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Everything’s Deflating And Nobody Seems To Notice
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
Whenever we at the Automatic Earth explain, as we must have done at least a hundred times in our existence, that, and why, we refuse to define inflation and deflation as rising or falling prices (only), we always get a lot of comments and reactions implying that people either don’t understand why, or they think it’s silly to use a definition that nobody else seems to use.
-More or less- recent events, though, show us once more why we’re right to insist on inflation being defined in terms of the interaction of money-plus-credit supply with money velocity (aka spending). We’re right because the price rises/falls we see today are but a delayed, lagging, consequence of what deflation truly is, they are not deflation itself. Deflation itself has long begun, but because of confusing -if not conflicting- definitions, hardly a soul recognizes it for what it is.
Moreover, the role the money supply plays in that interaction gets smaller, fast, as debt, in the guise of overindebtedness, forces various players in the global economy, from consumers to companies to governments, to cut down on spending, and heavily. We are as we speak witnessing a momentous debt deleveraging, or debt deflation, in real time, even if prices don’t yet reflect that. Consumer prices truly are but lagging indicators.
The overarching problem with all this is that if you look just at -consumer- price movements to define inflation or deflation, you will find it impossible to understand what goes on. First, if you wait until prices fall to recognize deflation, you will tend to ignore the deflationary moves that are already underway but have not yet caused prices to drop. Second, when prices finally start falling, you will have missed out on the reason why they do, because that reason has started to build way before a price fall.
A different, but useful, way to define -debt- deflation comes from Andrew Sheng and Xiao Geng in a September 24 piece at Project Syndicate, China in the Debt-Deflation Trap:
The debt-deflation cycle begins with an imbalance or displacement, which fuels excessive exuberance, over-borrowing, and speculative trading, and ends in bust, with procyclical liquidation of excess capacity and debt causing price deflation, unemployment, and economic stagnation.
That’s of course just an expensive way of saying that after a debt bubble must come a hangover. And how anyone can even attempt to deny we’re in a gigantic debt bubble is hard to understand. Our entire economic system is propped up, if not built up, by debt.
The mention of the excess capacity that has been constructed is useful, but we’re not happy with ‘price deflation’, since that threatens to confuse people’s understanding, the same way terms like ‘consumer deflation’ or ‘wage inflation’ do.
Central banks can postpone the deflation of a gigantic debt bubble like the one we’re in, but only temporarily and at a huge cost. And it looks like we’ve now reached the point where they’re essentially powerless to do anything more, or else. We are inclined to point to August 24 as a pivotal point in this, the China crash where people lost faith in the Chinese central bank, but it doesn’t really matter, it would have happened anyway.
And today we’re up to our necks in deflation, and nobody seems to notice, or call it that. Likely because they’re all waiting for CPI consumer prices to fall.
But when you see that Chinese producer prices are down 5.9%, in the 43rd straight month of declines, and Chinese imports are down 20% (with Japan imports off 11%), don’t you hear a bell ringing? What does it take? If the dramatic fall in oil prices hasn’t done it either, how about steel? How about the tragedy British steel has been thrown in, how about the demise of Sinosteel even as China is dumping steel on world markets like there’s no tomorrow?
How about the reversal of funds that once flowed into emerging markets and are now flowing right back out?

Or how about major global banks, all of whom see their profits and earnings deplete, and many of whom are laying off staff by the thousands?
Wait, how about global wealth down by 5% since 2008 despite all the QE and ZIRP policies? And global trade off by -8.4% YoY?!
Here’s from Tyler Durden last week:
Credit Suisse’s latest global wealth outlook shows that dollar strength led to the first decline in total global wealth (which fell by $12.4 trillion to $250.1 trillion) since 2007-2008.
[..] from HSBC: “We are already in a global USD recession. Global trade is also declining at an alarming pace. According to the latest data available in June the year on year change is -8.4%. To find periods of equivalent declines we only really find recessionary periods. This is an interesting point. On one metric we are already in a recession. [..] global GDP expressed in US dollars is already negative to the tune of $1,37 trillion or -3.4%.

