"Consumer credit isn't growing you say. Consumers are deleveraging. Not possible to have inflation unless consumers are borrowing and wages are rising. Pure nonsense!"
http://goldscents.blogspot.com/2010/09/deflation-never-had-c...
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Buy land out in the middle of
Buy land out in the middle of nowhere and build yourself a well stocked retreat and make sure you have a reliable means of getting there.
After that's secure, then I'd worry about buying precious metals.
I am out of touch with most Americans precisely because I am not out of touch with reality.
Good article.
This sentence is particularly relevant:
"Here's the thing, where the inflationary forces show up is determined by who gets first use of the money."
This is what typically gets forgotten. Inflation benefits those in closest proximity to the printing press.
Murray Rothbard talks about this in "The Mystery of Banking".
Imagine that a counterfeiter had a printing press in his basement and that no-one discovered the fraud. How would his spending affect the wider economy?
The inflationary effects would not be evenly distributed. Clearly, the counterfeiter himself would be the largest beneficiary. Next in the chain would be those places he spent the new money. Then the secondary recipients of that money would benefit, but to a lesser extent. As the money spread out the "benefits" of the inflation diminish and the general rise in prices makes itself felt to the point where it ceases to be a benefit and becomes a curse.
So it is with the legal counterfeiting operations we call "central banks". Government and the commercial banks are the first recipients.
The Death Of Cash?
Just thought I would share this with you all, I thought it was a a good read, I hope you will too.
The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions
Are we witnessing the slow but certain death of cash in this generation? Is a truly cashless society on the horizon? Legislation currently pending in the Mexican legislature would ban a vast array of large cash transactions, but the truth is that Mexico is far from alone in trying to restrict cash. All over the world, governments are either placing stringent reporting requirements on large cash transactions or they are banning them altogether. We are being told that such measures are needed to battle illegal drug traffic, to catch tax evaders and to fight the war on terror. But are we rapidly getting to the point where we will have no financial privacy left whatsoever? Should we just accept that we have entered a time when the government will watch, track and trace all financial transactions? Is it inevitable that at some point in the near future ALL transactions will go through the banking system in one form or another (check, credit card, debit card, etc.)?
Here is the link to the rest of the article:
http://theeconomiccollapseblog.com/archives/the-death-of-cas...
what the inflationists fail to acknowledge
our money is debt. You can print money, but you can't print new borrowers. I think we have come near or finally reached a debt saturation point. Bills will be paid, loans paid off, and no new money borrowed. The money supply will contract.
That is not quite true, the
That is not quite true, the reason being is that you have the ultimate borrower of all time: The Government. The FED is trekking down the path of Quantitative Easing full-steam ahead and the response of our government is to spend that money into circulation at a rate that boggles the mind.
Within the last few weeks Walmart, of all places, has very quietly raised prices, some increases have been between 6 and 10%, that reflects an inflationary pressure that you don't hear about on the evening news, but perhaps even more indicative of the inflationary pressure is the fact that such price hikes are anticipatory. Just wait....let's see what you think about deflation in the coming months.
You see, many people don't quite understand all the monetary mechanics of a hyperinflationary event. It is not only the over-issue of fiat currency that contributes to such events, it is when a vast and growing government sector begins to either consume or crowd out the private sector of an economy. This is a contributing factor in such events. What happens is that the government or public sector begins to completely undermine the coordination of trade within the markets. Thus, a hyperinflationary event is not only a monetary phenomenon, but it is also a psychological one where the market creates stress against the massive distortions created by the government's artificial monetary economy. So, while everyone is looking at the increasing money supply waiting for inflation to "kick-in" the truth is that hyperinflation is much more than simply a monetary event.
—
http://militantjeffersonian.com
"Men do not willingly read unpalatable truths of themselves. The People like those best who fool them most, by pandering to their vices and flattering their foibles" Raphael Semmes
thank you republicae.. not
thank you republicae.. not only do you have ultimate barrower, you also have the ultimate spender.
