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Gundlach Explains Biflation For The Cheap Seats
Appropos Bernanke's razor's-edge tight-rope-walk fence-sitting as the not-too-cold-not-too-hot economy reduces the Fed's ability to do anything, Jeff Gundlach of Double Line provided a succinct explanation of the the 'uncomfortable position' the place-of-confusion Fed finds itself in. Simplifying the dilemma to: the Fed cannot raise rates as the dramatic implications for the huge debt load (and implictly the interest expense saving the budget deficit) of the US Government are untenable while at the same time inflation (in the things we need - not just want) is rising notably. However the new bond-king notes rather sarcastically, that the Fed can show that there is only modest inflation thanks to housing and wage growth (and herelies 'the biflation'). The old-school-Fed's efforts at pre-emptive strikes against inflation is simply not going to happen, he states, citing an "intentional attempt to suppress national income - an attempt to stop nominal GDP growing too much - simply won't be tolerated until inflation moves into the 4-5% category".
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Biflation loosely translated means 'bend over'.
Bingo.
Whatever you need, gonna go up in price. Your income, not so much.
Yep, and the FED line is they need 4-5% inflation to show up? So we're really at well over 10% actual inflation using real numbers, FED says its 2%, so by the time the FED does anything to address inflation it will be at a real 25%. Oh thats just great.
To sum up the vid: rates can never be raised because by doing so, the US goes bankrupt.
Another important point: the second rates start rising, houses start heading back underwater. They may be affordable now but at higher interest rates the prices will go lower. Ya simply can't buy as much if you can't borrow as much. Regression tells me we will, some day, end up with 20% down and >7% interest rates. How does that NOT translate into lower prices?
More like 50% down with >20% interest rates. When the US goes bankrupt and can no longer back the mortgage market and the cookies really start crumbling, what private lender is going to loan money out at just 20% down?
100 year mortgage anyone
I will buy your house with my first born and two silver sheckles.
And rates must be raised in order to tamp down commodity price inflation because by not doing so, the people go bankrupt.
Government vs The People.
No because the government..i.e...Politicians can blame the higher costs on greedy corporations....not themselves...and can pass laws accordingly..and the dumb people will fall for it...
Austerity has an easily defined enactor. Inflation is an ephemeral boogeyman. Speculators, hoarders, greedy bankers, you name it can and all will be blamed when the real enemy points fingers.
It will all shake out in the end but not before the Peace Frog moment.
i just had a few holy shite moments reading the link below, and I'm still only on page II of the introduction.
It's totally ON topic, mind-boggling stuff.
Capital flows.... totally nuts.
Risks; Clearly delineated. Its' THEIR working doc it looks like.
The UNCTAD REPORT ON INTERNATIONAL DEVELOPMENT
Check it out when you can. You'll be glad. Great Macro of what is under-way! (Notice the marine terminology) ;-)
ori
What marine terminology exactly?
And what in the first few pages was 'mind boggling' ?
Canaduh, you're just a piker or I'd engage.
Under-way is a seafaring term. Ship's get under-way. As does everything else in our world.
Perhaps our minds boggle to different stimuli? How far did you get? It's the 2011 report, latest.... this is pretty much the voice of the IMF/WB cabal. Loaded with hints/reasons, stress indicators. All this in 2 pages... still 260 + to go.
Whatever though....
ori
Oooh, I think you just lost 3 levels of enlightenment by calling me names.
Under-way? That's the best you can come up with?? Pretty weak. I guess I was under the crushing oppression of the UCC in high school when my teacher told me there would be no talking after the test was 'under-way'.
I read about 30 pages throughout the report. Nothing new or 'mind boggling'. I was hoping you could actually point out some specific things that stuck out to you , instead of your usual circular babble. But I should have known better.
Way to not engage.
ORI has a tendency to get wasted out of his gourd and present whatever he's stumbling across at the moment as OMG DUDE THIS IS HUUUUGE...
I don't think he's wasted, I just think he's hyper-gullible, and even though he is supposedly well educated, dumb as fuck. Unfortunately, he feels the need to share the feces he finds by spreading it on the walls wherever he goes, metaphorically speaking.
Maybe it's documents made by Central Bankers to inform politicians of the 'well in advance' formulated plans to drown the Sovereigns in debt....then let the "chum" in the waters work it's magic in a multitude of linked and desired outcomes.
