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Chart Of The Day: 803 Years Of Global Inflation

Tyler Durden's picture





 

Spot the point in this 803 year timeline of world inflation, when the Fed was created.

The chart above comes courtesy of Jim Reid's fantastic "Journey into the Unknown" which we will dissect in much more detail shortly. For now we wanted to bring our readers attention to what is arguably the most important aspect of modern monetary times: the advent of persistent inflation, and the disappearance of deflation.

Figure 18 shows median global inflation first from 1209 (left) and then from 1900 (right). As we’ve discussed in previous notes inflation took on a totally different persona after the start of the twentieth century. The charts are again on a log scale to allow us to easily see the near exponential increase in inflation over the last 100 years or so, especially relative to what occurred before. Note that had we used average instead of median, the chart would look almost absurd given the extreme levels of hyperinflation seen in several  countries over the last century. The data behind the graph is based on a full set of 24 countries where we have inflation data back to 19001. Prior to this many countries have data that goes back several decades with some back through the centuries. We have  included data as and when it becomes available.

 

It’s not just the general trend of higher prices, it’s the fact that even single years of deflation have been increasingly hard to find globally over the last century. Figure 20 shows the same data set as used above but shows the median YoY inflation back to 1209 (left) and over the shorter period since 1800 (right).

 

 

Prior to the twentieth century years of deflation were almost as common as years of inflation. However as discussed above, this all changed over the last 100 years or so. Indeed we haven’t seen a year of deflation on this median Global YoY measure since 1933. So we’ve now had nearly 80 years without a global year on year fall in prices.

 

Figure 21 extends this analysis showing the percentage of countries in our sample with a negative YoY inflation print and the total number of countries in our sample each year. The number of countries in annual deflation has certainly fallen over the last 100 years and particularly since the Gold Standard link was broken in 1971. Indeed since 1987 no more than 2 countries (out of the maximum 24 in our sample) have seen deflation in any one year and in most cases one of these two countries was Japan.

 

 

So although the last 30 years has been a period where inflation was perceived to be under control across the globe, there has generally been a persistent positive bias not seen through longer-term history. The break with Gold has ensured that countries can mostly ensure they don’t have deflation by being free to conduct money creation policies.

 

 

Although the hyperinflation list perhaps isn’t 100% inclusive, the trend is absolutely beyond dispute. The 1980s and 1990s saw the vast majority of the examples of these occurrences through history. Although all these have been outside of the developed world, this region has also seen many countries with high inflation over the period and with wide divergence between countries.

Much more coming: in terms of both Reid's report, and inflation.

 


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Tue, 09/04/2012 - 07:44 | Link to Comment Aziz
Aziz's picture

Price stability, bitchez.

Tue, 09/04/2012 - 07:48 | Link to Comment HoofHearted
HoofHearted's picture

Gold and silver, bitchez and Elmo.

Tue, 09/04/2012 - 08:00 | Link to Comment gold-is-not-dead
gold-is-not-dead's picture

It's for your own good god damn it, stimulus package is good, repeat, GOOD!!!

 

Sheeple: Yes, gooooood...

Tue, 09/04/2012 - 08:02 | Link to Comment i-dog
i-dog's picture

Yummm ... stimulus taste good ... Money for nothing and chicks for free!

http://www.youtube.com/watch?v=wTP2RUD_cL0

Tue, 09/04/2012 - 08:16 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

803 years? Screw it........I QUIT!!!

 

Tue, 09/04/2012 - 08:48 | Link to Comment LawsofPhysics
LawsofPhysics's picture

803 years of stealing the value of productive labor to enrich a relative few paper-pushing fucks.  Who is John Gault and where the fuck is John Corzine?  Nothing changes until the moral hazard is addressed.  I suspect (as history shows over and over) that supply lines for essentially goods and commodities will crack first, then shit gets real.  Same as it ever was.

Tue, 09/04/2012 - 09:09 | Link to Comment hardcleareye
hardcleareye's picture

"The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained growth and recovery."

Jesse's Cafe Americain

Tue, 09/04/2012 - 09:27 | Link to Comment gold-is-not-dead
gold-is-not-dead's picture

I've read the scripts from before the mentioned period.

http://en.wikipedia.org/wiki/Du%C5%A1an%27s_Code

Did you know that they actually impaled and burned anyone who tried to use anything but gold and silver as money those days? (cloth and zinc for instance)

Tue, 09/04/2012 - 09:44 | Link to Comment RockyRacoon
RockyRacoon's picture

Forcing the use of PMs to settle debt or as savings is just as wrong as forcing the populace to use fiat money.  It's all about freedom in trade.  The concept is lost on TPTB in either case.

Tue, 09/04/2012 - 21:40 | Link to Comment UGrev
UGrev's picture

If there is to be any gov't, taxes must be collected at some point. The only way to do that is to have a common money. Free trade will have to accomodate the ability to be taxed with a common money system. If you can come up with a way to identify a common denomination in which all trades could be boiled down to, then have it! Free Trade for everyone. Otherwise.. free trade will not happen. 

Tue, 09/04/2012 - 21:58 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

"If there is to be any gov't..."

Yeah, I'm gonna challenge your assumption there.

Tue, 09/04/2012 - 22:47 | Link to Comment Revert_Back_to_...
Revert_Back_to_1792_Act's picture

It is supposed to be a 'limited' government.

 

Wed, 09/05/2012 - 01:47 | Link to Comment Michael
Michael's picture

9/11 caused a war on Iraq and a war on Afghanistan that the American people, not involved in it, had to pay for in many ways.

I want the people who were responsible for this brought to JUSTICE!

I want REVENGE, on the real perpetrators, within the RULE OF LAW!

9/11: Explosive Evidence - Experts Speak Out, Full-length, Pre-Release-v1.3; Low-Res.

http://www.youtube.com/watch?feature=player_embedded&v=4tTMMNTisBM

Wed, 09/05/2012 - 04:13 | Link to Comment Popo
Popo's picture

So according to the chart above there was sustained global deflation betwen 1920 and 1936???  I did not know that.

