Deflation?
- Thread starter qdog
- Start date
It will not influence the M1 figures in the beginning.
What it would do - it would push the UST bonds into inversion as in GB.
Simply speaking the FOMC policy to cease publishing eurodollar and M3 will unevitably push bonds higher.
This will drain the market's liquidity and slow the economy.
Therefore no matter what Bernanke does - it won't be inflationary in the coming year.
So we could see some deflation at one point in the near future. For a moment.
BUT:
If the yield goes too low - it would stop the foreign money inflow = UDS pressure.
And if USD goes down the drain - you will have strong inflationary impulse.
The GOLD mkt is saying SOMETHING.
Credit crunch coming? The paper getting worthless as each day sees the new sunlight. Are the BIG Boys/Girls getting out of "PAPER"?
Something is in the wind if this Gold trend continues, for sure. Mkts seldom make new 25 year highs on speculation alone, this kind of move should have some more flavor to it.
As Bob would say:
How many roads must a man walk down
Before you call him a man?
Yes, 'n' how many times must the cannon balls fly
Before they're forever banned?
The answer, my friend, is blowing in the wind,
The answer is blowing in the wind.
GOLD is singing something: The answer is blowing in the wind
............
:eek:
Credit crunch coming? The paper getting worthless as each day sees the new sunlight. Are the BIG Boys/Girls getting out of "PAPER"?
Something is in the wind if this Gold trend continues, for sure. Mkts seldom make new 25 year highs on speculation alone, this kind of move should have some more flavor to it.
As Bob would say:
How many roads must a man walk down
Before you call him a man?
Yes, 'n' how many times must the cannon balls fly
Before they're forever banned?
The answer, my friend, is blowing in the wind,
The answer is blowing in the wind.
GOLD is singing something: The answer is blowing in the wind
............
:eek:Quote from bighog:
The GOLD mkt is saying SOMETHING.
Credit crunch coming? The paper getting worthless as each day sees the new sunlight. Are the BIG Boys/Girls getting out of "PAPER"?
Something is in the wind if this Gold trend continues, for sure. Mkts seldom make new 25 year highs on speculation alone, this kind of move should have some more flavor to it.
As Bob would say:
How many roads must a man walk down
Before you call him a man?
Yes, 'n' how many times must the cannon balls fly
Before they're forever banned?
The answer, my friend, is blowing in the wind,
The answer is blowing in the wind.
GOLD is singing something: The answer is blowing in the wind
............
too many perma bears imo..
"its different this time.." because it is!
so sayeth Greenie, and Bushy and I believe them!
"from the perspective of the populous, they will always borrow if credit is loose enough."
Yes, but the Fed can't make lenders lend.
In a deflationary collapse, banks may be able to borrow at a mosquito's basis point above null, but if they want to get their money back they don't have anybody to lend to. Anybody who is solvent is solvent because they didn't borrow and aren't going to borrow: they are saving their pennies like Scrooge. The rest are bankrupt, unemployed or on the verge of so.
That's the liquidity crunch. That is, unless Helicopter Ben opens up the Fed's discount window at every qwiki-mart.
"Got pulse? Uncle Sam wants you to borrow! Low Low Low 0.1% rates! (Felon rate may be slightly higher.)"
The government is the only party with an unlimited and insatiable desire to borrow.
The change in the bankruptcy law is extremely deflationary: keeping people in hock for decades, go straight from student loan repayment to nursing home bills.
Yes, but the Fed can't make lenders lend.
In a deflationary collapse, banks may be able to borrow at a mosquito's basis point above null, but if they want to get their money back they don't have anybody to lend to. Anybody who is solvent is solvent because they didn't borrow and aren't going to borrow: they are saving their pennies like Scrooge. The rest are bankrupt, unemployed or on the verge of so.
That's the liquidity crunch. That is, unless Helicopter Ben opens up the Fed's discount window at every qwiki-mart.
"Got pulse? Uncle Sam wants you to borrow! Low Low Low 0.1% rates! (Felon rate may be slightly higher.)"
The government is the only party with an unlimited and insatiable desire to borrow.
The change in the bankruptcy law is extremely deflationary: keeping people in hock for decades, go straight from student loan repayment to nursing home bills.
Bumping this post...
Chanced upon this the other day. Not too familiar with Dr. Faber, but have heard his name bantered around with prechter and the other permabears.
His references from the italian economist living in Weimar hyperinflationary Germany were interesting.
http://www.gloomboomdoom.com/!gbdreport_samples/GBD0306.pdf
While I still maintain that there are potentially significant deflationary influences in the economy, they appear to be waning.
Notably:
1. China's economy is coming under both wage pressure (workers demanding higher salaries) and natural resource pressures (from the commodities bull market currently going on).
2. BSB as fed chairman is inherently inflationary
3. PM bull market and dollar bear market
4. Reports of wage hikes creeping into the media. This is significant.
Chanced upon this the other day. Not too familiar with Dr. Faber, but have heard his name bantered around with prechter and the other permabears.
His references from the italian economist living in Weimar hyperinflationary Germany were interesting.
http://www.gloomboomdoom.com/!gbdreport_samples/GBD0306.pdf
While I still maintain that there are potentially significant deflationary influences in the economy, they appear to be waning.
Notably:
1. China's economy is coming under both wage pressure (workers demanding higher salaries) and natural resource pressures (from the commodities bull market currently going on).
2. BSB as fed chairman is inherently inflationary
3. PM bull market and dollar bear market
4. Reports of wage hikes creeping into the media. This is significant.
John Rubino gets it right in this commentary:
http://safehaven.com/article-5479.htm
With the last paragraph quoted as the crux of the matter:
Which takes us -- as pretty much every economic debate does these days -- to the real question: If as a society we only have two ugly, seemingly mutually exclusive choices, how should investors play it? Hyperinflation means gold and land; deflationary depression means cash and long-term puts on banks and homebuilders. A lot of smart people are weighing in on one side or the other, and I'll summarize their thoughts in a later column. But for now, we should all be watching for signs of which way the cards will fall. As Sprott Asset Management's John Embry put it recently "This is THE question, really."
I couldn't agree more.
And I have not made up my mind.
http://safehaven.com/article-5479.htm
With the last paragraph quoted as the crux of the matter:
Which takes us -- as pretty much every economic debate does these days -- to the real question: If as a society we only have two ugly, seemingly mutually exclusive choices, how should investors play it? Hyperinflation means gold and land; deflationary depression means cash and long-term puts on banks and homebuilders. A lot of smart people are weighing in on one side or the other, and I'll summarize their thoughts in a later column. But for now, we should all be watching for signs of which way the cards will fall. As Sprott Asset Management's John Embry put it recently "This is THE question, really."
I couldn't agree more.
And I have not made up my mind.