Central Bankers seem "ego driven" like that....they love to ink it out on paper like it was written confirmation supporting their god complex.
Politicians are inherently low IQ....and easily impressed....they will assimilate any nonsense that has the appearance of "well thought out" and take it as the best of options...being the disgusting sycophantic "yes zombies" that they are.
Page 80:
When defaults occur, debts need to be restructured.
An outright debt default clearly undermines the general strategy of nurturing the confidence of financial markets (referred to as the confidence game).
Sovereigns were meant to be destroyed from the start....the unwashed masses have approached 'maximum potential' and they will need to be "managed".
If I were to guess....2012 is meant to be the calm...where the bankers get all of the traitors on board as to how the Event Horizon gets breached....after of course the debts get applied to the saddles of the serfs that were always meant to bear the burden of this looting in the first place.
Jubilee events....will not be available for all...as the feudal lords need to redress the new millenium's boundary lines in their favor
Bankrupt? You mean currency destruction via hyperinflation?
Already BK~
Bingo~
This is a good opportunity for me to explain monetary stimulus as well:
If our Federal Reserve follows these three simple steps, we will be on the road to recovery in no time.
If recovery means the end of the fiat ponzi, then you're right. The Fed will blow itself up.
I don't think there's any steps, though, it's just a simple plan of "keep the ponzi system afloat" and that requires the money to be pumped in at ever increasing rates.
"create a burst of liquidity"
I have a suspicion that the obvious "burst" is really a cover for a stealth deluge that we are prevented from seeing.
And then there is the troublesome use of the word "climax"
Were Secret Service agents involved? :>D
@mdb
Fess up, you read the post about Greek men yesterday, didn't you?
The use of the word "climax" is telling. It is never innocuous.
Add equal parts vinegar and baking soda to two liter soda container.
Screw cap tightly.
Shake.
So basically inflation that goes both ways. NICE!!!!!
Biflation.....getting phucked by Janet Yellen and the Ben Bernanke at the same time.
Biflation means that the whole world is coming apart at the seams , but if you short the market , you get fucked.
If you put any money within reach of the criminal cabal it surely will vanish.
Create a money making machine and you can bet your ass that it will get used...a lot.
No wonder a guy by the name of HOOVER was at the heart of the start of this round of gangsterism.
ori
It will surely VAPORIZE
Difference between Yellen and a bowling ball? You could have sex with a bowling ball if you had to.
Wait that means PE ratios will be 6x
Bingo. Like an x3 ETF squared then leveraged under a derivative chain. The half life of money in them is measured is nano seconds.
Sounds perfectly reasonable and safe.
Inflation in the things you need... deflation in the the things you own (including your labor).
I propose we tax millionaires and spend $trillions to stimulate the recovery.
If I wanted America to fail...
I'd vote for more of everythinng.
I would vote myself a trophy wife.
krugman's go to guy now... He Goes By @TheStalwart - @BusinessInsider 's Joe Weisenthal Joins Us On The @SquawkCNBC Set Tomorrow #Disruptors
I disagree with almost everything Joe says yet still follow him on Twitter. It is some sort of neurological disorder with the compound adjective "early-onset"
i finally dumped him this morning. he and drudge are becoming unclickabe...
You fast, pete-ah-san!
Someone please explain how come margin compression does not seem to be affecting earnings (for the most part) in this biflationary environment.
I dont know, other than now earnings are just outright bullshit? Why shouldnt they be, everything else is now.
Two words: Schrödinger's cat
Fifteen words: On a long enough enough timeline, the survival rate for every cat drops to zero.
You can do it both ways in a box...
earnings "beats" on "analysts" expectations and/or bullshit...
Perhaps because expenses are being cut at a greater rate. Or they are sacking people and re-hiring at a lower wage rate. Then again, don't underestimate their ability to fudge accounts.
What makes their accounts very very suspect though is how corporate tax collections do not align with the so called recovery.
This, it's simply a testament to how inefficient large organizations (bureaucracy) can become... especially during prosperous times (manipulated low interest rate environment).
At some point there is no fat left to cut...
Spot on.
I do not trust any announced "profits" at the moment.
On a par with the BLS figures !.
Things cost more. People don't. That's the situation. People buy the same goods for more money and don't increase in their salary.
see zerohedge article on cloud stuffing.
http://www.zerohedge.com/news/latest-economic-fad-cloud-stuffing
also why does the vid keep cutting out after 2 mins?
Jesus, i posted on biflation over a year ago.