Wed, 09/05/2012 - 05:31 | Link to Comment old naughty
old naughty's picture

"Spot the point..."

What's the point?

They fxxked us up already.

Fri, 09/07/2012 - 02:27 | Link to Comment Revert_Back_to_...
Revert_Back_to_1792_Act's picture

You'll probably never see this but...here goes.

more like 1913 and 1933.

The Fed printed notes against the circulating gold coin in the USA.

These notes were redeemed by other nations and the gold taken out of the country.

This encumbered and removed real value from circulation and even eventually encumbered bank deposits.

By 1933, so much money (coin) had been removed that it caused a depression.  It literally cut the nations real money supply in half while flooding with paper money.

When the people went to the banks to try and redeem thier notes for the real stuff, there was nothing there or the deposits were all owed to foreign nations.

If you don't read anything else, read this.  This guy was a banker before he became a Senator.

http://www.afn.org/~govern/mcfadden.html

That is the whole deal of the Fed.  Banks used to have to issue their notes against what they had in their own vaults!

We also had legit United States Notes that were printed against our circulating coin.

They printed their notes against our circulating gold and silver coins (commonwealth)..not their coins.

It had the net effect of taking public property (circulation coin) for private use!

Find an image of a series 1913 Federal Reserve Note online and read the fine print on the back of the Note.

1913-1933 the gold coin was encumbered and taken away..1933-1964 the silver coin..1965-now the land and the people are being used as collateral.

It is such a simple thing to understand once you see it.

It is why you see such decay and destruction in America all around us.

It is why there are so many people hurting and oppressed under the weight of the debt.

Read the book in my profile and read this opinion by Thomas Jefferson.  It shows how money can be alienated away from the true owners.

http://avalon.law.yale.edu/18th_century/bank-tj.asp

 

 

Wed, 09/05/2012 - 08:33 | Link to Comment UGrev
UGrev's picture

"Any" is not a qualifier in size. It simply means "some amount" of gov't and it is necessary to some degree. Anarchy doesn't seem to work so well, nor does an overbearing gov't. Your challenge is accepted. 

Tue, 09/04/2012 - 22:48 | Link to Comment RockyRacoon
RockyRacoon's picture

Yeah... if.  You are espousing the exact problem that many of us here (I think I can safely speak for more than a handful) are advocating against.  Taxation is doable in many forms, as are the forms of payment.  Once the reason and purpose of taxes are outlined and agreed upon, then we can discuss how they are to be paid.  Don't get the cart before the horse.

Wed, 09/05/2012 - 08:35 | Link to Comment UGrev
UGrev's picture

If you're suggesting that I'm suggesting income taxation, then you lose, sir. In fact, I'm a firm believer that we can return to a time when we didn't have income taxation. Taxing goods and services is a good place to start. 

Tue, 09/04/2012 - 23:38 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

The only way to do that is to have a common money.

We did have a common money.  Gold and silver. 

Go read the constitution.

Wed, 09/05/2012 - 08:39 | Link to Comment UGrev
UGrev's picture

I was arguing for this point, but you must not have read my post's "In between the lines" parts. Please re-read my post and you'll notice that I was arguing AGAINST the total free trade and for PM's. I'm well aware of what "COIN" means. Thanks though. 

Wed, 09/05/2012 - 03:34 | Link to Comment Davalicious
Davalicious's picture

"If there is to be any gov't, taxes must be collected at some point. The only way to do that is to have a common money"

Here is a thought, let money systems compete and let government allow settlement of taxes in a variety of money systems. You get to pay one chicken into the system, 1 oz of gold, 30 pcs of silver, 5 bitcoins. Let gubmint create their own Bullshit Bills (BB) for payment demands and tell you how much that will be in all of the above at a daily, or whatever, exchange rate. The gov can adjust those depending on what currencies it needs to conduct business from moment to monent.

 

 

Wed, 09/05/2012 - 08:40 | Link to Comment UGrev
UGrev's picture

I suspect the gov't would eventually say that it takes too much effort to sustain a system like that and insist on more taxation to pay for it. Circular reference time. 

Tue, 09/04/2012 - 10:29 | Link to Comment Backspin
Backspin's picture

Isaac Newton, when he was Master of the Mint in his later years, had people drawn and quartered for counterfeiting.

Tue, 09/04/2012 - 13:14 | Link to Comment trailing
trailing's picture

It might be interesting to overlay that very first chart with a chart of the availability of cheap energy. Spikes at coal and engines, and again when oil becomes widely used. Otherwise, growth moves pretty slowly, it seems.

Tue, 09/04/2012 - 19:15 | Link to Comment Diogenes
Diogenes's picture

"Isaac Newton, when he was Master of the Mint in his later years, had people drawn and quartered for counterfeiting."

 

Now they are drawn and quoted (see cover of Time )

Tue, 09/04/2012 - 21:36 | Link to Comment Michael
Michael's picture

Come on people, what were my lessons for today, anybody remember?

Wed, 09/05/2012 - 03:37 | Link to Comment Davalicious
Davalicious's picture

Typically the penalty was burning at the stake.

Lets do holocaust science and see if Jews like Ben Bernanke, Alan Greenspam and Timmeh G. burn as well as they have to for six million to have gone up the chimney during WW2.

Tue, 09/04/2012 - 09:34 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

+1 but that is not happening and why would anyone junk your comment can't handle the truth I guess

CONVICTED: Bush 1300+, Clinton 1000+, Obama 0.0 (+/-)

The case against Lehman Brothers

Tue, 09/04/2012 - 12:20 | Link to Comment Totentänzerlied
Totentänzerlied's picture

So you're saying that at no point in the past 8 centuries has moral hazard properly been addressed in whatever manner you consider satisfactory? How's that "rule of law" thing working out for you????????

Tue, 09/04/2012 - 17:28 | Link to Comment OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

"Inflation targeting", one of the entire mandates of the Fed, is 100% wrong and repressive at its very core. Until people understand this we are screwed. I guess that means we are screwed.

Tue, 09/04/2012 - 22:03 | Link to Comment MsCreant
MsCreant's picture

"supply lines for essentially goods and commodities will crack first"

You'd almost think someone needs to mess with sumptin, or sumptin.

