Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

[Charles Mackay]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

Thanks for the nudge. I've wanted to add a chart showing just gold & silver prices alone since I have the data, and this was a good excuse.
I updated my Weimar charts page too.

As you can see, the swings you saw reflected the changes & volatility in the cost of living index or the wholesale price index *much* more than they reflected gold & silver price changes.

Note also that the prices through mid 1923 are from data captures 4 months apart so the chart does not capture any of the volatility or corrections... probably a good thing since buy & hold was by far the best approach during Weimar.

So, that move was 10 to the 12th power. EJ is looking for only a one order of magnitude move... from $250 to $2500. What about yourself?

In terms of purchasing power my yardstick has been 100 oz of gold for a median existing house and 1 oz of gold for the DJIA. But, in Weimar there are stories of houses selling for just a couple oz of gold in the worst part of the crisis.

[Chris Coles]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

So, that move was 10 to the 12th power. EJ is looking for only a one order of magnitude move... from $250 to $2500. What about yourself?

In terms of purchasing power my yardstick has been 100 oz of gold for a median existing house and 1 oz of gold for the DJIA. But, in Weimar there are stories of houses selling for just a couple oz of gold in the worst part of the crisis.

I believe I have related this story before. I was once told of an Englishman that made his fortune by being asked to fly into Germany with a lot of Sterling stuffed into the nooks and cranny's of the aircraft. But his "friend" dropped dead between takeoff and landing and so he did it for himself and overnight became the proud owner of sufficient property to become a very wealthy individual.

The underlying truth is that when hyper inflation sets in, the instigators lose all sense of reality. We see that very clearly in Zimbabwe today. So at its height, the owners of property lose all sight of the true worth of property and only see the possibility of getting their hands on what to you will seem a small sum, but to them, because of the disparity, is a fortune.

My own family history has a similar story with the bequest of eight properties in Harrow High Street in 1939 all with long term leases and miserable rents. They sold them for insignificant sums. The mind boggles at the thought of the value today.

[Charles Mackay]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

I believe I have related this story before. I was once told of an Englishman that made his fortune by being asked to fly into Germany with a lot of Sterling stuffed into the nooks and cranny's of the aircraft. But his "friend" dropped dead between takeoff and landing and so he did it for himself and overnight became the proud owner of sufficient property to become a very wealthy individual.

The underlying truth is that when hyper inflation sets in, the instigators lose all sense of reality. We see that very clearly in Zimbabwe today. So at its height, the owners of property lose all sight of the true worth of property and only see the possibility of getting their hands on what to you will seem a small sum, but to them, because of the disparity, is a fortune.

My own family history has a similar story with the bequest of eight properties in Harrow High Street in 1939 all with long term leases and miserable rents. They sold them for insignificant sums. The mind boggles at the thought of the value today.

Right, and not only do they lose sight of the true worth but also rents are usually controlled therefore causing a transfer of wealth to the tenant.

[bart]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

So, that move was 10 to the 12th power. EJ is looking for only a one order of magnitude move... from $250 to $2500. What about yourself?

In terms of purchasing power my yardstick has been 100 oz of gold for a median existing house and 1 oz of gold for the DJIA. But, in Weimar there are stories of houses selling for just a couple oz of gold in the worst part of the crisis.

I've been on record since about 2005 for an eventual gold peak of at least $3200, based partially on Jim Sinclair's Fed custodials algorithm.

Here's the current picture, the green line representing his algorithm.





As far as 100 oz. of gold for a median house, I believe it will be exceeded but will look to actual market behavior and prices more for my cues.
I doubt that we'll see houses available for a couple of ounces... but I also didn't think the Berlin Wall would come down in my lifetime either.

[LargoWinch]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

I've been on record since about 2005 for an eventual gold peak of at least $3200, based partially on Jim Sinclair's Fed custodials algorithm.

Here's the current picture, the green line representing his algorithm.





As far as 100 oz. of gold for a median house, I believe it will be exceeded but will look to actual market behavior and prices more for my cues.
I doubt that we'll see houses available for a couple of ounces... but I also didn't think the Berlin Wall would come down in my lifetime either.

Bart, thank you for this. This complement my Saturday morning coffee nicely. I also saved this graph in my "[master] bart" folder.


I took the liberty to browse nowandthefutures.com for similar charts about crude oil, but could not find any for 2009. Would you happen to have the same for crude oil or a 2009 forecast for crude oil?

Lastly, I noticed that your forecast for the USD is quite bearish in H2 of 2009, hence I assume that your are probably bullish on commodities for H2/2009?

-W.

PS: I did find this chart, but I do not understanding as well as the one about gold above...

[bart]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

Bart, thank you for this. This complement my Saturday morning coffee nicely. I also saved this graph in my "[master] bart" folder.

For what its worth, that chart is also on my "miscellaneous" page and updated weekly.

I took the liberty to browse nowandthefutures.com for similar charts about crude oil, but could not find any for 2009. Would you happen to have the same for crude oil or a 2009 forecast for crude oil?

