Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

[kartius919]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

Can't take IMF medicine because IMF medicine is mustard gas. Destroy the only sector where employment is growing. States going bankrupt one after another. Federal receipts falling further with federal gov't jobs contracting sharply. Thousands of military trained soldiers left to roam American soil unemployed and desperate once our global wars and foreign bases are shut down. Defense contractors goes bankrupt. US still goes bankrupt. Foreign powers sweep in to pick up assets at fire sale prices. China gets their hands on Boeing.

[metalman]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

it's all just one big ******* iceland. who wins? the fish?

[gwynedd1]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

it's all just one big ******* iceland. who wins? the fish?

No, The dolphins got the fish. They said thank you.


http://www.youtube.com/watch?v=bG6b3V2MNxQ

[raja]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

That is a subscribers only thread... I can't see it.

Reposted here:

Possible scenarios for gold (not exhaustive list):

1) Big inflation -- I sell my gold near the top, make lots of money. Happy Days!

2) Big inflation with big taxation -- I sell my gold near the top, make lots of money. Gov't takes 90% of the profit with tax. If there is 100% inflation over 5 years (down Luke, down!), I lose maybe over 50% of my investment. Ouch! :rolleyes:

3) Big inflation with big taxation #2 -- I don't sell my gold. I wait several years when draconian tax laws are finally lifted, then sell. The gold mania will have died long ago, but maybe gold will return to the real value at which I bought it, so I have at least preserved my wealth.

4) Big inflation, then hyperinflation -- Gold goes waaaay up. I think it's the top, then sell for an insane profit. Hyperinflation hits and I lose it all. :eek:

5) Big inflation, then hyperinflation #2 -- I don't sell. Fiat becomes trash. Gold and real things are the only wealth. I'm doing great, but I have to shoot a robber now and then.

6) Big inflation, then hyperinflation #3 -- The dust settles and a new currency is instituted. Everything starts over, and nobody wants gold. My wealth has been reduced to a fraction of what it once was. :eek:

To develop a reasonable strategy regards gold, all likely scenarios must be considered. I welcome any criticisms or additions to my attempt at this . . . . .

[occdude]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

So . . . stocks, oil and/or real estate. Hmmmm.

I guess it depends on how dark your vision of the future probabilities are. Paper doesn't make me feel very secure, whether it's stocks or oil (I assume you're suggesting oil investments, not putting in oil tanks in your back yard).

Real estate could be good in the long term, but in the short term will be a loser. Retirees who have lost their pensions or nest eggs in the stock market are going to be moving into with their children or each other, as are people who are foreclosed upon. Rent is going to plummet due to all the empty houses.

As much as I respect golds ability to preserve purchasing power over the long term and through times of instability, it still is subject to periods of overvaluation such as the late seventies and early eighties.

There's a Japanese saying that goes "never mistake your finger for the moon" I would follow-up with never mistake a preserver of wealth for actual wealth.

Actual wealth are things used as needed which are/but not limited to food, shelter, medical care, etc. Gold has limited ability to provide satisfaction if you're hungry or need any or the aforementioned things currently. Gold stores the ability to enjoy these things in the FUTURE as needed.

If I see an opportunity to invest in income producing real estate to preserve and possibly increase my standard of living and guarrantee it (my need to occupy real estate of some sort) against deflationary or inflationary risks then it makes sense to lock in that ability and enjoy an upgrade my shelter needs. This way actual wealth is not only saved, but if purchased at a distressed level, can be enhanced. If the price of gold goes way above and beyond what the historical valuations are of other assets and if everyones flocking to it, creating a "bubble of doom" then as any contrarian can tell you, the time to move has come. Of course you have to evaluate what's actually going on. Are we at war? Are there roaving mobs in the streets? Serious threats to political stability etc. would negate my thesis, but you better have your gold in your suitcase as your boarding a plane to??


