patrick.net

bad debt is not the same as burning money

That's not how I see it at all. You created a dollar out of thin air (home values rising during the bubble), then burned a dollar (the bank held this dollar ... the actual money spent on the house is still held by the original seller, who has done who knows what with it ... but that money still exists). If this was the end of the story you'd be right - but with the new money being injected into the system to buoy up the banks, that dollar is recreated again. Effectively it's created twice, destroyed once ... the net effect is +1 dollar.

Matt says

Effectively it’s created twice, destroyed once … the net effect is +1 dollar.

That might be, but we are only experiencing Engineered Inflation.
It took three years of halting Oil production, destroying Oil wells, and unregulated Oil speculation to get Oil back to where it is now. In fact Oil is struggling to get where "THEY" keep touting for two years where it "Will be" and it's still short of that.

Washington just last year had to extend the Corn subsides and put even more corn to get food prices where they are now. Also coupled with wild commodity future manipulation. There's a plenty on the supply side, there's just more investors that want their cut of the action. None of this smells of classic inflation to me.

And I go even further to agree one hundred percent, about the dollar being destroyed with credit defaults.

Inflation is when all your average Joes get more money. This isn't happening. Market for salary isn't very competitive. Most people are competing their skills vs someone in China/India... so salaries aren't going to be going up. So I'm not concerned about it that much.

We are going to have bubbles though in the system because of the low interest rate the Fed is holding. But no inflation. Really I just cannot justify envisioning inflation in our current envornment.

Now if they start doing helicopter drops of money than yeah it will be inflationary.

Mr.Fantastic says

Just hedge your money in something like potatoes, guns, and ammo. I’ve been subscribing to the APOCALYPSEFUCK newsletter, and there is some interesting reading in there.

ROFL !!

ChrisLA says

Inflation is when all your average Joes get more money. This isn’t happening. Market for salary isn’t very competitive. Most people are competing their skills vs someone in China/India… so salaries aren’t going to be going up. So I’m not concerned about it that much.
We are going to have bubbles though in the system because of the low interest rate the Fed is holding. But no inflation. Really I just cannot justify envisioning inflation in our current envornment.

I can see price inflation in commodities and imports without wage inflation in the US.

zzyzzx says

I can see price inflation in commodities and imports without wage inflation in the US.

Yeah, it still wouldn't inflate home prices though... hence my fear of inflation in home prices isn't very high... YET.. Although the higher gas prices go... The more expensive metro areas near places of work could rise. I currently rent within walking distance to my work and rising gas prices don't affect me much.. But they would affect someone living 15-20+ miles away.