Inflation? What inflation?

[Roughneck]

Interesting take on why we haven't seen monetary inflation yet.

http://www.webofdebt.com/articles/quantitative_easing.php

[ThePythonicCow]

Interesting take on why we haven't seen monetary inflation yet.

http://www.webofdebt.com/articles/quantitative_easing.php

Debt money is like a narcotic drug. It's addictive, and unhealthy.

Our drug king pins, aka the Banksters, have a problem. Their primary customer, America, is dying off from too much debt drug. So they have pulled strings in our government, over which they already have substantial corrupt control, to take up the slack in their debt business on our behalf.

Now Treasury and various zombie businesses (Fannie, Freddie, big banks, AIG, GM, ...) are main-line connected to debt drug firehoses and consuming the debt money no one else will buy. More business for the debt sellers. More interest earned on nothing of any account other than having stole the power to create money in 1913.

We've already spent our money and our future income and our kids money on debt money interest. Now we're spending the rest of our kids future income.

Whether it's inflation, deflation or one of iTulips variants doesn't matter much to me, except as a matter of navigating the rapids. Similarly, whether I am so ill from a heroin addition that it no longer gives me a good feeling, or whether I am too poor to get enough and so getting partial withdrawal, or whether I get "lucky" and score another hit and enjoy the rush ... all this is as about as meaningful as who won some TV contestant show.

Only running the drug dealers out of town ... off this planet ... matters now. Only me and my fellow 300 million Americans (and apparently a few hundred million more suckers ... debt drug addicts ... abroad) coming clean and ridding our financial world of these b*stards matters.

The latest Obama administration proposal to give the Fed Reserve yet more powers is a flippin freakin outrage. The Fed is the debt money drug King Pin. They need to be abolished (and if any of them have so much as an outstanding parking ticket from 1972, locked up!), not granted more unlimited power than any actual government body, much less a private body of multi-trillion dollar thieves, has ever possessed in a "free" country.

[LargoWinch]

Debt money is like a narcotic drug. It's addictive, and unhealthy.

Our drug king pins, aka the Banksters, have a problem. Their primary customer, America, is dying off from too much debt drug. So they have pulled strings in our government, over which they already have substantial corrupt control, to take up the slack in their debt business on our behalf.

Now Treasury and various zombie businesses (Fannie, Freddie, big banks, AIG, GM, ...) are main-line connected to debt drug firehoses and consuming the debt money no one else will buy. More business for the debt sellers. More interest earned on nothing of any account other than having stole the power to create money in 1913.

We've already spent our money and our future income and our kids money on debt money interest. Now we're spending the rest of our kids future income.

Whether it's inflation, deflation or one of iTulips variants doesn't matter much to me, except as a matter of navigating the rapids. Similarly, whether I am so ill from a heroin addition that it no longer gives me a good feeling, or whether I am too poor to get enough and so getting partial withdrawal, or whether I get "lucky" and score another hit and enjoy the rush ... all this is as about as meaningful as who won some TV contestant show.

Only running the drug dealers out of town ... off this planet ... matters now. Only me and my fellow 300 million Americans (and apparently a few hundred million more suckers ... debt drug addicts ... abroad) coming clean and ridding our financial world of these b*stards matters.

The latest Obama administration proposal to give the Fed Reserve yet more powers is a flippin freakin outrage. The Fed is the debt money drug King Pin. They need to be abolished (and if any of them have so much as an outstanding parking ticket from 1972, locked up!), not granted more unlimited power than any actual government body, much less a private body of multi-trillion dollar thieves [sic], has ever possessed in a "free" country.

Well said my friend.

[icm63]

Why aren't USA people marching in the street...(IRAN citizens are a better example)...after all your getting screwed just as bad ???