How about companies like Walmart and Glencore, just two of the many large entities that have large troubles? These are not individual cases, they are part of a global trend: deflation. As evidence also by the increase in US corporate downgrades and defaults:
Moody’s issued 108 credit-rating downgrades for U.S. nonfinancial companies, compared with just 40 upgrades. That’s the most downgrades in a two-month period since May and June 2009, the tail end of the last U.S. recession. Standard & Poor’s downgraded U.S. companies 297 times in the first nine months of the year…
Everything and everyone is overindebted. All of the above stats, and a million more, point to the beginning of a deleveraging of that debt, something that curiously enough hasn’t happened at all since the 2007/8 crisis. On the contrary, a massive amount of additional debt has been added to a global system already drowning in it. China alone added $20-15 trillion, and that kept up appearances.
But now China’s slowing down everywhere but in its official GDP numbers. And unless we build a base on the moon, there is no other country or region left that can take the place of China in propping up western debt extravaganza. This will come down.

The only way a system that looks like this could be kept running is by issuing more debt. But even that couldn’t keep it going forever. We all understand this. We just don’t know the correct terminology for what’s happening. Which is that debt that has been inflated to such extreme proportions, must lead to deflation, and do so in spectacular fashion.
As long as politicians and media keep talking about disinflation and central bank inflation targets, and all they talk actually about is consumer prices, we will all fail to acknowledge what’s happening right before our very eyes. That is, the system is imploding. Deflating. Deleveraging. And before that is done, there can and will be no recovery. Indeed, this current trend has a very long way to go down.
So far down that you will have a very hard time recognizing the world, and its economic system, on the other side of the process. But then again, you have a hard time recognizing the world for what it is on this side as well.
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More confetti will fix it!
Okay, then riddle me this: if US debt is being dumped, then why does the yield on USTs continue to go down? Even to the point of being negative?
If things are deflating, then one big reason is that people have no $$ to buy shit. This is because increasign number of people don't have jobs, are govenrment clients, have low paying jobs or.....aren't getting any interest on their savings.
We are rapidly moving to a quasi-communist state where everyone's income, directly or indirectly, comes from the Government. We are probably 3/4 of the way there.
My local coin dealer has moved from a strip mall to the main mall. Running with the big dogs now.
He's right next to JoAnn fabrics....which also has just moved in.
He's right across from Radio Shack......which I hear is probably going to be closing soon.
I luvs me some hope and change.
Everything but stawks, Ilargi. Why aren't stawks deflating?
Exactly right, which is why we should forget about the upcoming election and focus like a laser on stopping the communoprogressive takeover which is responsible for pretty much all our woes.
yes............kick the progressive's(jews) out
''Jewish Domination of Weimar Germany was the National Socialist government’s first English-language attempt to explain the rationale behind their legislative moves to restrict Jewish influence in Germany after 1933.
Using official pre-Nazi-era demographics, this work showed that Jews were massively over-represented in all fields of German social and economic life—except that of farming and creative work.
It lists the ownership of mass media in Weimar Germany, the astonishing financial scandals, Communism and political subversion, degenerate theater, sexual psychology, Communist indoctrination in educational institutions and the media—all of which was predominantly Jewish in origin.
This new edition contains the entire original text and illustrations, and benefits from a series of appendixes which reveal:
- The measures taken by the Nazi state against Jews;
- Details of the Havaara transfer Agreement whereby the Nazi government and the World Zionist movement worked together to help create the state of Israel;
- The World Jewish declaration of war against Germany in 1933; and
- A series of eye-opening parallels between Weimar Germany and the present-day United States of America, showing exactly the same trends of Jewish domination of educational institutions, the mass media, and financial scandals—proof that history does repeat itself.''
http://www.amazon.com/Jewish-Domination-Weimar-Germany-Eckhart/dp/149299...
I have no problem with governments issuing currency, debt free, and with real collateral requirements. However, in the modern monetary system bankers and financiers print themselves money out of thin air with no workat all, you must exchange the real value of your labor for these DEBT notes. Keep in mind that the velocity of a dead currency is zero (very "deflationary").
I think people are waking up to the fact that bankers and financiers are nothing but useless overcompensated middlemen between the printer/computer and the producer/consumer in the real economy.
The bankers and financiers are buying your representation in order to keep the scam going.
"Okay, then riddle me this: if US debt is being dumped, then why does the yield on USTs continue to go down? Even to the point of being negative?"
my first thought was qe never ended and all .gov and fed stats related to it are bullshit
+1 Junkie. Basically you cannot trust the "public statement" about QE.
