Big Inflation Coming
Late 2008’s stock panic has certainly had a complex and multifaceted impact on popular psychology. Mindsets and outlooks that were scoffed at as recently as 6 months ago have suddenly become fashionable. One of the more intriguing is the meteoric rise to prominence of the deflation thesis.
The growing legions of deflationists see an unstoppable depression-like deflationary spiral approaching like a freight train. They cite some convincing data. The stock markets have been cut in half in just a year. In the past 6 months, some key commodities prices fell farther and faster than they did in the entire Great Depression. House prices are down by double digits across the nation, with no bottom in sight. And credit is a lot harder to come by today than in any other time in modern memory.
In light of these universal falling prices, how could we not be entering a sustained deflationary period? The case may seem airtight, but I’d like to offer a contrarian view in this essay. Believe it or not, despite 2008’s price collapse there is plenty of overlooked evidence suggesting big inflation is coming. You won’t hear much about this on CNBC, but it could have a big impact on your investments in the years ahead.
read more:
Ever hear of Stagflation?
It is when you have a stagnant economy, no growth, but still have high inflation, that is what I think is coming down the road soon.
I use to subscribe to Zeal years ago. Adam Hamilton makes the best charts on the planet, and his commentary is outstanding. The problem I have with him is that he will not mention, or refuses to acknowledge any manipulation of the gold or silver markets, although he writes about those markets all the time.
I have written him in the past about this and he just will not respond. Therefore I stopped reading his stuff. GATA won't even print his stuff anymore because of this same issue.
Stagflation would be correct
If you have too much money chasing too few goods coupled with higher wages. Not the case for now.
High unemployment (weak wage demand) and over capacity (no demand) equals deflation.
Maybe stagflation in food ? Farmers are not planting at a loss now, equals shortages and higher prices.
Stagflation is a macro-economic situation,
not just in one industry. We certainly have to much money(fiat) chasing the goods that are out there. I think there is ten times more money(debt) out there compared to goods available. It is not all in the form of cash to buy goods but plenty of Government debt that has been monetized.
There will be more wage pressure from the inflation that is all ready built into the system, but slow to no growth and to me anyways means stagflation in the macro sense. Thats just my opinion and may turn out to be wrong. Anyways thanks for the comment.
bump
for others.
Prepare & Share the Message of Freedom through Positive-Peaceful-Activism.
I forget who said it, maybe
I forget who said it, maybe Ron Paul, but it was just recently in some interview where they talked about the gov increasing the money supply by 70% in the past 4 months or so.
To me that spells inflation, maybe not now - but eventually the we will be hit by the wave.
...
I read that too
I'm still trying to figure out if the money supply means actual greenbacks in paper form, or credit expansion. I know excessive dollars in paper form is inflation in the making, but I'm still not sure about the credit expansion. I think Michael Nystrom posted an article about this.
Thanks for sharing
good article
Thank you for this
This guy puts in in simple terms and I think I get it.
Two Competing Expectations
1. Uncontrollable money-printing and excess spending on bailouts and stimulus are breeding a new, super-inflationary environment.
2. The change in capital flow as evidenced by shifting consumer attitudes is ushering in a period of deleveraging and deflation that will force a global economic rebalance.
With a growing proportion of money under the mattress, I find it hard to believe we need to batten down the hatches now for the coming "Inflation Armageddon."
Right now cash is reflecting the expectations of a rise in the purchasing power of money ... or in other words, falling prices.
In the meantime, I believe that inflation is not an immediate concern, which is a good sign for the U.S. dollar.
richard you need look
richard you need look closer... last week even as the dollar "strenghtened" got went up! something else is going on that we the public do not see behind the scenes! the dollar is toast.. it;s only a matter of time!
"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┐
SIERRAHPBT
I don't disagree with your premise, just how soon it will occur or if it ever will ?
The most probable sequence of events resulting in hyperinflation:
1. A broad based shortage of goods that are thought essential develops and this is not relieved in time to satisfy demand.
2. Consumers trying to acquire essential goods that they believe are in short supply become fearful and are prepared to pay increasingly higher prices and stockpile these goods further increasing shortages and accelerating prices as a sellers market develops.
3. Prices rise for essential goods in short supply as an increasing proportion of the money supply circulates in these goods, also with increasing velocity and as most of these goods are consumables with high turnover upward re pricing quickly occurs.
4. The proportion of available money circulating in goods that are perceived as essential increases and the demand for less essential goods diminishes I.e essentials become disproportionately more expensive than the norm against non essential goods displacing money towards the goods most in demand further fuelling inflation,
5. The shortage of essential goods accelerates as manufactures increasingly focus on short term survival, longer term risk is avoided and investment in the production cycle is reduced accelerating 1.
6. The normal balance of demand for all goods increasingly prefers those goods required to satisfy primary needs and people engaged in making and supplying less immediately essential or non essential goods become unemployed who then pressures governments accelerating condition 9.
7. Eventually goods not immediately required but non the less essential are needed and rapidly increase in price as they also become in short supply.
8. Consumers with least money first find it increasingly difficult to secure essential goods, become frightened and are forced to allocate greater proportions of their money on essential goods and demand greater income.
9. The demand for money forced by need and fear becomes irresistible so governments feel insecure and provide increasing amounts of fiat new money.
10. Consumers first to spend the new money see some value but soon as this new money is distributed and its value is lost, the velocity of money also accelerates as people rapidly exchange money for goods, wealth is seen as best protected when stored as goods rather than cash further increasing price and reinforcing condition 9.
This means big inflation is
This means big inflation is coming, it’s already baked into the pipeline. Too distracted by deflationists who have no dictionaries and hence don’t even know what the word “deflation” really means, Wall Street hasn’t realized the real threat is inflation yet. But when it does, capital should rapidly flood into investments that thrive in inflationary times. Of these, gold remains the king. Its bullish potential in the years ahead is vast.
"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┐
this is for those who think
this is for those who think that money being written down is being destoyed.. it isn't,,,
Imagine an investor buys stock for $10k. To receive his shares, his broker transfers $10k of money from his account to the seller’s. The seller now has $10k, the buyer now has shares. The money simply changed hands. Then a stock panic hits and the shares plunge 50%. The investor’s fear gets the best of him so he frantically liquidates these shares for $5k. A new buyer’s broker transfers $5k from the buyer’s account to the investor’s. Did the investor’s original $10k of cash get destroyed in this stock plunge?
Of course not. The original seller could have taken that $10k and parked it in a bank. He could still have the $10k if he wasn’t in the assets that plunged in price when demand evaporated during the stock panic. Money is a medium of exchange. Rising asset prices don’t create it in an aggregate sense and falling asset prices don’t destroy it. Sure, you can get a bigger share of the overall money pool if your assets are rising in price, but only the central bank can affect the size of that money pool. You and I can’t
"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┐
very good article! why is
very good article! why is gold going up?
"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┐