This page has been archived and commenting is disabled.

What's Next: Deflation, Inflation, Or Hyperinflation?

Tyler Durden's picture




 

Submitted by Bill Bonner via Bonner & Partners (annotated by Acting-Man.com's Pater Tenebrarum),

Divided Opinions

We are not the only publishers to offer opinions. And not the only ones with alternative points of view. So, to answer these questions, let’s look first at the range of opinions on offer…

First, there is “the authorities must know what they are doing… besides, I have more important things to think about” camp. This is by far the largest group: hoi polloi. The masses. The lumpenproletariat.

 

border collie

Saved by the border collie

 There may be some grumbling and kvetching. But most people count on the feds to manage the economy, foreign policy, the future, and the government. They expect mistakes from time to time. But they also believe the system can be trusted to produce an acceptable, although perhaps not always ideal, outcome.

And if not, God help them. Because the difference between the outcome if they bothered to think about it and the outcome if they didn’t is the same. They have no ability to influence public policy… and not much room to maneuver in their private lives.

They get salaries, pensions, Social Security. They need jobs, mortgages, student loans, and medical insurance. They have little capital to invest or protect. They depend so heavily on “the system” that they can’t afford to believe there is something deeply wrong with it. They go along. They get along.

 

sheeple

Going along, getting along…

At the other end of the idea spectrum, there are the edgy, malcontent, and extremely marginal opinions. A man, sitting in his double-wide watching TV can come to hold all sorts of wacky views. There is an entire infotainment industry that provides screwball opinions.

You want to believe Obama is a Muslim? You want to believe the Bilderbergers, the Rothschilds, or the Rockefellers run the world? You want to know about GM’s perpetual-motion engine that – if the secret got out – would put the entire auto industry out of business?

 

covercheneyrobot

We always knew it….

Well, that is a market. But it is not ours. Let others fill that demand. There used to be a tabloid newspaper called Weekly World News. You would see it at the convenience store, right in front of the checkout with enticing headlines such as: “Garden of Eden Found”… “Obama Adds Himself to Mount Rushmore”… or “150-Year-Old Man Finally Graduates from High School.”

 

pope hat

There was a second pope hiding under the pope’s hat! More popes to come?!

Our favorite was a front-page photo of an airplane crashed on the surface of the moon. “WWII Bomber Found on Moon,” was the headline. “Pilot Error, Say Experts.”

 

ww-2-bomber

Finally found on the moon! Needless to say, this was quite a significant pilot error

 

Terminal Problem

But it is the far-out world of money, economics, and finance that interests us. We try to figure it out. We try to understand. We try to see what’s coming before it arrives. And we try to be serious about it.

Apart from the mainstream view – that the authorities have things under control – almost all serious analysts see a terminal problem developing. The current situation (with zero and even negative interest rates… and debt expanding much faster than GDP) can’t go on.

It had a beginning, in the early 1980s. It must also have an end. Most of the guesswork is now focused on when and how that end comes.

 

the end

The real reason why the end is near: Elvis told Bigfoot to shut us down!

Recently, one of our dear readers summarized the three major points of view, along with one minor one:

Deflation Camp

Harry Dent is in line with the Austrian Business Cycle Theory: Money printing causes financial bubbles, distorts the economy, and is therefore counterproductive. Like Bob Prechter (I don’t follow him closely, but his argumentation sounds similar), Dent bets on deflation and depression.

 

Fighting debt deleveraging and demographics is like putting yourself in front of a tsunami. In such an environment, the U.S. dollar would gain purchasing power, and gold would underperform significantly. (Harry sees it back to $700 in 2018-19.) Cash/T-bills/short-term Treasurys are the place to be. Rates will stay low for very long.

 

Inflation Camp

Jim Rickards’ thesis – “inflate debt away via a massive issuance of SDRs after China has joined the club” – is also very credible. World currencies are massively diluted via issuance of SDRs, which serve only the powers that be. Rather than a new gold standard, this is the solution to Triffin’s dilemma (more flexibility for the elite).

 

[Triffin’s dilemma describes the constant need for the global reserve currency issuer – in this case, the U.S. – to supply the world with reserve currency by way of a long-term trade deficit. Eventually, argued Yale economist Robert Triffin, this would lead to a loss of confidence in the reserve currency.]

 

Citizens are excluded/not allowed to own SDRs. Their purchasing power shrinks. They don’t know who to blame. The IMF does not consist of elected officials, and the majority of the population doesn’t even know it plays a role in creating inflation. And they can pretend that they have to save the world, too. (Remember the Greek bailout?)

 

Hyperinflation Camp

Shadow Stats’ John Williams is having a really hard time fighting for his ideas. He is right about the “CPI-CP Lie” and the current true state of the economy. But whoever invests along his ideas is running out of capital to stay in the game.

 

Peter Schiff and Mike Maloney are on a similar line. The problem with them is that they have a conflict of interest with their businesses. But I have no doubt about their integrity: They do/live what they say.

 

Deflation to Hyperinflation Camp

I recall an interview with Nassim Taleb on Bloomberg TV in 2009 when he said, “We will go from deflation to hyperinflation without seeing inflation.”

 

nassim-taleb580_101416a

Nassim Taleb, from one extreme to the other …

 

Tokyo to Buenos Aires

Our view is that Taleb will be proved right. Back in 2009, we predicted “Tokyo… then Buenos Aires” – a Japan-like deflation, followed by Argentine-like hyperinflation. Most likely, there will be no stop in between for moderate levels of inflation. Inflation, as economist Milton Friedman observed, is “always and everywhere” a monetary phenomenon.

But hyperinflation is a political phenomenon. It is caused by those same authorities the masses think they can trust. When they are threatened, they will protect themselves by printing money on a scale we haven’t seen since the War Between the States (consumer prices in Richmond, Virginia, had risen 6,700% by the end of the war).