Every bank reports Govt. Securities transactions to Fed daily aka compliance reporting. Fed then as a sorta trash man picks the shit somehow at the end of day. This is a net QE, and it is NOT small, and they maintain rates accordingly. Anyone can follow this by looking up reporting compliance to the Fed, numerous papers on it. Then you have the ESF....
Flight to safety. US debt as the cleanest dirty shirt.
Yeah, that IS the most plausible explanation.
speak for yourself... the past couple of years for me... I've pulled in record ammounts... though I would add that most of the growth was from investments I had made (not in stocks).
while I do agree that the government seems to want to try to get more and more involved... I don't think we are as far along as you say. If you want a real picture of just how bad dealing with the government can get just do some traveling.. it gets far worse..
... mailing a package to the US from ching (china post) I show up with my box packed... and am told I need to empty the entire box, because they need to inspect and pack it for me. not only am I not allowed to ship anything that has anything that resembles an envalope, I'm also not able to ship things like CD's or DVD's.. and they want to look at everything.. clothes.. flip through books... etc..
... trying to go to the bank in china... you spend 30 min sitting there just waiting to see a teller (all gov run places have lots of chairs), once you see the teller, you can expect it to take another 30 min or so just to get enough copies of whatever the transaction you are trying to do, and stamp the thing a million times.
... airport in china, the inspection is similar to that of the post office, they want to go through everything you are taking on the plane with you.. this happens twice... once getting into the restricted terminal areas... and again when you get to boarding time.
... even a visit to the embasy in the US can get you an example of how things are there... they set things up in a similar way there, though it's not quite as bad.
USTs are essentially propped up by the entire world because everywhere else is trending downward. If you take in everything as a whole it IS diminishing. OK, for sure, the RATE of expansion, that we'd come to know and "love," has been hammered. Would you agree with that? THAT is your trend, the one that this article, and many others, struggle to really identify.
"If things are deflating, then one big reason is that people have no $$ to buy shit. This is because increasign number of people don't have jobs, are govenrment clients, have low paying jobs or.....aren't getting any interest on their savings"
You're still not pinning the tail on the donkey. The DEMAND isn't there because of debt saturation. Add in demographics and one can see that the tide has shifted and is not coming back in for some time.
"We are rapidly moving to a quasi-communist state where everyone's income, directly or indirectly, comes from the Government. We are probably 3/4 of the way there."
Whatever buzz words/terms you wish to use... The FACTS are that increased control is ALWAYS something that occurs during severe declines and unrest- TPTB, and all those attempting to cling to the dying paradigm will do everything they can to hold on to their positions. When GW Bush said that "you're either with us or you're against us" it was, I could say, this sense of forcing us to group-up such that we support TPTB or the "terrorists" (those opposed to the failing status-quo).
For a great read on how empires rise and fall (you can see it happening now; Glubb, however, failed to pin the tail on the donkey- the underlying issue is that perpetual growth on a finite planet isn't possible [if you fail to understand that this is a flawed premise then you fail to hit the target]):
http://www.newworldeconomics.com/archives/2014/092814_files/TheFateofEmp...
all they talk actually about
sorry, but the grammar police must cite you a ticket on that one.
Yeah, I got kind of ill trying to read this. I figure that it's "free," in which case the editing staff might be busy from time to time (and this is one of those times).
LOL! Bullshit, things that are NOT deflating; DEBT, human population, money supply...
What sort of bullshit propaganda is this? The cost of anything that is required for a high standard of living is most certainly not "deflating".
Global Weimar fuckers!
Raul loves to write articles about deflation. That is deflation of the important stuff, like financial assets. The things consumers buy that keep going up in price and hurting real people, that means nothing to Raul. In this article he can't even seem to make up his mind if this deflation is good or bad.
Financial "assets" areat all time highs, no deflation there.
Of course things are deflating. Over production has stuffed inventories to capacitiy. There is always a lag between those who need to dump inflated assets and the realization that those assets are not worth what they thought they were when they produced or acquired them.
I work extensively in real, physical, world markets. I know the pressure for a powerful wave of deflation for existing assets is already slowing and freezing markets worldwide. Those who hold out the longest, denying the deflating of their assets, or coming late to the acquisition game, will ultimately take the larger losses.