Barring political instability, assets will reach an attractive valuation in relation to gold after a period of correction and the time for that will unfortunately be when everyone is terrified about the current prospects and disgarding any notion of stability in the future.

I'm a long term optimist though and I believe we will get are acts together eventually solely due to the fact that the blueprint exists to get us back on track and the amount of people who want stability vastly outnumbers the amount of people who don't.

[Spartacus]

losing your edits

this may help

https://addons.mozilla.org/en-US/firefox/addon/4125

AFter saving the temporary buffer I keep the editor open until the post is accepted.

occdude, I just LOST a three paragraph post describing my 1970s experiences and what I've done to prepare for this. I'm just too tired and pis#!% -off right now to retype it.:mad:

Thank you for your thoughtful post. I agree with everything you said.
The only huge unknown (to me) is the timing.:confused:

[Spartacus]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

you don't need to move all at once, do you?

Move out of gold . . . into WHAT ???

Will the new currency be established before the gold bubble pops??

move a small fraction as needed into whatever transitory stuff serves as money.

Later when you need more ammo and there's a new scrip issued from washington & the Illuminati in Tel Aviv, move a little more

Later when you need more gasoline and there's a new scrip issued from the Texas provisional neonazi authority, move a little more

you get the idea ... sidle into the apocalypse one step at a time.

[gwynedd1]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

As much as I respect golds ability to preserve purchasing power over the long term and through times of instability, it still is subject to periods of overvaluation such as the late seventies and early eighties.

There's a Japanese saying that goes "never mistake your finger for the moon" I would follow-up with never mistake a preserver of wealth for actual wealth.

Actual wealth are things used as needed which are/but not limited to food, shelter, medical care, etc. Gold has limited ability to provide satisfaction if you're hungry or need any or the aforementioned things currently. Gold stores the ability to enjoy these things in the FUTURE as needed.

If I see an opportunity to invest in income producing real estate to preserve and possibly increase my standard of living and guarrantee it (my need to occupy real estate of some sort) against deflationary or inflationary risks then it makes sense to lock in that ability and enjoy an upgrade my shelter needs. This way actual wealth is not only saved, but if purchased at a distressed level, can be enhanced. If the price of gold goes way above and beyond what the historical valuations are of other assets and if everyones flocking to it, creating a "bubble of doom" then as any contrarian can tell you, the time to move has come. Of course you have to evaluate what's actually going on. Are we at war? Are there roaving mobs in the streets? Serious threats to political stability etc. would negate my thesis, but you better have your gold in your suitcase as your boarding a plane to??


Barring political instability, assets will reach an attractive valuation in relation to gold after a period of correction and the time for that will unfortunately be when everyone is terrified about the current prospects and disgarding any notion of stability in the future.

I'm a long term optimist though and I believe we will get are acts together eventually solely due to the fact that the blueprint exists to get us back on track and the amount of people who want stability vastly outnumbers the amount of people who don't.

Hi occdude,

As Adam Smith stated, money and the physical economy cannot be considered the total capital in an economy. One either measures the physical capital or the money that represents the physical capital. Gold is rather a stable denominator rather than an economic numerator. With fiat currency your denominator may go from say 1/5 to 1/10. Gold on the other hand is 1/5 to 1/5.01 .
The original Caribbeans did know why the Spanish like the shinny yellow metal so much.

[nero3]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

I see that Japan in 89 is like us in 29, that the US debt market, is like the debt market the Germans never had, because the US never got the idea in the 1930's to prop up the German (they instead dumped it) and other debt market's causing a extra market for their export, and that now, we are in 1948-1949, with a rise in long term interest rates as the asians set their economies free ,I assume this will be the defining event that cause US long term yields to rise. As debt levels in Japan, have deflated for so long, I definitly think they are ready to enter some sort of spring, where the consumer wakes up.


The dollar and treasuries is probably not worth any more than the german mark, and the german bond market was.Second. The US have had a 28 year bond bull. For a japan repeat to go on, it would have to extend to 38 or 48 years. I am not writing that off, but I think it's unlikely.