I agree.

Tue, 09/04/2012 - 22:55 | Link to Comment Daily Bail
Daily Bail's picture

In the immortal words of WalStreetPro, Tim Geithner is a worthless piece of maggot shit.

New story:

REPORT: Geithner Dumping TARP Bank Shares At Below Market Prices To Make Obama More Appealing To Voters
Tue, 09/04/2012 - 09:29 | Link to Comment Stock Tips Inve...
Stock Tips Investment's picture

I think inflation is not currently a major problem in the global economy. There is concern that bailouts of major countries can generate high inflation. Obviously, this is an ongoing risk. But there are many examples in the economic history of the world in which these processes could be controlled. I am of the opinion that there are far more pressing problems.

Tue, 09/04/2012 - 09:41 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

Do you go to the grocery store?  Have you seen the food inflation riots?  We have inflation on all the things you actually need to live already. 

Higher grocery bills knock American families lower

Tue, 09/04/2012 - 10:18 | Link to Comment Diplodicus Rex
Diplodicus Rex's picture

Try telling that to the Egyptians (and those in many other countries) who spend 40% of their annual income on food and energy that inflation is not a major problem. You live in the cosetted west where food and energy amount to approximately 7% of your annual income. A 10% rise for either party represents a disproportionate effect for those whome food and energy represent a higher proportion of their annual income.

Tue, 09/04/2012 - 21:20 | Link to Comment Ahmeexnal
Ahmeexnal's picture

The irony of it all is that while Egypt is still suffering from massive near hyper-inflation and has gone through a faux revolution, the "fearless leaders " of that country believe it's more important to buy submarines from germany that to feed the starving population.
One day people are going to wake up and it's going to get veeeeeeeeery ugly in "das vaterland".

Tue, 09/04/2012 - 21:38 | Link to Comment Michael
Michael's picture

Is Egypt's money backed by gold? Well then there's your answer.

Tue, 09/04/2012 - 21:28 | Link to Comment Taint Boil
Taint Boil's picture

 

 

Try telling that to the Egyptians (and those in many other countries).........

 

 

Well if you lived in Libya you would have had all of this:

 

1. There were no electricity charges in Libya; electricity is free for all its citizens.

2. There is no interest on loans, banks in Libya are state-owned and loans given to all its citizens at 0% interest by law.

3. Home considered a human right in Libya -- Gaddafi vowed that his parents would not get a house until everyone in Libya had a home. Gaddafi's father has died while his wife and his mother are still living in a tent.

4. All newlyweds in Libya receive $60,000 Dinar (US$ 50,000 ) by the government to buy their first apartment so to help start up the family.

5. Education and medical treatments are free in Libya. Before Gaddafi only 25% of Libyans are literate. Today the figure is 83%.

6. Should Libyans want to take up farming career, they would receive farming land, a farming house, equipments, seeds and livestock to kick- start their farms -- all for free.

7. If Libyans cannot find the education or medical facilities they need in Libya, the government funds them to go abroad for it -- not only free but they get US $2, 300/mth accommodation and car allowance.

8. In Libya, if a Libyan buys a car, the government subsidized 50% of the price.

9. The price of petrol in Libya is $0. 14 per liter.

10. Libya had no external debt and its reserves amounted to $150 billion.

11. If a Libyan is unable to get employment after graduation the state would pay the average salary of the profession as if he or she is employed until employment is found.

12. A portion of Libyan oil sale is, credited directly to the bank accounts of all Libyan citizens.

13. A mother who gave birth to a child receive US $5 ,000

14. 40 loaves of bread in Libya costs $ 0.15

15. 25% of Libyans have a university degree

16. Gaddafi carried out the world's largest irrigation project, known as the Great Man-Made River project, to make water readily available throughout the desert country.

 

Too many sources to give credit [not mine] but even if only ½ are true……

Tue, 09/04/2012 - 21:54 | Link to Comment natty light
natty light's picture

The Great Man-made River

Look at Google Earth and you will see green growth various places in all parts of Libya.

Tue, 09/04/2012 - 23:04 | Link to Comment Taint Boil
Taint Boil's picture

 

 

Addendum:

 

Well that was before we “saved” the people from Muammar Gaddafi, I wonder how it is now. The first thing the “rebels” did was to start a bank – go figure … I wonder if they are still charging 0% interest for the people.

Tue, 09/04/2012 - 23:34 | Link to Comment piceridu
piceridu's picture

What happened to Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar.

http://www.washingtonsblog.com/2012/01/are-the-middle-east-wars-really-about-forcing-the-world-into-dollars-and-private-central-banking.html

 

Don't f with the dollar as the world settlement currency or you get a ICBM up your A

Tue, 09/04/2012 - 23:50 | Link to Comment putaipan
putaipan's picture

it wasn't an icbm.....

Wed, 09/05/2012 - 00:54 | Link to Comment divide_by_zero
divide_by_zero's picture

Go investigate Soros and his OSI involvement (with some Rothschild for good measure) before they were "revolutioned" with help from Soros' WH Nobel laureate

Tue, 09/04/2012 - 23:35 | Link to Comment Wilderman
Wilderman's picture

Must be why he was gutted in the street; who could propose such things? 

/s

From that example, it's obvious that giving the people all they could want is fruitless.  Nothing has worth to a man 'cept that which he has earned. 

Tue, 09/04/2012 - 23:35 | Link to Comment Wilderman
Wilderman's picture

Must be why he was gutted in the street; who could propose such things? 

/s

From that example, it's obvious that giving the people all they could want is fruitless.  Nothing has worth to a man 'cept that which he has earned. 

Tue, 09/04/2012 - 23:36 | Link to Comment Wilderman
Wilderman's picture

Must be why he was gutted in the street; who could propose such things? 

/s

From that example, it's obvious that giving the people all they could want is fruitless.  Nothing has worth to a man 'cept that which he has earned. 

Tue, 09/04/2012 - 22:42 | Link to Comment Diggintunnels
Diggintunnels's picture

When did the Bernake start trolling under the handle of "Stock Tips Inve..." 