Don't believe the carnival barker theoriticians, economist talking their own books, and banksters and politicians who have already sequestered themselves behind walls of laws and regulations that protect them from prosecution and extermination.
Wake up! A 12 year old, if given access to the truth, would recognize what is already happening.
So, you think that debt and wages don't matter?
Technically, the calories available for consumption have not increased and unfortunately, calories are what keeps the real economy going. Something else noone will recognize is that infinite growth is fucking impossible, let along exponnetial eCONomic growth of 7-8% require to keep the ponzi going.
The TRUTH is we would have been far better off cutting every single person who paid income tax a check for a million dollars with the stipulation that all DEBT must be paid off first. The Fed would have more than met their "inflation targets" and despite flat wages people could still send more becuase they would have less DEBT to service.
Intstead the taxpayer (99%) were handed the private losses of the 1%
Fuck em, roll the motherfucking guillotines!
nothing changes otherwise.
".......Those who hold out the longest, denying the deflating of their assets, or coming late to the acquisition game, will ultimately take the larger losses......."
Spot On.
This is something I have seen firsthand........The Denial......
"......carnival barker theoriticians...."
Great Line......
And Excellents Comments....
I just checked my Snickers bars and cornflakes, and they aren't growing either.....
Kind of the opposite. And check your pasta carefully, some boxes stay at 16 oz. while others sneak down to 14 or lower.
Also a good idea to check your pasta for bugs occasionally. Bugshit is very deflationary.
As I noted above, the issue is that the RATE OF GROWTH is in severe decline. We've been based on an hyper-growth level.
Your ability [and mine] to afford affluence (be honest, when compared to the majority of humans on the planet, and to humans throughout history, we ARE living affluently) IS in decline.
Corporate entities are having their margins hammered. Many have done what they could to keep the old game going. Doesn't matter, economies of scale in reverse is a tractor beam that's not going to let go.
Prices themselves mean little: one just needs to look at the ridiculous valuations on all the companies that contain the bulk of the world's capital. I argued this MANY years ago in discussions (elsewhere) on the future prices of oil. I stated that it's about "affordability;" if prices are low and you're unemployed are the prices really low? vs. if the prices are high and you're employed (by the global economic structure in which you enjoy a good salary) are the prices really high?
"The cost of anything that is required for a high standard of living"
Should we notify the 1%? A "high standard of living" is defined as? When I bought my property I got a pretty low-level home on it (still do); I wasn't happy about it but I wanted property; I told my wife it was a cheap home, to which she looked at me and said: "Cheap is a cardboard box!" She grew up in what is likely NOT going to fall in your "high standard of living" bracket.
Pay attention, the FUTURE is eroding. The rate of returns equates to future growth. This is the macro.
The central banks aren't powerless yet. They still have NIRP and helicopter money before they've run their gambit of "tools".
But are those tools or hand-grenades?
Having power over a game in which fewer and fewer people play... As more and more people become detached from the system the harder the banks will try to force feed us with bad debt: first housing; then autos; then education; then iShit.
There was that [supposedly] saying in the USSR: "They pretended to pay us so we pretended to work." Clearly it will eventually come down to the inescapable realization that whatever "they" do has no substance, has no value to reality (ability to live/survive).
We really have one of two choices:
1) Walk away from it all;
2) Fight for what is there, but doing so only means you pick up the baton for the race to the cliff (it's a dead-end).
Sadly, too many people are looking to "make America great again," so it'll likely be the false patriotism that wins out. Meet the new boss, same as the old boss...
Wonder where Raul lives...?
Does he rent a place...or know anyone who does? Does he pay for health insurance?
If the con artist government statistics conjurers would just come clean...
Great...we have deflation in 10% of our budget!!
...but rampant inflation in 40-50% of our budget...
Raul must be living somewhere at someone else's expense. If he paid for his own stuff he would be crying about inflation.
moody's is a fraud machine. they have less credibility than the fed. they should all be in jail. if they are doing a bunch of downgrades it is only because that crap was overrated (by them, for a fee) in the first place.
That's pretty much it. Our wealth has been vastly over-stated. That's what bubbles do. The underlying drivers are being pulled DOWN. Rates of returns on fixed assets are next to nill. Pensions are under continued downward pressure. These are the things forecasting how the future will be, and that forecast is NOT growth (inflation).
