never tought it was that easy.
And I thingk that’s my next company that I’ll start. Supplements for animals (not people because of all the paperwork :) )
But food supplemnts for animals are actually a big market that is mostly new.
But I’m gojng off track.
Paycheck to paycheck = bad attitude = bad education.
If you only have money for a coke, you don’t order the steak. You order a water. Even if you feel you deserve the steak.
It's the petro dollar (Kissinger's baby) that prevents it. That's partly why DC's so eager to get Iran back on the plantation(the other is corralling Russia). They don't want Iran to sell oil for gold(it's running out, in western vaults) or Yuan. Iran was bartering with India, too. When the dollar % of world trade breaks below 50%, things will get ugly fast. Que WW3.
Hyperinflation results from the lack of faith in currency, not from too much money chasing limited supplies.
THere will be no hyperinflation... We will see massive deflation first.. then ionflation on the other side
The inflation was created all the bad credit/ debt with will be destroyed..
This peice was awsome was spot on until theHyperinflation argument.
THe US is an ugly step sister on the World Stage that will be the last one to rollover..
All moneys will come here after an initial correction (are markets are the only ones big enough to handle the capital
stampede that is coming to find a temporary safe haven.
Massive deflation until one day there is a loud "pop" and we are off to the races.
We are already firmly in the deflationary stage. The inflection point ("pop") is going to be tough to predict. TPTB are going to fight this one like a wounded and cornered lion...
So if I'm getting this right, we're fucked?
Yup. I doubt it's going to happen the way described here, tho.
As the Weekend just arrived, that’s a good prospect!
Not if you pay attention to the value of the gold Mark vs. the paper Mark in the chart above.
Hyper-inflation ain't going to happen when all the people are getting less money not more. The rich can only buy so much more.
Study history, poor people don't matter. It's debt sustainability issue. Look at Mexico, mid-'80's, after oil prices collapsed. They had no way to pay back loans except for borrowing more money from banks (counterfeiting currency). The Peso went from 12/1 to 3- 4,000/1 dollar. Their poor having been scrambling up here ever since. If there was a fence on our border, they would have had a revolution years ago. Same story in USSR. They couldn't carry their debt load either. Now, the tables are turned, regarding Russia. We have far more debt than they.
Hyper Inflation will never happen, It has NEVER happened in a reserve currency country. It only happens in the Other countries.
How many forsee employers raising pay to match rising costs?
How many can forsee employers paying at lunch time while the currency is still worth something.
Hyperinflation won't happen in the US.
I agree with Martin.
Hyperinflation unfolds ONLY when nobody buys the bonds and that forces government to create money to pay debts.Here is a chart of the German Currency during the Hyperinflation of the 1920’s. How can anyone in their right mind suggest this will happen to the USA when it is the core economy and the reserve currency? When it happened in Germany and in Zimbabwe, the core economies watched in awe. It did not impact them. If such a scenario took place with the USA, there would be war before you got half-way there. You would wipe out the world reserves everywhere. That is the difference with a core economy.As a core economy, there is no such unchecked outcome. Everything is connected.
http://armstrongeconomics.com/archives/8367
Your argument is predicated on the USD role as reserve currency.
Tick tock, tick tock
Hyperinflation the worst way to end deflation? You'd seriously rather have a world war than hyperinflation?
"Threatened with deflation, the authorities will want to turn the tide in the worst possible way. What’s the worst way to stop deflation? With hyperinflation"
A CYCLE HAS TWO PHASES. UP AND DOWN. EVERY CYCLE HAS THEM. DEFLATION IS THE DOWN PHASE OF THE INFLATION/DEFLATION CYCLE.
DEFLATION CANNOT BE STOPPED. IT IS THE DOWN PHASE OF THE CYCLE.
I'm looking for some serious deflation in ammunition prices. I'd like to stock up another 25-50k rounds in each caliber that I have. 80% deflation would be real nice!
The FED is in the same rock and hard place it was in 1930.