 

Confederate_100_Dollars

100 dollars printed by the Confederate States in Richmond, Virginia

There are times when printing money seems like the best course of action – especially for the people running the printing press. It may not do the common man any good, but it gets the feds out of a jam. But that is a long story… and one for the future.

We’re still in a Japan-like long, slow slump. And it looks as though we’re going to be there a while longer.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 11/03/2015 - 12:58 | 6744296 JustObserving
JustObserving's picture

War is next.

That will destroy the dollar and lead to hyperinflation.

Tue, 11/03/2015 - 13:05 | 6744331 LawsofPhysics
LawsofPhysics's picture

eventually all those paper claims start seeking out real assets or producers of essential goods and services simply can no longer deliver or accept the bullshit paper.  This is simply math and physics folks...

same as it ever was...

Tue, 11/03/2015 - 13:12 | 6744367 coinhead
coinhead's picture

DOW 100,000

Eggs $1,000

Tue, 11/03/2015 - 13:33 | 6744481 two hoots
two hoots's picture

So the market will do well with hyperinflation? 

Tue, 11/03/2015 - 14:40 | 6744782 Jethro
Jethro's picture

Didn't Zimbabwe's market generally outperform the herd for awhile?

Tue, 11/03/2015 - 14:53 | 6744846 Tall Tom
Tall Tom's picture

Nominally...No.

 

It will not be able to keep up with the rate of the growth of Hyperinflation.

Wed, 11/04/2015 - 07:37 | 6747862 N2OJoe
N2OJoe's picture

But the word nominal is not even in the vocabulary of the greater fools who keep the "market" profitable.  The absolute number will rise, and that's all that matters to keep a steady flow of new suckers . Well, assuming they can still afford food and electricity, which at some point they won't.

Tue, 11/03/2015 - 13:40 | 6744509 A Nanny Moose
A Nanny Moose's picture

A new monetary regime will be created, just as with every other war.

Tue, 11/03/2015 - 14:03 | 6744605 SWRichmond
SWRichmond's picture

Deflation cannot be wishstood by any government, especially one with so much debt to service.  (Even if it cancelled all of its promises (Medicare / Medicaid / Social Security) the US is broke.)  But debt saturation stops the debt / spending growth that is required to keep the system floating.  So first debt saturation (which shows up as marginal productivity of debt dropping below zero), then Keynesian "quatitative easing" to try to refloat the system one last time, and when this does not overcome the current level of debt saturation, a deflation begins.  A pronounced deflation destroys tax revenues, which left unchecked will destroy faith in the currency (hyperinflation).  (Note: Japan had the rest of the world in the middle of a debt bubble, buying useless consumerist junk hand over fist, and so was able to "get away with it" for a few decades.  Japan also had no global empire to maintain.)  So the response to a pronounced deflation is reliably always more money-printing, and if $4Trillion wasn't enough the first time, then the Fed will have to print enough to cause a run on Treasury bonds, destroying confidence in the currency = hyperinflation.

And a concurrent war, to blame it all on

So yes, first deflation, then hyperinflation.  Thus the wisdom of the so-called "barbell" portfoilio, half cash (to survive the deflation) and half dollar shorts (PMs, miners, etc) to survive the hyperinflation.  We have been in this portfolio since 2009.  And still are, and have no intention of leaving it.

You guys can have fun with your Apple stock.

Tue, 11/03/2015 - 14:25 | 6744726 gator gatlin
gator gatlin's picture

Just exactly who is "we" white man?

Tue, 11/03/2015 - 15:27 | 6745044 centerline
centerline's picture

Great post SWR.  Wish I had the magic touch when it comes to summing things up like this.  Agree of course.  Deflation, then hyperinflation.  I would add though that there is a chance the hyperinflation side of things move more quickly than any expects.  This time around, information moves quickly.  Things can go bad in a "flash."  The deflationary journey though is going to be the real killer though.  Most people will be crushed before the currency goes "poof."

Heck, more and more articles are coming out to support this.  Just yesterday I saw an article about how Chicago is jacking property taxes again. 

Like I said long ago... got a house?  pay up.  got car?  pay up.  want trash picked ip?  pay up.  want the fire department to give a shit?  pay up.  etc.

Dont want to pay up?  OK.  Here it is in your electric bill.  You like electricity, right? 

The "system" is going to come after anyone and everyone for everything.  And the result will be full-on economic collapse (deflation).  Everything that is not mission critical will be thrown overboard.  And THAT is the majority of our consumer economy.  At some point on this path, it all goes to hell of course. 

Tue, 11/03/2015 - 23:06 | 6747124 thinkmoretalkless
thinkmoretalkless's picture

Damn I thought I was original in this position, but it has been irritating watching the deceivers pump and dump with paper and digits. I've learned the hard way over the years that reality always wins.

Tue, 11/03/2015 - 13:00 | 6744302 Ignatius
Ignatius's picture

Tyranny.

Tue, 11/03/2015 - 13:17 | 6744400 Boris Alatovkrap
Boris Alatovkrap's picture

Cross dress dictator.

Tue, 11/03/2015 - 13:26 | 6744446 Ignatius
Ignatius's picture

That's "Tranny," Boris, but you're close.

Tue, 11/03/2015 - 14:18 | 6744687 cougar_w
cougar_w's picture

Boris got ahead of you.

Tue, 11/03/2015 - 14:20 | 6744700 Boris Alatovkrap
Boris Alatovkrap's picture

Sorry, Boris is struggle with pronounciation of Englsih jargon.

Wed, 11/04/2015 - 08:48 | 6748008 Chuck Walla
Chuck Walla's picture

Sorry, Boris is struggle with pronounciation of Englsih jargon.

Simple enough, just say FLOTUS. Same thing.

FORWARD SOVIET WOOKIE!

Tue, 11/03/2015 - 13:07 | 6744305 Supernova Born
Supernova Born's picture

You can't print beef as the skyrocketing price demonstrates.

