patrick.net

sbh says

I can hear Indigiot clawing at the door, but his squealing catechism just doesn't come through

That I believe...

You say deflation as if it were a bad thing???

The question is not "how much money", but "does it circulate".

With deflation the money moves slower because everyone wants to hang-on to it.

And this is a self-reinforcing mechanism.

2% of inflation just nudges people to spend or invest, both of which help.

The problem with "printing money"/QE is that it is done in a way that doesn't create inflation or extra circulation of money. It's just added cash that sits idle in accounts. Which is why Japan is falling back in recession and why recovery is so slow in the US.

It's so obviously wrong that it's hard to think it's not deliberate.

It's wrong to say deflation helps lenders, inflation helps debtors:

Interest rates compensate for either deflation or inflation, unless it is somehow unexpected in the market, which is unlikely.

Heraclitusstudent says

2% of inflation just nudges people to spend or invest, both of which help.

Not if they think the financial system will crash again. Not far fetched, as we are reminded that the world can be pitched into another tailspin by the mere indictment of criminal bankers.

it is clear that the US and likely world financial system is a fraud, and that crimes will not be prosecuted. In such of an obvious environment, sitting on cash might be the prudent thing.

Blurtman says

Not if they think the financial system will crash again.

The system will crash again if debts go up but not wages, which comes back to "does the money circulate?". They mask deflation with asset inflation which is temporary because the real economy doesn't follow, and assets ultimately have to align with reality.

And when the system DOES crash it will be the perfect pretext to do more of the same.

This is NOT a necessary consequence of "money printing" or trying to force to inflation. This is just a consequence of THE WAY THEY DO IT. i.e. giving cash to rich people.

Look at 3 stories that speak volume about current policies:

1 - Japan falling in recession in spite of (or because) massive QE.
http://www.nytimes.com/2014/11/17/business/international/defying-expectations-japans-economy-shrinks-further.html?ref=business

2 - Workers unclear on the concept ask the central bank for more help. Everything the central bank did provided almost no help to them. But they think an emotional appeal to a technocratic organization will help. That's the thing with QE: giving public money to the rich has never been that popular.
http://www.nytimes.com/2014/11/15/business/economy/face-to-face-with-the-fed-workers-say-the-economy-needs-more-help.html

3 - complaints that inequality are increasing. Duh.
http://www.nytimes.com/2014/11/17/opinion/inequality-unbelievably-gets-worse.html?_r=0

CaptainShuddup says

Deflation is the stuff "OH Happy days are here again!" is made of, for everyone that doesn't depend on what the market is doing.

Unless you depend on a job and income, that is.

Deflation is great for manufacturers that aren't in debt up to their eyeballs, or is owned and operated by private funds. They get to enjoy cheap production costs, while all of the Idiots with their heads up Wall streets ass and the Banks and Investors owns those companies, it's pure pandemonium and panic. Don't confuse your worst nightmares for everyone else sweet dreams.

The small guy has been living deflation for about 8 years now, so it's about damn time you people get some. The end of our economic hardship DEPENDS on it.

I see the US dollar, S&P and other US markets are living in a bull environment for what could amt. to several years. Anyway that’s what my eyes, numbers and understanding are saying to me. This is a sweet spot for those who can interpret the current flow of capitol cause and effect, deflation and continued low gold, silver and interest rates ranging between 2.6% - 5.25% etc.

The causes are a long list to pick from geopolitical, austerity of policy, unrest of people living in poverty, riots, wars and so on, the effect is countries around the world taking risk off the table. Their exposure is real; US companies (1% ers) are bringing assets back to the US in both monetarily and human form. Other countries are moving the money flow to the west investing in dollars and markets which will soak it up critical mass, including the bond markets.

RE median and below will likely go sideways in the range of the last high 2014 and low 2011 in general excluding high end and luxury. I witnessed many median home sellers going into the RE market this season with realized losses with expectation of the buyer, buying the remainder of the sellers loss above reasonable fundamental market levels. Many of these properties stayed as seller’s home or rental and some having to go back threw the process of finding new renters.

Gold, silver and digital currency will continue to fall to lows most can’t come to terms with in the same regards as the bull rally in the dollar.

Price in the Dollar stabilizing above the high of 88.70 will be a 2nd stage confirmation and the odds are heavy we will not see the dollar (DXY) below 85 for an extended length of time although it maybe tested. This will provide some long term opportunity for currency trading and investing.

All I see is opportunity and and have plans to participate.

tatupu70 says

New Renter says

So show some evidence that workers are directly worse off with deflation than inflation.

See 1930s. That's deflation.

Correlation does not imply causation.