Tue, 09/04/2012 - 22:44 | Link to Comment Diggintunnels
Diggintunnels's picture

Delete duplicate

Tue, 09/04/2012 - 22:35 | Link to Comment Silver Bug
Silver Bug's picture

The FED has got to go.

 

http://jimrickards.blogspot.ca/

Wed, 09/05/2012 - 01:29 | Link to Comment vast-dom
vast-dom's picture

...

 

Tue, 09/04/2012 - 09:11 | Link to Comment LMAOLORI
Tue, 09/04/2012 - 09:49 | Link to Comment RockyRacoon
RockyRacoon's picture

You bet they fear loss of autonomy, because it means transparency.  How can they keep one hand in the till and the thumb of the other hand on the scale?   A right and proper looting can't take place if they have to account for every move.  Furtiveness is essential!

Tue, 09/04/2012 - 22:54 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

We shouldn't decry their autonomy, their independence. It's their right. The Treasury should, could, won't, take on the responsobility of issuing the nation's currency. The Fed and every other bank should be independent; independent to issue their own currency in parallel with the nation's constitutional currency. Competing currencies. If there were true openness in the money markets, the Fed note would price poorly against gold and silver. Oh, wait a minute, it's already being priced accordingly. Not preaching at you Rocky but some folk here need a heads-up.

 

Tue, 09/04/2012 - 10:04 | Link to Comment Grinder74
Grinder74's picture

E-I-P-C  F-I-A-L

Buy G-L-O-D.

Tue, 09/04/2012 - 10:31 | Link to Comment Backspin
Backspin's picture

I bought some glod, but I lsot it in baoting accident.

Wed, 09/05/2012 - 00:41 | Link to Comment Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

the vuris stloe my bitcions

Wed, 09/05/2012 - 01:59 | Link to Comment MedTechEntrepreneur
MedTechEntrepreneur's picture

I wish we could "enlarge" our avatars...can't quite make it out...

Tue, 09/04/2012 - 11:39 | Link to Comment Strut
Strut's picture

We both seem to have sexdaily.

er, I mean dislexia...

Tue, 09/04/2012 - 15:00 | Link to Comment akak
akak's picture

Just like the dyslexic insomniac agnostic, who lay awake many nights wondering if there really was a Dog.

Tue, 09/04/2012 - 21:53 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

What do we want?  A cure for dyslexia.  When do we want it?  Own.

Wed, 09/05/2012 - 00:58 | Link to Comment vato poco
vato poco's picture

Don't matter none WHO y'are, that raht thar is *fynnu*.

Tue, 09/04/2012 - 22:55 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Competing currencies, bitchez.

Tue, 09/04/2012 - 07:46 | Link to Comment GOSPLAN HERO
GOSPLAN HERO's picture

Counterfeiting pays!

 

 

Tue, 09/04/2012 - 07:55 | Link to Comment economics9698
economics9698's picture

yid banking fuck the peasants.

Wed, 09/05/2012 - 02:00 | Link to Comment MedTechEntrepreneur
MedTechEntrepreneur's picture

Ahh yes, the obligatory anti-Jew remark....

Tue, 09/04/2012 - 07:51 | Link to Comment Meesohaawnee
Meesohaawnee's picture

transitory

Tue, 09/04/2012 - 08:14 | Link to Comment JPM Hater001
JPM Hater001's picture

No two data points indicate a trend any more than correlation = causation.

Neither of these apply here.  We have inflation and it is the Fed's fault.

Tue, 09/04/2012 - 08:30 | Link to Comment NewWorldOrange
NewWorldOrange's picture

"Neither of these apply here.  We have inflation and it is the Fed's fault."

Agreed. But technically the Fed is only doing what the law mandates. So it's a lot more the fault of our government (or maybe more than that, the sheeple who won't take the time to learn something and vote for people like RP and speak truth to power instead of sling the same bullshit.) When the SHTF, the gov is going to try to blame the Fed. We shouldn't buy that snake oil. The sheeple will buy it though. So maybe our real enemy is the sheeple. Remember the Bolsheviks? They were about 10% of the population. But they were more daring, better organized, and more brutal. We also have the advantage of being CORRECT. We may need a purge of our own.

Tue, 09/04/2012 - 09:07 | Link to Comment hardcleareye
hardcleareye's picture

Chris Hedges has a great interview that goes into this with some interesting insights (a follow up on his book Empire of Illusion).

http://youtu.be/dHle_turjes

Tue, 09/04/2012 - 09:35 | Link to Comment Dan The Man
Dan The Man's picture

you tell em sister

Tue, 09/04/2012 - 09:37 | Link to Comment mvsjcl
mvsjcl's picture

The best government money can buy. And whose money is that?

Wed, 09/05/2012 - 01:16 | Link to Comment John_Coltrane
John_Coltrane's picture

Indeed!  The analogy I always use its the relation of the FED to the government is that of the drug addict to his supplier.  Without debt there is no reason for debt.  Wtihout debt, government must run on cash flow and thus must be quite small.

Tue, 09/04/2012 - 07:52 | Link to Comment max2205
max2205's picture

Looks like the inflation bubble might be ready to pop

Tue, 09/04/2012 - 08:01 | Link to Comment Haager
Haager's picture

Give me a lift-off first

http://www.youtube.com/watch?v=ugfa4gr9tD4

 

Any similarities bw. the acting of P&T vs Ben and Mario are pure coincidence.

Tue, 09/04/2012 - 08:46 | Link to Comment max2205
max2205's picture

In perspective , about 4 little dots represent your entire adult trading lifetime so don't trade a nano second on a 20 year dot

Lol

Tue, 09/04/2012 - 08:10 | Link to Comment Beam Me Up Scotty
Beam Me Up Scotty's picture

How is that?  At the first whiff of deflation, they can print at the speed of light.  They don't have your grandmothers printing press.  They have a computer.  And they can create digital dollars with a few keystrokes.  You don't even have to bang the zero button that many times to create a lot more money than has been created in the history of man.

Tue, 09/04/2012 - 23:57 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

At the first whiff of deflation ...

We don't have to worry about any "whiff of deflation". 