[D-Mack]

Ellen Brown has some interesting articles like this one on Weimar


The Weimar Hyperinflation? Could it Happen Again? (http://www.globalresearch.ca/index.php?context=va&aid=13673)

[kartius919]

She never defines deflation, but it seems eerily similar to Mish's definition of deflation as contraction of money supply plus credit. Credit is on a decline faster than the expansion of the money supply ergo deflation is the likely outcome.

[Roughneck]

For the record, I think she's right as to why we haven't seen massive monetary inflation even though the fed has flooded the system with money.It's just plugging a huge black hole. However, I do believe that our government debt and the weakness of the dollar will cause inflation down the road.we are already seeing that in oil and commodities.Oil inventories are up and demand is still weak but oil is going higher because the dollar is on the slide. Plus as Janzen points out a long term depression may drive many producers out of business causing shortages of consumer goods down the road. I think in the 70's it was caused stagflation. Does Obama remind anyone of Jimmy Carter? Break out the platform shoes and the polyester:)

[cjppjc]

For the record, I think she's right as to why we haven't seen massive monetary inflation even though the fed has flooded the system with money.It's just plugging a huge black hole. However, I do believe that our government debt and the weakness of the dollar will cause inflation down the road.we are already seeing that in oil and commodities.Oil inventories are up and demand is still weak but oil is going higher because the dollar is on the slide. Plus as Janzen points out a long term depression may drive many producers out of business causing shortages of consumer goods down the road. I think in the 70's it was caused stagflation. Does Obama remind anyone of Jimmy Carter? Break out the platform shoes and the polyester:)


I couldn't resist.:eek:

http://www.youtube.com/watch?v=AakoaWrJCrs

[bart]

The Great Depression parallels... busted (http://www.itulip.com/forums/showthread.php?t=10477)

[Ghent12]

For the record, I think she's right as to why we haven't seen massive monetary inflation even though the fed has flooded the system with money.It's just plugging a huge black hole. However, I do believe that our government debt and the weakness of the dollar will cause inflation down the road.we are already seeing that in oil and commodities.Oil inventories are up and demand is still weak but oil is going higher because the dollar is on the slide. Plus as Janzen points out a long term depression may drive many producers out of business causing shortages of consumer goods down the road. I think in the 70's it was caused stagflation. Does Obama remind anyone of Jimmy Carter? Break out the platform shoes and the polyester:)If what you say is true, then the logical conclusion is that "quantitative easing" is the wrong approach regardless of whether production drops or not, according to my as-yet unedumacated kind of logic.

The figurative and literal printing press fills the huge black hole for now, but what happens afterwards? What happens when "the banks start lending again" and the debt that once filled the void is now back in play, along with all the recently-eased-into-existance dollars? Alternatively, assuming that the banks never "start lending again" as before, won't all these newly created dollars perpetuate the phony economy longer while delaying the necessary fundamental restructuring that would otherwise occur?

One possible outcome of "quantitative easing" appears to be (hyper)inflation leading to a Banana Republic, while another possible outcome appears to lead directly to Great Depression II.

Would a third possible outcome be postponement of restructing into a production economy long enough to inflate a new bubble or system of bubbles, such as "green" energy?

[Jim Nickerson]

http://www.nytimes.com/2009/06/21/business/economy/21view.html?adxnnl=1&adxnnlx=1245600060-zStG7zg4FUAdrlA8zmFDXQ

Blinder wrote "First, the clear and present danger, both now and for the next year or two, is not inflation but deflation. Using the 12-month change in the Consumer Price Index (http://topics.nytimes.com/top/reference/timestopics/subjects/c/consumer_price_index/index.html?inline=nyt-classifier) as the measure, inflation has now been negative for three consecutive months."