New Renter says

Correlation does not imply causation.

Sure it does.

New Renter says

Correlation does not imply causation.

You're actually correct about that--deflation is a symptom of lack of demand as is unemployment. Not sure you'll care when you're in the soup line though.

Graybox says

This is a sweet spot for those who can interpret the current flow of capitol cause and effect, deflation and continued low gold, silver and interest rates ranging between 2.6% - 5.25% etc.

Exactly.

You need a strong deflationary gravity so you can pump so much money into the market without creating inflation. Inflation would cause rate rise and ravage the market. They just have to keep the sweet spot going until....

Correlation can have many parts not always visible, calculable or a sure bet. At best it can be included as part of the odds factor as a forward indicator. However kind of like the warning "Past performance is no guarantee of future results.". Price and the ability to interpretate is the golden ark as it were.

The world is in a risk off environment thus the cash flow to the west. More than likely much of it will go to more liquid markets such as equity markets rather than hard assets such as RE median homes and less.

The Sweet Spot USA is situational and it appears to me to be in it's beginnings, critical mass will eventually pop the bubble but will take considerable time. That will be the prime time and sweet spot concerning RE, metals and int. rates. Whomever might have their bets in that corner at this time I believe will be sorely disappointed.

I maybe mistaken but I think the money is in 1st position not deflation or correlation. The demand for the dollar is at the forefront, which markets 101 say that causes dollar strength and the ability to buy more junk we don't need for less.

tatupu70 says

New Renter says

Correlation does not imply causation.

You're actually correct about that--deflation is a symptom of lack of demand as is unemployment. Not sure you'll care when you're in the soup line though.

...and again with the fear mongering.

Graybox says

The world is in a risk off environment thus the cash flow to the west. More than likely much of it will go to more liquid markets such as equity markets rather than hard assets such as RE median homes and less.

The Sweet Spot USA is situational and it appears to me to be in it's beginnings, critical mass will eventually pop the bubble but will take considerable time. That will be the prime time and sweet spot concerning RE, metals and int. rates. Whomever might have their bets in that corner at this time I believe will be sorely disappointed.

I maybe mistaken but I think the money is in 1st position not deflation or correlation. The demand for the dollar is at the forefront, which markets 101 say that causes dollar strength and the ability to buy more junk we don't need for less

WTF?

New Renter says

WTF?

It's okay your on the right side by renting your home. Just don't tell me your buying fist loads of gold and precious metals, otherwise you will definitely have cause to inquire WTF....

New Renter says

and again with the fear mongering.

Sorry-some things are scary and deflation is one of them. If you look through my posts, I think you'll find I'm a generally optimistic sort, but there's not really anything to celebrate in a depression.

tatupu70 says

there's not really anything to celebrate in a depression.

At a human level, a depression can be a good thing. Less greed, more time talking to your neighbor (in bread lines), and a general refocus on the things that really matter.

Though of course there are jumpers too.

To God, all things are good.

Deflation is nothing to be afraid of unless you are leveraged to the hilt, which is why the government and the banks are afraid of it.

You mutts associate deflation with the great depression but depressions and deflation are two separate things. Inflationary depressions are more common. The reason the great depression was so severe was because of the handiwork of Hoover and FDR, mostly the latter. The recession of 1921 was much more severe and was over in 18 months but again because of the two mutts...

To everyone else it is a good thing.

indigenous says

Deflation is nothing to be afraid of unless you are leveraged to the hilt...

... or you need a job to survive.

Heraclitusstudent says

indigenous says

Deflation is nothing to be afraid of unless you are leveraged to the hilt...

... or you need a job to survive.

Which is why the wealthy would love deflation--they don't need a job and they have available cash that can be used to buy assets at fire sale prices.

Heraclitusstudent says

... or you need a job to survive.

Au contraire, deflation is the natural disposition of the economy, it was the way the US rolled up until 1913.

indigenous says

Heraclitusstudent says

... or you need a job to survive.

Au contraire, deflation is the natural disposition of the economy, it was the way the US rolled up until 1913.

You are talking of a period with large population and productivity growth. And also probably low leverage.

With the current leverage, deflation, left to itself, means the global financial system collapses. A large part of companies would go bankrupt for purely financial reasons, reasons that have nothing to do with the validity of their businesses.

Heraclitusstudent says

You are talking of a period with large population and productivity growth. And also probably low leverage.

Why is leverage good?

Heraclitusstudent says

With the current leverage, deflation, left to itself, means the global financial system collapses. A large part of companies would go bankrupt for purely financial reasons, reasons that have nothing to do with the validity of their businesses.