Is this a joke?
Jesus, you expect the whole world to notice a forum post you made over a year ago?
Is this a joke?
Actually the joke is on you since you have failed to realize biflation has been ongoing since '09.
Woo, learn somrthing new every day even if it is a few years late.
lot's of people have been talking about it here for a long time. It's not particularily unique. It is a bit unique to see it on CNBC.
Yea well lots of people were posting about biflation, stagflation and all that 2 years ago here too. And getting called crazy for suggesting such a thing.
What is the difference between biflation and stagflation?
A wonkish concept since 2002/2003:
http://en.wikipedia.org/wiki/Biflation#cite_note-1
By now, i'm resigned to the fact of biflation/transitory inflation etc; but what could the inflation in taxation have in store for us in the future ? Austerity comes in many guises.
For sure... taxes will go up, services will go down, things we need will become more expensive and things we own will be worth less. And this isn't just throwing a bunch of negative comment up against the wall... this is what the system has created. The illusion of wealth and prosperity that allowed most people to merely keep their heads above water is quickly coming to and end. Kind of like the frog in water gradually coming to a boil... we're cooking and we don't even know it.
This. Except some of us own things that will weather the storm just fine... not all things lose value. It's just that for most people, buying things that are more durable isn't as fancy and the jones aren't doing it...
The Jones'? Oh they dropped their home keys in the foyer and walked out on their mortgage years ago. Haven't heard from them since.
Their granite countertops presumably outlasted them. Some things they bought were durable.
Austerity means we learn to live with less so our ruling class can tax us to more prosperity ... theirs, that is.
Free ride until after elections...
If the GOP were smart - they would throw the election - there won't be a Dem left standing by the following election
Um, as an aside on that GOP stuff: http://www.policymic.com/articles/7460/ron-paul-wins-washington-on-track...
The piece's start:
The Ron Paul “delegate strategy” seems to be working. And he could very well be nominated at the Republican National Convention in Tampa in late summer.
Wow. Twist.
The Texas libertarian has based his entire 2012 presidential campaign on the ability to win over state delegates — rather than winning the popular vote. To do this, Paul has utilized an extensive grassroots campaign network to influence local officials, who in turn would influence the higher-up officials. Until recently, this strategy had shown only limited results: the ground-level Paul delegates had not been able to immediately influence the wider state delegate situation. Now, though, caucus states like Washington, Minnesota, and Iowa — each with a complicated system of “bound” and “unbound” delegates — are nominating their delegates to the GOP national convention in Tampa. And the Paul ground game is starting to work, but with some institutional backlash.
I'm long Rand Paul 2016
Not enough pain yet for Ron in 2012
Your statement assumes a whole lot, most notibly: 1. there are two sides, 2. these elections mean anything and 3. there will be a next election.
I think its going to take every bit of bullshit they can come up with, all-out effort 24/7, then also rely on getting a bunch of miracles as well, to keep this going until 'after elections'. I'm not buying into that line at all anyway, I think its a big ruse.
'Oh dont worry, everything will surely be fine till after some elections' yea sure.
"They" is too kind...should read " The soulless, pyschopath cannibals"
Biflation = the rich get richer while the poor don't have enough gruel to eat.
Biflation is a fancy term for face down ass up, that's the way Bernanke like to fuck us all, right in the balloon knot, all day everyday, and twice on Sunday.
God Damn video has a terrorist bankfiend bankster pop-up in it.
G. does not like DELL I mean AAPL.
Inflation = theft. No more. No less.
Inflation is just stealth tax theft, while the FED says 2% its really 10% at least, a 10% new tax no one even admits to.
my thesis remains that post election the fed will flood the world with dollars causing a burst of inflation in the 20-30% range while keeping rates low allowing the banks to flush out all their bad debt through skyrocketing nominal asset prices(aapl will be the first trillion dollar company). in other words they will try a controlled reset. it will fail and 2013-23 will spawn a million economics phds and great new battlefield apps.
I dont buy any of it, at all....from the 'after the election' line everyone believes in to the huge economic nuclear weapon device theyll deploy....its over, theyre just going to pull the rug out one day, leave everyone bankrupt under the cover of WW3.
it is definitely over and will end in war but don't misunderestimate the capacity of genius to fool itself with the outrageous self deception that htey can fix this and make money. this is just like in 2004 and 2005 when the most prescient forecasters saw the end of the real estate bubble clearly and were ridiculed and laughed at on tv. what did the banks do to forestall the collapse? they rolled out the most toxic of the toxic loan paper.
the banks need a fix and quick. they will do something that will appear incredibly stupid by everyone else but themselves causing a huge capacity destruction event ultimately resetting the paradigm for the survivors.
