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Deflation Is Winning - Beware!
Submitted by Chris Martenson via PeakProsperity.com,
Deflation is back on the front burner and it's going to destroy all of the careful central planning and related market manipulation of the past 6 years.
Clear signs from the periphery indicate that a destructive deflationary pulse has been unleashed. Tanking commodity prices are confirming that idea.
Whole groups of enterprises involved in mining and energy are about to be destroyed. And the commodity-heavy nations of Canada, Australia and Brazil are in for a very rough ride.
Whether the central banks can keep all of their carefully-propped equity and bond markets elevated throughout the next part of the cycle remains to be seen. We know they will try very hard. They certainly are increasingly willing to use any all tools at their disposal to keep the status quo going for as long as possible.
Whether it’s the People’s Bank of China stepping in to the market to buy 10% stakes in major Chinese corporations in a matter of weeks, the Bank Of Japan becoming the majority owner of key ETFs in the Japanese markets, or the Swiss National Bank purchasing $100 billion of various global equities, we see the same desperation. Equity prices are being propped, jammed and extended higher and higher without regard to risk or repurcussions.
It makes us wonder: Why haven’t humans ever thought to print their way to prosperity before?
Well, that’s the problem. They have.
And it has always ended up disastrously. History shows that the closest thing that economics has to an inviolable law is: There’s no such thing as a free lunch.
Sadly, all of our decision-makers are trying their hardest to ignore that truth.
First, The Fall….
So how will all of this progress from here?
We’ve always liked the Ka-Poom! theory by Erik Janzen which we explained previously like this:
One of the models of the future that I favor is the Ka-Poom theory put out by Erik Janszen of iTulip.com back in 1999.
Basically it states that the end of a bubble era begins with a sharp deflationary event (the ‘Ka’ part of the title), but ends in a highly inflationary blow-off, (the ‘Poom’).
It’s a one-two punch. Down then up.
The reason you get the deflationary portion is simply because bubbles always burst. They are seeking a pin from the moment they are born.
The logic for the inflationary secondary reaction is that the central banks always respond to deflation with more money printing. Ironically, this is a doomed attempt to stem the damage caused by their prior money printing efforts.
They never learn.
So that’s what we’re looking for here at Peak Prosperity: a deflationary crunch savage enough to scare the central banks into opening the monetary spigots even wider. But this next time, we think they’ll seek to goose economic growth by giving money directly to the people as well as non-bank corporations.
And we think that deflationary bust has already begun. Our record-high stock markets simply somehow haven’t gotten the memo yet.
So that’s it: prices first go down (Ka!) and then they rocket back up (Poom!). When it's all over some years down the line, many of the world's fiat currencies (Yen, Euro, Bolivar, Real, and maybe a few Pesos and the Rupee, too) will be damaged or dead.
Dreams are dashed. And those who are mentally unprepared and emotionally unequipped will have a very hard time adjusting.
This predicted implosion has to happen. It's a mathematical result of the grave errors made by central banks and government busybodies, who mistook the low volatility and easy gains of the virtuous portion of the money printing cycle for actual success.
Goaded on by their great fortune, they simply doubled down over and over again; seeking the same bang for those freshly-printed dollars (or yen, euros, and yuan). Of course, their efforts progressively resulted in diminishing returns. Yet they completely ignored charts like the one below, which explains much if you just stop and think about it for a couple of seconds:

(Source)
This chart says that between 1947 and 1952, when the middle class was expanding like crazy, each new dollar of debt increased the GDP by $4.61. Today, that number is $0.08(!). We can flip this, to say that it takes $12.50 of new debt to boost GDP by $1.
Clearly this is an unsustainable trend. What's been the response from the central banks? Why to encourage more debt, of course! We need more GDP, they say, and new credit formation is critical to that process!
Well, what else would you expect a banker to say? Note that the central banks are deadly mute on topics like the role of cheap debt in fostering mal-investment, to say nothing of the importance of net energy and functional ecology to the human experience.
Central planners may have a lot of power because of their access to and use of the magic printing press. But their knowledge of the real world is horribly immature, if not entirely wrong.
From The Outside In
The way things tend to work is that trouble begins on the outside and works its way towards the center. The weaker periphery elements get clobbered first, the strongest last. So it’s Greece before Spain, and Spain before France. It’s the poor before the middle class, and the middle class before the rich.
We can already see the signs of this process in play, but it's now accelerating.
Mexico
In January 2015 the Mexican peso, stung by falling oil export revenues, breached the 15-to 1-level against the US dollar for the first time since the 2009 crisis. Today, it's 16.12-to-1:

(Source)
Brazil
Meanwhile, the Brazilian real has declined by a stomach-churning 45% in the past 12 months versus the dollar:

(Source)
Where one Brazilian real used to be worth 45 cents a year ago, it's now worth just 30 cents. All of the hedge funds that tried to get rich off of the fat 12.5% yield that Brazilian 10-year debt offers just got their heads handed to them as a result of the plummeting currency exchange ratio.