Tue, 11/03/2015 - 13:18 | 6744406 Boris Alatovkrap
Boris Alatovkrap's picture

New 3-D Print Technology for Bacon!

Tue, 11/03/2015 - 13:29 | 6744466 RadioFlyer
RadioFlyer's picture

All you need to do is take a dump into the flux capacitor!  Instant bacon!

Tue, 11/03/2015 - 14:19 | 6744692 Boris Alatovkrap
Boris Alatovkrap's picture

How many is Jigawatt?

Tue, 11/03/2015 - 13:01 | 6744311 ToSoft4Truth
ToSoft4Truth's picture

Every posters earliest memory should be Louis Rukeyser asking, “Deflation, Inflation, Or Hyperinflation”

Tue, 11/03/2015 - 13:04 | 6744325 stant
stant's picture

Deflation ,war , then inflation

Tue, 11/03/2015 - 13:04 | 6744327 autofixer
autofixer's picture

Whatever corrals the sheep quickest.  

Tue, 11/03/2015 - 13:22 | 6744340 Dr. Engali
Dr. Engali's picture

My view has always been that we see one more big deflationary event, and then all the global dollars come home to roost causing overnight hyperinflation with a quick super nova like burn out.

 

Edit: I recall a story from a poster during the early days of the Hedge. If I butcher it I apologize, but it essentially went like this: He was riding in the car with his dad and the topic of the great depression came up. His dad said, ïn the first great depression nobody had any money." Ïn the second great depression everybody will have money."

Tue, 11/03/2015 - 14:30 | 6744652 cougar_w
cougar_w's picture

Someone's dad might turn out to have been right.

I think however that we get real classic "depression" regardless, and for a long time, and then we stabilize at a very low level of production and wealth creation not seen for 1,000 years. My reason for thinking that is very simple.

The inflation and wealth creation we've enjoyed for 500 years (mostly in the last 100 years) was only possible due to the increasing availability of cheap/free energy culminating in our current frantic efforts (tight oil) to keep the music playing. Our economic growth was and is fueled by that energy. As that situation reverses we are going through a period of energy stagnation that will result in economic stagnation, as now. It's easy to become confused about which dog is wagging that tail, but that's how it is. In this case, economics dances to the tune being played by energy physics. As the EROEI curve starts to eat us alive we will fall off the cliff into energy consumption chaos, not a gradual slide but a disastrous catastrophic failure. People may or may not have money, but nobody will want money they'll want energy and in particular crude oil, being the master resource, and at that point will pay anything for it. But it won't be there, at all, except for the military and maybe the elites. Tanks for us and private jets for our masters. The resulting energy shock will be utterly unexpected and totally irreversible. It will give rise to all sorts of cargo cults and nationalist movements, but to no avail. 

The road back to a sustainable solar-based (meaning sunlight) economic activity will leave us fewer and vastly less optimistic.

I do not see how any of this can be avoided.

It will take less than 50 years.

Tue, 11/03/2015 - 16:23 | 6745404 Lockesmith
Lockesmith's picture

Solar is not sustainable.

Nuclear is.

Thorium reactors would solve all energy problems forever...but the US government de facto banned them by declaring thorium to be evil. Yes, really.

Tue, 11/03/2015 - 17:29 | 6745823 cougar_w
cougar_w's picture

Sun light.

Growing crops. Forests and wood. Incident heating. Wind-driven mills and pumps.

We've been sustainable for a 10k years. Not at 8 billion humans, for sure, but at one time we knew how to do this living off the Sun.

Wed, 11/04/2015 - 00:13 | 6747305 MEAN BUSINESS
MEAN BUSINESS's picture

That ~50 years will be a very very long row to hoe (fugly). I can't imagine what the World Meteorological Organization 15th Assessment Report will have to say...

Tue, 11/03/2015 - 14:54 | 6744853 seek
seek's picture

"My view has always been that we see one more big deflationary event, and then all the global dollars come home to roost causing overnight hyperinflation with a quick super nova like burn out."

This is my read as well. And if you do any long-term modeling (I do as part of my work) on macro stuff, for several years there's been all sorts of interesting pointers/crossovers, etc around the 2017-2018 time frame. My sense has been for a while now that whatever "event" appears then, and we quickly (over about 18-24 months) go through whatever re-alignment we're going to go through -- at least phase one. My sense is that phase two is some sort of short-lived government patchwork before a real reformation or balkanization happens.

I've been dealing with buying and selling a few things on the used market lately -- not something I'm very prone to do -- but I'm stunned at how little things are are trading for, and how illiquid the markets are. There's a lot of "stuff" chasing very few dollars that the average person in the US has. I have no doubts whatsoever, regardless of what the government stats say, that we are in a deep, deep deflation.

Taleb is a very smart guy, while I know not all ZH'ers appreciate him and see him as part of the financial complex, to ignore anything he says about the long term and especially about risk is unwise.

Wed, 11/04/2015 - 09:20 | 6748099 Chuck Walla
Chuck Walla's picture

I've been dealing with buying and selling a few things on the used market lately -- not something I'm very prone to do -- but I'm stunned at how little things are are trading for, and how illiquid the markets are. There's a lot of "stuff" chasing very few dollars that the average person in the US has.

This is a MAJOR problem for the Boomers. We aquired a lot of needless stuff, collections, antiques, etc and now need to convert these into cash. Can't take it with us.

There is no interest among the coming gens behind us, no money, either. This junk, that was so expensive to aquire, is essentially worthless now. This phenomena will continue until only the staffs of life are bought and sold.  

 

FORWARD SOVIET!


Tue, 11/03/2015 - 13:07 | 6744342 LawsofPhysics
LawsofPhysics's picture

The "flation debate" is stupid and a fucking distraction.  Infinite growth in a finite biosphere is impossible.

some will have access to the resources required to maintain a decent standard of living, most will not...

regardless, retribution will be paid...

same as it ever was you stupid fucks...