Moody's and such (as controlled by the West) are also becoming more and more political tools as can be seen in attacks on the credit ratings of the West's "enemies."
I'll notice when the Hong Kong housing market starts deflating.
a long time ago they started calling it a "depression"
r
https://enronnext101.wordpress.com/
"And today we’re up to our necks in deflation, and nobody seems to notice, or call it that. Likely because they’re all waiting for CPI consumer prices to fall."
I just received notice that my 2016 Health Insurance premium will increase by over 17%.
Deflation only applies to the shit you don't need!
Am I correct in thinking that a health insurer requesting an increase of 10% or below will have it pretty much automatically approved. And that the states will only review and negotiate or require a lesser 2016 increase if the request is over 10%?
Anything artificially 'demanded' since 2008, with that artificial demand pulled back, is now exhibiting deflation. For example commodities copper and oil were heavily "invested" since 2008 and are now in freefall.
That is what the deflation is about.
Generally since there are fewer real demands on many retail products the prices are going up to makeup for the sales shortfall. So raising prices for many refined products to pay for new higher minimum wages or reduced demand, is why many refined products are going up in price.
The whole education and medical inflation is caused by large demand for "free stuff" supported by fiat printers.
So wherever fiat is used to support artificial demand, then there is inflation. When the artificial demand is pulled back (i.e. copper and oil) then the prices deflate to meet the actual demand price point.
We can see both deflation and inflation occurring at the same time in different markets, but the cause is always due to artificial demand by fiat printers.
Can we just post your comments at the top and erase everything else?
I'd only add that it is illogical to believe that TPTB want to run the presses. That is, it is my belief that they are only doing so in order to prop up a global market that is wanting to collapse. While anything can be seen a success given a short enough time-frame, the fiat printing, as history tells us, is but a terminal condition (the long-term won't deem it a success).
Over-saturation. Changing demographics. Growth as we'd known it, and predicated the future upon, won't be back any time soon (and likely won't ever).
Wait until economies of scale in reverse really start kicking in. THEN you'll see real PRICE INFLATION (as a measure of "affordability"); this will be the final burn-out phase- a last-gasp effort to keep the large production machines cranking away, until, that is, there's not enough buyers to support the operation of those machines: keep in mind the scale of raw materials extraction- without the scale of demand here the economies of scale will really go negative (thereby feeding price pressures on manufacturers- margin compression, big time).
"Healthcare" is a protection racket. The mafia just made you an offer you could not refuse.
Best analogy: The economy is a bathtub. They are trying to fill the tub artificially, but leaks and cracks form - defaults and bankruptcies. Sure, they'll panic and try to fill it faster, but with greater wealth disparity comes bigger leads and cracks. Deflation becomes inevitable.
Keep in mind even when they hyper inflate, big deflationary events happen in many different way. But ultimately we will not be free until we are all out of debt.
For those who count paper as gold: deflation commeth.
think of the economy as the fed's toilet. the fed throws a real shitty party and someone gives them an upper decker (bad debt, twin deficits). they try to clean the shit out of the top with repeated flushes but no matter how much liquidity goes through the bowl the shit remains in the tank.
I don't disagree with Peter Schiff and all the Austrians.
In principle they are right.
But the point I add to their arguments is that if you allow the deflation to occur without first fixing its cause - the debt-based monetary system - then there will still be no real healing, because you'll either be perpetuating the problem by lodging it in the currency itself, or destroying the currency without a replacement leading to a collapse in trade.
We don't need the elephants to agree on a currency for trade.
But an understanding of currencies needs to be widely enough spread that people can choose what to use themselves.
Invest in jewler's Precious Metal's purity testers.
If there was a lot more knowledge, and many more manufacturers of such devices out there, there would be little need for 'official' currencies. Just the metal would be enough.
Is it really the "debt-based" system that's at the heart of the problem?
A strong argument could be made that the issue is that of an "interest-based" system. Interest is compounding. Compounding growth cannot be maintained as we're on a finite planet. I believe that the "debt-based" system is the "sales" job that TPTB use to force us to buy the false premise of perpetual growth; rather, they really only care to have something to game the masses with such that they, TPTB, maintain control (have their free ride).
Deflation...my ass!
