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I'm Confused ... Inflation or Deflation, Which Is It??
Submitted by truthsanityalways on Sat, 10/04/2008 - 12:22
I keep hearing inflation, then I hear deflation. Which is coming and why?? » |
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The government thrives on inflation.
There are several ways of creating inflation in the Keynesian socialist system. First the government can increase credit, this is what it did by passing the bailout, but this will only work if people go out and borrow money, if they don't then there will be no inflation.
I imagine if people do not run out and put themselves into debt then the government will increase interest rates, which will probably deter borrowing, but require that the government pay more interest on the money it borrows to it's lenders in a trickle down model of economics, but this would require that people and countries remain invested in the system, if not then the government would either have to coin money or eliminate the Federal Reserve and just print paper.
Of these methods coining money is the only way to bring down the banking system in a fair and just way.
In the meanwhile we will probably see deflation in the world markets if the bailout fails.
We may even see the fall in silver and gold prices, but this does not mean that their buying power will fall, it will just mean that many people in desperate need to get FRNs will sell, such as foregn central banks.
grant
AMOUNT OF CREDIT IN THE TOTAL MONEY SUPPLY
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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Take a look at the amount of credit in the total money supply chart. (Scroll down one chart to see the long term chart.)
http://www.nowandfutures.com/key_stats.html#m3_plus_credit
Do you see how big the amount of credit is in the total money supply chart?
In my opinion, once this credit starts to collapse in the private sector (I think it is happening now), the Fed and the government cannot create and distribute money fast enough to stop a major deflation.
government of the people, by the people, for the people
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Deflation on things that
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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you want to sell to raise money including commodities, in my opinion.
BTW, even if prices go down, it does not mean things will become more affordable, in my opinion.
In my opinion, it is highly likely that income will decline much faster than the prices of general goods and services.
government of the people, by the people, for the people
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monetary inflation,
leading to commodity price inflation, and asset price deflation. A situation otherwise known as biflation.
http://en.wikipedia.org/wiki/Biflation
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"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."
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which way
INFLATION on things that matter & DEFLATION on things that don't matter....weee
Just found excellent article ... Mises and "Crack Up Boom"
Discusses reason for coming hyperinflation. Written in 7/08 ... on track so far. http://www.financialsense.com/fsu/editorials/andros/2008/072...
Seems you have both
Seems you have both happening at the same time and in opposite directions and with different items. On another forum I have read that silver one ounce coins are 22% above spot from certain outfits. Basically that's $4 above the "market spot" price. Seems that supply must be hard to come by. Of course the question would be why isn't the fair market price higher if such demand exists? To me it suggests manipulation or at the very least a symptom of an artificial market and or economy on which the prices are set and based.
The other side of the coin, is housing prices continue to drop (deflating)
due to lack in demand and how many houses are on the market. Add in the fact that the "cost" of money is higher between banks (LIBOR rate) you've seen a freezing of the credit markets.
What I can't understand is how the dollar rose last week AFTER the FED injected $630 billion into the world banks (before the votes on Monday or Friday) and continued to rise the rest of the week to 52 week highs.
My best guess was that it wasn't necessarily a rise in the dollar as much as it was a decrease in oil because the market had begun to factor in a complete global recession occurring.
Any thoughts from the wizards out there?
Puppets come and puppets go but the world's stage is getting cluttered.
one thought
the dollar is rising because there is massive currency swaps going on between the fed and foreign central banks.
the fed may be taking those dollars and 'destroying' them to offset the dollar outflows.
i/o/w they're cooking their balance sheet.
for details go here:
http://blogs.cfr.org/setser/2008/10/02/give-the-fed-a-bit-of...
All that money the FED is pumping into world banks
is being used by them to buy FED notes. That is what is driving the FRN rally.
how about people just not
how about people just not spending or borrowing, and holding on to their dollars...
that would cause dollars to be pulled out of circulation.
70% of the economy is the consumer.....or so i've heard
looking at the historical dollar index...or any index of any sort
nothing goes in one direction forever, and the dollar has had a good sound beating since 2002
and barring the collapse of the dollar
it stands to reason that it would strengthen a bit
for a period of time
for how long and how much....who knows....
yes exactly
and the money they're pumping is in form of that foreign country's currency.
