0 votes

"It will be hard for the US and UK to avoid a depression."

Deflationary Hurricanes to Hit U.S. and U.K.

"The odds of a significant bout of inflation now are about the same as they were in 1929. Next to none. History is about to repeat."

Trending on the Web

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Inflation, deflation, they

Inflation, deflation, they both have solid argument. There are so many variables though. We will probably know in retrospect.

either way I would prepare for bad times.

I heard the word "crash" on the radio

www.dvds4delegates.com the newest and possibly the greatest weapon the Revolution now possesses.

today. It is a comin, hold on tight!

Those who expect to reap the blessings of freedom must. like men, undergo the fatigue of supporting it.-Thomas Paine

The R3volution requires action, not observation!!!!

Inflation vs. Deflation

Both Mish (who believes we are in a deflationary period) and Schiff (who argues the opposite) are outspoken Ron Paul supporters. In the sense they use the terms, inflation doesn't necessarily refer to price, but to an increase in the quantity of money and bank notes in circulation. Price increases are a symptom of inflation.

One thing they agree on is holding gold, which they both describe as "real money."

Schiff: http://www.safehaven.com/article-9083.htm

Mish: http://globaleconomicanalysis.blogspot.com/2007/12/peter-sch...

Mish's blog is excellent, as are most of the comments to his posts. It's critical to note that a deflationary period doesn't necessarily mean that prices for everything will go down, nor that the purchasing power of the dollar will increase across all asset or consumable categories, nor that the ratio of prices (like the cost of filling your tank versus the cost of a haircut) will stay the same. From a pricing perspective, I personally think we're closer to the description of blflation:


Boston, I think you are very

Boston, I think you are very astute, and describe the current and future situation much more accurately with that word "biflation". But as for a GENERAL deflationary episode, a la the 1930's, I think it is laughable to believe that the US government would allow or invite such a scenario, as it would be against their own self-interest, considering the massive debt with which they are burdened.

What makes you think that the government has the power to

stop deflation is what I don't understand.

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters."
Benjamin Franklin

government of the people, by the people, for the people

Deadbeat nation

I agree. After all, what incentive do we really have to pay off $10 trillion in national debt, for starters?

Why pay them off with currency that takes 1000 units to buy one ounce of gold, when you can just create more money, and pay it off with 1000 units that buys only half an ounce of gold? Or even less? By inflating, we are robbing the rest of the world of the purchasing power of what we owe them. Clever of us!

Of course, it's also robbing you and I of the value of what we have saved, or the purchasing power of our future earnings.

Despite reading Mish daily, I remain in the camp that believes that the political incentives to inflate will ultimately create an environment in which price increases will run rampant. Obama and government entitlements. Endless stimulus packages. Housing bailouts. Printing to roll massive amounts of interest. Added to the return of trillions of US dollars held as foreign reserves when sovereign wealth funds try to exchange all their dollars for something real (like US corporations, or real estate, or other resources), there will be many more dollars floating around, credit bubble collapse or not. All these dollars will be bidding up gasoline, food, health care, etc.

I was watching "Monopoly Men" last night...

and Milton Friedman was talking about how the Fed actually caused the Great Depression. They are doing it again.

It's really simple, and they are following the plan to a "T". Super easy credit for an extended period of time, just like before the Great Depression. Then you simply cut it off. Deflate the money supply. That's their next move.

Get ready. It won't be pretty.

On purpose or by checkmate, I think we'll find ourselves in

a similar situation, but probably much worse, in my opinion.

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters."
Benjamin Franklin

government of the people, by the people, for the people

This just in from Jim Sinclair

check out his web site tonight www.jsmineset.com

Posted On: Tuesday, July 01, 2008, 11:43:00 AM EST

It Is Now!

Author: Jim Sinclair

Dear Friends,

There are two subjects of extreme importance today.

I sent you an email months ago saying, “This Is It.”

1. I am now telling you, “It Is Now.”

Gold is preparing for an assault not on $1000, but for a brief penetration of $1200.
Violent chopping will occur, then off it goes to $1650.

This violent chop we have been living in here and now will resolve itself very soon and the take will be seen by history as having occurred in this last formation HERE AND NOW.

2. Where your juniors are concerned please give equal attention to the fundamentals before you make any decision. When beaten down, as they have been, think about gold at $1200 and $1650 coming sooner than anyone expected.

Call the company and respectfully demand to speak to management, not an IR officer. If management is in the country but will not speak to you, put that in the debit column. Allow time for a call back as many other investor may be doing the same thing.

The questions are simple. Property, finances and costs are the subjects you approach.

As an example, a high cost mining company in Ghana just experienced an increased production cost per ounce of gold as a byproduct of increased electrical costs in the country. Before you push the panic button the question to the company is “What are your total costs per ounce, not cash cost?” Once you have that answer think about gold at $1650.