Bernanke pushed on a string. What causes a bubble to deflate? Inflating one. Bernanke has pushed deflation, not inflation. 100% of bubbles deflate. It is just a bigger bubble now. Bernanke did not change the math on bubbles. Math set the rule on that long ago and Bernanke had no means by which to change it. 1+1 ALWAYS = 2. Inflate a financial bubble, it ALWAYS deflates.
FED: "The Necronomy is still just fine. Don't be a conspiracist paper denier and get your panties all transmorgrified and stuff like that."
The PowersThatBe in the U.S obviously are aware their policies will end in tears (for the 90 to 99%).
Isn't that what JadeHelm is in preparation for.
"They all know they will die, and that the process of capitalism is creative destruction – today’s wealth owners must be stripped of their money and power so that tomorrow’s generations can take over. And that’s why government’s essential role is to look into the future and prevent it from happening."
Defaults transfer collateral to creditors ... massive defaults in the economy will decrease the wealth denominated in dollars of the upper class, but it will increase their wealth denominated in m2 of land and their power won't diminish. Only with an extreme lack of peons can the market strip wealth from from it's owners, like after the black death. Such a situation will likely never occur again, even with a mass die off they'd still have enough peons.
Creative destruction might make economies more efficient, but wealth distribution wise it's at best a zero sum game.
Fed stole America's gold and shipped it to Germany
What no one recognizes to this day is that the Fed stole America's gold and shipped it to Germany causing bank runs and the Depression.
Banking Chairman Louis McFadden called on congress in the below speech from the congressional record to join him in the arrest of the Fed for theft and treason.
Congress was scared sh*tless to join him and left him alone to be assassinated two years later on their third attempt.
To this day we have morons like NYT economist Paul Krugman and Ben Bernanke stating the cause of the 30s Depression was the fact that we just didn't print enough
money even though we were on a gold standard and you can't print gold. Just more deception and disinformation from today's United States of Deception.
Even on alternative sites, this truth has not gotten the recognition it deserves. Most American's believe the Fed is a government agency benefitting them and no one seems to know the cause of the 30s Depression.
The bank runs of 32-33 were caused by this gold theft from American depositors. Amazing that 80 years later this truth is still not out and a great American hero was killed trying to stop this theft and treason and the cowards in congress let it all happen.
For the full speech see
Louis McFadden
http://www.afn.org/~govern/mcfadden.html
His assassination history
Commenting on Former Congressman Louis T. McFaddens's "heart-failure sudden-death" on Oct. 3, 1936, after a "dose" of "intestinal flue," "Pelley's Weekly" of Oct. 14 says:
Now that this sterling American patriot has made the Passing, it can be revealed that no long after his public utterance against the encroaching powers of Judah, it became known among his intimates that he had suffered two attacks against his life.
The first attack came in the form of two revolver shots fired at him from ambush as he was alighting from a cab in front of one of the Capital hotels. Fortunately both shots missed him, the bullets burying themselves in the structure of the cab.
"He became violently ill after partaking of food at a political banquet at Washington. His life was only saved from what was subsequently announce as a poisoning by the presence of a physician friend at the banquet, who at once procured a stomach pump and subject the Congressman to emergency treatment."
/s/ Robert Edward Edmondson (Publicist-Economist)
Here's some quotes from McFadden's speech from the congressional record.
On May 23, 1933, Congressman, Louis T. McFadden, brought formal charges against the Board of Governors of the Federal Reserve Bank system, The Comptroller of the Currency and the Secretary of United States Treasury for numerous criminal acts, including but not limited to, CONSPIRACY, FRAUD, UNLAWFUL CONVERSION, AND TREASON.
The petition for Articles of Impeachmentas thereafter referred to the Judiciary Committee and has
YET TO BE ACTED ON.
So, this ELECTRONIC BOOKLET should be reprinted, reposted,
set up on web pages and circulated far and wide.
Congressman McFadden
on the Federal Reserve Corporation
Remarks in Congress, 1934
AN ASTOUNDING EXPOSURE
Assorted Quotes
"On April 27, 1932, the Fed outfit sent $750,000 belonging to American bank depositors in gold to Germany. A week later another $300,000 in gold was shipped to Germany. About the middle of May $12,000,000 in gold was shipped to Germany by the Fed. Almost every week there is a shipment of gold to Germany. These shipments are not made for profit on the exchange since the German marks are below parity with the dollar.