Tue, 11/03/2015 - 13:24 | 6744439 imapopulistnow
imapopulistnow's picture

Thick copper cables replaced by strands of glass the width of a hair"

 

A dozen electrical appliances replaced by a mobile in your pocket?

 

Coal replaced(eventually) by direct photon to electron conversion?

 

Are not all of these examples of economic growth?

Tue, 11/03/2015 - 13:39 | 6744498 two hoots
two hoots's picture

But how do you get a piece of toast in a device that's in your pocket?

Tue, 11/03/2015 - 13:44 | 6744523 A Nanny Moose
A Nanny Moose's picture

@MyToaster

https://twitter.com/mytoaster

Viola!!! Er...is it cello?

Tue, 11/03/2015 - 16:25 | 6745419 Lockesmith
Lockesmith's picture

To an eco-liberal like our friend there, the very act of you drawing breath is a sin.

Tue, 11/03/2015 - 13:07 | 6744343 pods
pods's picture

I think a slow deflationary collapse.  Not a WTC7 type collapse.  

I think hyperinflation only if the government issues a new currency alongside the FRN one.  As people pay off debt with raw currency, further collapse in FRNs will stem hyperinflation until they are gone and a new, non backed one is all that is left.  Then if the gov starts printing you will see it.

Can't get hyperinflation if currency has debt attached to it.

pods

Tue, 11/03/2015 - 13:11 | 6744358 LawsofPhysics
LawsofPhysics's picture

"Can't get hyperinflation if currency has debt attached to it."  -  hhmmm, what if no one accepts it?

the debt is still "attached"...

remember, the velocity of a dead currency is in fact zero.

Tue, 11/03/2015 - 13:27 | 6744452 Apocalicious
Apocalicious's picture

Currency is debt.

Tue, 11/03/2015 - 14:00 | 6744596 pods
pods's picture

In our current system, yes, currency is one side of the ledger, as like 90% of all currency is loan derived.

That is why the helicopters everyone warns about will never come.  Unless someone borrows it first. And because everyone is debt saturated, it wont happen.

pods

Tue, 11/03/2015 - 14:10 | 6744642 Usurious
Usurious's picture

Mako............''We use credit/debt as currency and credit/debt wont be HyperInflating''........

 

trav7777..........hyperdeflation vs hyperInflation...............it does not matter, as they both end in the same place.

Tue, 11/03/2015 - 14:18 | 6744689 Jethro
Jethro's picture

"they both end in the same place." Dining on Dinky Di without the luxury of toilet paper.

Tue, 11/03/2015 - 15:42 | 6745121 centerline
centerline's picture

Trav was right in the grand sense of where this all leads once the current financial systems go tits up.  Either way, you can't buy what you need.  Does not matter if your currency imploded or exploded.

But, nonetheless, it is a journey.  And my take on it is that decade from now there will be a lot less people.  So, like being chased by a bear... you dont have to be faster than the bear.  You need to be faster than the next guy.

Tue, 11/03/2015 - 15:30 | 6744934 Tall Tom
Tall Tom's picture

The currency ALREADY EXISTS, pods. It does not have to be created. It does not have to be borrowed into existence.

 

It is in the vaults of Foreign Central Banks. It is "Commodity Backed" by OIL.

 

Believe me when Oil stops trading in strictly US Dollars...or predominately in US Dollars, those Foreign Central Banks will divest themselves of those US Dollars and they will find their way back to our shores.

 

The Foreign Central Banks will play the role of the Weimar Republic Germany lumpkin.

 

And as there are currently agreements being made and acted upon to trade in Oil using alternative currencies then the storm is just beginning. And that is the writing on the wall.

 

WATCH THAT PRICE OF OIL. 

Tue, 11/03/2015 - 13:09 | 6744351 Sizzurp
Sizzurp's picture

Banks will never allow gov to hyperinflate.  Instead they will grind the population to dust under the heavy millstone of taxation.

Tue, 11/03/2015 - 13:09 | 6744352 Supernova Born
Supernova Born's picture

Company scrip handed out to get everyone from plumbers to orthopedic surgeons to jump through hoops.

Wall St. moneychangers can make more in a week than a brain surgeon can make in a lifetime.

 

Tue, 11/03/2015 - 13:11 | 6744360 Johnny Horscaulk
Johnny Horscaulk's picture

the GDP must flow, young man.

Tue, 11/03/2015 - 13:15 | 6744374 Supernova Born
Supernova Born's picture

Like the bloody diarrhea of an e. coli afflicted Chipotle customer.

Umm, umm food price inflation.

Tue, 11/03/2015 - 13:11 | 6744356 Johnny Horscaulk
Johnny Horscaulk's picture

'Deflation, Inflation, Or Hyperinflation?'

To me, as a genuine scientician, the fact that economics PhDs can not answer with any amount of certainty this ostensibly simple question, arising out of economic/monetary policy decions made by economics phds...

tells me:

1] Economics is not a fucking science. |:
2] economics phds have no more business running the economy than people who merely successful run businesses, innovate and invent.

This said hyperinflation is the method by which large aggregations of capital can leverage itself against the poor masses and poor sovereigns and exchange absolutely farcical and odious "debt" based on money that only came into existence, at interest, AS a loan, backed by nothing.............can trade ink and paper for realty, equity, and your government and media.

Tue, 11/03/2015 - 13:58 | 6744583 Shad_ow
Shad_ow's picture

To me, as an ordinary individual who pays attention, it says everything is fixed and we are not in on the game.  We are being gamed.

Tue, 11/03/2015 - 14:13 | 6744664 Jethro
Jethro's picture

We are being farmed.

Tue, 11/03/2015 - 14:17 | 6744682 cougar_w
cougar_w's picture

Yup!

Not going to work though. The age of empires is over.

Tue, 11/03/2015 - 13:11 | 6744359 gcjohns1971
gcjohns1971's picture

"What's Next: Deflation, Inflation, Or Hyperinflation?"