I will discuss the “why” of all this on www.JSMineset.com this evening.

Respectfully yours,

..... says the establishment

..... says the establishment stooge and shill for the Federal Reserve and powers-that-be.

Has anyone else noticed how desperately the elites are trying to convince us that we should be worried about DEFLATION (absurd) instead of what they are already giving us in spades: INFLATION?

As far as I'm concerned, and from all I understand about economics, politics and history, we have about as much to fear from deflation as we do from alien kidnappings, maybe less. The real threat, the one that the powers-that-be KNOW is in the works, is inflation --- that is why they are so desperately pushing all this deflationary disinformation.

This supports exactly what you are saying

Best article I've read on this

Hey, don't freakin' diss the aliens man!

I'd take them over poopy-doopys in DC any day.


Lisa C.

“Elections are short term efforts; revolutions are long term projects.”

--Ron Paul

Join the rEVOLution here: http://www.campaignforliberty.com/

Ron Paul "Sign Wave Across the USA" -- November 5th!

Well, Lisa, I hear some of

Well, Lisa, I hear some of them aliens have some pretty freaky anal probes. Funny how they always seem to go after the younger boys in rural areas almost exclusively.


maybe they mean 100% monetary deflation after everyone looses faith in the USD and British pound.

Hyperstagflation coupled with biflation until a period reminiscent of the French Revolution coupled with 100% deflation is my guess.

"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."

I agree with you

oh all those flations - few understand!

Big Difference

The big differences between now and 1929 are the size and cost of government, the government's massive debt, and the government's unrestrained power to create fiat money.

In the Great Depression, the vast majority of employment was private sector. When the banks collapsed, people were thrown out of work in droves. The government tried to "make" work as much as possible, but its hands were tied by lack of revenue and the sheer logistics of creating from nothing a massive national employment program. It tried to raise revenue by raising taxes but that, of course, backfired. Critically, the government in the great depression did not have the power to create fiat money that it does now.

Now, government is a MASSIVE employer already. No need to create a national employment program - there essentially already is one in place. AND the government has the power to create as much money as it wants. As the economy crashes, government revenues will fall and demands for government services will rise as a result of private sector unemployment. Running massive deficits even before the downturn, the government will have a budget crisis of monumental proportions. Having blown its credit rating by irresponsible borrowing and spending, the government will not be able to borrow the money it needs and it certainly will not be able to tax its way to solvency. The government will turn to inflation as the only means to pay its its millions of employees and special interest dependents. The alternative will be massive government layoffs, the abandonment of various social programs, and defaulting on existing national debt.

It will not be Fed credit to banks that leads us into hyper-inflation. It will be Fed credit to the US government, or direct creation of currency by the government, that leads us into hyper-inflation.

You are right

What faces us now is not a deflationary depression like in the 1930s but an inflationary depression like in Wiemer Germany or in Zimbabwe today. The biggest deadbeat on the planet is Uncle Sam, so the Fed has every incentive to monetize the debt and thus lower the real debt load of the government. This impoverishes savers and anyone on a fixed income, but the savers are a tiny minority nowadays and the people on fixed incomes can always be told that their problems are caused by greedy oil companies, greedy landlords, and greedy farmers. Not one voter in 20 has enough economic sense to blame politicians for inflation, and the politicians know this.

We can totally hijack the upcoming election

In the last election 85% of the people in Congress got to keep their $14,108 a month jobs (which includes a $4,100 raise they just gave themselves!) despite the fact that it was the worst, do-nothing Congress in history and the bulk of them were responsible for authorizing the wars we're in and everything else that has massively eroded our standard of living, security and of course our liberties and freedoms since 9-11. They ALL took an oath to defend and protect the Constitution and our Bill of Rights. They did not take an oath to defend and protect their political party and the interests of transnational corporations and cartels.

[ http://www.kickthemallout.com/ ]

What you believe to be true, is true to you... "until you change your mind"


Thanks for that.

"The body is but a vessel for the soul,
A puppet which bends to the soul's tyranny.
And lo, the body is not eternal,
For it must feed on the flesh of others,
Lest it return to the dust whence it came.
Therefore the soul deceives and despises."



"The body is but a vessel for the soul,
A puppet which bends to the soul's tyranny.
And lo, the body is not eternal,
For it must feed on the flesh of others,
Lest it return to the dust whence it came.
Therefore the soul deceives and despises."

It is an interesting circumstance the economy is in

No one can deny the deflationary pressures on housing and many other major investment vehicles, just as there is no denying the inflationary pressures on consumable goods like fuel and food. I see a continuing inflationary spiral on food and fuel taking hold and deflationary spiral on items not necessary for daily living such as cars and houses. But, when the whole thing cracks open, fiat currencies will become worthless for all practical purposes and things with intrinsic value will have prices in terms of those fiat currencies going through the roof. We are indeed living in interesting times.