Deflation-stealth in '08 shows face in '10
- Thread starter deadbroke
- Start date
Its more than a safe haven currency. Its a champion. Look at the beating it took from 2001 to the low in 2008. Everyone was writing him off, calling him a reprobate. Then look what Benny did to him, poured green ink all over him and tried to ruin his image.
But he fcked 'em all.
And what's more, the second place contender is who, where, what, say what?
Maybe his reign will end some day, but not till this GREAT BEAR ends!!!
Some more practical observations
Since Deflation results from a contraction in the quantity of outstanding debt .....
Real-estate crashed in 2005, the stock market crashed in 2007, and commodities crashed in 2008. Despite trillions in bailouts and coddling, the highs are still not taken out. PPI and CPI's roc is still near zero.
M3 (money supply, actually credit supply) has turned down.
15% of US home mortgages are either delinquent or in default. Mortgages are the bedrock of banks' assets. Banks don't lend freely when their assets are collapsing in value.
Since Deflation results from a contraction in the quantity of outstanding debt .....
Real-estate crashed in 2005, the stock market crashed in 2007, and commodities crashed in 2008. Despite trillions in bailouts and coddling, the highs are still not taken out. PPI and CPI's roc is still near zero.
M3 (money supply, actually credit supply) has turned down.
15% of US home mortgages are either delinquent or in default. Mortgages are the bedrock of banks' assets. Banks don't lend freely when their assets are collapsing in value.
In hyperinflationary times, people are desperate to get rid of their wheelbarrows full of money.
In deflationary times, people are desperate to obtain money. Today, it is difficult to get anyone to part with a dollar. Homeowners can't make mortgage payments. Employees are taking pay cuts. Retailers are cutting prices. And jobs are scarce.
Even as monetary authorities urge banks to lend, Congress has curtailed credit by passing laws to regulate bank loans, reduce banks' proprietary trading, restrict profits from credit card fees, oversee credit-rating services and restrict the size of financial institutions. This trend is the opposite of the government's expansionary policies of the late 1990s and early 2000s, and it is deflationary. Recklessness contributed to inflation; conservatism will curtail it.
Monetary authorities have done everything they can think of to bring back inflation, and they are failing. Central banks face a problem they facilitated: There is too much doomed debt in the world.
In deflationary times, people are desperate to obtain money. Today, it is difficult to get anyone to part with a dollar. Homeowners can't make mortgage payments. Employees are taking pay cuts. Retailers are cutting prices. And jobs are scarce.
Even as monetary authorities urge banks to lend, Congress has curtailed credit by passing laws to regulate bank loans, reduce banks' proprietary trading, restrict profits from credit card fees, oversee credit-rating services and restrict the size of financial institutions. This trend is the opposite of the government's expansionary policies of the late 1990s and early 2000s, and it is deflationary. Recklessness contributed to inflation; conservatism will curtail it.
Monetary authorities have done everything they can think of to bring back inflation, and they are failing. Central banks face a problem they facilitated: There is too much doomed debt in the world.
observing the HERD ........
Most people seem to believe monetary authorities can and will inflate away all this debt. But one leading indicator should give pause. According to Trade-Futures' Daily Sentiment Index, the percentage of bulls among traders of gold futures in May hit 98%. This record-high reading suggests inflation has been widely anticipated and is therefore not likely to be the next big event.
conclusion: Prepare for Deflation, not Inflation.
Most people seem to believe monetary authorities can and will inflate away all this debt. But one leading indicator should give pause. According to Trade-Futures' Daily Sentiment Index, the percentage of bulls among traders of gold futures in May hit 98%. This record-high reading suggests inflation has been widely anticipated and is therefore not likely to be the next big event.
conclusion: Prepare for Deflation, not Inflation.
Hyper inflation comes only from the excessive printing of money. Problem the Govies round the world have now, is that their debt is all short term or close to short term, when inflation kicks rates will jump.
So you are right they have throw the baby and the bathwater at this and result no inflation, I have to think though how bad would it have been if they hadn't but now its time to let the invisible hand work its magic and let the weak banks and companies die, time to let the strong thrive, otherwise we have zombie land
So you are right they have throw the baby and the bathwater at this and result no inflation, I have to think though how bad would it have been if they hadn't but now its time to let the invisible hand work its magic and let the weak banks and companies die, time to let the strong thrive, otherwise we have zombie land
I disagree. The full transaction adds MONEY to the economy. Thus lower value to the economy, which results in inflation.
A more valuable economy would have deflation. Everything purchased on credit is costing a premium. Future pricing of goods and services must adjust to these realities. This creates the bubble. Bubbles as everyone well knows by now are NOT VALUABLE.
Less credit is good credit.