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Post by looter on Nov 21, 2011 7:32:10 GMT -5
I think we need big deflation to get a meaningful Euro PIIGS bailout. People have to fear for their lives before they adequately bail out laziness thousands of miles away.
A little late for the party, but there's still some cheese dip left.
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Post by kcm on Nov 21, 2011 7:56:50 GMT -5
Do you think it will happen? I can't see how it couldn't, if nature took its course, but governments are working overtime to see that nature doesn't take its course. Seems to me that deflation is about the only thing that would turn the world economy around naturally.
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Post by thirsty on Nov 21, 2011 8:14:17 GMT -5
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Post by glowplug on Nov 21, 2011 9:09:27 GMT -5
We have inflation now. Food and fuel prices up. And fuel prices drive up the cost of everything else.
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Post by iowa55 on Nov 21, 2011 10:09:35 GMT -5
What is more likely to happen is just like the 80's/90's scenario ...low raw ingredient prices and high inputs = misery index of epic proportions for most. The new crooks incharge are hell bent to destroy the whole fabric of this country and world economy. They seem to think they will become kings or something. Egypt is back to protesting and killing each other again. Can you say "dark ages" ?
These people should take a lesson from what is happining over there ...They take their leaders out and shoot/hang/behead them.
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Post by looter on Nov 21, 2011 12:33:01 GMT -5
Spiking energy prices are absolutely deflationary. It's hell on banks. It kills credit. It unravels fractional reserve lending like a fat chicks thong 5 miles into a trail ride.
I agree with everything KCM posted.
$50-something crude on Valentines Day. DLT will work....
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Post by Grainbelt on Nov 21, 2011 16:12:13 GMT -5
Food and fuel prices rising is NOT INFLATION. Increases in the money supply is inflation. Rail loadings have nothing to do with inflation.
I am in agreement with Looter, we have a good dose of deflation headed our way.
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Post by looter on Nov 21, 2011 20:43:03 GMT -5
What is more likely to happen is just like the 80's/90's scenario ...low raw ingredient prices and high inputs = misery index of epic proportions for most. The new crooks incharge are hell bent to destroy the whole fabric of this country and world economy. They seem to think they will become kings or something. Egypt is back to protesting and killing each other again. Can you say "dark ages" ? These people should take a lesson from what is happining over there ...They take their leaders out and shoot/hang/behead them. The misery index is derived from a combination of inflation and unemployment. It was high in the 1970's and very low in the 1980's and 1990's. The present problem is the result of the institutionalization of fractional reserve lending. The inverted pyramid has been growing for a full century. No leader in the world was alive when it started. We are just along for the ride. If you ever get a chance to learn about the 19th century market crashes, I highly reccomend making the most of it. There was some fractional reserve lending before the Fed, during the gold standard, and its as old as civilization itself. There was a time when fractional reserve lending was strictly outlawed, and of course it happened regardless. I can guarantee members of the seedcorn industry are fractional reserve selling some corn numbers as I type this. Next spring when the run on the seedcorn warehouse bank hits, guys will be moved over to something they didn't order.... in the exact order they show up for their seed. The only proven solution to fractional reserve lending is a rumor of it. A bank run results, and honest banks who don't lend more than it has (by a factor of 1,000) survive the bank run. The crooks go broke. The lost savings fuel the rumors of the next bank run. Like a vulture keeping the desert clean, the bank run, and only the bank run, keeps lenders honest. Today the leverage banks use is just amazing. I picked up a copy of "Fortune" Magazine from Dec 1999. Always good for a belly laugh. In it was a full-page ad from