Isn't that sweet, more overlaying of charts on apple, this time google. Of course nobody takes into account PE ratios and earnings when doing these chart overlays, which you would think would be important as opposed to just throwing jagged lines over one another. It's really terrible analysis. I certainly hope ZH is not trying to somehow gain credibility by their overlap of NFLX/AAPL that was an epic fail.
Also they start Apple at the bottom of the crash in early 2009. That's where they start their chart. What an awesome place to start a chart at the bottom of a crash. CNBC fucking sucks, Gundlach needs to stick to fucking bonds when he's not in court.
I fully agree with this assessment and will provide a case study and explain just how bad things are getting for the average Joe (which includes myself and family). The focus is education. First and which I'm assuming is not counted in the official inflation figures is the gradual shift in misc. fees, expenses, costs, etc. that have been passed on to the average household which use to be covered by schools and are now forced on to the parents. Want your kid to participate in band. Payup. Football, here's the annual participation fee (of course this doesn't even count the cost of making sure your kids have a chance in club sports which now dominate K-8 grade activities). Field trips, science labs, etc., etc., etc., you name it, the parents are on the hook for it. Every year at back to school night, the teachers make a plea for contributions which we support as much as possible. But the hidden inflation that is occuring is shift of funding responsiblity for basic school activities that when I was younger, was fully funded.
Next stop, college. It goes without saying that annual tuition rates have been increasing at high single to low double digit rates (not even counting the slew of other fees that are being tacked on annually). In California, I believe the Cal and State schools have basically doubled the annual tuition rate over the past six years (plus or minus). But this is only the tip of the iceberg as let's face it, today, a properly educated college student in California (especially with the state schools) has basically no chance in getting through in four years (five and six are now the norm). So add two more years of college expenses to the tab. But let us not forget how the rules have changed to even get into college now (for in-state students). Having a 3.5 GPA with only core classes (no honors or advanced placement courses) no longer cuts it as the competition is fierce to get into the best schools. So you better stock up on added tutorials, AP courses, etc., etc., etc. in highschool to make sure you have a chance to get into the right college (all added fees being passed down on to the parents).
But I'm not through yet as the final straw that will break the back of parents, the ultimate insult, or in the words of Clark Griswald from the movie Christmas Vacation, "If this isn't the bag pulled over our heads, kick in the stomach, etc." or something to this effect (once he finds out he's been inrolled in the Jelly of the Month Club), colleges are now actively pursuing more out of state students that are required to pay 3x to 5x more in annual tuition over in state students (even if they are better qualified). Why, the answere is simple. Higher tuition to offset collapsing state support. The colleges are being forced to increase the acceptance of out of state students to generate more revenue which of course just adds further fuel to the student loan disasster which will now being compounding at even a more accelerated rate.
I firmly believe, as most parents do, that obtaining a high quality education is essential for our children to have a chance to compete and hopefully learn and gain knowledge on how screwed up the current economic enviornment is and can lend a hand in maybe one day figuring a way out of this cluster fuck. But it's becoming very clear that obtaining a proper higher education is becoming a luxury good which is quickly falling out of the reach of most Americans. The implied inflation (i.e., when the burden of all educational costs are properly account for) is running so high right now and only looks to get worse in the coming years that it is only going to amplify the separation between the 1% and everyone else.
It's hard to believe that I would ever make this statement but in today's economy, having children is a "luxury" most people will not be able to afford. It is beyond comprehension that a so called developed soceity (i.e., the United States) has reached a point that it will not be able to compete in as little as 20 years on a global basis as it undermines one of its most important competitive weapon - Education. But maybe that was the grand scheme all along. Strip the masses of any ability to succeed and simply line the sheepie up for the eventual slaughter. Man has this situation gotten twisted beyond all reason and logic.
I respect the effort you put into your post and agree wholeheartedly with you. Right now I'm trying to give my children the best headstart possible in these difficult times that will yet get even more difficult for our children once they enter the labour market. Affording the best education is my priority and it is my largest single cost burden I have. I am giving them that 1% education on an income that puts me among the 99%. Children truly have become a luxury but in reality they are an absolute necessity. A perverted world we live in.
