I think it's very easy to handle deflation, just print more money to buy back treasury debt. Why worry?
The Coming Deflation . . .
- Thread starter Landis82
- Start date
Because even if you print enough money, at certain points if the deflation gets significant enough that it is noted by the lumpeninvestoriat:
1. They stop spending $ and hoard it
2. The banks stop loaning $ and hoard it, making it effectively not enter circulation.
And then it doesn't make a difference.
I agree 100% with the defaltion scenario. The fact that inflation isn't taking off right now with the rise in commoditities tells me there is no more buying power left. Companies cannot pass on the increases and will inevitably start undercutting each other.
Plus how much bullshit can the American consumer buy? How many pairs of Nike's do you need? How many TV's, cars?
People are getting older and are going to be forced into saving more. Americans buy too much shit and if thatl changes prices will fall.
John
Quote from Landis82:
Watch the commodity markets.
Some "risk" premium is already being taken out of the energy markets . . . but just wait till they figure out that the DEMAND for Crude has slooooooooowwed.
I just used the thread as an opportunity to look at monthly charts of every U.S. exchange traded grain, meat, soft, energy and metal contract. Perhaps a couple of dozen.
To recap: Everything is more expensive then the late 90's. HOWEVER, ex-energy nothing is on it's all-time highs and many commodities are at Two-Decade averages. Cattle took out all-time highs a few years back and has stayed above them and I see little coming deflation in steaks.
IMO the biggest canard will be the steepness of the RE decline. I know by experience that even when a gain is unrealized, i.e. an open-trade, or a condo going up in value, the emotional buoyancy of those events spurs carefree spending and pursuit of additional risks. Human nature, eh? But in equity declines the opposite is evident. Can anyone remember way back to the summer of 2002 when restaurants were empty and the few airlines remaining were cutting flights down by half? Jeez, I'd never even heard in '02 of non-rappers driving Bentley's and now I see a few a day. We've always had peaks, valleys, booms and busts. Nothing new under the market's sun.