You don't think that is going to happen anyway? cuz it's gunna. It happened severely in 1921 worse than at any other time in US history yet it was over in 18 months, only because Silent Cal and Harding had the good sense to do nothing other than Raise the interest rate and cut the Fed government in half.

This time would be bad but once it was over we could have honest money and a real economy at least theoretically.

Another thing regarding this is the fat tail, the millennials may surprise everyone and see the wisdom I speak of and dump the asinine D v R thing. And say get the spending under control.

Call it Crazy says

Why is it the most prolific and king of lying on Patnet accuses others of what he does EVERY DAY here?

You see CIC this is text book example of projecting, the cure is to take the red pill, unfortunately the Wogster is addicted to the blue pill

indigenous says

Why is leverage good?

It's not.
It's a way to mask the fact that the US is not producing as much as it buys.

indigenous says

You don't think that is going to happen anyway? cuz it's gunna.

I don't see how it could happen as long as it is backed by a printing press.
indigenous says

It happened severely in 1921 worse than at any other time in US history yet it was over in 18 months

Believe me, if it happened now, 1921 or 1929 would look like a walk in the park.
You are talking of the entire financial system worldwide. And the real economy is much more dependent on credit flows now. There would be blood in the streets.

Heraclitusstudent says

I don't see how it could happen as long as it is backed by a printing press.

Have you heard of Weimar or Zimbabwe?

Heraclitusstudent says

Believe me, if it happened now, 1921 or 1929 would look like a walk in the park.

You are talking of the entire financial system worldwide. And the real economy is much more dependent on credit flows now. There would be blood in the streets.

That is how the story goes and what Paulsen and Co would like you to believe.

Heraclitusstudent says

What about debts of corporations to buy back stocks?

Very productive.

They is to the CEOs

indigenous says

Have you heard of Weimar or Zimbabwe?

Yes and these were not deflationary collapses.

A condition for hyperinflation is that your debt is not in your currency, in which case printing can't help you.

It's not the case here.

indigenous says

That is how the story goes and what Paulsen and Co would like you to believe.

No, it's a logical conclusion of this loop:
1 - deflation makes debt harder to pay
2 - debt defaults cause more deflation

Which of these 2 do you believe is incorrect?
Because if you believe these 2 then you can see that a leveraged system is inherently unstable, and that the amount of debt is fuel for a chain reaction that would propagate through the system and destroy it.

Heraclitusstudent says

It's not the case here.

Tell that to the 70s

Heraclitusstudent says

Because if you believe these 2 then you can see that a leveraged system is inherently unstable, and that the amount of debt is fuel for a chain reaction that would propagate through the system and destroy it.

It would be bad but it is going to happen either way...

indigenous says

Tell that to the 70s

The 70's got hyperinflation????
You've seen that in that show?

indigenous says

It would be bad but it is going to happen either way...

Explain what is going to prevent the central bank for putting guaranties on everything assets Wall Street touches.

We saw that movie before.

Heraclitusstudent says

The 70's got hyperinflation????

How about double digit mortgages? The debt was in dollars. Your assertion does
not hold water.

Heraclitusstudent says

Explain what is going to prevent the central bank for putting guaranties on everything assets Wall Street touches.

Inflation

indigenous says

How about double digit mortgages? The debt was in dollars. Your assertion does

not hold water.

Double digit mortgages is not hyperinflation.

indigenous says

Inflation

You're losing context so fast....
We were talking about how deflation would destroy the financial system, and you were saying that's not true... because of inflation?
Uh... What???

Heraclitusstudent says

Explain what is going to prevent the central bank for putting guaranties on everything assets Wall Street touches.

The answer is inflation. If the interest rate returns to historic norms, debt service becomes 1/3 to 1/2 of the budget right quick. This means either default of cut the 1 trillion dollar defense budget and entitlements and any superfluousness like what you describe.

Once USD (DXY) closes above 90 real deflation is on it's way and just the beginning of what I would consider a long term deflationary cycle.

My question is @ what "price point" is deflation @ critical mass and the collapse/destruction of the USA or global financial systems taking place? Is it DXY 95, 110, 120?

I have notion that at the brink of destruction what ever that might look like, the USD will lose as stand alone standard currency.

Heraclitusstudent says

What about debts of corporations to buy back stocks?

Very productive.

1. Debt for consumption = mostly stupid, but manageable in moderation. Brings demand forward so eventually the reverse has to hold true when consumer debt stops expanding.

2. Debt for speculation = inflates asset prices, so profitable until it blows up (bubbles....)

3. Debt for real investment (expanding a business) = good idea, unless it proves to be mal investment.

Overall I think deflation is ugly but necessary to clean up the bad debts, especially from category 2.