AIG. (Remember AIG? The outfit that insured mortgage lenders?) The ad said; "Because the biggest risk is not taking a risk at all." BAHAHAHAHAHAHAAH!!!!!!!!!!!!!!!!!!!! AIG took in BILLIONS every year in PMI (insurance) and they couldn't pay out enough money to insure an outhouse when it was finally claim time. They were more broke than the secretary answering the phone. We've been told the CME could pay us if the guy on the other side of the trade couldn't. Really? How do we know the CME is AAA+  Wasn't AIG also Triple A? Planting time is the only way to test integrity in the seed business. Deflation is good. It's the ONLY way to test solvency. For nearly a century economics proffessors taught ways to avoid deflation altogether via monetary policy. The FDIC (moral hazzard on steroids) and every aspect of economic policy spawned in the rotten 20th century was designed with a sole purpose in mind.... to defeat the inferno of deflation. Well folks.... you can stop every forest fire for decades... but all you do is make more fuel for the inevitable firestorm. This is where we are. A bank in Belgium speculates on Greek bonds and loses. It then can't pay Wells Fargo who lent them the money. Wells can't pay its inter-bank loans to Citi or (OneMain or whatever they call themselves) and so on so forth. The to 1,000-to-1 leverage on customer loans and another 1,000-to-1 leverage on inter-bank loans means the tiniest hiccup means nobody anywhere has any money at all. Credit = money = faith. It could all vanish by the time you wake up. The results of the deflationary spark today make the standard 19th century bank run look like a camp fire in the middle of the Sahara. When this blows up it will be the sun itself. People will panic, and all bailout restraint will get thrown to the wind. The Fed has an infinite firehose with infinite PSI. It will quelsh the deflationary fire, but to do so it will need complete control over money, banking, industry, and economic policy. It will get the keys to the whole works, and shell shocked citezenry will hand them over. This is the future and only Ron Paul would know enough to stop the last part from happening. |
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Post by thirsty on Nov 21, 2011 21:19:23 GMT -5
Food and fuel prices rising is NOT INFLATION. Increases in the money supply is inflation. Rail loadings have nothing to do with inflation. I am in agreement with Looter, we have a good dose of deflation headed our way. Inflation is a rise in prices, whether it occurs by increasing money supply, restricting supply of commodities or flooding countries with immigrants it all results in the same-inflation. Deflation is caused by austerity (not printing), demographics (lots of old people/negative birth rate) and/or an over-supply of 'things'. Three quarters of the world is in a BOOM, five billion people on this planet live in countries with growth rates well above 5%, half the world's population live in countries with growth rates above 10%. 90% of new cars in China are purchased with cash on the barrelhead. That is anything but DUHFLATION. Intermodal is telling me that the US is slowly becoming an exporter again. Is the US in deflation? Yes, so is pretty much all the world that spent the last decade exsisting with a current account deficit. Spain, UK, Italy, US, Greece, Portugal, see a common trend? Name me the top current account surplus countries and the role they are presently playing in this so called 'crisis'? Typically with large currency walls they are being asked to bail out the profligate. No crisis there. Germany has the lowest unemployment rate in decades, China has a three trillion dollar currency wall, Norway holds a half trillion in foreign equities in a rainy day slush fund. The crisis isn't global, its a boom for those who haven't been living beyond their means. It sucks for those who spent the boom digging themselves a bigger hole. Americans have a bad habit believing the world revolves around them. It doesn't, get over yourselves. en.wikipedia.org/wiki/List_of_sovereign_states_by_current_account_balanceen.wikipedia.org/wiki/List_of_countries_by_real_GDP_growth_rate_(latest_year) |
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Post by thirsty on Nov 21, 2011 21:24:00 GMT -5
Its expiry tomorrow. Every other expiry and almost always on the end of every quarter the commodities get flogged, gold dumped $100 in a couple days flat. You can set your sundial by it.