Why is Brazil tanking so hard? It’s due to a combination of challenges: corruption scandals, poor trade prospects (as commodities collapse) and growing political risk. But the big one is that it's 'miracle' economic growth has crashed into a brick wall.
Puerto Rico
Similarly, Puerto Rico is in dire financial straits. There are huge haircuts coming for investors in Puerto Rican bonds and -- like Greece -- many years of economic hardship for the island's populace:
More than half of all muni bond funds have investments in Puerto Rican tax-exempt bonds, even though the sunny Caribbean island is an economic basket case. Its outstanding municipal debt of $72 billion amounts to $30,000 for each of the commonwealth’s residents, almost three times average annual per capita income. Puerto Rico’s ratio of debt to gross domestic product is more than triple that of any other U.S. state or territory, and the island’s economy has been mired in recession for nine years.
(Source)
How does a small island nation even borrow 3x average annual income per capita? It turns out it’s remarkably easy in the free-money liquidity fest offered up by the Fed. It was only a year ago that yield starved “investors” (more properly called speculators) placed $16 billion in bids for $3.5 billion of newly issued Puerto Rican junk muni bonds.
Venezuela
In even worse shape is Venezuela. It's so far down the road to financial ruin that it's almost certainly gong to be the next victim of hyperinflation.
Inflation in Venezuela signals default impending
Jul 16, 2015
Venezuela is about to earn another ignominious distinction.
Long home to the world’s highest inflation rate, the country now is set to become the site of the 57th hyperinflation event in modern recorded history, says Steve Hanke, professor of applied economics at Johns Hopkins University. While the feat may be little more than a formality in a country where Hanke calculates annual cost-of-living increases already run at 772 percent, it’s the latest sign a debt default may be closer than previously thought.
With Venezuela’s currency losing 32 percent of its value in the past month in the black market, according to dolartoday.com, and falling oil prices throttling the cash-starved nation’s biggest revenue source, the government may run out of money to pay its debts by year-end, according to Societe Generale. Derivatives traders have ratcheted up the probability of a default within one year to 63 percent, compared with 33 percent just two months ago.
(Source)
Things are about to get even more dire for the people of Venezuela. Already suffering acute shortages of consumer staples, they're about to experience the same type of horrific monetary devaluation that Zimbabwe did.
China
China is anything but a peripheral country, but the import/export numbers suggest that China is slowing down hard and ripe for a crash. Instead of trying to gracefully manage its transition from an industrial economy to a consumer economy, China is simply plowing ahead following the same script that fostered its growth in the first place.
Loans are being hurriedly pushed out the door to support everything from the stock market to real estate. Despite these efforts, lots is going wrong, as evidenced by the vicious bursting of China's stock bubble and the heavy-handed government rescue efforts that have followed:
Half the shares traded in Shanghai and Shenzhen were suspended. New floats were halted. Some 300 corporate bosses were strong-armed into buying back their own shares. Police state tactics were used hunt down short sellers.
We know from a vivid account in Caixin magazine that China’s top brokers were shut in a room and ordered to hand over money for an orchestrated buying blitz. A target of 4,500 was set for the Shanghai Composite by Communist Party officials.
Caixin says the China Securities Finance Corporation - a branch of the regulator - now owns an estimated $200bn of Chinese stocks and has authority to buy a further $500bn if necessary to prop up the market.
This use of “brute force” - in the words of Peking University professor Michael Pettis - has done the trick. Equities have recovered. How could they not do so, since selling was illegal, and not to buy was also illegal?
(Source – AEP Telegraph)
We get the following interesting chart, from this same article which supports the idea that China’s rate of economic growth has slowed sharply and is well below the officially-stated rate of 7%:

Throwing lots and lots of new money at the problem of slowing growth and collapsing equity prices is exactly backwards from what should be done.
The problem is not that equity prices are falling, it's that they are too high compared to earnings (70x trailing earnings!).The problem is not that real estate building and sales are slowing down, it’s that too much was built and prices are already far too high (20x median income or higher!).
Assume The Crash Position
In Part 2: Assume The Crash Position, analyzes how if deflation does indeed take over and swamp the official efforts at damage control, quite a lot of fantasy wealth in today's stock, bond and real estate markets will be destroyed. This means you want to be positioned away from risk-based financial assets right now -- with stocks and low & junk grade bonds are right at the top of that list. Cash and short maturity sovereign debt of good countries will be much better places to hang out while the storm rages.
Like it or not, things are getting interesting again. The prudent move here is to watch developments very closely, position yourself defensively, and be ready to react nimbly, if necessary. After years of suppression, the forces of reality are threatening to overwhelm our managed global ""markets"'. And it's about damn time.
Click here to read Part 2 of this report (free executive summary, enrollment required for full access)
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BS. I love Brady.
Set the printing presses to RAMMING SPEED!!!!
So gold and silver price crashing equals deflation now? What planet is this guy from?
Everything continues to rise in price.
As I've said here many times before...
MASSIVE, EPIC, BIBLICAL, CRUSHING DEFLATIONARY IMPLOSION DEAD AHEAD.
