Today reports show savings up, spending flat and inflation slightly dropping. All sounds good right?
Deflation followed by hyperinflation is coming.
- Thread starter KINGOFSHORTS
- Start date
That can be bad, if borrowing does not pick up fast. Otherwise, they can be signs of deflation.
Looks like the Media Pundits are now waking up to my prediction.
http://www.businessinsider.com/how-hyperinflation-will-happen-in-america-2010-9
How Hyperinflation Will Happen In America
From the article.
"#1 One dayâwhen nothing much is going on in the markets, but general nervousness is running like a low-grade fever (as has been the case for a while now)âthere will be a commodities burp: A slight but sudden rise in the price of a necessary commodity, such as oil.
Read more: http://www.businessinsider.com/how-...rice-of-a-necessary-commodity-1#ixzz0zpHxTXbr"
http://www.businessinsider.com/how-hyperinflation-will-happen-in-america-2010-9
How Hyperinflation Will Happen In America
From the article.
"#1 One dayâwhen nothing much is going on in the markets, but general nervousness is running like a low-grade fever (as has been the case for a while now)âthere will be a commodities burp: A slight but sudden rise in the price of a necessary commodity, such as oil.
Read more: http://www.businessinsider.com/how-...rice-of-a-necessary-commodity-1#ixzz0zpHxTXbr"
Hyperinflation is the result of a total loss of confidence in the currency not a higher rate of inflation.
The U.S. will stagnate until it fixes its structural unemployment problem.
The U.S. will stagnate until it fixes its structural unemployment problem.
When the Fed senses the QE pumps (being used to try to prevent deflation) are pushing us into hyperinflation (loss of faith in the dollar), they will either pull the plug on the QE or hike rates, or both.
My thought is Greenspan is saying that the price of gold is the canary in the coal mine that signals that loss of faith beginning.
On the separate subject of "why should we not allow deflation?", I think the reason is that the Fed is run by banks, and those banks are owed money backed by assets that would be deflated in value, and as asset values deflate, they are going to experience higher default rates. They aren't going to allow deflation if there is any way they can help it. The same goes for the government which owes vast unpayable sums. The sums owed don't drop in a deflationary environment, but the revenues sure do. Both of these situations have been occurring the past couple years, so I think that is proof enough of the validity of the argument.
My thought is Greenspan is saying that the price of gold is the canary in the coal mine that signals that loss of faith beginning.
On the separate subject of "why should we not allow deflation?", I think the reason is that the Fed is run by banks, and those banks are owed money backed by assets that would be deflated in value, and as asset values deflate, they are going to experience higher default rates. They aren't going to allow deflation if there is any way they can help it. The same goes for the government which owes vast unpayable sums. The sums owed don't drop in a deflationary environment, but the revenues sure do. Both of these situations have been occurring the past couple years, so I think that is proof enough of the validity of the argument.
Quote from KINGOFSHORTS:
Looks like the Media Pundits are now waking up to my prediction.
http://www.businessinsider.com/how-hyperinflation-will-happen-in-america-2010-9
How Hyperinflation Will Happen In America
From the article.
"#1 One dayâwhen nothing much is going on in the markets, but general nervousness is running like a low-grade fever (as has been the case for a while now)âthere will be a commodities burp: A slight but sudden rise in the price of a necessary commodity, such as oil.
Read more: http://www.businessinsider.com/how-...rice-of-a-necessary-commodity-1#ixzz0zpHxTXbr"
This is very silly.
Inflation, if you look at the historical data, isn't tied to the level of debt, or the rate of growth in debt, or even the 2nd derivative of the rate of growth of debt.
It's tied to the rate of growth of nominal GDP.
The Civil War was our first really amazing period of debt growth, but there was deflation until 1872. Not inflation, deflation.
Why?
GDP was falling.
The next spell of debt growth, tied to WWI, saw our first period of double-digit inflation since the Revolution.
Why?
GDP was rising very fast.
In 1921-1922, GDP fell off a cliff. Prices also fell by double digits.
In 1932, same thing. Prices fell by double digits.
In WWII, GDP rose sharply. Prices rose by double digits.
The pattern continues to the present day: in 2009, the debt went from around 10 to nearly 12 trillion dollars.
GDP, though, fell slightly: from 14.4 to 14.2 trillion.
Guess what? The CPI did too: by .86%. Not much, but then the fall in GDP wasn't much either.
When GDP rises, depending on the rate of that growth, prices will rise.
This isn't rocket science.
And by the way, the level of debt in absolute terms is well south of the record set in WWII. We're nowhere near even levels that would be considered a record by our historical standards, much less the world's.
Sorry to burst your bubble of doom and gloom.
All figures come from here: http://www.measuringworth.com/
Ummm, sorry, but we ALREADY had the beginnings of hyperinflation a couple years ago. Remember oil going to was it $140 a barrel? And the Fed reacted, causing the deflationary crush that sent the economy into a tailspin.
I bet we see that commodities zooming situation again in the next year...
But how will the Fed respond this time? I bet they are more careful not to cause a wanton deleveraging again, after seeing the deflationary impulse that resulted last time. What exactly DID they DO, anyway? I don't recall any overt Fed moves as per se, but yet all of a sudden all of the hedge funds were panicked out of EVERYTHING! Why did the banks all pull the credit lines all of a sudden? Or better yet, what in the hell were they doing lending to hedge funds at all in the first place, with 20 or 30 to 1 leverage?
Odd... Why don't we read these kinds of discussions in the Fed meeting minutes?
I bet we see that commodities zooming situation again in the next year...
But how will the Fed respond this time? I bet they are more careful not to cause a wanton deleveraging again, after seeing the deflationary impulse that resulted last time. What exactly DID they DO, anyway? I don't recall any overt Fed moves as per se, but yet all of a sudden all of the hedge funds were panicked out of EVERYTHING! Why did the banks all pull the credit lines all of a sudden? Or better yet, what in the hell were they doing lending to hedge funds at all in the first place, with 20 or 30 to 1 leverage?
Odd... Why don't we read these kinds of discussions in the Fed meeting minutes?