Another problem is that Globalization is nowhere near being dismantled - so good luck squeezing into the correct field that isn't next on the chopping block. This from somebody that has spent the last decade getting "closer to the ground" in fields that might still earn somewhat of a living.
STEM, my ass. The only reason unemployment among those with college pedigrees is 4% is many are having to slum. The easiest thing to see in the world today is that nothing has changed. THAT'S why retail isn't buying Jim Cramer's fairy tale (actually saying yesterday, "what are we doing wrong? why isn't retail back in the market?"). I'd say TWO generations have been lost and deleveraging will continue until the SHTF..
When the 'excess' bankers and financial researchers get the ax - and have to live in the new 'UBER-profits for the shareholders-at-all-expense'-world and need to change careers midstream; ONLY THEN will they see how FckD up things really are.
As long as there are people to fire and shares to buy back - profits will be up, in our new 'Inc.-World' (tm).
I must say, one of the most level headed and sincere pundits on CNBC for a while. This guy talks sense.
Which is why you'll probably never saee him again on CNBC.
They should install a second red button in the White House. One to launch nuclear war, another to crash the stock market.
I HATE YOU SECOND RASH AMERICANS!
EAT THE DIRT AND FEEL THE INDIANDS! OH YEAH!
20 EUROS THANKS, YOU FUCKERS;
OH, WFUCKIN AA!
With 20 euros you can buy 2 gallons of gas. That is your fault, not ours.
Lithium, mug of hot chamomile tea, Oxford English dictionary, good History text.
Is that you, Mary Stack?
"won't be tolerated until inflation moves into the 4-5% category".
We're already 2X that figure~
One day closer to Global Hyperinflationary D-Pression!
Assets of middle class >>> government and banks (and minions)
So glad the FED is on it.
CNBC .... Maria ... "If all that money on the sidelines comes back, Shiiiiiiiiiiiiii "
Simon Hobbes thinks money can be printed forever as long as wages don't go up. Because everything is free at the store for unemployed people, right? What logic.
Yes biflation has been a topic that ZH has covered for a while. It is finally becoming a topic on Lame Stream Media.
This is a first, indeed a benchmark. Once "biflastion" becomes a concept discussed in the left wing, know it all salons of NYC...it will become an issue.
Biflation hits at the value of the USD, not at the historical inflation points of imnterest like wages and housing. Fed debt creation will increasingly be seen as inflating commodities and subsequent deflation / debasement of Westren currencies.
Very soon we will begin hearing CNBC commentators speak of the value/ necessity of a hybrid bi-metalic standard (they won't call it a gold standard...maybe "21st century policies for" a "healthy" USD"?)
A bi-metallic system is the only way to prevent a total; collapse and chaos.
Tyler - can we start a contest to see if ZH'ers name the eventual central bank policy name for an effective bi-metallic system?
Out of curiosity, how many writers use "tyler durden" as their pseudonym? Why not use Charlie Brown, since it has so many interesting variations (e.g. Charles Brown, Charlie Brown Jr.)? Then again, there's always Mark Twain.
Silas Marner, Theodore Geisel, Relyt Nedrud...
More fun that way, Nillorraj.
Don't question the fight club logic...there is a rule about it. If you don't know about the rule, I'd like to offer you some soup, Mr. Jarrolin.
Durden drinking the Kool-Aid. Fed is going to buy every piece of shit MBS, CDO & piece of junk debt it can get it's hands on from the dealers & the treasury. Then its gonna memo everybody + congress (you and I are nobody's btw) that rates are going up and the sheeple are going to eat shit again while Nancy Pelosi's kid buys puts across the market and Goldman does some bistromath and hedges itself so well they can start buying back shares.
Obama is happy because his 2nd term is gonna expire before the I-Generation realizes gas doubled and the DOW is batting 1000.
...biflation. Lol. Of course you know, this means war.
http://www.youtube.com/watch?v=7B0A0jojwBE&feature=related
The Bull is the global derivative debt beast. Bugs find himself divested from his hole and is now subject to the bull market ring ( the public paid to be in the cheap seats) and the beast kicking his arse. In the end Bugs wins the dodge game when the Wall Street Bull crashes into the Market Wall, do to it's own ''physical'' momentum. LMAO. Looney Tunes Gold.
http://www.youtube.com/watch?v=UNZbP3ZVem4&ob=av2e