D.  All of the above.

 

Inflation is what you get when more currency units chase the same number of products for sale.

Hyper inflation is what you get when people would rather store wealth in something other than currency.

Deflation is what you get when the loans backing debt-based money default.

 

You can go through each in sequence.  Because the design of debt-based currency REQUIRES that the total amount of currency always be SMALLER than the total amount of debt it draws on, it ends in deflation as those debts default, whether or not it inflates (as for the last 102 years) or hyperinflates first.

In a hyperinflation, people trade their currency for real stuff.  This drives the value of the currency down vs real stuff.  The debtors sell real stuff to get currency, with which they willl pay off their loans.   When their loans are gone, there is no more currency...but still loans outstanding, even as no one wants the currency.  In this way it can hyperinflate, and deflate at the same time.

Tue, 11/03/2015 - 13:12 | 6744363 LawsofPhysics
LawsofPhysics's picture

YES!!!  Remember, the velocity of a dead currency is zero.

remind us, what has the velocty of the FRN been doing?

Tue, 11/03/2015 - 13:19 | 6744407 arbwhore
arbwhore's picture

Record lows...

Tue, 11/03/2015 - 13:22 | 6744423 LawsofPhysics
LawsofPhysics's picture

exactly.  If you don't have the currency the poducer wants, the "price" goes to infinity!!!

Tue, 11/03/2015 - 13:59 | 6744590 Shad_ow
Shad_ow's picture

...unless the price is fixed.

Tue, 11/03/2015 - 14:13 | 6744660 Implied Violins
Implied Violins's picture

Brandon Smith coined the term, "hyperstagflation." Necessary items like food will skyrocket, while things like TV's won't sell at any price.

Tue, 11/03/2015 - 15:46 | 6745152 centerline
centerline's picture

Another way to put this that the forces of deflation and inflation coexist from the moment a debt based system is put into motion.  And as the system reaches it's limits, and it's very stability begins to give way, the effects of these forces become divergent.  The result is being crushed by both at the same time.  The final act, either outright deflation (implosion) or hyperinflation (explosion) leads to the same conclusion... zero velocity.  Dead money as LOP puts it.

Tue, 11/03/2015 - 13:12 | 6744366 rejected
rejected's picture

I liked the bomber on the moon. A little too much windage adjustment.

Tue, 11/03/2015 - 13:26 | 6744429 gcjohns1971
gcjohns1971's picture

As to the bankers...

Banks' assets are mostly loans.

Loans default in deflation...but get retired in hyperinflation.

Typically hyperinflations end when a new currency is issued that is equal to some number of the old currency with all the zero's chopped off.

 

To retain their wealth, the bankers need either a hyperinflation to allow them to heal their books, and then trade their monetary assets for new currency, or to hire thugs now who will simply kill off the banks' counterparties and seize their property.

EXCEPT

If the banks go the 'Thug' route (which they are...at the moment)  How do they keep the 'Thug' from doing the same to them????

They can't.

By the way, one man's "Evil Thug" is another man's "Legitimate Government".

So...don't be suprised if today's bankers are making deals with today's foreign governments to be tomorrows' domestic governments.  It is all about which thug they believe will give them the best deal.

WATCH YOUR BORDERS.

THE GREAT IRONY IS....

They could halt the whole problem next year by revaluing their currencies against a monetary commodity at some realistic backing percentage...  That would even buy them some time if, for instance, they'd leased out all that commodity.

But then commercial constructs would remain mostly in place.

It really is the only orderly solution.

Tue, 11/03/2015 - 13:26 | 6744444 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

At the other end of the idea spectrum, there are the edgy, malcontent, and extremely marginal opinions. A man, sitting in his double-wide watching TV can come to hold all sorts of wacky views. There is an entire infotainment industry that provides screwball opinions.

You want to believe Obama is a Muslim? You want to believe the Bilderbergers, the Rothschilds, or the Rockefellers run the world? You want to know about GM’s perpetual-motion engine that – if the secret got out – would put the entire auto industry out of business?

My Checklist:

Edgy Malcontent --------------  check

Extreme marginal opinions-----check

Sitting in double wide----------- no check

wacky views/screwball opinions--check

Obama Muslim------------------- no check

believe the Bilderbergers, the Rothschilds, or the Rockefellers run the world-------------------- big friggin' CHECK

GM gadget------------------------no check

 

I reckon I'm the demographic he doesn't want to cater to.  Damn, he's broken my heart.

Tue, 11/03/2015 - 13:27 | 6744454 gcjohns1971
gcjohns1971's picture

I think a huge percentage of the population agrees with you.

As do I.

Tue, 11/03/2015 - 14:08 | 6744634 Hugh G Rection
Hugh G Rection's picture

The self important fake awake assholes are the worst.  

They think they are enlightenend because they don't trust the TV anymore, but don't have the balls to challenge their worst dogma about 9/11, WW2 revisionism...

Tue, 11/03/2015 - 14:16 | 6744676 tarabel
tarabel's picture

 

 

Well, damn, son. Trade in your old trailer home for one of them newfangled double wides. Conform to their sneering shallow characterizations and be happy.

Tue, 11/03/2015 - 15:17 | 6744461 Youri Carma
Youri Carma's picture
DEFLATION STARTED!http://forum.prisonplanet.com/index.php?topic=80429.msg1559610#msg155961...