Third, both the japanese and the US stock market track eachother almost 100 % since 2003, as they now are at around the same price. I think the Japanese market in 89 was at a much higher level than the US market in 2007 (when deflating the stock market to the size of the GDP). Somehow the market's got to around the same level in 2003.

If the US is to go down 80 % from the 2007 level, the Japanese will also go down around 80 % from that level. This due to the level of the US and Japanese market's in relationship to yields on US treasury notes. For that to play out, yields would have to drop to 1,5 % on 10 years, and the dow and the nikkei would have to drop to around 3000. I think it's far more likely that yields and inflation heads up. If yields rise, then the dow will up to. I even think the dow would rise through a weaker dollar, if the federal reserve target's yields through quantitative easing.

Fourth. If the bull in treasuries is over, then those who benefits most will be emerging market's. The era after 1950 was great for emerging markets. That the US debt market no longer have any "hold" on the worlds savings, will create a totally new generation of consumers in the "poor" countries, and a huge demand for energy will come along, as the bear market in treasuries will cause the world wealth to get spread "everywhere". Stock market graphs from emerging market's the last 20 years, is a mirror of the US stock market from 1929-1949. I think emerging market's will become more stable, when the dollar looses it's "grip".

[metalman]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

welcome!

I see that Japan in 89 is like us in 29, that the US debt market, is like the debt market the Germans never had, because the US never got the idea in the 1930's to prop up the German (they instead dumped it)

the usa and uk were broke.

and other debt market's causing a extra market for their export, and that now, we are in 1948-1949, with a rise in long term interest rates as the asians set their economies free ,I assume this will be the defining event that cause US long term yields to rise. As debt levels in Japan, have deflated for so long, I definitly think they are ready to enter some sort of spring, where the consumer wakes up.

the usa consumer will not wake up until he has savings. the japanese consumer will not wake up until he is young again. the chinese consumer will not wake up until he trusts his gov't with money (after the elections, establishment of consistent rule of law, little things like that, etc.)

The dollar and treasuries is probably not worth any more than the german mark, and the german bond market was.Second. The US have had a 28 year bond bull. For a japan repeat to go on, it would have to extend to 38 or 48 years. I am not writing that off, but I think it's unlikely.

with you on the old usa bond bull. it's over.

Third, both the japanese and the US stock market track eachother almost 100 % since 2003, as they now are at around the same price. I think the Japanese market in 89 was at a much higher level than the US market in 2007 (when deflating the stock market to the size of the GDP). Somehow the market's got to around the same level in 2003.

politically since after wwii the usa and japan are one. they will split over this. no more japanese sacrifice as protectorate of usa. good for which market when the split? first japan needs immigration and kids. this takes time.

If the US is to go down 80 % from the 2007 level, the Japanese will also go down around 80 % from that level. This due to the level of the US and Japanese market's in relationship to yields on US treasury notes. For that to play out, yields would have to drop to 1,5 % on 10 years, and the dow and the nikkei would have to drop to around 3000. I think it's far more likely that yields and inflation heads up. If yields rise, then the dow will up to. I even think the dow would rise through a weaker dollar, if the federal reserve target's yields through quantitative easing.

they will diverge.

Fourth. If the bull in treasuries is over, then those who benefits most will be emerging market's. The era after 1950 was great for emerging markets. That the US debt market no longer have any "hold" on the worlds savings, will create a totally new generation of consumers in the "poor" countries, and a huge demand for energy will come along, as the bear market in treasuries will cause the world wealth to get spread "everywhere". Stock market graphs from emerging market's the last 20 years, is a mirror of the US stock market from 1929-1949. I think emerging market's will become more stable, when the dollar looses it's "grip".

agree 100% on this. paradox... the usa taught its ways to emerging markets then forgot them for itself!