[Jim Nickerson]

Simon Johnson wrote: “4. The consensus from conventional macroeconomics is that there can’t be significant inflation with unemployment so high, and the Fed will not tighten before late 2010. The financial markets beg to differ - presumably worrying, in part, about easy credit leading to dollar depreciation, higher import prices, and potential commodity price inflation worldwide. In all recent showdowns with standard macro models recently, the markets’ view of reality has prevailed. My advice: pay close attention to oil prices.

http://baselinescenario.com/2009/06/13/where-are-we-now-five-point-summary/?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_content=442913&utm_campaign=On-Demand_%272009-06-14+09%3a21%3a00%27

[Jim Nickerson]

Airtime:<SCRIPT> document.write(cnbc_video_toDateString(12454372800 00)); </SCRIPT> Fri. Jun. 19 2009 | 1:48 PM ET
Why the United States has a good chance of hyperinflation, with Marc Faber, "The Gloom, Boom, & Doom Report" editor and CNBC's Erin Burnett.

http://www.cnbc.com/id/15840232?video=1158418047&play=1 5:17 Min,

Faber closed with saying real estate was not a place to be to "hide" from the coming inflation, but that he would rather be in real estate than US 30-year bonds. Not a bad video, not a lot of stupidity on the part of the interviewer.

Interestingly, to me, in last week's Barron's Faber in his picks for the next year (as I interpreted that parameter) http://online.barrons.com/article/SB124474397599607023.html suggested shorting the 10-year Treasury note when its yield falls to 2.8% to 3% (Friday it closed at 3.789%). So I interpret that he, at least a week or two ago, foresaw a period of further disinflation/deflation if it is correct that bonds do well during deflation--if such improvement in bond prices can be sorted from a "flight to safety" increase in prices.

[Roughneck]

n S. Blinder is a professor of economics and public affairs at Princeton and former vice chairman of the Federal Reserve. He has advised many Democratic politicians. That's two strikes against him in my book:D I have looked hard at the tips spread. My feeling is the numbers were skewed by the rush to treasuries due to the crisis. And since most investors were fearing deflation the numbers only reflected investor sentiment. When people start exiting treasuries lets see what happens.

[Starving Steve]

Ellen Brown has some interesting articles like this one on Weimar


The Weimar Hyperinflation? Could it Happen Again? (http://www.globalresearch.ca/index.php?context=va&aid=13673)

I am not an economist by education, but it seems to me that blaming currency speculators for hyper-inflation is like blaming someone who adds a zero to a written price for hyper-inflation. The real cause of hyper-inflation is the central bank keeping interest rates below the rate of inflation and introducing too much paper money into general circulation. Then the currency speculators can speculate and profit.

If interest rates would be kept above the rate of inflation, the cost of money would make lending of money prohibitively expensive. The money supply would therefore be restricted, and prices could not be raised. Currency speculators would end-up with losses.

Or think of it this way: If a central bank restricted the supply of money, anyone who raised prices would not be able to sell goods simply because there would be no money around to facilitate the sale of goods.

With the putz from Princeton (Bernanke) continuing to print money, the ultimate inflation in America is inevitable.... It's like pouring gasoline onto a dry forest and saying the forest is fine. One can do the pouring for a while, but just for a while.

The putz from Princeton should have studied the hyper-inflations in Latin America for his Ph.D. instead of the policies of the Federal Reserve Bank in America during the Depression. America and the world would have been better-off.

[coolhand]

IMHO, there still is not enough press given to the collapse of economies in the face of onerous obligations as the real cause of hyperinflation.

Zimbabwean unemployment is 85%. German unemployment in the Weimar Republic was ~30-50% I believe. Traditional economists would tell you hyperinflation with such a huge "output gap" is thoroughly impossible...yet it happened.

My point is that when these economies hit a "sudden stop" - where debt deflation causes the economy to take a massive & sudden step down, leaving the gov't with the choice to either allow the total collapse of the economy & political system, or print money & risk hyperinflation.

These to me seems like the key crux of EJ's Ka-poom theory - and if you look at ocean container volumes, rail volumes, truck volumes, US state personal income tax receipts (down 26% nationally), etc. - there is an overwhelming quantity of evidence to support that the US is going thru a sudden stop right now.