AMOUNT OF 'POCKETS IN DEFLATION' GROWING!
U.S.
UMich Warns "Disinflationary Mindset Is Taking Hold" As Inflation Expectations Crash To Record Lows
Export Prices Unexpectedly Collapse, Led by Agriculture; Non-Petroleum Import Prices Sink Most Since October 2009
Producer prices fall again, inflation quiet
U.S. Import Prices Edge Lower In September
U.S. Producer Prices Fall More Than Expected In September

ASIA
Global Deflation Alert: Hidden EM Debts To China Could Be Immense
China Inflation Slows; PPI On The Decline For 43 Months
Hong Kong Inflation Slows For Third Month To Lowest Level In Over 3 Years
India Wholesale Prices Drop For 11th Straight Month
Indonesia Inflation Eases More Than Expected In October
Japanese Firms Cut Inflation Forecast
Japan Domestic Corporate Goods Prices Dip 0.5% In September
South Korea Inflation Slows To 0.6% In September
Singapore CPI Falls As Expected In September
Singapore PPI Falls At Faster Rate In August
Malaysia Inflation Slows More Than Expected In September
Malaysia PPI Falls Further In September
Philippine Inflation Eases Unexpectedly In September
Thailand Consumer Prices Fall In September
Indonesia Sep Inflation Eases More Than Expected

EURO ZONE
Draghi Dud: Investor Confidence Collapses As PMIs Plunge Across EU
Euro zone inflation could stay low for months: Bank of Italy official
Eurozone Inflation Turns Negative Again In September
Eurozone PPI Falls More Than Expected In August
Eurozone Inflation Turns Negative
German Producer Prices Fall Most In 7 Months; Worse Than Forecast
Germany Sep Import Prices Fall More Than Forecast
Swiss Producer And Import Prices Fall Sharply
Austria Wholesale Prices Fall At Faster Rate In September
Austria's Inflation Slows In September
Dutch HICP Inflation Slows In September
Norway Inflation Accelerates Less Than Expected In September
Finland CPI Falls Most Since 2009
Finland PPI Continues To Fall In September
French PPI Continues To Fall In September
Poland PPI Declines At Faster Pace In September
Poland Consumer Prices Fall More Than Forecast
Hungary CPI Falls More Than Expected In September
Czech Producer Price Decline Worse Than Forecast
Slovakia HICP Falls For 10th Straight Month
Slovenia Output Prices Fall For Second Month
Romania CPI Falls For Fourth Month
Romania PPI Falls Further In September
Bulgaria Producer Prices Fall In August
Croatia Producer Prices Fall Worsens In September
Estonia PPI Continues To Fall In September
Latvia PPI Falls For Ninth Month
Latvia Consumer Prices Fall In September
Lithuania Consumer Prices Fall Further
Lithuania HICP Falls Further In September
Spain's CPI Falls At Faster Pace As Estimated
Spain PPI Falls At Faster Rate In September
Spain Oct CPI Falls More Than Forecast
Portugal PPI Falls At Faster Rate In September
Greece CPI Falls More Than Expected In September
Greece Import Prices Fall At Fastest Pace In 7 Months
Turkey Inflation Eases More Than Expected In October
Malta PPI Falls Further In September
U.K. Enters Deflation Again In September
Deflation returns to UK for second time since 1960
Ireland CPI Falls In September

Tue, 11/03/2015 - 16:36 | 6745503 The Gladiator
The Gladiator's picture

 


Vote up!

0
Vote down!

0

I see what you did. Posting a hyper link to InfoWars. Totally appropriate. Since it is the interweb version of The Weekly World News.

Tue, 11/03/2015 - 13:43 | 6744517 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

 

 

Regardless of which "ation" we end up with, in this world there are Eloi and Morlockthals.  We will oscillate through waves

of all the "ations", and in each cycle the "click"/Morlocks will gobble up more Eloi.  Stimulate massive credit bubble;

get free fiat from the Fed.,; perpetuate a dollar strengthening/deflation of assets; use said fiat to buy real things;

in doing so pump fiat into markets and wait for velocity/extend more credit;

sell accumulated real things previously bought(sans those which you would like to keep); stimulate massive bubble etc...

Tue, 11/03/2015 - 13:45 | 6744530 exartizo
exartizo's picture

There will be no hyperinflation in the United States. 

 

Period.

Tue, 11/03/2015 - 13:57 | 6744578 Automatic Choke
Automatic Choke's picture

exartizo - agreed.  

the US simply has too many resources and too much productive capacity.  we can inflate, for sure, but the zimbabwe style hyperinflation requires printing heavily in a country with no productivity.

Tue, 11/03/2015 - 14:53 | 6744840 Livermore Legend
Livermore Legend's picture

Exactly Right, "Period".....

Hyperinflation is Politically Impossible in the United States......

But "Deflation" is NOT......

We survived the last one just fine........

And as to "Our view is Taleb will be Proved Right".......

As "RIGHT" as he was Advising that ..."every single human should be Short Treasuries....." in February 2010 when Rates were c. 4 %......

The Bond Market is the Key to it all....

Failure to understand what is unfolding there, is Fatal to all reasoning flowing therefrom.....

As I have said, "Pseudo Guru Book Peddlers".........

I have Flat Out Proven that the Market is NOT "Random" in the "Blackjack Analogy"......

He is the worst kind of Hack on Wall Street.........

A Highly Intelligent Man who doesn't know 'dick' about Markets, but because of that Intelligence Lures many to believe that he does and act thereupon.......

The Most Important Thing a Man can Know is what He Doesn't Know......

As the True Master said long ago, the "Nature of the Game" will never change, because Human Nature never changes.....

No "Metaphysical" or "Mathematical" Answers........

Just the Legion of Suckers who believe they can be found there.......

And those who "Promote/Sell" such.......

Caveat Emptor.......

Tue, 11/03/2015 - 13:46 | 6744536 Professorlocknload
Professorlocknload's picture

What? No Stagflation Camp?

Tue, 11/03/2015 - 14:12 | 6744655 Jethro
Jethro's picture

Stagflation I guess is the transition process? Worthless shit gets cheaper, while necessities become more expensive. Can't wait until electricity costs more than the mortgage. Those will be fun times.

Tue, 11/03/2015 - 13:47 | 6744537 Consuelo
Consuelo's picture

 

 

I remember the week that the original 'Bat boy' WWN edition came out.   So hilarious, that I actually bought a copy and brought it home to share with my room mate.   It remains today - in my mind, as the high-point of real journalism...