Our power bill is up and going up more, our water bill is up and going up more, our food bill is up and going up more, our proerty tax is up and going up more...etc.
Again deflation...my ass!
Not how it works. You need all of those things, thus the price isn't being reduced to liquidate inventory. Deflation occurs as people run out of extra money to buy crap they don't actually need, therefore inventories of this crap get liquidated to stay in business.
People are running out of extra money for junk.
Most of the food and energy bill are also crap people don't need. But they are comforts so people pay.
That will change.
Einstein quote:
An EXTEREME LUNACY, is for someone to keeps doing THE SAME ROUTINE, and EXPECTING a DIFFERENT RESULT.
Couldn't said it any better..
Lunacy here implies that if you were to stop doing that your life would be better. At least people would think you less crazy.
The CB cannot stop because once they stop the entire global economic system and 600 years of financial "progress" unwinds.
They are not crazy. They are desperate.
Yeah, like pushing for more growth when we KNOW that perpetual growth on a finite planet isn't possible.
I get bashed all the time for saying it, BUT... INFLATION should simply be defined as RISING WAGES.
Without rising wages, price hikes ARE NOT SUSTAINABLE. If they are not sustainable they will always revert back to where th emarket needs them to be. Yeah, rising prices seem like inflation, but only if you can afford to pay them.
now bash me, I simply don't give a fuck anymore.
Agree. Fiat printing + low interest rates (both artificial) will lead to price rises (which appear as inflation), but then later appear as deflation as the artifical demand is removed.
All the artifices are causing price deviations (appearing as inflation and deflation) from the natural market driven price point.
Fiat + low interest rates artificially cause price swings and supports, which fall away when the fiat financiers fall away.
You are correct, and the current round of price hikes are desperate price gouging. They will not endure but companies will go broke before they reprice.
It's over.
Yes, I think that this really nails it to the ground! When you have rising wages you tend to have rising production, and these result in a need for additional infusions of cash/money (to help with expansion of production).
"Without rising wages, price hikes ARE NOT SUSTAINABLE."
Nothing that is rising indefinitely is sustainable.
"Yeah, rising prices seem like inflation, but only if you can afford to pay them."
"Affordability" is key.
"now bash me, I simply don't give a fuck anymore."
That's the spirit! That's the point that I've come to. How ironic it is that I find someone with a clown avatar is anything but a clown!
Curb, I never though in exactly the same terms, but completely agree none the less. When the ass hats at the top keep a continually growing percent of the pie, the regular folks just don't have enough to keep the show going. Whether its dropping money from helicopters, or more realistically as you put it, increasing wages, it all points to the same thing. I'm not a socialist by any means, but I also don't agree with wanton greed. The ass hats at the top are keeping far more than they should, and in the process are cutting their own throats by cooking the goose that lays the golden eggs, the middle class.
Kill the ass hats ability to screw us all….END THE FED
The "ass hats at the top" are accumulating NUMBERS ON PAPER!
Are you expecting everything to be fair, to be equal? Should we ALL be like THEM? What is it that you're asking for here?
"Kill" the "ass hats," and "END THE FED" and we're STILL all broke and staring at a totally un-workable system (it's based on perpetual growth on a finite planet). AND, we'd STILL be aging! (demographics has us slowing down at the same time that are hard-working machines are starting to lose their ability to be sustained).
The "middle class" is primarily a phenomenon of excess. That is, the "middle class" exists only in an "land of plenty." But as you put it, the loss of the "middle class" will essentially result in a bad outcome for TPTB. Do you not think that TPTB know this, that they aren't aware of history? Do you not understand what all the US empire's actions over the past several decades have been about installing more control over its own citizens because they KNOW what's coming? But like a dog always returns to eat its vomit, TPTB cannot refrain from engaging in these actions because POWER never cedes itself.
I don't embrace the "ass hats," the "FED" or any other power (not by a long shot). I DO, however, embrace logic. You can overthrow, but then what? If you don't have a plan to succeed then you have a plan for failure. Threats against TPTB will only give them more reason to crack down on everyone else. I don't believe that it makes sense to be a martyr for a system that's based on an impossible premise; therefore, I believe it more prudent to walk away from, to NOT engage, TPTB (etc).
Banker's have achieved excellent market penetration with their product, debt.