So if that's the case, & I think it is, then it becomes not an economics question but a politics question, as EJ has noted before:

Do you think the US gov't will allow deflation which will, if it persists long enough, bring about a "Mad Max" scenario (eventual collapse of financials & therefore possibly the gov't), or do you think they will at least give printing money a try? I mean if we have hyperinflation, we'll all own our houses free & clear (we won't be able to afford to heat them w/nat gas, but we'll own them!! )

Clearly, some are hedging their bets against the former - US private citizens reportedly bought 1.5B rounds of small arms ammo in Dec-08; this compares to 2.5B rounds fired by US troops during the average YEAR during WW2.

IMHO, there is virtually zero chance the US will just allow the economy to collapse without at least giving wholesale money printing a chance. As I believe EJ has said, they can either inflate the debt away or default on it.

For an interesting real time read, try "The Bubble That Broke The World", written in 1932 by Garrett Garet. Key takeaway: NO ONE thought there was ever any chance that Germany could default on their obligations post WW1.

[raja]

Only running the drug dealers out of town ... off this planet ... matters now. Only me and my fellow 300 million Americans (and apparently a few hundred million more suckers ... debt drug addicts ... abroad) coming clean and ridding our financial world of these b*stards matters.

So, what are you going to do about it, Bovinator?

I'm planning to contact my representatives . . . .

I'd also like to write an email that I can send to all my contacts . . . one that will outrage them, and make them want to contact their representatives, as well.

I'm not very sophisticated in economic matters, so would appreciate any suggestions or constructive criticisms. Here's what I've come up with so far:Dear Representative,

At a time when about one-in-ten Americans are unemployed, and thousands are losing their homes through foreclosure, Goldman Sachs has just announced that it will make record bonus payouts to its employees. "Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms." (The Observer, Sunday 21 June 2009)
How is it that so many retirees and other citizens have lost half their savings in the stock market, while the bankers and Wall Street financiers are making record profits?

The answer is that our unjust financial system is run by the greedy and enabled by you, the politicians, who are either too ignorant or too corrupt to regulate the profiteers. It's time for a change, and not Obama's change, which is just more of the same (Geithner and Summers).

Therefore, I am going to vote against every incumbant politician who does not convince me that they have done something substantial to correct this unjust system. I will also urge all my friends, relatives and acquaintances to do the same. Here is what I expect from the elected officials who want my vote:1. A clear explanation of the causes of the economic crisis and those responsible (e.g., repeal of the Glass-Stegall Act, excessive credit creation by the Fed that enabled the housing bubble, etc.)

2. Laws created to end the revolving door between federal regulators and the financial industry.

3. Prosecution and punishment for those who fraudulently sold toxic assets.

4. Prosecution and punishment for those in the rating agencies who enabled fraud.

5.

6.
Things have gone too far . . . .
The public is becoming increasingly aware of what's going on, and they will express their anger at the ballot box.
You'll need more than money from wealthy campaign contributors to win your next election . . . .

[dummass]

Raja,

You could take it a step further and have a petition drawn up along those lines. You could set-up in front of the unemployment office to get the signatures; plenty of disgruntled voters there.

http://www.ipetitions.com/how-to-write-petition.html

[ThePythonicCow]

So, what are you going to do about it, Bovinator?"Bovinator" -- that's a neat variant of my screen name. :).

What am I doing? Surviving, watching and learning. Building various relations with honest locals and supporting local businesses. Talking online and with neighbors.

I don't see a big opportunity to "do something" about the corruption at this time. I vote and on rare occassion write a Congress critter, but I suspect these activities are often a distraction from anything affective.

The most affective thing an old man (such as myself) on the Titanic could do was help the women, children and their loved ones to safety.

Life is about focusing on those places where the external circumstances align with ones own vision and potential to create good opportunities.

[santafe2]

"Bovinator" -- that's a neat variant of my screen name. :).