[nero3]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

welcome!




the usa consumer will not wake up until he has savings. the japanese consumer will not wake up until he is young again. the chinese consumer will not wake up until he trusts his gov't with money (after the elections, establishment of consistent rule of law, little things like that, etc.)

Thanks,

The best potential consumers I see, is in the BRIC. Especially Russians are big on consuming, try give a credit card to a Russian woman and I am sure they could finish it quicker than I could blink. They have a desire for everything someone in the US have enjoyed, and they long for. Holydays, things. I even think they have had a baby boom there. I also get the impression Brazil is in a structural bull. Newspapers in India have that tone that were common in the US 40-70 years ago, they have that go-go tone, that is so common from the 1950-s. Emerging market's have been the big driver for Apple. I think Apple have an extreme brand appeal there, while we, have gotten so rich, that nobody cares for brands anymore, as everyone "have what they want". What's going on with the Swiss franc? Will it go down, to create new bubbles, to save Eastern Europe, and Swiss Banks or will the bust go on, with a strong franc, strong yen, and a strong dollar? If the US, UK, even the Swiss take their currencies down, I think you perhaps could get a carry trade boosting emerging markets, given those market's low debt levels, it got a lot of potential.

I think the reason Warren Buffet is buying railroads is that the performance of the railroads, mirror emerging market's performance.

[wkwillis]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

There is one further problem with gold, silver, and uranium that you don't have with most other metals. They have huge, huge, stockpiles above ground. Nickel doesn't, copper doesn't, tungsten doesn't, etc.
I'm an inventor. I work in geophysical instrumentation. My invention may crash the price of detecting some mineral deposits, including gold and silver. In the case of nickel, who cares? It is still going to take ten years to find out if the needle twitch is nickel, how much, what percent can be recovered, for how much, and if the local ecofreaks are going to let you dig a big hole, etc. Then you get to bet on what the price of nickel is going to be in ten years when you actually start production. Meanwhile the actual real nickel miners will be making profits every week.
In the case of gold, if I (that is, if my customers) find lots of gold and the debate is whether it's going to cost one hundred dollars an ounce, or one dollar an ounce, to get that gold out of the ground, the price of gold collapses immediately. Like, right then, because if you can find one gold deposit, you can find one thousand.
Everyone should have a few hundred ounces of gold. Not a few thousand.

[nero3]

Re: Flow of Funds Q4 2008: Debt Deflation confirmation - Eric Janszen

I made a quick and dirty graph for Steve on debtdeflation.com a few weeks ago, to explain to him why there would be a new bubble (could very well be alternative energy and infrastructure as itulip have written about), why Steve is wrong, and why there would not be any deflation. The kind of non linear thinking, is more of a trader thing, than what I think an economist would think of, and it's this bubble that now is really on the way, the NOK have gone to 5,58, from 6,01 when I made the prediction.

It's the currency cross NOKCHF, an excellent measure of "the bubble", and how it's doing. The weaker the CHF, the stronger the bubble.

I am posting it here to, so you can see. Just to add. This is NOT a bear market rally. This is a geniune bull market.

[Mega]

This is worrying

http://market-ticker.org/archives/11...ead-This!.html
Mike

[aaron]

Re: This is worrying

http://market-ticker.org/archives/11...ead-This!.html
Mike

I think at this point the Banks (the big, bailed out ones) know there is going to be massive inflation. And, the only way the can survive is to be protected... If they end up owning half the real estate in the United States, they have one big inflation hedge. They WANT to foreclose on as many houses as possible before the shit hits the fan. As the article said, they have already taken the loss at loan time. And, since the government has bailed them out, and they can sell stock to keep up their businesses, they just need to wait it out. When the country is wrecked from massive inflation & defaults, then they will be left holding.. not the bag... but the land! (And, if they are "good corporate citizens" they will not throw people out of their homes until after inflation has run its course. After all, it is like free security and maintenance for their real estate portfolio)

Yeah, Jefferson was right.

--------------------
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)