;D
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Post by looter on Nov 21, 2011 21:28:33 GMT -5
Food and fuel prices rising is NOT INFLATION. Increases in the money supply is inflation. Rail loadings have nothing to do with inflation. I am in agreement with Looter, we have a good dose of deflation headed our way. Inflation is a rise in prices, whether it occurs by increasing money supply, restricting supply of commodities or flooding countries with immigrants it all results in the same-inflation. Deflation is caused by austerity (not printing), demographics (lots of old people/negative birth rate) and/or an over-supply of 'things'. Three quarters of the world is in a BOOM, five billion people on this planet live in countries with growth rates well above 5%, half the world's population live in countries with growth rates above 10%. 90% of new cars in China are purchased with cash on the barrelhead. That is anything but DUHFLATION. Intermodal is telling me that the US is slowly becoming an exporter again. Is the US in deflation? Yes, so is pretty much all the world that spent the last decade exsisting with a current account deficit. Spain, UK, Italy, US, Greece, Portugal, see a common trend? Name me the top current account surplus countries and the role they are presently playing in this so called 'crisis'? Typically with large currency walls they are being asked to bail out the profligate. No crisis there. Germany has the lowest unemployment rate in decades, China has a three trillion dollar currency wall, Norway holds a half trillion in foreign equities in a rainy day slush fund. The crisis isn't global, its a boom for those who haven't been living beyond their means. It sucks for those who spent the boom digging themselves a bigger hole. Americans have a bad habit believing the world revolves around them. It doesn't, get over yourselves. en.wikipedia.org/wiki/List_of_sovereign_states_by_current_account_balanceen.wikipedia.org/wiki/List_of_countries_by_real_GDP_growth_rate_(latest_year)My guess is that asset values in every country in the world are going to head steeply south in the next 12 months due to a contraction in credit (M3). Too much inter-connectedness for any country to survive a liquidity trap. Time will tell... |
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Post by thirsty on Nov 21, 2011 21:35:53 GMT -5
Here is a list of countries by unemployment. en.wikipedia.org/wiki/List_of_countries_by_unemployment_rateBelarus and Cuba are kind of jokes, but I see a lot of interesting stories here. Austria at 4.3, Swiss at 2.9, Australia 5.2, Germany 5.8, Japan 4.1.... Where's the crisis? Now match up countries with high current account deficits, low growth rates and high unemployment and you definitely see a trend. |
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Post by looter on Nov 21, 2011 21:43:45 GMT -5
Here is a list of countries by unemployment. en.wikipedia.org/wiki/List_of_countries_by_unemployment_rateBelarus and Cuba are kind of jokes, but I see a lot of interesting stories here. Austria at 4.3, Swiss at 2.9, Australia 5.2, Germany 5.8, Japan 4.1.... Where's the crisis? Now match up countries with high current account deficits, low growth rates and high unemployment and you definitely see a trend. How much exposure do German banks have to the PIIGS? How are those banks going to function with those non-performing loans? What is the loss in credit going to do to their money supply? Just asking. I don't claim to know exactly.... |
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Post by thirsty on Nov 21, 2011 21:44:25 GMT -5
Tough to say. I understand blowing up primary dealers and/or rolling over whole countries into default isn't good for liquidity and may cause 'hyperdeflation'. On the other hand, it seems most of the world (the other 6.5 billion people on the planet) has no problems drinking what used to be America's milkshake at $96 and change a barrel. Its hard to fathom that the Chinese buy a couple more million cars a year than US and 90% of them lay down cash on the barrelhead. Throw in these massive currency walls/Sovereign Wealth Funds, and I think A LOT of this so called crisis is contrived. The question you should be asking yourself is why???
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Post by thirsty on Nov 21, 2011 21:49:29 GMT -5
Dunno, that's what made fall 2008 so death defying, nobody knows what is on who's books. On the other hand if you want to understand the situation in regards to Germany you realize that the German people have 5.3 trillion dollars in deposits stashed away in their banks, they just don't believe in equities like in Anglo-land. At that point you understand why the German controlled ECB wants nothing to do with money printing. They want structural changes from the PIIGS, like they had to go through after the re-unification boom went to bust.
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Wasn't AIG also Triple A?