 

 

Tue, 11/03/2015 - 13:47 | 6744541 PoasterToaster
PoasterToaster's picture

The system convinces peasants not to strive.  That is how aristocrats keep their competition down.  In service of this not striving thing, people are taught by the indoctrination centers that there is no such thing as critical thinking or objective reality.  Striving is replaced by putting your company scrip into a scheme where you can supposedly turn everything over to experts, who will manage your money until the day your slavery ends.

It never ends.

Tue, 11/03/2015 - 14:10 | 6744641 Jethro
Jethro's picture

Learned cultural apathy and ennui. And then TV provides the SOMA.

Tue, 11/03/2015 - 13:50 | 6744551 Head_Shots_Work
Head_Shots_Work's picture

SO gold then. AND bullets AND food. AND toilet paper - for what is civilization without a quality supply for soft toilet paper? For deflationary times will give us the opportunity to buy stuff like there is no tomorrow - then when the Hyper comes in we can hide in our lairs and thank the stars we have none of the feelthy fiat left to see hyped away!

Tue, 11/03/2015 - 13:52 | 6744559 buzzardsluck
buzzardsluck's picture

War Between the States

 

You mean the war of northern aggression, FIFY

Tue, 11/03/2015 - 14:13 | 6744661 tarabel
tarabel's picture

 

 

You mean the one that started with a Confederate invasion of a foreign country followed by them declaring war on it?

Fort Pickens, where the first shots were fired, was a US-owned territory exactly like the District of Columbia. Same for Fort Sumter. 

Confederate attacks upon and invasions of United States territory that was not included in the landmass included in the various State secessions was the cause of the war. And just to make it official, the Confederacy then declared war on the United States.

Northern aggression indeed.

Tue, 11/03/2015 - 15:54 | 6745196 buzzardsluck
buzzardsluck's picture

So you're the type that waits for the imminent raping to happen before acting, like a true beta bitch.

Tue, 11/03/2015 - 13:53 | 6744562 Consuelo
Consuelo's picture

 

 

Good 'ole Whiskey & gunpowder Bill Bonner - always taking the 'high-road', not to sully himself with those crazy 'Bilderberger'/One-dare-not-call-it-conspiracy' kooks.   And when this edifice crumbles and flushes, so too will his high-minded prose into the dustbin of irrelevancy.

Tue, 11/03/2015 - 14:11 | 6744647 astoriajoe
astoriajoe's picture

Much better than I would have put it. +1

Tue, 11/03/2015 - 13:53 | 6744563 CosmicDebris
CosmicDebris's picture

I'm banking on hyperdeinflation myself.  

Tue, 11/03/2015 - 13:59 | 6744587 Lost in translation
Lost in translation's picture

< Deflation

< Hyperinflation

Tue, 11/03/2015 - 14:12 | 6744658 Hugh G Rection
Hugh G Rection's picture

< Masturbation

< Stagflation

Tue, 11/03/2015 - 14:05 | 6744621 Ace Ventura
Ace Ventura's picture

This crap is hard to get my brain cell around. Technically speaking, hyperinflation has already occurred. That is, the amount of dollars 'poofed' into existence by the fed gangsters has gone parabolic thanks to TARP and QE1 thru Infinity. The caveat, insofar as my layman's ability to rationalize can determine, is that these dollars are digital entries strung across a constellation of banking networks across the globe. In other words, they haven't been released into the general economy in the form of tangible bits of paper for Joe and Jane Public to handle. In this fashion, the visible effects of hyperinflation (i.e. $100 loaf of bread) have been retained behind the proverbial barn doors....for the moment.

So as long as TPTB can keep the 'digi-dollars' corralled in the form of computer entries vs. pallet-loads of paper bills.....this can kicking could go on for quite a while. Naturally, those of us in the real world have already noticed inflation making steady progress at the grocery store.

Tue, 11/03/2015 - 14:12 | 6744659 7againstThebes
7againstThebes's picture

First deflation, then hyperflation sounds plausible to me.  But what kicks it off? 

What causes the transition from one to the other?

Tue, 11/03/2015 - 15:05 | 6744916 Raoul_Luke
Raoul_Luke's picture

Helicopter money.

Tue, 11/03/2015 - 15:27 | 6745046 Tall Tom
Tall Tom's picture

Hyperinflation is a POLITICAL EVENT.

 

When the rest of the World tires of America's Warmongering...

 

When the rest of the World tires of America's Fraud and Corruption...

 

When the rest of the World realizes that the USA does not produce ANYTHING but has been leeching off of their slave labor...

 

When the rest of the World comes to the understanding that a Dollar is a promise to pay for a future Good or Service and that America cannt produce those Goods and Services and cannot possibly fulfill her promises...

 

When the rest of the World makes DEALS to trade for OIL without using the US Dollar...

 

Then the rest of the World's Central Banks divest their vast $12 TRILLION DOLLARS that they are holding in their vaults and those will make it back to our shores.

 

That is what HAS ALREADY STARTED IT.

Tue, 11/03/2015 - 14:20 | 6744702 venturen
venturen's picture

CRONYFLATION!

Tue, 11/03/2015 - 14:30 | 6744745 Mick Shrimpton
Mick Shrimpton's picture

The only thing I know for sure is that we don't have to worry about widespread inflation anytime soon.  Until wage growth and employment increase significantly, you can cross inflation off the list.  That doesn't mean there won't be some isolated squeezing in the short term, like rent and health care.  I'm betting deflation and then war.

Tue, 11/03/2015 - 14:35 | 6744760 Magooo
Magooo's picture

You want to believe the Bilderbergers, the Rothschilds, or the Rockefellers run the world?

 

"I care not what puppet is placed on the throne of England to rule the Empire, ... The man that controls Britain's money supply controls the British Empire. And I control the money supply."  Nathan Rothschild

 

 “Once a nation parts with the control of its currency and credit, it matters not who makes the nation’s laws. … Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of the sovereignty of parliament and of democracy is idle and futile.” — Mackenzie King, Canadian Prime Minister 1935-1948.