Unfortunately, they have been so successful that the market is now saturated.
It's the exponential function. Compounding interest and the quest to feed "profits" (and to pay off compounding interest on capital loans) necessitated all of this.
The bankers didn't really make up the story, they just profit off of it. They are promotors of the BIG LIE: that we can have perpetual growth on a finite planet.
Why is it every time I mention exponential function it gets a down-arrow? WTF? Folks are here at ZH, a site dedicated to the economic affairs of the world and they have issues with a simple math function?
Or, if you're still confused as to the origins of the "problem:"
"Go forth and multiply." (until what? until we start to cannibalism ourselves because we've overpopulated?)
And as far as the origin of "interest," that's attributed to the Phoenicians (origin merchants, not "bankers"): http://phoenicia.org/interest.html
Utter fucking moron(s)!
Well I do: DEFLATION STARTED!
And keep in mind that this is with their infusions: I believe that infusions really only amount to filling in holes in the books so that the insolvency that's everywhere doesn't pop up (it will!) and then trigger a bunch of cascading defaults (margin calls).
"recent events, though, show us once more why we’re right to insist on inflation being defined in terms of the interaction of money-plus-credit supply with money velocity"
Well, "inflation" is defined only as an aggregate rise in the prices of all goods, so technically, you're not right. However, you are correct in a more general sense. Based on the metrics you show, we are seeing the beginnings of a global deflationary unwind. As you indicate, when debt levels rise too high, they choke off all economic activity. Deflation has taken strong hold on the PPI and that will inevitably trickle through to the CPI as businesses, like the ones you highlight, realize the only way to boost sales is by slashing prices.
Since 2008, when central banks embarked on a historically unprecendented campaign to drown the world in money (which being debt-based money had the knock-on effect of drowning the world in more debt... oops.), an argument has raged between the three or so analysts (including myself) calling for deflation, and everyone else calling for hyperinflation. Since then, the hyper-inflation crowd has pointed to rising food prices as evidence that hyperinflation is upon us. Of course, "hyper-inflation" would be an unusually high and accelerating aggregate rise in the prices of all goods. As time wore on, the promised Weimar-style hyper-inflation never materialized. Interest rates never backed up and no one except Donald Trump is wallpapering his nook with $100 bills. (A hyper-inflation limited to food prices would be more accurately called "famine." Thank you Monsatan.)
"the system is imploding. Deflating. Deleveraging. And before that is done, there can and will be no recovery."
There is another way. We can implement meaningful market reforms, declare a debt jubilee, outlaw privately manipulated debt-based currencies, arrest all the criminal bankers, nationalize the TBTF banks, unwind them in an orderly fashion and distribute the proceeds to the people. Of course, there are no signs of that happening and it wouldn't be like the bankers not to bleed the corpse dry, so buckle your seatbelts.
"Well, "inflation" is defined only as an aggregate rise in the prices of all goods,"
Not according to Austrian economics it ain't. And herein lies the problem. There are TWO different means by which inflation and deflation are measured.
"We can implement meaningful market reforms, declare a debt jubilee, outlaw privately manipulated debt-based currencies, arrest all the criminal bankers, nationalize the TBTF banks, unwind them in an orderly fashion and distribute the proceeds to the people. Of course, there are no signs of that happening and it wouldn't be like the bankers not to bleed the corpse dry"
And THEN what? We return to play the growth ponzi? Are you ready to shell out for re-equalization? After all, if you're asking one group to bail out you've got to ask ALL groups. Though the banks do hold a fair amount of wealth, they only hold a fraction. Canceling contracts, because that's what we're talking here, will necessarily mean that those cancellations will come back around to YOU and I. You really think that things can be unwound in an orderly fashion? The TBTF entities will ensure that they come out on top, period. It'll be THEIR laws, THEIR courts and THEIR politicians.
It's all fanciful thinking. Might as well state that the solution would come about by the use of unicorns, but the bankers are going to kill the unicorns so it all ain't going to happen. You have effectively proven yourself right that your "solution" won't happen, not because it's not-workable (in any reality that we know), but because "THEY" (it's always easier to blame others for one's failures) won't allow it!