It's Both
Thomas Jefferson said it many moons ago…
“If the American people ever allow private banks (Federal Reserve) to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children wake up homeless on the continent their fathers conquered.”
This is a great quote
But I challenge anyone to provide the original source for this. Jefferson historical societies which catalog and study his writings cannot find the quote anywhere.
Every online source I find, all eventually point back to an un-cited webpage claiming it was Jefferson with no proof.
Real quotes can always be traced back to some private letter or other published document. This one so far as I know, cannot be.
If you have the original source, including date, and name of publication or to whom the letter containing it was written to, I'd love to know what it is.
I got it
from here
http://quotes.liberty-tree.ca/quote_blog/Thomas.Jefferson.Qu...
"If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them,
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered."
by: Thomas Jefferson
(1743-1826), US Founding Father, drafted the Declaration of Independence, 3rd US President
Source: in 1802 in a letter to then Secretary of the Treasury, Albert Gallatin
We are seeing significant
We are seeing significant deflation right now, as hedge funds, banks, and mortgage houses are forced to de-leverage. US citizens are not borrowing. Some cannot get loans because they are under water on their mortgages. Others do not want loans because they fear for their jobs.
But at the same time, the Fed's balance sheet is expanding at a rate far, far above anything that's ever been seen before, and foreign demand for T-bills is collapsing, which will force the Fed to monetize government debt. So there is a mountain of base money being built up right now that is in hiding. Banks are not lending it, so the "multiplier effect" is on hold. I think it's a pressure cooker that could blow its lid, creating hyper inflation. But when? Next week? Two years from now? I have no idea.
A global "race to debase" could develop, in which all the major fiat currencies hyper inflate.
But what do I know?
Inflation and deflation can and are occuring simultaneously
At first these two economic phenomenons appear to be contradictory. But, they do and are occurring at the same time.
For example, dropping home prices are deflationary while rising food and energy prices are inflationary. And, wages dropping against CPI are deflationary while the increased money supply will lead to great inflation.
END the FED before it ENDS US
That period is now over. No
That period is now over. No one will be able to prop up prices and they will all drop.
Food and energy prices have
Food and energy prices have declined significantly. Crude oil has dropped from $145/bbl to the $90's. If or how long that will continue, who can say?
This mp3 posted on Mises.org
This mp3 posted on Mises.org is the best attempt at explaining what's going to happen: deflation then, because of the massive amounts of credit/reserves made available by the FED, inflation.
http://mises.org/multimedia/mp3/interviews/Shostak_09-30-200...
"My theories explain, but cannot slow the decline of a great civilization. I set out to be a reformer, but only became the historian of decline."
- Ludwig Von Mises
"My theories explain, but cannot slow the decline of a great civilization. I set out to be a reformer, but only became the historian of decline."
- Ludwig Von Mises
"If we do this
right, there's opportunity to MAKE money." Here's REALITY of what they've got in mind:
http://news.yahoo.com/s/ap/20081001/ap_on_fe_st/odd_cheap_home
well
Fortune Favors the Bold
it all depends on if the government keeps doing what they've been doing. You're already seeing the results of inflation at the macro level, which causes finance to lose trust in the value of money, which in turn causes deflation at the micro level.
Fortune Favors the Bold
both! inflationary
both! inflationary depression..... the fed is about to cut rates half a point.. the eu and other central banks are about to cut rates! the currencies will suffer.. as more dollars or euros are printed prices go up!
as the economy slows, goods that are luxeries will go down in price..
so food, gold silver, gas, etc.. goes up.. because of a devalued currency
houses, stocks, etc come down because of a depression...
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
Eventually, cutting interest rates will
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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be like pushing on a string, in my opinion.
government of the people, by the people, for the people
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ha! How many times do you have to type this?
I think about how many times you explain this in a week and it cracks me up. I wonder what it would be like without the bailouts. Would we still be heading for inflation like most are certain we are?
Watched the Argentine video last night and can't believe how the government stole so much from the people. They litterally stripped everything away and left people with nothing. I hope we don't wait until we are starving to do something here.
OK, Inflationary Depression is What RP Says, Too
But I sure have been hearing a lot about deflation and how the price of gold and silver will continue to go down because of the deflation. Somebody was saying that all the money printing doesn't make a different because of the tremendous loss of worth in the stock market, etc.