 

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." - Woodrow Wilson, after signing the Federal Reserve into existence

 

“Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive that they had better not speak above their breath when they speak in condemnation of it.”  ? Woodrow Wilson

 

 

The private company that has the right to print the reserve currency and loan it out at interest run the world.

 

Remind me who owns the Fed?

Tue, 11/03/2015 - 15:16 | 6744854 SMC
SMC's picture

Deflation until "Just Us" figure out that they killed the demand side.

Followed by hyperinflation and/or war when they try to fix it instead of letting the economy self-correct through free markets with no government intervention, accurate accounting and real capitalism with the only role of government being to maintain a level playing field.

Wed, 11/04/2015 - 01:47 | 6745343 Radical Marijuana
Radical Marijuana's picture

Of course, I liked that article because

its conclusions are the same as mine:

Basically, MAD Money As Debt systems operate by:

Too much "money" made out of nothing is inflation, &

too much "money" disappearing to nothing is deflation.

 

What I did NOT agree with was notions that somehow:

It had a beginning, in the early 1980s ...


AROUND & AROUND:

POLITICAL FUNDING,

ENFORCING FRAUD.

DID NOT START, THEY WERE ALWAYS THERE,

& GROWING AT ABOUT EXPONENTIAL RATES. 

While too much "money" made out of nothing manifests as inflation, and too little "money" made out of nothing, or too much "money" disappearing back to nothing, manifests as deflation, both problems trace back to the SOURCE of that problem, which is the legalized counterfeiting of the public "money" supply out of nothing as debts, which frauds by private banks were not only legalized by the governments, but also enforced by the governments demanding taxes be paid in that form of fiat "money," as well as legislating legal tender laws, which similarly enforce that fraud, by requiring that everyone must operate within that fundamentally fraudulent financial accounting system. In turn, those problems trace back and back throughout the history of successful warfare based upon deceits and treacheries. The intense paradoxes are that civilization is necessarily controlled by the methods of organized crime, whose excessive successfulness becomes runaway criminal insanities.

When one looks deeper into the history of that, it is clear that the funding of the political processes became totally triumphant in creating the situation wherein the vast majority of people have adapted to living INSIDE of the established systems based upon ENFORCING FRAUDS for generation after generation ...

... most people count on the feds to manage the economy, foreign policy, the future, and the government ... They have no ability to influence public policy… and not much room to maneuver in their private lives. They get salaries, pensions, Social Security. They need jobs, mortgages, student loans, and medical insurance. They have little capital to invest or protect. They depend so heavily on “the system” that they can’t afford to believe there is something deeply wrong with it.

Again, I liked the article above for stating:

... it is the far-out world of money, economics, and finance that interests us. We try to figure it out. We try to understand. We try to see what’s coming before it arrives. And we try to be serious about it. ... hyperinflation is a political phenomenon ...

I too regard the overall sociopolitical situation driven by being able to back up lies with violence to be a "Terminal Problem."

The only tactics that "work" are taking temporary advantage of how INSANE those systems are, by operating in ways which then become even more INSANE, by exploiting some temporary advantages from how those legalized financial frauds are enforced (or how the laws against the few remaining frauds which were not yet legalized are not enforced). Meanwhile, the essential problem that being able to back up lies with violence never stops those lies from being false, but rather drives the whole society to become more psychotic, applies to the ways that the excessive successfulness of fundamentally fraudulent financial accounting systems drive those towards psychotic breakdowns, where there are wilder and wilder oscillations. In the past, those have always ended in hyperinflations, while the approach towards that end-game often included phases of hyperdeflations.

http://www.zerohedge.com/news/monetary-endgame-score-date-hyperinflations-56-hyperdeflations-0

We won't waste our readers' time with the details of all the 56 documented instances of hyperinflation in the modern, and not so modern, world. ... What we will point is that at no time in recorded history did a monetary regime end in "hyperdeflation." In fact there is not one hyperdeflationary episode of note. Although, we are quite certain, that virtually all of the 56 and counting hyperinflations in the world were at one point borderline hyperdeflationary. ...

Tue, 11/03/2015 - 16:23 | 6745408 USGrant
USGrant's picture

The deflation problem is fixed if the Treasury issues currency directly. The other way to generate inflation is to increase interest rates but there is a bound because that increases debt. So the currency remains stable with a judicious release of Treasury notes to battle the deflation engendered by declining interest rates. You can bend currency space any way you want if you understand the levers.

Tue, 11/03/2015 - 16:38 | 6745482 The Gladiator
The Gladiator's picture

What we need is a good old fashioned war.

Tue, 11/03/2015 - 17:05 | 6745629 mojojojo
mojojojo's picture

The U.S. will not experience a deflationary period like it did in 1930's. No sir. The masters have given us basically seven years of ZIRP.  They're taking this all the way. They're not gonna suddenly snap out of their delusions. These fucking socialist control freaks know they're in murky waters though. Keep gold down by selling paper gold contracts. Have intermediaries or the FED itself buy U.S. treasuries. Gov will continue to expand debt ceiling. We can go into NIRP. Remember, U.S. treasuries are the bedrock of the derivatives ponzi. The whole financial system is essentially run on USD and U.S. treasuries. Gov can keep issuing debt, and FED can monetize. All this debt required FED rate to go to zero or potentially below. Eventually though, there will be a bank run. There is the problem. Bank holiday. Haircut/bail-in. Bye bye cash I think. Perfect time to eliminate it. After NIRP eventually creates a panic. The masters will continue to ease, until collapse. Confidence will be lost. U.S empire is finished. Without reserve currency status, U.S. will just be a country with a whole lot of debt that nobody wants. Then after global financial collapse, war, the next phase of global governance will begin.

Do NOT follow this link or you will be banned from the site!