Enjoy the ride.
basically, the pie in the sky (treasury-fed) thought they could avoid deflation by pouring out USD on the banks and 1 percenters whilst sending good paying jobs for the 99 percent over to other parts of the world.
OK - 99 percent has only net debt or is barely in the black and not interested in taking on any debt.
They expected to NOT have deflation from this!? What a bunch of evil stupid fncks.
All this was predicted way back in 1987 in the book "Blood in The Streets" which gained popularity but faded from memory.
http://www.amazon.com/Blood-Streets-Investment-Profits-World/dp/067162735X
I vividly recall watching numerous news shows (60 minutes comes to mind) where the question was often asked
"So are we all going to be just selling insurance to each other and taking in laundry for a living?"
Remember Ross Perot saying "that giant sucking sound you hear..." ??
This all could have been avoided if not for the sheer greed of Wall Street and the banks since then.
So we're fucked now.
Get used to it.
"Assume the crash position"
Dude, most of us are still IN the fucking crash position since 2008!
One can only cry "wolf" so many times...
Until the wolf shows up..
It won't be a wolf that shows up, it will be a Black Swan.
Trying to predict something like that is useless, unless you want to live your entire life waiting waiting and more waiting, in your nuclear bunker with enough toilet paper and tinned food to last for 3 months, whilst polishing your gold and silver coins.
Better to be flexible, focus on your health, and enjoy life.
Better to be flexible, focus on your health, and enjoy life........
have useful skills, knowledge and have 3 months food and some PM just in case - enough cash to cope with a bank holiday wouldn't hurt either.
How can it be a black swan when the shoe shine boy knows its coming.
"Better to be flexible, focus on your health, and enjoy life."
That is getting very hard to achive:
1. GMO foods, Processed foods with unsafe chemicals for color, texture, preservatives
2. Taxes going up, up and away.
3. Can't get affordable health insurance
4. No jobs, no wage growth, rising costs of basic goods and services.
5. Nanny state which pretty much prevents you from doing anything but watch crappy TV (unless your Gay, non-white, or a feminist). ie "White privilege" attack.
6. Few "safe" places to go on vacation, Cross-off the EU, Asia, South America, Mexico. Off the vacation list since they are un-safe do to rioting, pickpockets, etc.
7. Humilation wihen traveling by Air - TSA groping, TSA theft of money, jewerly, electronics.
..and many more!
Dire Wolf
Explained in Demon Box by Ken Kesey
not if they can get those putzes in Venezuela to revolt, and then dollarize that entire "economy" (what's left of it); hey, think about it....all that oil soaking up all those dollars
hey, maybe you're right
"Everything continues to rise in price."
Oil? Labor? Electronics? Housing? Assets of all types? Commodities?
Over the last 8 years all are down from their highs.
This is deflation, get used to it as it's not over. That's why the FED can get away with printing trillions, what they have printed represents only a fraction of the assets that have been destroyed.
At some point the facts on the ground overwhelm the narrative, which is only a belief system.
I'm afraid we've already reached Spaceballs' LUDICROUS SPEED!
No! No! No!...Not "Raming Speed"....Kick in the Warp Drive....We're going where no man has gone before
Leave Hillary's vagina out of this.
(Pure Evil note: She was probably artificially inseminated with a turkey baster.)
Chelsea probably cut herself out of that womb rather than go through it, to boot.
Go to 105% on the reactor! (The Hunt For Red October)
Maybe a better notion would be, Go to 105% on the printer!!
Disclosure: I'm long paper, ink and industrial printers.
"Set the printing presses to RAMMING SPEED!!!!"
When they engage "ludicrous speed" is when it all goes to plaid:
https://www.youtube.com/watch?v=NAWL8ejf2nM
[Clip from SpaceBalls (1987) "Ludicrous Speed"]
"Space ball Central Bank... They gone to Plaid!"
and so exactly what is so wrong with central bankerz and their puppet governments getting screwed?
im not so good wid numberz...
"The problem is not that equity prices are falling, it's that they are too high compared to earnings (70x trailing earnings!).The problem is not that real estate building and sales are slowing down, it’s that too much was built and prices are already far too high (20x median income or higher!)."
Word. Up.
RE here in Maui is ridiculously priced, and especially commercial RE. Leases and rents are so far out of whack that many restaurants and bars are closing down. At least 6 or 7 the last year or two (Mooses in Lahaina, Waterfront and Buzz's at the harbor, and Stella Blues, Oceans, Dennys and the Sportspage here in Kihei). Eliminated hundreds of jobs, and nothing has been filled in those spaces either. They remain empty.
It's a sad situation out here...
typical...US locales next to the developing world (i.e. South Florida, El Paso, Tucson/Phoenix/San Diego, Hawaii, et al) are probably gonna do OK, as the money flees their way.
What you describe is being repeated across many disparate markets across the globe.
There is an all too familiar, and frail tendency of people to misjudge falling markets on the basis of previous values.
