HYPERINFLATION VS DEFLATION

Opulence · Oct 30, 2012

Peter Schiff makes a great point about why deflation needs to occur and why it would actually benefit our economy. We all know that our level of inflation is artificially high because, for some reason I don't understand, the govt and The Fed sees rising inflation as a sign of progress. So, prices are high for no fundamental reason whatsoever.

www.youngandopulent.com

morganist · Oct 30, 2012

Quote from Opulence:

Peter Schiff makes a great point about why deflation needs to occur and why it would actually benefit our economy. We all know that our level of inflation is artificially high because, for some reason I don't understand, the govt and The Fed sees rising inflation as a sign of progress. So, prices are high for no fundamental reason whatsoever.

www.youngandopulent.com

Is the problem deflation or the mechanism they use to "solve" it namely QE?

Opulence · Oct 31, 2012

Quote from morganist:

Is the problem deflation or the mechanism they use to "solve" it namely QE?

In my opinion, deflation would in fact be beneficial. I do believe QE and low interest rates are the problem. Only thing I can see happening as a result is stagflation.

Scataphagos · Oct 31, 2012

Quote from Opulence:

"... for some reason I don't understand, the govt and The Fed sees rising inflation as a sign of progress. So, prices are high for no fundamental reason whatsoever.

There is a BIG reason why the government supports inflation... because it LOOKS like growth.... if you don't look too deeply.

GDP is based upon the final price of goods and services. If prices are inflated 5%, looks like "5% growth" when there really was none.

Yes, they calculate an "offset for inflation", but they fudge it to be less than it really is.

More government "lipstick on the pig".

syswizard · Oct 31, 2012

Quote from Opulence:

In my opinion, deflation would in fact be beneficial. I do believe QE and low interest rates are the problem. Only thing I can see happening as a result is stagflation.

Totally agree. The question is: what will the equities and commodities markets do as a result of this ?
1) hard down
2) slight down
3) agonizingly sideways

Certainly at these levels there's little upside.

StarDust9182 · Oct 31, 2012

Quote from Ed Breen:

.... then private credit will not increase, it will stagnate or decrease...that is called 'deleveraging.' Where private credit is 'deleveraging' no amount of interest rate manipulation or 'QE' to produce base money in the banking system, can produce inflation...becuae the 'velocity' required to produce the inflation is the private credit formation that is not taking place..........

First I must admit Ed, that I find you difficult to read. Perhaps that is because we come from different views. That's great though, I can learn from you.

I would like to know what you mean by private credit in the above quote. Are major banks and the FED private credit agencies? Are you implying that the FED policy was correct but 'joe publi'c screwed it up by not increasing their debt? Do you have a graph of something that is deleveraging currently?

Opulence · Oct 31, 2012

Quote from Scataphagos:

There is a BIG reason why the government supports inflation... because it LOOKS like growth.... if you don't look too deeply.

GDP is based upon the final price of goods and services. If prices are inflated 5%, looks like "5% growth" when there really was none.

Yes, they calculate an "offset for inflation", but they fudge it to be less than it really is.

More government "lipstick on the pig".

That's exactly what I was hinting at: the govt seeing inflation as growth. LOL

Opulence · Oct 31, 2012

Quote from syswizard:

Totally agree. The question is: what will the equities and commodities markets do as a result of this ?
1) hard down
2) slight down
3) agonizingly sideways

Certainly at these levels there's little upside.

Man, its so uncertain that I'm not even in the markets at the moment.

morganist · Oct 31, 2012

Quote from Opulence:

Man, its so uncertain that I'm not even in the markets at the moment.

I made the same decision back in 2007 when this all started off. Even if you have a good idea of what is going to happen all you need is a goverment or central bank to make a competely stupid decision and it throws any kind of logical sense out of the window.

Now the markets are unpredictable for two reasons the general fluctuations in the market and decisions governments and central banks make. It is double the uncertainty there is no way to predict things.

piezoe · Oct 31, 2012

Do either of you two guys who are arguing here allow for the possibility that the collateral held on the Fed balance sheet may have been mispriced, priced way too low that is, when they acquired it? If so, is it possible that Bernanke and company will have the last laugh when 20 years from now they turn out to be geniuses.