Deflation-stealth in '08 shows face in '10

excerpted from the same you don't want to know who ... :)


10-year yields from various issuers, showing sovereign, municipal and corporate issues on the same spectrum, so that we can see, for example, how high-yield corporate bonds compare with Greek debt. We chose a parabola to depict the situation of debt issuers because debt gets exponentially harder to repay or refinance as the interest rate rises, especially for large debtors. So problems tend to intensify exponentially the higher up the curve one goes -- just as the angle of a parabola's ascent grows steeper





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D E M A N D

that's what they were talking about on CNBC. As yet nobody knows how to solve this .... lack of demand


Demand, lack thereof, is a very strong component of D E F L A T I O N

Drop trillions from helicopters - people will grab it and then SAVE it.

All I can see is STRONG DEMAND FOR CASH!!! All cash but some are better than others :) :) :)

USD and Yen!! yum, yum. :D

Gold? I think top is being formed, otherwise it would be included.
 
Quote from deadbroke:

D E M A N D

that's what they were talking about on CNBC. As yet nobody knows how to solve this .... lack of demand


Demand, lack thereof, is a very strong component of D E F L A T I O N

Drop trillions from helicopters - people will grab it and then SAVE it.

All I can see is STRONG DEMAND FOR CASH!!! All cash but some are better than others :) :) :)

USD and Yen!! yum, yum. :D

Gold? I think top is being formed, otherwise it would be included.
More...

on what timeframe does it look like gold is topping out? it feels like it's about to break highs from the recent price action. even if does make highs though I don't see how it can stay up if/when the real deflationary selling takes hold...
 
repeat post because its highly relevant to my argument for Deflation .....

the thread is here .....

http://www.elitetrader.com/vb/showthread.php?threadid=204039


"Further thoughts on the scenario that if if if if TLT has topped, i.e. rates have bottomed ... and rates start shooting north like a rocket ...

will it be because of Inflation .... ?

I don't think so. I think it will be because of fears of US govt. default. As this fear increases due to suspicion and/or a shaken belief in the strength of the govt., the govt. will be forced to pay higher and higher rates to satisfy the fear of default within investor groups.

This higher Yield will attract money from all sorts of locations and will become a sponge and suck money from other sources causing other investment categories to fail by making their debts worthless.

As per the chart I've shown on Yields, this is what I am expecting and is outlined in the CALL earlier in this thread.

Fasten seatbelts" :)
 
I think in this case, we are working with fiat currency, as in paper dollar promises, not money, like 20 dollar gold pieces, and so this time, they are trying to debase the currency as fast as the credit bubble deflates, in order to try to maintain nominal asset values and prevent deflation in nominal value terms.

Proof to that would be to look at the DJIA or SP500 indexes priced in gold instead of dollars.

Quote from deadbroke:

The primary precondition of Deflation

Deflation requires a precondition: a major societal buildup in the extension of credit (and its flipside the assumption of debt). Austrian economists Ludwig von Mises and Friedrich Hayek warned of the consequences of credit expansion, as have a hnadful of other economists, who today are mostly ignored. Bank credit and elliotwave expert, Hamilton Bolton, in a 1957 letter, summarized his observations this way:

In reading a history of major depressions in the US from 1830 on, I was impressed with the following:

(a) All were set off by a deflation of excess credit. This was the one factor in comon.

(b) Sometimes the excess-of-credit situation seemed to last years before the bubble broke.

(c) Some outside event, such as a major failure, brought the thing to a head, but the signs were visible many months, and in some cases years, in advance.

(d) None was ever quite like the last, so that the public was always fooled thereby.

(e) Some panics occurred under great government surpluses of revenue (1837, for instance) and some under great government deficits.

(f) Credit is credit, whether non-self-liquidating or self-liquidating.

(g) Deflation of non-self-liquidating credit usually produces the greater slumps.
More...
 
Quote from thriftybob:

I think in this case, we are working with fiat currency, as in paper dollar promises, not money, like 20 dollar gold pieces, and so this time, they are trying to debase the currency as fast as the credit bubble deflates, in order to try to maintain nominal asset values and prevent deflation in nominal value terms.

Proof to that would be to look at the DJIA or SP500 indexes priced in gold instead of dollars.
More...


Yes.

Have you looked at a monthly long-term chart of dow versus gold?

Go back to the 1929 stock market top, then look at the 1966 top, then see the corresponding Dow/Gold tops.

Then look at Dow/Gold today and see that the nominal Dow has not YYYYYYEEEEEEETTTTTTT followed. But "follow" it has always done.

Therefore just looking at the magnitude of the sheer vertical drop of dow/gold, one can only be stunned when one tries to fathom how great the corresp[onding drop in nominal dow must be WHEN it gets underway.
 
Quote from deadbroke:

Judging from the threads on Deflation/Inflation its appropriate to ask ALL ET-ers, "Why aren't you in school? Do your parents know what you're doing?" :D


----------------------

let's get to it, then ....


I'm an avid student of DEFLATION, a tough subject especially given that none of us experienced its last bout in the Great Depression of the 1930s. So we have no practical experience. But such experience is coming bigtime IN SPADES. Actually its been trickling in since 2005 but despite the real estate crash its hardly been easy to identify its presence ELSEWHERE. Its going to hurt even the ones who are prepared but the opportunity to learn will be huge.

Of course body death will then cause the forgetter mechanism to kick in and all will be forgotten by the time I wake up sucking on a tit in some hospital in China, starting a new life hoping to then serendipitously find ET so I can revisit what I once knew and learned about Deflation IN THIS THREAD. :) :)

One ET-er said that Deflation is a good thing because it means falling prices as in a market correction, so why is that a bad thing if we can then buy cheaper etc., etc., ?

This and more will be answered and since this is an intense thought provoking thread esp. for me, its not likely anyone will ever state that Deflation is a good thing ever again.

All are welcome, even that useless bum, Lucrum. :) :D :D
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Oil peaked $147 and now $70.
So yes proof there's deflation.

Wage deflation is the worst deflation.
Already underway for a long time.
 
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