"Mr. Chairman, I believe that the National Bank depositors of these United States have a right to know what the Fed are doing with their money. There are millions of National Bank depositors in the Country who do not know that a percentage of every dollar they deposit in a Member Bank of the Fed goes automatically to American Agents of the foreign banks and that all their deposits can be paid away to foreigners without their knowledge or consent by the crooked machinery of the Fed and the questionable practices of the Fed.
[Ed. Note- Problem with next paragraph in original] "Mr. Chairman, the American people should be told the truth by their servants in office."
On Roosevelt's anti-hoarding gold law taking the US off the gold standard.
"The Fed lately conducted an anti-hoarding campaign here. They took that extra money which they had persuaded the American people to put into the banks- they sent it to Europe- along with the rest. In the last several months, they have sent $1,300,000,000 in gold to their foreign employers, their foreign masters, and every dollar of that gold belonged to the people of these United States and was unlawfully taken from them."
The London Connection
"the officials in charge of the Fed unwisely gave Great Britain immense gold loans running into hundreds of millions of dollars. They did this against the law! Those gold loans were not single transactions. They gave Great Britain a borrowing power in the United States of billions. She squeezed billions out of this Country by means of her control of the Fed."
"She abandoned the gold standard and embarked on a campaign of buying up the claims of foreigners against the Fed in all parts of the world. She has now sent her bailiff, Ramsey MacDonald, here to get her war debt to this country canceled. But she has a club in her hands! She has title to the gambling debts which the corrupt and dishonest Fed incurred abroad."
"Under cover, the predatory International Bankers have been stealthily transferring the burden of the Fed debts to the people's Treasury and to the people themselves. They the farms and the homes of the United States to pay for their thievery! That is the only national emergency that there has been here since the depression began."
"Do not deceive yourself, Mr. Chairman, or permit yourself to be deceived by others into the belief that Roosevelt's dictatorship is in any way intended to benefit the people of the United States: he is preparing to sign on the dotted line! "He is preparing to cancel the war debts by fraud!
"He is preparing to internationalize this Country and to destroy our Constitution itself in order to keep the Fed intact as a money institution for foreigners. "Mr. Chairman, I see no reason why citizens of the United States should be terrorized into surrendering their property to the International Bankers who own and control the Fed. The statement that gold would be taken from its lawful owners if they did not voluntarily surrender it, to private interests, show that there is an anarchist in our Government.
"The statement that it is necessary for the people to give their gold- the only real money- to the banks in order to protect the currency, is a statement of calculated dishonesty!
"By his unlawful usurpation of power on the night of March 5, 1933, and by his proclamation, which in my opinion was in violation of the Constitution of the United States, Roosevelt divorced the currency of the United States from gold, and the United States currency is no longer protected by gold. It is therefore sheer dishonesty to say that the people's gold is needed to protect the currency.
"Roosevelt ordered the people to give their gold to private interests- that is, to banks, and he took control of the banks so that all the gold and gold values in them, or given into them, might be handed over to the predatory International Bankers who own and control the Fed.
"Roosevelt cast his lot with the usurers. "He agreed to save the corrupt and dishonest at the expense of the people of the United States."
"He took advantage of the people's confusion and weariness and spread the dragnet over the United States to capture everything of value that was left in it. He made a great haul for the International Bankers.
"The Prime Minister of England came here for money! He came here to collect cash!
"He came here with Fed Currency and other claims against the Fed which England had bought up in all parts of the world. And he has presented them for redemption in gold.
"Mr. Chairman, I am in favor of compelling the Fed to pay their own debts. I see no reason why the general public should be forced to pay the gambling debts of the International Bankers.
Roosevelt Seizes the Gold
"By his action in closing the banks of the United States, Roosevelt seized the gold value of forty billions or more of bank deposits in the United States banks. Those deposits were deposits of gold values. By his action he has rendered them payable to the depositors in paper only, if payable at all, and the paper money he proposes to pay out to bank depositors and to the people generally in lieu of their hard earned gold values in itself, and being based on nothing into which the people can convert it the said paper money is of negligible value altogether."