My father and I had almost identical condos in South Florida leading up to the 2008 crash. I saw the writing on the wall, and sold "early", tripling my original cost. My father, even though he had moved into a bigger unit, stubbornly kept his and asked too much all the way down, until it was worth half of what I had sold for.
Human nature, I'm afraid, and it's very tough to wake people up.
Aloha, BoP, I had to leave Maui in February, I am over in Honolulu but want to return. Your sobering words frighten me.
These are tough times.
Damn bro...would have liked to have met up with you then.
I wanted to open a bar here in Kihei but it makes no financial sense whatsoever on the lease. They want over $10K a month for the space (which has been empty for 12 years) lol.
I went to Stella Blue's with a girl I fell in love with, thought she was the one..... it was magic sitting at the pointed end of the bar, one on each side laughing with each other..
now we are done, and she's putting her Wailuku house on the market-- but I bet she loses it to foreclosure before it sells, unless she lands a guy with more money than me!
It's happening everywhere.... dreams shattered and hope fading in the year 2015
BoP says:
They want over $10K a month for the space (which has been empty for 12 years) lol.
Are the owners completely nutz?? I've had commercial real estate before, and if I'd had a vacancy for even a year, I would accept half rent (or even less) on a month-to-month lease. Hoping for a permanent tenant, but if not, at least I'd have some income.
I've been to Hawaii plenty, especially Kihei. I get the feeling they aren't business people there.
A Maui tourist dive bar can go into business pretty easy without much in the way of TI's. Try offering the owner $2,000 – $3,000 a month on a monthly lease. If they don't take that after 12 years of zero income, then they're either crazy, or they're nuts. Or maybe insane. Because a few $thousand a month is a lot better than nothing, no? At least it will help with the property taxes.
I can do it, Doc. Can you bankroll me?
Sure, do you take quatloos?
Next spring instead of Maui, I think the mrs and me will be heading for Mexico.
Exactamundo, the rigging of equity and real estate assets with the stagnation in wages and benefits is reaching a peak. How can an inflation in wages occur in a competetive global economy, the products and services we provide will cost much more in comparison to our trading partners,our productivity has hit a plateau, a devaluation in the dollar will be matched with currency devaluation in other currencies. This is not going to be your fathers 1970's style generalized wage and price inflation. My money is on a sharp deflation perhaps preceded by a continuation of and acceleration of this mind numbing stagflation we are experiencing.
" My money is on a sharp deflation perhaps preceded by a continuation of and acceleration of this mind numbing stagflation we are experiencing."
Central Banks will just do lots more QE. They start dropping money from helichopters if necessary to avoid deflation. Deflation is only really possible with a sound money system. If they permitted deflation, every industrial gov't would be forces to default and collapse in a matter of months. They delay and print until currencies become worthless. Japan has printing its way out of a depressionw with QE for 25 years. FWIW: its likely that we will see more wars as politicans start blaming other nations for economic problems. My money is on a slow boil with more frequent crisises that drive minor nations into civil war and major nations into gobbling up weak nations with resources, then morphing into a global war. While consumer and corporate spending is down. Arm sales are ramping up.
"a devaluation in the dollar will be matched with currency devaluation in other currencies"
Thats not deflation, that's inflation.
" How can an inflation in wages occur in a competetive global economy"
That's why there is stagflation. Wages remain flat, but prices for goods and services rise. Infation can also happen when people begin to lose faith in currencies, although I think it will be some time before we see high inflation in the US. The Fed will continue to do QE, but just enough to prevent deflation (unless we get someone that implement abenomics in the USA). We probably see some price declines until the next financial meltdown begins, which the CB's will once again unleash Trillions more in QE to prop the system back up. They will continue to do this until shortages of critical goods (food, fuel, electricity) start to begin. As people lose jobs more and more people will end up on wealthfare. Taxes will go up, and production will go down. Food & Fuel prices will start to rise (due to decrease production). Store shelves become empty. People will have to pay more and more for basic goods, Blackmarket begins to bypass taxes and support rackeetering. Gov't will have to increase Wealthfare payments to accomidate rising costs and impletement price controls (ie see Venezuela as an example).
The best thing for us would be a cash&carry undergrund economy and since they are trying to outlaw cash money the TBTF crowd knows it too.......
+$$$$$$$1
Just a reminder... I've blogged about this before... everybody should keep a retirement portfolio that contains a selection of currencies. My own (besides USD, which is by far the largest proportion) are Australian, Swiss, Norwegian and gold. I don't need to be persuaded that it's not the best possible (!), but I chose it some years ago and have slept soundly ever since.
I just adore how pertinent (by definition) input from the one percenters adds that touch of realism our economy so desperately needs.
Exactly, I'm trying to figure out how to get through the next few months, while Barnacle gets to enjoy discussing his global portfolio of currencies.
I'm not downvoting you Barnacle, but I don't have the luck to be partaking of your wisdom.