Printing to fund ever increasing government debt will insure continued growth of the money supply all by itself.

Then add ongoing bank bailouts, currency swaps, etc, and the money supply is absolutely guaranteed to keep growing way faster than GDP.

...which means inflation ...maybe hyperinflation at some point ...and yes, currency collpase ultimately.

Tue, 09/04/2012 - 07:53 | Link to Comment sbenard
sbenard's picture

A picture word a thousand words!

Tue, 09/04/2012 - 10:07 | Link to Comment Deo vindice
Deo vindice's picture

In a week that will be a thousand dollars!

Tue, 09/04/2012 - 07:54 | Link to Comment diogeneslaertius
diogeneslaertius's picture

ZH, where to go for not-bullshit

Tue, 09/04/2012 - 07:58 | Link to Comment NewWorldOrange
NewWorldOrange's picture

Note that the scale of the x-axis is logarithmic (each successive notch isn't just 1 more, but 10 TIMES the previous notch.) If it were linear, it would be one very long vertical line to Alpha Centauri after the mid-30s (you know, when Roosevelt seized everyone's gold.)

Tue, 09/04/2012 - 08:58 | Link to Comment hardcleareye
hardcleareye's picture

And what is to stop that from happening again?

Tue, 09/04/2012 - 09:12 | Link to Comment NewWorldOrange
NewWorldOrange's picture

Again? It has never stopped, and as ZH has said forever, it is 100% certain that QE will not only continue ad infinitum but will in fact accelerate until the wheelbarrows are worth more than the piles of cash they're able to tote. The silver lining: You'll be able to pay off your mortgage with a a single trillion dollar bill from your front pocket, and get enough change back to still buy a McDouble (as long as you don't wait over an hour.)

Tue, 09/04/2012 - 09:24 | Link to Comment machineh
machineh's picture

'Note that the scale of the x-axis is logarithmic.'

It's the y-axis (vertical axis) that's logarithmic.

Tue, 09/04/2012 - 09:47 | Link to Comment NewWorldOrange
NewWorldOrange's picture

I stand corrected. Fortunately everyone got the point!

Tue, 09/04/2012 - 10:31 | Link to Comment Galactic Superwave
Galactic Superwave's picture

I stopped paying extra each month on my mortgage back in 2009 when it became obvious what the Fed was going to do. But, I can't shake the feeling that somehow the financial entities that hold mortgages are going to try and prevent inflation from occuring too fast since it would impact their balance sheets. By that time my mortgage would be paid off and I would be depending on retirement income which would buy less and less. Fucked again.

Tue, 09/04/2012 - 15:11 | Link to Comment hidingfromhelis
hidingfromhelis's picture

It's a win-win for the financial institutions.  If currency devaluation gets too extreme, they'll get our legislators to void our mortgage contracts, require them to be paid back with additional devalued currency, or simply find some excuse to call all mortgages.  All the while, they're able to use the fractional reserve advantage to make new loans at virtually no risk to themselves.  Remember, it's the first one to use the deflating currency that has the advantage.

Tue, 09/04/2012 - 23:09 | Link to Comment grid-b-gone
grid-b-gone's picture

This is why individuals have been deleveraging since 2008. Zero % central bank money and liquidity is for the banks, not families.

Anything you want to own after a reset or devaluation, you need to own outright before any serious official action is taken.

Live below your means - not like an urchin, but be able to easily maintain your home if property taxes should get reset with any currency adjustment, or if your locality tries to prop up underfunded public pensions with taxes instead of cuts.

The 1% will likely continue their winning streak.

Of the remaining 99%, be the top 10% that remains prepared, gets small, and weathers this historical financial stress relatively unscathed.

Wed, 09/05/2012 - 00:01 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Y axis is logarithmic.

Tue, 09/04/2012 - 07:57 | Link to Comment bigbwana
bigbwana's picture

The FED/BOE, their respective governments, and the MSM, are owned by the Illuminat. The financial crisis has been deliberately engineered in their attempt for a NWO. This has failed. Thanks to the wonderful Galactic Fedration. who are in our skies, right now! All nuclear weapons have been disarmed and there will not be a nuclear catstrophe. This the GF promises. Spread the wondrous news. Spread the Light. Thank you.

Tue, 09/04/2012 - 08:03 | Link to Comment Terp
Terp's picture

You were off to a good start before you decided to go full retard.

 

 

Tue, 09/04/2012 - 08:09 | Link to Comment bigbwana
bigbwana's picture

the2012scenario; aquariouschannellings, treeofthegoldenlight; are but three sites where you will find the Truth. You want to win? Then spread the Light, bro. Please.

Tue, 09/04/2012 - 08:24 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

You were off to a good start before you decided to go full retard.

 

Felt so good....he doubled down.

 

Tue, 09/04/2012 - 21:15 | Link to Comment MagicHandPuppet
MagicHandPuppet's picture

You should have stopped while you were ahe....hem.... less behind.  Don't believe everything you read.  If there is absolutely NO EVIDENCE to support an assertion, then it is 100% bullshit every time.  Same with religion... same with big games of "pretend" like you are playing.  The shit you are spewing is even less conceivable than the tripe spewed by the main stream media.

Tue, 09/04/2012 - 08:17 | Link to Comment Praetor
Praetor's picture

The Galactic Federation? Pheww, for a minute I thought you meant the United Federation of Planets, a real nasty bunch.

Tue, 09/04/2012 - 08:20 | Link to Comment bigbwana
bigbwana's picture

Dec 21/2012 fast approaches. The Illuminati know it, know their evil tyranny is over, but desperately cling to power. To be expected from demented ones.

Tue, 09/04/2012 - 09:01 | Link to Comment gold-is-not-dead
gold-is-not-dead's picture

Sorry to ruin your party but the Illuminati don't exist... it's just a marker... there are however criminal organisations of all kind in this world...

Tue, 09/04/2012 - 10:08 | Link to Comment Grinder74
Grinder74's picture

Yeah, and neither do the Sith.  But we all know how well that turned out.

Tue, 09/04/2012 - 08:21 | Link to Comment NewWorldOrange
NewWorldOrange's picture

For real. Xenu isn't as Nanny Statish as fhe Federation.