Ok, totally off topic and apologies to all but I have to ask, is this a Python code reference or a Monty Python reference? That is boolean or hooligan? Come on cow...time to moo.

[ThePythonicCow]

Ok, totally off topic and apologies to all but I have to ask, is this a Python code reference or a Monty Python reference? That is boolean or hooligan? Come on cow...time to moo.
I'm a Boolean cow. It's all black and white, you know ;).

In a past life, I was a Linux kernel hacker. I thought and dreamt in C, translated to English for my shrink (but not for my wife, who thus divorced me) and wished for the day when I could make a living coding in Python.

[santafe2]

I'm a Boolean cow. It's all black and white, you know ;).

In a past life, I was a Linux kernel hacker. I thought and dreamt in C, translated to English for my shrink (but not for my wife, who thus divorced me) and wished for the day when I could make a living coding in Python.

Thanks, I assumed a digital reference from your posts but I had to ask. Sorry about the ex but I hope you've found someone who knows how to moo.

[ThePythonicCow]

Sorry about the ex That's ok. The two of us went out for dinner together to celebrate the finalizing of the divorce. We were both delighted to be rid of the other :).

[ax]

So, what are you going to do about it, Bovinator?

I'm planning to contact my representatives . . . .

I'd also like to write an email that I can send to all my contacts . . . one that will outrage them, and make them want to contact their representatives, as well.

I'm not very sophisticated in economic matters, so would appreciate any suggestions or constructive criticisms. Here's what I've come up with so far:
Dear Representative,

At a time when about one-in-ten Americans are unemployed, and thousands are losing their homes through foreclosure, Goldman Sachs has just announced that it will make record bonus payouts to its employees.
"Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms." (The Observer, Sunday 21 June 2009)

How is it that so many retirees and other citizens have lost half their savings in the stock market, while the bankers and Wall Street financiers are making record profits?

The answer is that our unjust financial system is run by the greedy and enabled by you, the politicians, who are either too ignorant or too corrupt to regulate the profiteers. It's time for a change, and not Obama's change, which is just more of the same (Geithner and Summers).

Therefore, I am going to vote against every incumbant politician who does not convince me that they have done something substantial to correct this unjust system. I will also urge all my friends, relatives and acquaintances to do the same. Here is what I expect from the elected officials who want my vote:
1. A clear explanation of the causes of the economic crisis and those responsible (e.g., repeal of the Glass-Stegall Act, excessive credit creation by the Fed that enabled the housing bubble, etc.)

2. Laws created to end the revolving door between federal regulators and the financial industry.

3. Prosecution and punishment for those who fraudulently sold toxic assets.

4. Prosecution and punishment for those in the rating agencies who enabled fraud.

5.

6.

Things have gone too far . . . .
The public is becoming increasingly aware of what's going on, and they will express their anger at the ballot box.
You'll need more than money from wealthy campaign contributors to win your next election . . . .



Good luck with this, Raja. In my own experience of writing to my rep and Senators, I can only tell you that I received form letters saying thank you for your concern about this country imploding and your home value plummeting; I will be sure to use this to wipe my ass in the near future. Still worth doing I think, if for nothing else other than to feel like you're trying.

[Jay]

IMHO, there still is not enough press given to the collapse of economies in the face of onerous obligations as the real cause of hyperinflation.

Zimbabwean unemployment is 85%. German unemployment in the Weimar Republic was ~30-50% I believe. Traditional economists would tell you hyperinflation with such a huge "output gap" is thoroughly impossible...yet it happened.

My point is that when these economies hit a "sudden stop" - where debt deflation causes the economy to take a massive & sudden step down, leaving the gov't with the choice to either allow the total collapse of the economy & political system, or print money & risk hyperinflation.

These to me seems like the key crux of EJ's Ka-poom theory - and if you look at ocean container volumes, rail volumes, truck volumes, US state personal income tax receipts (down 26% nationally), etc. - there is an overwhelming quantity of evidence to support that the US is going thru a sudden stop right now.