Don't be impressed by my wisdom, Hugh: there's precious little of that, I assure you. Rather, be impressed by my desperate wish to sleep well at nights. I'm an old codger with no pension, and I fear the prospect of going without sleep as well! The portfolio is a modest one, but my point is valid for all sizes. That's why I posted.
I hear you, Bill, and I don't want to begrudge you your situation vis a vis mine.
I was in a pretty good financial situation to begin 2007, but my divorce made me feel free and bulletproof and I made some big mistakes that still haunt me.
I sold the gold and the Porsche and it still wasn't enough.
"My own (besides USD, which is by far the largest proportion) are Australian, Swiss, Norwegian and gold."
I doubt that will work. First off they will impose capital controls, preventing you from access it.. Its pretty much impossible for americans to open bank accounts overseas these days. All of the economies of the industrialize world are now interdependent and CB's cordination actions. Austrialia is in some serious trrouble with a massive real estate bubble and an economy that is largely dependent on selling commodites to China
My own retirement plan is to purchase good farm land (not in a drought zone) in a low tax rural area where I can grow a lot of my own food, and distance myself as much as possible from economy. Build a low-maintanence, high energy-efficient home, and use a large wood lot for heating on I am not reliant on natgas, oil which will likely be in short supply. Have some firearms, some PMs, etc.
Would you like to play a game?
http://www.sweetliberty.org/issues/wars/
"It was arranged well ahead of the planned first Great War, that England would declare Turkey its enemy, gain control of Palestine, and hand it over to the Jews. It happened as planned. During the war British leaders beholden to Zionist powers diverted men, weapons and planes from France to Palestine just prior to the German invasion of France, endangering the lives of hundreds of thousands of soldiers, and the possible outcome of the war ... except they knew the U.S. would come to their rescue."
http://www.sweetliberty.org/issues/wars/wwi.htm
http://www.sweetliberty.org/issues/wars/mrbalfour.htm
---
http://www.globalresearch.ca/greater-israel-the-zionist-plan-for-the-mid...
conspiracy theory?
"hate"?
Nope... just the unvarnished truth.
Past may be prologue unless more wake the flock up
http://www.ahavat-israel.com/eretz/future
http://www.historycommons.org/context.jsp?item=western_support_for_islam...
WWI is on all day today on TV. I did not know that the Germans bombed London during WWI. Or that it took a WWI plane an hour to climb to 10,000 feet.
That's why Germans lost. They bombed the offices of their banksters. The same ones who financed us, too.
Everything's fine. Just make up a story that makes you happy and have your kid read it to you.
If everyfuckingthing is going down,why is the price I pay for any of it,still going up?
You're not buying the right things like hookers and blow.
The price of what you need is going up, the value of what you own is going down......
A tsunami starts with the surf pulled out to sea...what happens next is a smack down of those who watch this on the beach.
Don't you hate when some good doom-porn is just getting you warmed up - and then you come to this part...
Click here to read Part 2 of this report (free executive summary, enrollment required for full access)
Now I gotta pony up $30 to finish the movie...?
Ah, so there is an advantage to premature ejaculation!
So, basically, you get to wiggle the 'tip' around the lips some...but if you want the full show you gotta pay!!
"...first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."
Thomas Jefferson
Almost there.
Thank you Mako.
I graduated from Central Connectucut in 1984 with a BA in Economics (worthless degree) and no one has, yet, to convince me that deflation is bad for an economy. The only people that hate deflation are bankers that exist in a fiat currency, fractional reserve banking environment.
It's the BS argument that in deflation no one buys as they expect prices to go down. Ok so what's wrong with no buying your shit until you absolutely need it?
Deflation is bad, becasue the bankers already control a large portion of the pie... so further deflation just means that they will be able to add to their share with lower expenditures, and you can only get a samller margin on the same work but you will hold the old debt.
The Thomas Jefferson quote explains it well, first they get you by inflation, controling vast amounts of money and putting it in circulation, then they tighten the nose, and you will not be able to get out of the pit by deflation. (Once they have you in debt, they take the inheritance of your children).
IT's a flip.
You borrow when money is easy, and have to pay it back when it's hard. Hence you and your kids become slaves.
Exactly...Big banks love deflation. The cash they are paid back is more valuable than the ones they loaned.
Meet Your Strawman:
https://www.youtube.com/watch?v=ME7K6P7hlko
++
Ernie Wayne Tertelgte
'iTulip', ha ha! How incredibly prescient.
I need a new car. How soon will this deflation kick in?
"the commodity-heavy nations of Canada, Australia and Brazil are in for a very rough ride"
That is going to shake up a couple of raging housing bubbles in Canada and OZ. If any two nations have been able to sit out the great 2008 financial crisis it has been Canada and OZ. Resource exports to China and other East Asian economies kept money coming in the door and employment in high paying resource jobs going strong. Refelected in the housing bubbles of both. Central Bank liquidity was finding it's natural home in people's homes.