Tue, 09/04/2012 - 09:58 | Link to Comment roadhazard
roadhazard's picture

Nice tin foil space helmet, dude. I didn't up or down arrow you because I want to believe your tongue is in your cheek.

Wed, 09/05/2012 - 00:00 | Link to Comment putaipan
putaipan's picture

yeah really. i thought we had a million dollar shirley mclaine there fora second.....and we could really use one.

Tue, 09/04/2012 - 07:57 | Link to Comment sbenard
sbenard's picture

Bloomberg had a story yesterday that the Fed is preparing to begin INFINITE debt monetization. They used the term "open-ended". That's just as verbose as "quantitative easing". Sounds so harmless, doesn't it?

But isn't "open-ended" just a panderous way of saying "limitless", ie., "infinite"? I think so!

Calamity this way comes!

Tue, 09/04/2012 - 08:01 | Link to Comment EscapeKey
EscapeKey's picture

link, please?

Tue, 09/04/2012 - 08:08 | Link to Comment i-dog
Tue, 09/04/2012 - 08:25 | Link to Comment Temporalist
Temporalist's picture

From blmbrg:

Fed Moves Toward Open-Ended Bond Purchases to Satisfy Bernanke

http://www.bloomberg.com/news/2012-09-03/fed-moves-toward-open-ended-bon...

Tue, 09/04/2012 - 09:55 | Link to Comment RockyRacoon
RockyRacoon's picture

So, no more a la carte money printing -- it'll be a buffet!  Whoever stopped at one plate full?

Tue, 09/04/2012 - 10:09 | Link to Comment Grinder74
Grinder74's picture

Obviously Michael Moore.

Tue, 09/04/2012 - 08:08 | Link to Comment Tyler Durden
Tyler Durden's picture

Absolutely nothing new to Zero Hedge readers. We have said for years that sooner or later the Fed must admit that its entire monetary philosophy is flowed, and it is not the stock but the flow that matters, which in turn means that the Fed has only one option: endless QE.

Here is the most recent instance of this, from June: "The Stock Is Dead, Long-Live The Flow: Perpetual QE Has Arrived"

Incidentally, the biggest winners should this insanity come to pass are holders of hard assets.

Tue, 09/04/2012 - 08:14 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Hedge to infinity, bitchez

Tue, 09/04/2012 - 08:15 | Link to Comment fiftybagger
fiftybagger's picture

"entire monetary philosophy is flowed"

Nice f-slip Tyler

Tue, 09/04/2012 - 08:18 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

 

Sure you can hedge......but you still gotta fight.....thems the rules.

Tue, 09/04/2012 - 10:19 | Link to Comment exi1ed0ne
exi1ed0ne's picture

Flowbie: Everyone getting haircuts.

Tue, 09/04/2012 - 08:20 | Link to Comment redd_green
redd_green's picture

Great comments and great story, as usual.   My biggest fear now is government confiscation of private property.   As the debt increases further up the exponential growth curve, and interest payments on that debt consumes more and more of the tax revenue, those in power, congress, senate,etc, will certainly do anything to stay in power, and to do that, i.e. to keep the whole charade going, it's the next natural step in the progression.   <big frown>  

Tue, 09/04/2012 - 08:51 | Link to Comment Disenchanted
Disenchanted's picture

 

 

redd_green said:

"interest payments on that debt consumes more and more of the tax revenue"

 

Obviously you didn't get the memo...'everyone' knows it's only the 'entitlements' that are the problem. /s

 

Pay no attention to who profits on those interest payments resulting from that debt.

Any portion of that debt resulting from 'Fed' actions over the years should be repudiated. Fuck that Jewbilee bullshit.

 

repudiate:

 

3a : to refuse to accept; especially : to reject as unauthorized or as having no binding force  

Tue, 09/04/2012 - 10:13 | Link to Comment roadhazard
roadhazard's picture

SS wants about $3 Trillion back before repudiating, thank you. Yeah, SS is the problem. I've been talking about the money being ripped off since Reagan... and it turns out to be my fault the whole time. God Bless America. 

Tue, 09/04/2012 - 09:35 | Link to Comment Winston Churchill
Winston Churchill's picture

Yes ,it is.

What the banks don't steal first,the Govt. surely will.

Just a matter of time till they get that desperate.and

thats what the billion rounds of hollow point are really for.

The executive order is already signed.

'You didnt't build that' is just the first part of the softening up process.

Wed, 09/05/2012 - 12:06 | Link to Comment mkkby
mkkby's picture

They don't need to confiscate property. They print money. So they can buy what ever they want with monopoly money, so to speak.

You really need to wake up. New here?

Tue, 09/04/2012 - 08:28 | Link to Comment Ghordius
Ghordius's picture

Hellooo, Tyler! First, let me express again my thankfulness for ZH. Agree with you. Would you care to eventually put your collective heads together and give a coherent opinion on the EUR? Or do you think it's way too early for that (something I would understand and agree with)?

One of you (I call him Manboobz) just lowers the "Tyler Durden" standards when it comes to the ECB. I find it unnecessary. Perhaps you should revise your policy regarding the use of the TD nick. If you want, I'll supply a summary of links with comments. Example: 2751923

Tue, 09/04/2012 - 08:57 | Link to Comment Tyler Durden
Tyler Durden's picture

Your biased opinion of a flawed European experiment is your biased opinion of a flawed European experiment, and you are completely entitled to it.

Tue, 09/04/2012 - 08:59 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

....and please take it home with you.

 

Tue, 09/04/2012 - 09:08 | Link to Comment falak pema
falak pema's picture

home is where the sailor says it is! A wife in every port and sport on the dot at each docking. 

Hows that for good stockings; sown by eager wives of merry barefoot Contessa origins?

Tue, 09/04/2012 - 21:59 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Ghordius,

You want a coherent opinion on the eurozone?

Here it is:

ESCAPE FROM THE EUROZONE WHILE YOU CAN.

http://euobserver.com/political/117204

 

BRUSSELS - The prospect of Britain leaving the European Union is increasingly likely according to a leaked strategy paper by banking giant Nomura.