I've tried for years to come up with an algorithm that does a decent job of predicting oil prices, other than on the very long term, and have failed. My long term minimum target is $250-350 per barrel though, for what its worth.

Lastly, I noticed that your forecast for the USD is quite bearish in H2 of 2009, hence I assume that your are probably bullish on commodities for H2/2009?

-W.

In a word - yes.

And for others, this is probably the forecast/prediction chart to which your refer.

PS: I did find this chart, but I do not understanding as well as the one about gold above...

That chart is from my intervention page which I put together about 18 months ago, due to requests to show many of the behind the scenes and lesser known factors that can affect oil, gold, stock indexes etc... and yes, its also one of my infamous spaghetti charts.

It's also evidence, due to its failure to show any reasonable correlation between the oil price and any of the elements being charted, of my difficulties & failures in predicting oil prices.

[LargoWinch]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

Thank you Bart for the comprehensive (and prompt!) response.

My maple syrup debt to you has just increased once again.

[strittmatter]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

I've been on record since about 2005 for an eventual gold peak of at least $3200, based partially on Jim Sinclair's Fed custodials algorithm.

Here's the current picture, the green line representing his algorithm.





As far as 100 oz. of gold for a median house, I believe it will be exceeded but will look to actual market behavior and prices more for my cues.
I doubt that we'll see houses available for a couple of ounces... but I also didn't think the Berlin Wall would come down in my lifetime either.

I have not known of or followed Jim Sinclair for very long, lately he seems to be extremely headstrong with his bullish gold outlook. He says he agree's with Alf Fields' predictions and he also points to Martin Armstrong's latest bullish sentiments, although Armstrong doesn't tout specific numbers, just refers to "an exponential rally going into 2015".

Mr. Sinclair strikes me as an interesting fellow, and one that has evidently had his finger on the pulse of the game for quite some time.

So I guess my question is, What are your thoughts on him?

Thanks.

[bart]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

I have not known of or followed Jim Sinclair for very long, lately he seems to be extremely headstrong with his bullish gold outlook. He says he agree's with Alf Fields' predictions and he also points to Martin Armstrong's latest bullish sentiments, although Armstrong doesn't tout specific numbers, just refers to "an exponential rally going into 2015".

Mr. Sinclair strikes me as an interesting fellow, and one that has evidently had his finger on the pulse of the game for quite some time.

So I guess my question is, What are your thoughts on him?

Thanks.

The simplest answer is that I have a great deal of respect for him and have also learned a great deal from him. He's very much in my top 10, which of course includes EJ.

He has been around since the '70s and knows mining and gold and futures and behind the scenes issues etc. as well as anyone. About the only non positive things are that he's virtually always bullish (for as trader like me it can be costly paying too much attention to his shorter term views) and that he can be over the top or difficult to understand sometimes. I'm subject to that last item too.

[strittmatter]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

I see.

Thanks.

[Willette]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

O.O. - I agree with you: I think EJ got entangled in his terminology here.

"The political question is, in this scenario, which savers are losing? Remember, savers lose when debt is written off, either explicitly or via inflation. The answer is that in inflation, all savers lose. Politically, inflation is a tax on all savers to pay all creditors, but the creditors pay, too, by loss of purchasing power of debts collected. The political advantages of inflation in a debt deflation crisis are obvious: savers and creditors share the pain, and to accomplish it all the government has to do is continue to do what it is already doing, without changing course."

Savers of money and creditors are indeed almost the same thing, unless these savers are personally holding gold, silver or dead presidents. I would say that by hyperinflation debtors and creditors share the pain of a destroyed real economy where normal business activity becomes difficult to impossible.

Also, many debtors just do not realize that they are also creditors by virtue of holding dollar denominated promises of future government benefits like social security and medicare, etc. So while their Loan balances are inflating away, their retirement benefits are doing the same.

Because of the delay between money creation and price inflation, governments can continue to spend, while acting like they just don't understand what is happening and never saw it coming and have only the best motives of saving the world, but aren't really responsible.

The truly wealthy will be little affected because they already own the majority of the world's productive assets, which are unaffected by all this money jiggering. The nominal price may change, but who cares if you own it free and clear?

[photoncounter]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

Thanks Bart !

There's both some incorrect or incomplete facts there and its also missing many other stat comparisons.

Monetary & fiscal stat comparisons, 1929 and now

[globaleconomicollaps]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

http://www.nytimes.com/2009/02/22/bu...2&ref=business


Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.

[metalman]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

http://www.nytimes.com/2009/02/22/bu...2&ref=business


Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.

maybe i'm getting old and forgetful but until last week or so... wasn't the japanese model for fighting deflation the model of success?

[jk]

Re: Deflationistas, inflationistas, and hyperinflationistas - Eric Janszen

maybe i'm getting old and forgetful but until last week or so... wasn't the japanese model for fighting deflation the model of success?

i think a google search on "lost decade" will show that japan was NOT considered a model of success.