I live in an economy that is a mirror image of Canada's, and we are just over the Ontario border. Our mines are starting to close, two shut down this spring, thousands of layoffs. Shipping is slowing, I drove past the major Great Lake Port at the head of the lakes and saw three 1 thousand foot ore ships layed up at the yards in the peak of the shipping season. That does not happen unless commodities are in trouble. New copper mines are in the permit processing and have been fast tracked by state government. I keep waiting for the investors to pull their money from the mining companies. New copper nickle mines, expensive underground mines? Now? I doubt these mines ever leave the drawing boards. Local governments have been giddy over the coming new mines, seeing all kinds of nice tax revenues flowing in. Ha! Ha! Looks like the spending spree will have to wait.
My ex gf is an Aussie and she lost her ass in the housing collapse. It has pretty much reinflated along with the States, at least in Queensland anyway.
I admit I only barely skimmed the article and went to the posting to see how many bought into this BS article on ZH. Most seem to believe it, sadly.
The things you NEED have continued to go up. SOME of the others have stagnated. Family's do not go out to eat because of the inflated price. Places close down because they cannot lower prices and stay in business, all their basic materials are too costly.
Home prices are still way high. Rent is escalating like a rocket, I know some underemployed who are worried about the next rent increase.
Buy shoes, even camping supplies and you get a shock and have to consider lower quality. Everything is being downsized in packages to fool you that the price per quanity has not gone up.
Those countries who are commodity rich will be fine. There are some countries (most) who have fallen into the trap of increasing all spending due to the increased revenue. There will be an adjustment and some who have taken on debt will suffer. AND they should suffer, a govt does not take on debt during the good times unless they are fools. And most are.
It makes us wonder: Why haven’t humans ever thought to print their way to prosperity before?
Indeed!
B-B-but shouldn't printing *inflate* commodity prices?
Fundamentally, yes. but it's been exposed that commodity exchanges sell multiples of the underlying principal asset. (The fines for naked short selling are now just a business expense.)
If they are smart, they will use the printed QE to close out those short positions. IF.
I see a day coming when many people starve to death because multiple speculators who own a food commodity will demand payment before the commodity gets consumed.
Dup
0.08 cents.LOL Does this mean my Social Security cost of living increase will be even less then last years measly 1.7% Got to keep inflation numbers low or else SS will go belly up much faster.
A cut to Social Security disability benefits may be around the cornerhttp://www.washingtonpost.com/news/get-there/wp/2015/07/23/a-cut-to-soci...
Wasn't long ago whenever you turned on the telly, you saw some shady lawyer advertising to get those who lost their unemployment benefits on to Social Security Disability. Where did all those guy go? I remember watching 60 minutes and they were interviewing one of these cronies who did his business out of a mobile home. The guy had his own doctor who would sign off on the applicants papers that the guy was disabled. Now we have Millions of free loaders sucking up disability payments.
Move to Florida, "God's waiting room", and you'll be inundated with all of those type of commercials you can stand.
https://en.wikipedia.org/wiki/California_Proposition_187
For those who count paper as gold; deflation commeth.
I'm not sure if Pike was right about pre-palnned 3 world wars [I suspect his letter was a foregery for various reasons] but a 3rd world war seems probable, and in large part fomented by the same cabal who pulled the US into ww1...
"On page 262 of The Creature From Jekyll Island there is a reproduction of one of the campaign ads designed most effectively to reach into the very depths of one's heart. A painting depicts a young woman at the bottom of the ocean, holding an infant tightly in her arms, her hair and gossamer gown drifting in the current. The painting says it all. The single commanding word, in large, bold letters says simply: ENLIST
Those same unconscionable methods are being used today, to sustain the hurt, anger and desire for revenge of the WTC tragedy, in the minds and hearts of Americans. HBO is just now airing a memorial to the victims of the heinous act of evil, renewing, refreshing, and re-energizing the gamut of emotions that had begun to heal.
We are dealing here with cold, calculating devils who have either lost, or they've never had so much as a glimmer, of either compassion for another human being or remorse for their deeds. If it should happen that any of them would suddenly awaken to the terror they've caused and committed, they would surely lose their minds with relentless grief.
The United States' entry into the Great War filled the needs of both the British and the Zionists. England needed U.S. military power - including American men and boys - and the Zionists wanted the 'Holy Land' for themselves. It is for themselves and their ruthless plan for World Dominion, not for their lesser brethren. In exchange for the Zionists' promise to bring the U.S. into the war, the British government promised a 'homeland' in Palestine for the Jews.
This promise was made via a letter from Arthur James Balfour to Lord Rothschild on November 2, 1917, that became known as the Balfour Declaration (appendix B). Incidentally, the Declaration did not promise a Jewish State for the Jews; it promised a homeland, along with certain and specific conditions, to wit:
". . . it being clearly understood that nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine, or the rights and political status enjoyed by Jews in any other country".
The snag accompanying the promise was the fact that Palestine was not England's to give; at that time Turkey ruled Palestine under a sort of home rule government. For nearly twenty years the Zionists had been wrangling for a homeland for the Jews, and they turned down offers made for other territory. It had to be Palestine!