Anyone who thinks that the banksters are intentionally wanting to collapse everything is failing to point out the logic in this "strategy." This is the game that has given them the power and they want to crush it? Doesn't make sense. If, however, the system is seen as failing (who believes that it could have gone on forever?) then I could support the notion (and believe it to be of a high probability) that the banksters are scrambling to reshuffle the deck chairs and that they KNOW it's going down.
Are you going to give up a share of any wealth that YOU have in order to make others residing in other parts of the world, people that have been exploited for YOUR wealth, on equal footing?
Details matter.
They know. They simply do not care.
Prices are flat because wages are flat. Wages are flat because in the developed world, most people's usefulness to our masters even as wage-slaves is rapidly diminishing.
The portions of the human race who made industrial civilization possible are being encouraged in no uncertain terms to stop reproducing, because they're becoming more trouble and potential competition for our masters than they're still worth now most of their jobs can be automated. Low-IQ fan-wavers from Africa and the Middle East will cheerfully replace us for a fraction of the cost, to do the jobs that can't yet be assigned to robots.
The empty promises of support made to elderly proles will be defaulted on or hyperinflated away at an appropriate time. Our masters never intended to keep them, and it is increasingly unclear that they were ever in a position to do so.
So, are you saying that we could have bred like bunnies and all achieved a high standard of living?
"They know. They simply do not care."
OK, if they "cared" what would you expect to see "them" (it's always "them," someone else responsible for one's situation, yes?) do?
"Low-IQ fan-wavers from Africa and the Middle East will cheerfully replace us for a fraction of the cost, to do the jobs that can't yet be assigned to robots."
Yes, you're insecure. You're afraid of being pushed out of favor by YOUR overlords! Low-IQ, really, and you have some mythical high one? When things return to a more normalized way of life, a life that's more along what the majority of humans live and have lived throughout history, we'll see just how "smart" YOU are. My "IQ" might be higher than my brother-in-law's, but when TSHTF guess who is actually "smarter" about survival? (he's a good hunter -I'm a farmer; he's a gunsmith -I'm a good mechanic (tractors and shit); he's a knife-maker -I can barely keep knives sharp!)
If I were to hire someone it would be someone that doesn't think that they are entitled. Too many folks here are essentially hiding their sense of entitlement. And, well, however you deal with YOUR insecurities is up to you; note, however, that I don't sign on to emotionally-charged and illogivcal "solutions"/actions; oh, and while my brother-in-law is a good hunter, I'm a very good aim.
I'm feeling insecure? I suppose I am. I prefer to think that's mostly proof I'm sane and I understand how truly desperate our situation is.
To answer your question, yes, Europeans could easily have had much larger families, driven out the native population in much larger parts of the world than they did, settled on their land and done with it what the natives could not. By now white-majority southern Africa should have been as rich and prosperous as Australia. Unfortunately, our masters preferred cheap African labour to white settlement even in South Africa.
Talk of nightmare scenarios from the practice of eugenics is mostly hysteria. Actual governments have generally preferred to encourage people smart and creative enough to be a threat to them to reproduce as little as possible when they were not actually murdering them. It's the blithering idiots who were always encouraged to breed like rats.
You're a farmer? Good for you. In the end they'll take your land too, just as in Rhodesia. Do yourself a favour and save the last bullet for yourself, all right?
There's hope. Just not for us.
Seer, we all know rome is going to burn. What we want to know is, what will get us through it without incinerating us all alive? I too have posted the Jubilee idea here on Zerohedge (http://www.zerohedge.com/article/ron-paul-appeals-america-default-now-or-suffer-more-expensive-crisis-later#comment-1482324), including the fact that I don't think it will work because it does not change the underlying human nature that lead to the situation in the first place. If a jubilee ever happens, the world will end up back in the same debt, only it won't take as long to get there the next time. Like you said, destroy it, then what? What's your solution? Is there ANY solution besides what appears to be the inevidable, "Let it burn"? As you say, even that is not a solution, as we end up in the same circumstances that got us there in the first place.
You are right, the big guys have things set up in their favor. I'm right, they have gotten to greedy. Like you, I do not want to become them either. They have a monoply on controlling the system, and I don't see myself changing that fact.
The only solution I see on a personal level is to do my best living below my means and ask for God's mercy.
This ALWAYS happens with fiat-debt non-money.
Solution: money == physical gold/silver only.
Solution: NO fractional reserve practices.
Stocks are not deflating.