"Ineptocracy: a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confisc
My take
is we still have a ways to go as there is still much debt with the banks that is waiting to be defaulted upon. The problem with the banks, is they can not mark to market those assets at today's value because if they did, it would throw off their minimum reserve ratios and trigger the FDICs knock on the door.
You are right, banks can not force people to borrow and the Fed can not force them to. Besides, if you own a bank, would you want to lock in a 30 year fixed rate of under 5% right now? Heck no. You are in the business of making a profit.
The only ones doing the real lending is our good ol government via a failed FHA program that entices those with insufficient wealth to become debt slaves in an attempt to make money in a declining real estate market. A good percentage of those are defaulting.
My Christian/Political Blog:
We the Serfs! Blog
who was the guy who had a few
who was the guy who had a few articles published on kitco? the guy had a picture of himself standing on beach somewhere. He claimed "deflation" and the price of gold and silver was going to plummet. umm maybe 6 months ago or so? he was dead wrong.
"Ineptocracy: a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confisc
Inflation
is a monetary phenomenon as we all know, but it also must include credit.
Right now its not just consumers who are deleveraging, but also businesses and the entire derivatives market that was created during the credit expansion that preceeded it, when banks were allowed to loan at multiple fractions, much more than they had in the decades past.
The author is correct in pointing out the banks aren't taking any of the money and loaning, but the reasoning is they can't. They are in debt up to their ears and on top of that they have a shadow inventory that if marked to market would collapse the top 5 banks. The banks are what I keep a close eye on.
Any assumptions that Bernanke would print 1000 trillion to fight deflation is silly. Sure, they will print some, but they can't nilly willy destroy the dollar in the process. That's why they want more power and have been given it; to be secretive about their machinations.
The author then states that it is the dollar index that we should watch, but while this type of analysis has worked the past decade, gold has been decoupling from all currencies.
The U.S. Dollar Index is just how the dollar is performing against these other currencies that make up the basket which are also depreciating (except the Yen of late and somewhat the Swiss Franc).
The reason gold will fly beyond most people's expectation will be because of a rush to real wealth, a rush out of the riskier paper to the safer paper and ultimately gold and silver.
Yes, Bernanke and company will inflate. Yes, they have been inflating, yet the dollar index has been rising of late. This is mostly because the Euro took a hit.
It's the dollar and other currencies vs. gold that matter.
Japan has been in deflation going on their second decade as they have been unwinding from their credit contraction. This despite a government that has caused the debt to GDP ratio to rise past 220%. The Yen meanwhile has appreciated against the dollar, but not against gold the last few years (and decade).
Inflationist and deflationist may disagree on the "how," but the eventual outcome I believe to be the same. The "when" is the unknown. Also, the "how" can make people rich or break them, so putting one's money in certain assets believing one side could wind up hurting them if they are wrong.
But an investor in gold (silver too) doesn't care. An investor in gold has acquired gold as insurance. A type of insurance that isn't held by most.
My Christian/Political Blog:
We the Serfs! Blog
In
the sentence above, I meant Japan unwinding from their credit "expansion" not contraction.
Edit: changed the word in the sentence above that my Droid created to "unwinding." I need an iPad!
My Christian/Political Blog:
We the Serfs! Blog
I sure wish
That Metals would pull back, I bought HEAVY at $11.60 (Silver) $840.00 (Gold) and haven't bought a single ounce of anything since. I'm goin' cRaZy here and I need More mEtAlS!
=-(
for most americans their savings are
..the inflated/ future selling price of their home..when that asset deflates as gold continues to go up ..which in time will end ..it seems to freak out the fed ..........Oh well, who knows... really ..noone
one thing I disagree with is
one thing I disagree with is that bernanke could sop up the liquidity they put in the system to keep it afloat..
That is pure BS.. once its in there is no way to suck it out. All the idiot can do is raise rates. That does not stop the sea of dollars they just released.