According to Doug Reed:
"As the first decade of the 20th Century grew older the signs of the coming storms multiplied. In 1903 the British Government had offered Uganda to Zionism and Max Nordau had publicly foretold 'the future world war', in the sequence to which England would procure Palestine for Zionism. In 1905 the Protocols prophetically revealed the destructive orgy of Communism.
Then in 1906 one Mr. Arthur James Balfour, Prime Minister of England, met Dr. Weizmann in a hotel room and was captivated by the notion of presenting Palestine, which was not his to give to 'the Jews". Rabbi Elmer Berger says of that time,
"that group of Jews which committed itself to Zionism . . . entered a peripatetic kind of diplomacy which took it into many chancelleries and parliaments, exploring the labyrinth and devious ways of international politics in a part of the world where political intrigue and secret deals were a byword. Jews began to play the game of 'practical politics'."
It was arranged well ahead of the planned first Great War, that England would declare Turkey its enemy, gain control of Palestine, and hand it over to the Jews. It happened as planned. During the war British leaders beholden to Zionist powers diverted men, weapons and planes from France to Palestine just prior to the German invasion of France, endangering the lives of hundreds of thousands of soldiers, and the possible outcome of the war. . . except they knew the U.S. would come to their rescue.
Why did the Zionists specifically want Palestine? ... {continues}..."
http://www.sweetliberty.org/issues/wars/wwi.htm
______________
The Nameless War - A Book
By Captain A. H. M. Ramsay, 1952
Another "little gem," suppressed. More history we were never taught. Capt. Ramsay, WWI veteran, former member of H. M. Scottish Guard, Member of Parliament, was arrested and imprisoned for nearly three years under an Orwellian law in England, without formal charges or a trial, because he had discovered and was attempting to expose the orchestrators of WWII.
http://www.sweetliberty.org/issues/wars/nameless/5.shtml
DG, remember...as a virtue brevity is only exceeded by godliness
It seems logical. Deflation is counter to growth. Why spend now for what will cost less later. If debt is the currency of the banks to promote growth this deflation threatens the scheme. Lower prices cannot be allowed to effect the mindset of the economic participants. The only weapons are the printing press or force. We seem to,see both emerging to keep the dream alive. Are the elite in the process of pulling a judo move? Pull then push. Sell paper AU while collecting the physical. Trying to be the last man standing after creating a collapse only to,start the process all over again.
Getting spending power into the hands of those who have a high propensity to spend would be a plan. Pumping money into the financial markets just means that you have to wait for folks taking profits and finally going out and buying that new Lexus -or Upper East Side penthouse.
Instead rent a large helicopter, fill it full of $100 bills and make "dusting runs" over sundry trailer parks. Rinse and repeat as necessary. Beer sales will pick up right away. So will large flat screen TVs. You might even put a few Title Pawn outfits out of business. Walmart and Target sales will rise. The great unwashed may finally take the time to clean themselves up.
Or maybe easier, abolish all penalties imposed by the "ACA" for not carrying or offering healthcare plans. The money not wasted on these new terrible high deduction, high premium policies will save the typical household $10k a year. They can even use the huge windfall to pay for the occasional doctor visit - something they cannot afford to do now.
dis-inflation is correction to the rapid, completely bullshit appreciation of intangible assets.
You havent seen deflation yet - too many bubbles, and too much rapid erosion of the purchasing power of fiat....
Deflation where? One of the more interesting revelations coming out of this orchestrated crisis is that the people who own the banking system have so far been able to isolate the effects of certain monetary policies onto particular sectors. This in the face of being told fairy tales about the Great Depression our whole lives, and us assuming everyone suffers the same effects in a monetary crises.
But those who were employed in the 1930's experienced no depression, and bankers made ever more bank. Perhaps this time, though, the bankers will themselves be consumed by their own schemes.
Deflation is winning?!
Someone doesn't shop for their own food, and doesn't pay their own bills.
LOL.
Liberty is a demand. Tyranny is submission..
Bankster, pol, and crat heads in baskets, is "deflation" winning."
It's easier to fall off a cliff than climb a mountain.
Ain't no mountain high enough!
Great link! Thanks, Dave
As long as we have a monetary system based on debt we will have these problems. The banks create the money through creating debt and are more than happy to keep driving those debts up until the system breaks. Remove that power of money creation from the banks and you can move from a debt based system to a production based system.
No it isn't. A shitty economy and no demand is not deflation. Central banks completely control exchange rates. They do not mean anything.
Deflation exists in the sense that large swaths of digital wealth are evaporating in the oil play. The shale oil bubble popped. The reasons were nefarious. The U.S wanted to crush Russia. The Saudis wanted to crush shale and tar sands. The linier thinking hucksters wanted to sell high yield in a zero interest environment. Both digital and real assets are vaporizing as we speak. Can the bankers weather this? Not without a digital infusion of massive proportions. The question is this? Will the newly fabricated billions light the fuse of hyperinflation and kill the currency?