"At noon on the 4th of March, 1933, FDR with his hand on the Bible, took an oath to preserve, protect and defend the Constitution of the U.S. At midnight on the 5th of March, 1933, he confiscated the property of American citizens. He took the currency of the United States standard of value. He repudiated the internal debt of the Government to its own citizens. He destroyed the value of the American dollar. He released, or endeavored to release, the Fed from their contractual liability to redeem Fed currency in gold or lawful money on a parity with gold. He depreciated the value of the national currency.
"The people of the U.S. are now using unredeemable paper slips for money. The Treasury cannot redeem that paper in gold or silver. The gold and silver of the Treasury has unlawfully been given to the corrupt and dishonest Fed. And the Administration has since had the effrontery to raid the country for more gold for the private interests by telling our patriotic citizens that their gold is needed to protect the currency.
"It is not being used to protect the currency! It is being used to protect the corrupt and dishonest Fed. "The directors of these institutions have committed criminal offense against the United States Government, including the offense of making false entries on their books, and the still more serious offense of unlawfully abstracting funds from the United States Treasury! "Roosevelt's gold raid is intended to help them out of the pit they dug for themselves when they gambled away the wealth and savings of the American people.
Dictatorship
"The International Bankers set up a dictatorship here because they wanted a dictator who would protect them. They wanted a dictator who would protect them. They wanted a dictator who would issue a proclamation giving the Fed an absolute and unconditional release from their special currency in gold, or lawful money of any Fed Bank.
"the people of the U.S. to be left without gold or lawful money and with no currency other that a paper currency irredeemable in gold, and I charge them with having done this for the benefit of private interests, foreign governments, foreign central banks of issue, and the bank of International Settlements"
"having permitted them to exercise control over the gold reserves of the U.S. and with having permitted them to transfer upward of $100,000,000,000 of their debts and losses to the general public and the Government of the U.S., and with having permitted foreign debts of the Fed to be paid with the property, the savings, the wages, and the salaries of the people of the U.S. and with the farms and the homes of the American people, and whereas I
charge them with forcing the bad debts of the Fed upon the general public covertly and dishonestly and and with taking the general wealth and savings of the people of the U.S. under false pretenses, to pay the debts of the Fed to foreigners"
"Whereas I charge them, jointly and severally, with failure to protect and maintain the gold reserves and the gold stock and gold coinage of the U.S. and with having sold the gold reserves of the U.S to foreign Governments, foreign central banks of issue, foreign commercial and private banks, and other foreign institutions and individuals at a profit to themselves, and I charge them with having sold gold reserves of the U.S. so that between 1924 and 1928 the U.S. gained no gold on net account but suffered a decline in its percentage of central gold reserves"
"Whereas I charge them, jointly and severally, with having robbed the U.S Government and the people of the U.S. by their theft and sale of the gold reserves of the U.S. and other unlawful transactiving created a deficit in the U.S. Treasury, which has necessitated to a large extent the destruction of our national defense and the reduction of the U.S. Army and the U.S. Navy and other branches of the national defense; and
"Whereas I charge them, jointly and severally, of having reduced the U.S. from a first class power to one that is dependent, and with having reduced the U.S. from a rich and powerful nation to one that is internationally poor; and
"Whereas I charge them, jointly and severally, with the crime of having treasonable conspired and acted against the peace and security of the U.S. and with having treasonable conspired to destroy constitutional Government in the U.S.
"Resolve, That the Committee on the Judiciary is authorized and directed as a whole or by subcommittee, to investigate the official conduct of the Fed agents to determine whether, in the opinion of the said committee, they have been guilty of any high crime or misdemeanor which in the contemplation the Constitution requires the interposition of the Constitutional powers of the House. Such Committee shall report its finding to the House, together with such resolution or resolutions of impeachment"
Maybe the FEDs plan was not as much to prevent the US from having the Japan experience, but rather to follow the same path on purpose? Look, it has been 25 years and Japan is still there in one piece and is doing ok… No reset, no revolt and no collapse. And their currency is still convertible. So it must mean that we have at least 10 more years to enjoy life as we know it, right? :)