The Asian bank, which is drawing up contingency plans for a "Brexit," said that "a referendum on EU membership without first securing significant concessions from EU partners would result in the UK leaving the European Union."

Wed, 09/05/2012 - 03:20 | Link to Comment Ghordius
Ghordius's picture

thanks, good article

note that "The UK may head for the EU exit door if it fails to win exemptions for the City" caption

It would be a good thing, IMHO. The UK is definitely in a state of cognitive dissonance in regard to the EU. Leaving would clear their minds.

and yet, again, is this coherent? we are talking about the EUR and it's zone (17 countries/CBs) and you bring an article about the European Union (27 countries).

The UK can't leave the eurozone - because it never joined. It uses the British Pound, not the EUR.

Are you trying to tell me that you appreciate my remarks?

Tue, 09/04/2012 - 09:09 | Link to Comment Poor Grogman
Poor Grogman's picture

That was too funny

Tue, 09/04/2012 - 09:16 | Link to Comment taraxias
taraxias's picture

Best post EVER by one of the Tylers.

Everyone is getting a little tired of this pseudo-intellectual shill trumpet the euro fantasy ECB horn on here time and again.

Wed, 09/05/2012 - 03:24 | Link to Comment Ghordius
Ghordius's picture

I find this interesting from a guy that sports a pseudo-greek nick and nearly never challenges what I write

Tue, 09/04/2012 - 12:15 | Link to Comment Ghordius
Ghordius's picture

LOL - nice punch! Perfect Tyler composture and execution.

yes - and I'm forever grateful for it - my very biased and personal opinion of the Euro Experiment is allowed here

no - I'm not down - only a bit nosebleed from your subtle reminder of what you entitle me

nevertheless, I assume my punch reached you, for example the whole article devoted on the EuroZone Unemployement that implies (as if FED=ECB) that this is relevant.

http://www.zerohedge.com/news/stagflation-eurozone-unemployment-hits-rec...

The unsuspecting reader might just think that the ECB has, like the FED, three key objectives: maximum employment, stable prices and moderate long-term interest rates.

Nevertheless, the ECB has one primary objective: maintain price stability. Period.

And so, the whole article was one of those "they are all the same", for which I'm grateful, too, since it lead me to request an account and write a bit here while sporting this "advocatus diaboli" avatar. Because they aren't.

Note: I'm not saying that the project will achieve it's goals. I'm just saying that we don't know for sure and that I don't like the alternatives.

and so: thanks

Tue, 09/04/2012 - 12:40 | Link to Comment Totentänzerlied
Totentänzerlied's picture

Are you related to AnAnonymous?

Tue, 09/04/2012 - 13:32 | Link to Comment Ghordius
Ghordius's picture

nope, seriously don't think so. and you? what is your critique? Am I boring? Do I bullshit? A waste of ZH space? We opened an account in the same week, apparently, so I presume you have read a few of my comments.

I had my fun and I'm starting to think I had my say. Meanwhile there are in ZH a few freegolder/FOFOA fans and a few europeans that do write corrections to some of the more obvious mistakes. And the details about the non-FED central banks seem to be uninteresting, counting the +1 and -1 signs, so don't wonder if you are soon rid of me. My contribution was meant to support this site. I hope it did.

Tue, 09/04/2012 - 21:59 | Link to Comment Poor Grogman
Poor Grogman's picture

FOFOA does not acknowledge silver as a monetary metal and seems to think that freegold is a "desire of" or can be somehow "managed by the Eurocrats".

Hs whole theme seems to be, that the Euro is a smarter way to do things as it recognizes gold as a superior savings device. (gee who would have thought?)

What he says in 25000 words or more can be distilled into one sentence, there doesn't seem to be much more that he has to offer....

Without the recognition of other possible paradigms and outcomes FOFOA just continually justifies one potentiality which I find somewhat tedious and tiresome.

Wed, 09/05/2012 - 03:26 | Link to Comment Ghordius
Ghordius's picture

he relies on history and extrapolation. If you look there, the SilverZone and the GoldZone - with many overlaps - had quite a fight over the 19th century. Then of course the DollarZone entered the fray, and this threw Silver out of the game first.

Why? Because usually more than two currencies (one "functional" and one for wealth preservation) have no place in the markets.

A Soft Currency and a Hard Currency. For long time this meant Silver and Gold, then Dollar and Gold.

Have a look at the opinions in the US in 1896: http://en.wikipedia.org/wiki/Cross_of_Gold_speech

Wed, 09/05/2012 - 05:08 | Link to Comment Poor Grogman
Poor Grogman's picture

If force and coercion is assumed then of course silver is demonitized. This builds on my earlier post that FOFOA s entire proposals assume just another type of state control or coercion.

Why not let the maket decide on what money is and is not, I guarantee In such a case that the Euro would be quickly abandoned....

Wed, 09/05/2012 - 06:06 | Link to Comment Ghordius
Ghordius's picture

I find this view a bit narrowly US-centric. In the EuroZone and in Europe in general there are at the moment some 15-17 working private currencies. For example in Bavaria you'll find the Chiemgauer http://www.chiemgauer.info/ and in Switzerland the WIR http://en.wikipedia.org/wiki/WIR_Bank.

They do work. People use them. You can have an account, a creditcard, loans, checks, whatever. But they are not dislodging the EUR.

And we never stopped using gold. We simply have a radically different monetary history than the US. Gold was and is always money, here.

Here FOFOA is right: the market typically favours for the broadest, "functional" use a Soft Currency, while for wealth preservation the personal preferences are more relevant.

The old adage is: "bad money (i.e. soft) drives good money (i.e. hard) away (i.e. you don't use it functionally but for wealth preservation)"

Wed, 09/05/2012 - 06:16 | Link to Comment Poor Grogman
Poor Grogman's picture

Are you saying there are no legal tender laws in Europe?

Tue, 09/04/2012 - 21:49 | Link to Comment James
James's picture

You don't know for sure if the Euro is dead??

U.S. taxpayers borrowed 16 trillion dollars to give Europe a loan.