Gotta look back 5 years to see support for a materials XLB bear market lower low at 40, down 12% more, followed by a later lower low at 35, minus 22% from Friday's 45.08 close. Can't wait to see how the Keynesian-Alinskyite perception-management community-organizing team fumbles their last down, hail mary, funny money, attempt to keep the impending equity-bond-credit collapse crisis from going to waste:
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=xlb&insttype=&freq=2&show=&time=12
"But this next time, we think they’ll seek to goose economic growth by giving money directly to the people as well as non-bank corporations."
I don't see this happening. Rather, the banks who have reserves at the Fed.(which is where the bulk of the QE fiat has ended up) will deploy them to take distressed assets(mines, real estate, businesses, homes, etc,)
at fire sale prices, capitalizing on the desperation to service debts and survive. Of course they will sell some of the assets back, once the business cycle has turned, and the velocity of the deployed fiat stimulates asset
prices to the point where hefty windfalls are to be had. Each of these cycles concentrates more wealth at the top of the pyramid, and pushes more people down the socioeconomic ladder. And I don't think they'll stop
voluntarily. These boom bust / credit expansion-contraction / inflation-disinflation waves are surfed down the ages, and the rojo escudo types know how to shoot the tube with expert precision. They are not
incompetent, they are calculating and manipulative, playing a long con on mankind.
Inflation and deflation are not mutually exclusive.
You can have deflation in debt-financed goods while other goods' prices are inflating.
This has been covered in several articles over the past 5 years here on ZH, Mish's blog and others.
Do a search for inflation in things you need and deflation in things that you want, or some combination of words to that effect.
I just bought a new set of tires for the Yukon. Three years ago the price for the exact brand and size of tires was about 750. Now the price is 600. No differences in where the tires were made and they aren't being closed out. I save all of my receipts and invoices and they are scanned for the past five years and OCR'd. I'd love to have to go back and scan my older receipts, but many over five years old have all faded now to blank strips of paper.
If I remember correctly it was Max Keiser who introduced the term 'debtflation'...at least that's where I heard the concept aired first: Every thing you need goes up in price, everything you own goes down (not applicable to the the top tier beneficiaries of fast $ printing, and those who have buckets of fresh $ to invest in top teir assets ie art, collectables, productive property, cars etc)
Agreed. Stagflation, disinflation, deflation, low-flation, are all symptoms of a credit contraction, and manifest in different sectors as capital rotates. Staples and integral services will typically continue to inflate, it's the
rate that will vary. Discretionary goods will typically deflate as disposable income craters. It's kinda like that kid told a gov. mouthpiece when he was talking about how tech. gadgets / TV's, etc. had drastically fallen over
the last few years, and the kid said, yeah but I can't eat an i-pad. Regardless, I still feel that these cycles of credit ease vacillation are managed, or at the very least front run to the benefit of a chosen few.
Chris Martenson: Peak Prosperity News Update - 7-24-2015 https://www.youtube.com/watch?v=lqHjTMGeoG8
Credit defaults will be coming! - What's happening to oil and how that will affect Canada https://www.youtube.com/watch?v=RZWd6MDygxA
Commodities at 6-Year low! - Commodities supercycle’s end is nigh - FT https://www.youtube.com/watch?v=VbIPzbsoX44
Commodities slump undermining Anglo -FT https://www.youtube.com/watch?v=Vr8k1pnBaUY
"But this next time, we think they’ll seek to goose economic growth by giving money directly to the people ..."
Thank you ZH, for publishing this article. There's no better way to enjoy a quiet Sunday afternoon than by having a good laugh.
And please let us know when they are mailing the checks so we can keep an eye out for them.
buying opportunities ladies and gents. buying opportunities. crash baby crash. my investment horizon is 40 years at least. and therefore, i shall not despair, i shall not fret. i shall save save save and purchase purchase purchase. and then i shall retire early. doom and gloom has its place, certainly. but historical facts still don't lie, and never will. Despite all the attempts to rig, the market wins in the end, and markets go down, and then they go back up.
And in the meantime I get dividend payments if invest carefully, defensively, and properly. And so I shall.
Deflation is winning... ROTFLMFAO
Devaluation with some stagflation<> Perhaps?
Just like I suggested, the commodity trade re-traces.
There is one way out of this in the short term and its a massive war between Saudi Arabia and Iran.
Think about it the US would massivly increase supply of weapons to Saudi:s and maybe Turkey (ie this time they would make monety on weapons sales not spend like Iraq war)
With a deal with Iran they could even privde some support to them too.. and the result would be a spike in oil to help out fraking ect.. and it would be very stimulatory. Also Russia would be onboard because of higher oil and they would provide some weapons to Iran/Syria..
ie they need the Sunni / Shia divide to really kick off to point Saudi and Iran oil facilities are getting pounded.
Also the Saudis seemed to have played the game with China/Russia so they may have lost Obama support..
(I could see it being a bit of a racial thing as well.. ie Saudi:s cant be pushed by Obama because he has African heritage ect)
The trade that's working weel for me, is the "inverse bond trade".
lol I mentioned this trade 2 weeks ago.