So if that's the case, & I think it is, then it becomes not an economics question but a politics question, as EJ has noted before:

Do you think the US gov't will allow deflation which will, if it persists long enough, bring about a "Mad Max" scenario (eventual collapse of financials & therefore possibly the gov't), or do you think they will at least give printing money a try? I mean if we have hyperinflation, we'll all own our houses free & clear (we won't be able to afford to heat them w/nat gas, but we'll own them!! )

Clearly, some are hedging their bets against the former - US private citizens reportedly bought 1.5B rounds of small arms ammo in Dec-08; this compares to 2.5B rounds fired by US troops during the average YEAR during WW2.

IMHO, there is virtually zero chance the US will just allow the economy to collapse without at least giving wholesale money printing a chance. As I believe EJ has said, they can either inflate the debt away or default on it.

For an interesting real time read, try "The Bubble That Broke The World", written in 1932 by Garrett Garet. Key takeaway: NO ONE thought there was ever any chance that Germany could default on their obligations post WW1.
If we get hyperinflation, Mad Max will be here too and the chances of government collapse are likely much higher than in a deflationary depression. The US government has survived multiple deflationary great depressions already. No one wants hyperinflation including uncle sam and the Fed. In fact, that is one reason, maybe the main one, that if they face the precipice of Weimar, they may decide to put the helicopters away. Whether it becomes too late to make and enforce that kind of decision in tumultuous times is another matter.

[ThePythonicCow]

... if they face the precipice of Weimar, they may decide to put the helicopters away ...Put the helicopters away ... or change out the weapon systems on them, from cash dispensers to something that makes a bigger "bang" for the buck?

[raja]

Good luck with this, Raja. In my own experience of writing to my rep and Senators, I can only tell you that I received form letters saying thank you for your concern about this country imploding and your home value plummeting; I will be sure to use this to wipe my ass in the near future. Still worth doing I think, if for nothing else other than to feel like you're trying.
I believe it all depends on the volume and intensity of the correspondence . . . .

Yeah, if there's 1,000 letters of complaint, you get a form letter back. But if there's 10,000 or more angry letters, the politician starts to sweat.

We are the ultimate boss . . . if We take the reins. That's why I like the ax-wielding, toy-destroying guy on youtube . . . he's motivating . . . as are all the other bloggers and contributors on the internet who are telling it like it is. Reading that stuff makes my blood boil . . . and has spurred me to action.

Believe me, the wealthy campaign contributors will be powerless if the People get angry. It wouldn't be the first time in history that heads have rolled due to public reaction to injustice. You can only push people so far, and as unemployment rises and people don't have the money to feed their kids, and retired folks run out of money, and people are kicked out of their houses, there will be an angry and effective response.

[flintlock]

Unfortunately, I think there will be no political solution to all of this. So write away, but they've pulled off a beautiful job of "divide and conquer" that would make Machiavelli proud. Between the FIRE class, the politician class, the government employed worker class, the eco-weenies, and Unions, they'll always have the votes they need to do whatever they want. Any one of those groups gets out of line and they destroy it and replace it with another. They don't NEED most of America behind them, so they don't care. I think George Bush showed how little it matters what the American people think. He carried on for years with horrible "approval ratings". :rolleyes:

[Masher]

Unfortunately, I think there will be no political solution to all of this. So write away, but they've pulled off a beautiful job of "divide and conquer" that would make Machiavelli proud. Between the FIRE class, the politician class, the government employed worker class, the eco-weenies, and Unions, they'll always have the votes they need to do whatever they want. Any one of those groups gets out of line and they destroy it and replace it with another. They don't NEED most of America behind them, so they don't care. I think George Bush showed how little it matters what the American people think. He carried on for years with horrible "approval ratings". :rolleyes:

Sad to say I must agree with you.