I'm calling it due.

Now do you know?

Wed, 09/05/2012 - 03:06 | Link to Comment Ghordius
Ghordius's picture

LOL - that's a good one.

Wed, 09/05/2012 - 06:14 | Link to Comment falak pema
falak pema's picture

Ghordius, 

You know my reservations about the EUro construct. But having said that, one point pleads in your favour in this current race to bottom :

THERE IS NO ABSOLUTE JUSTIFICATION FOR THE SPREADS ON CLUB MED BONDS IN THE CURRENT CONTEXT; IF THE MARKETS WERE TRULY FREE AND NOT MANIPULATED.

US reserve status and big stick allow the HFs to manipulate the euro scene  via Zirp shenanigans from City all the while their own ship sinks deeper into the mire. 

I have always maintained here on ZH that the crash of 2008 has destablised the Euro system as a lot of public debt resulted from the boomerang of bank bolstering in 2009, as the private mega Euro banks were up to their necks in the toxic scam in the 2003-2008 period. To subsequently bleed the Euro bond market so outrageously is "capitalism gone mad" in all its glory. We are, aka some of those PD/HF shills, drilling holes into the hull of the Titanic all the whiile we sit on it.

So whatever the inevitable outcome of this madness in first world and more so today in Euro land, as weak link of integrated chain; it is only normal in their desperate last ditch attempts to save the EURO the EU tries to create artificial mechanisms to bring the manipulated bond spreads down...

It won't save the Titanic but there is some short term rationale in this euro 13th hour knee jerk. 

Time will tell where the ship hits the iceberg first. Looks like it will be in Costa Concordia waters! 

Tue, 09/04/2012 - 09:00 | Link to Comment falak pema
falak pema's picture

Flowed and flawed; could become floored, if the US$ loses its reserve currency status!

In any hubristic madness it is ALWAYS the underlying assumptions that are the Achilles Heel of the construct.

Just ask Achilles BEn! If he is still sane! One has flown out of the cuckoo's nest they call Princeton! 

Tue, 09/04/2012 - 09:20 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

We wouldn't want the Banks to suffer now would we (sarc)

Breaking Up Banks Is Hard With Traders Hooked On Gov. Subsidies/Deposits

http://www.bloomberg.com/news/2012-09-03/breaking-up-banks-is-hard-with-traders-hooked-on-deposits.html

Tue, 09/04/2012 - 10:01 | Link to Comment Disenchanted
Tue, 09/04/2012 - 10:17 | Link to Comment i-dog
i-dog's picture

It seems that those "Dry Goods" included humour. :)

Tue, 09/04/2012 - 10:33 | Link to Comment Disenchanted
Disenchanted's picture

 

 

Yup...

 

More pics like that from 1940s America(before the rot...I mean 'progress' really set in) here:

 

http://www.dailymail.co.uk/news/article-2197244/Main-Street-40s-Rare-col...

http://www.dailymail.co.uk/news/article-2036932/New-York-City-photos-Cha...

http://www.dailymail.co.uk/news/article-2174473/Library-Congress-color-p...

 

However war propaganda then was already full blown. It's not a coincidence that it began around the same time period as the beginning of the Federal Reserve.

 

Tue, 09/04/2012 - 23:45 | Link to Comment Element
Element's picture

Thanks for that.

Tue, 09/04/2012 - 23:52 | Link to Comment Radical Marijuana
Radical Marijuana's picture

That was a GREAT CHART to illustrate the effect of the international banksters taking over the most powerful country after the First World War. And, as well, some of the comments and links about "endless QE" were enlightening.

HOWEVER, nobody "wins" including not those with hard assets, if this runaway insanity finally generates a full scale World War Three!

All the gold and land, or whatever, that one is supposed to "own" is going to become relatively meaningless IF there is a nuclear winter raining down radiation for many years.

The same situation exists now as it has for several decades, only it is getting obviously worse!  Everybody used to be standing knee deep in a pool of gasoline, while some of them waved matches at each other.  Now, we are neck deep in that pool of gasoline, and even more crazy people are threatening each other with matches.

The REAL system is runaway electronic fiat money fraud, backed up by the threat of atomic weapons ... and the day by day insanity of the first is driving us towards the possible insanity of the second.

Wed, 09/05/2012 - 02:05 | Link to Comment MedTechEntrepreneur
MedTechEntrepreneur's picture

Well then, we could reelect BHO and crash this bitch sooner rather than later...might be interesting.

Wed, 09/05/2012 - 03:16 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Bloomberg had a story yesterday that the Fed is preparing to begin INFINITE debt monetization.

Well, there goes the US dollar then, right down to toilet paper.

Now we know why gold and silver took off.  Open-ended QE on the way.

Calamity this way comes!

Yep, you'll be working for free before long.  Your paycheck may buy a loaf of bread if you're lucky.

I guess they decided to stop farting around, go ahead and destroy the currency, wrap this farce up and end it.

(from the article)

The strategy for more bond-buying “could be open-ended purchases, meaning that they would continue at a certain rate until there was clear evidence of improvement in economic conditions,” Evans said in an Aug. 27 speech in Hong Kong. “To me, one example of clear evidence would be a resumption of relatively steady monthly declines in unemployment for two or three quarters.”

Evans has also argued that the Fed should hold interest rates near zero until the jobless rate falls below 7 percent, so long as inflation does not breach 3 percent.

 

There's just one problem with this thinking.  Printing and buying treasuries, MBS, etc, doesn't help the economy nor the employment situation one little bit.  There's no connection between the two.

Saying "until the economy improves" means it will never stop, because it won't help the economy one bit.

It just helps banks and the government.  And that's all they really care about, banks and the government.

Of couse they won't say that.   They know it, but they won't say it.

Helping the economy is just a cover story. 

They're actually looting the economy.

Wed, 09/05/2012 - 12:20 | Link to Comment mkkby
mkkby's picture

I said it a year ago. They would QE secretly, or under an assumed name. They have/had to because the US has an intractable spending and trade deficit problem. Nobody's actually buying those shit bonds. They have to print forever until foreign CB's say enough, and we all go down the devaluation drain.

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