"Ineptocracy: a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confisc
The thing is...
that he hasn't put significant liquidity "into the system" as of yet. The banks held onto it. That's not saying that, one day, the banks might actually be forced to take a chance on the consumer again.
But that day certainly is not today.
the whole article is saying
the whole article is saying deflation/hyperinflation/inflation has nothing to do with liquidity to the consumer. The GOVERNMENT prints the money to pay its obligations thus destroying the currency. It makes no difference how much the banks loan or don't loan. How much money has the government spent buying bombs, tanks, and planes to run this war on terror? How much does the government spend on welfare and medicare. You do not need banks to loan to get hyperinflation. Believing that is what keynes taught.
"Ineptocracy: a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confisc
'zactly
Hyper-inflation is not inflation amplified.
that would be hyperinflation brought about by loss of faith
in the government. This is something I personally don't believe is going to happen until the deflation of bad asset investments goes forward. But it's fun to have our own views on this.
-oh, and also, "inflation" has everything to do with liquidity to the consumer. in fact, that's one of the stipulations of standard inflation. I was only bringing your use of "liquidity into the system" in real perspective. Little to no liquidity was brought into the real economy. This is one of the primary reasons that houses can stay so high and btw Ron Paul himself says the same thing :)
yawwnnnnn... Ron says we are
yawwnnnnn... Ron says we are in for an inflationary depression. again the price of housing etc has nothing to do with hyperinflation.
"Ineptocracy: a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confisc
I think Inflation/Deflation is somewhat of a false debate.
We are struggling not to enter a massive deflation on items such as housing, automobiles, and many locally produced goods. The massive bank-bailouts were not used to channel any part of that money to the real economy and this is flat fact.
The Federal Reserve, hand in hand with the Executive and Legislative branches, are fighting tooth and nail for house prices (and to a lesser extent, automobiles) NOT to super-plunge in price.
To many economists, price deflation is simply a phase that comes before "hyperinflation." Note that "hyperinflation" and normal price inflation are completely different phenomena. For an excellent article on what hyperinflation actually is:
http://financialsense.com/contributors/brian-paragamian/tsun...
^scroll to the paragraph titled "Deflation then Hyper-inflation?"
-To sum up, I don't think, from the economic theory I see at least, that Deflation or Inflation is a "one or the other," rather I think it is most likely a chain of events in the modern era.
Falling asset prices are not deflation.
Besides I see no falling prices on food, energy, living expenses, they have been rising every month, some dramatically.
/Mike
Front Fell Off
http://www.youtube.com/watch?v=WcU4t6zRAKg
Look also at car insurance,
Look also at car insurance, health insurance etc.. I wonder when people will finally wake up and get it figured out they have been had by the mainstream media claiming "deflation" so they would not jump in and buy silver and gold ounces which would have overun the big manipulating banks in the metals markets..
"Ineptocracy: a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confisc
Asset price deflation is not
Asset price deflation is not deflation. The prices that the credit market ballooned will collapse when the credit collapses. There I agree with the deflationists. That has happened and Bernanke has held the monetary base flat for nearly 6 months, so, no there hasn't been any more money 'printed' from that perspective. All of this means that the overall CPI can stay flat.
But, commodity prices are different. Money printed and put into circulation during a recession like this will preferentially flow towards commodities over assets. The government is still pushing cash into people's hands that it doesn't have, that it had to borrow. This cash is going to buy food, rent, etc.
The great deflation is happening and may continue to happen, but the Fed won't change this policy until the CPI begins to dip negative. At that point Bernanke will stand ready to force the excess reserves into the economy. That will be your trigger. Then hyperinflation is most likely.
Ta,
Blog: The Present in Plain Text
Listen to The Myo-Tonics on YouTube
correct
falling asset prices are a function of what happens _with_ deflation.
Must Read
for a slightly different take on the inflation/deflation debate.
Freedom, Prosperity and Peace