FED wants Hyper inflation?

[Mega]

http://www.zerohedge.com/article/fed...precisely-case

Delighted to see Oil heading over $100, may it sail gracefully on to $200.........does the FED want Hyper inflation, Mega's veiw:-

The FED wants to devalue the $ by 30%, the question is over what time frame?......the answer to that will tell you if it is to be High or Hyper..
Mike

[Starving Steve]

Re: FED wants Hyper inflation?

If V=0, then MV=M0=0.

Yes, Bernanke is blatently supporting the U.S. stock market by putting a floor under the market. But how much printing-press M1 is Bernanke injecting into the NYSE? ( I don't think it is very much M1. )

Therefore, MV=0. End of story.

Kids: deflation should be spelled, de-flation in order to make the spelling and the word de-flation stand-out from in-flation. To-morrow, we shall discuss what de-flation does to an economy, as prices fall. But the adjustment downward in prices has to come because otherwise, we have hyper-inflation.

Before the necessary de-flation begins, most people are starving now, so what have we to lose? De-flation means paying-down debts, not inflating debts away with cheap money. In the long run, de-flation restores the economy--- just the opposite of what current economics textbooks like Samuelson's textbook would have you believe.

[GRG55]

Re: FED wants Hyper inflation?

Here's Ben...

Bernanke Says Fed's Monetary Expansion Won't Spur `Super-Normal' Inflation

By Scott Lanman and Steve Matthews - Nov 6, 2010 12:24 PM MT

Federal Reserve Chairman Ben S. Bernanke, adding to his defense of this week’s expansion of record monetary stimulus, dismissed the idea the central bank will increase inflation higher than it prefers.

“I have rejected any notion that we are going to raise inflation to a super-normal level in order to have effects on the economy,” Bernanke said today in a panel discussion at a Fed conference in Jekyll Island, Georgia. “Our credibility must be maintained,” and “it’s critical for us to maintain inflation at an appropriate level,” he said.

Policy makers led by Bernanke, a former Princeton University economist who studied the Great Depression, decided Nov. 3 to resume large-scale asset purchases in an effort to reduce unemployment and avert deflation. The Fed is buying $600 billion of Treasuries through June after lowering the benchmark rate almost to zero and carrying out a $1.7 trillion first round of asset purchases that ended in March.

“We’re not in the business of trying to create inflation,” said Bernanke, [ ] who spoke on the panel alongside his predecessor, Alan Greenspan, and former New York Fed President E. Gerald Corrigan, to an audience including more than a dozen current and former Fed policy makers.

“Our purpose is to provide additional stimulus to help the economy recover and to avoid potentially additional disinflation which I think we all agree would be a worse outcome,” Bernanke said...

[GRG55]

Re: FED wants Hyper inflation?

Here's Ben...

Bernanke Says Fed's Monetary Expansion Won't Spur `Super-Normal' Inflation

...“I have rejected any notion that we are going to raise inflation to a super-normal level in order to have effects on the economy,” Bernanke said today in a panel discussion at a Fed conference in Jekyll Island, Georgia. “Our credibility must be maintained,” and “it’s critical for us to maintain inflation at an appropriate level,” he said.

...

"...it's critical for us to maintain inflation at an appropriate level..."

Sugar zooms on tight exports, weak dollar


6 Nov, 2010, 02.33AM IST,REUTERS

LONDON: ICE raw sugar futures reached a fresh 30-year high and refined sugar a record peak for a second day on Friday due to tight export availability and a weak dollar...


Brent oil price finishes week six percent higher, over $88

November 6, 2010

Brent oil prices end Friday’s trading session firm over $88 a barrel, a clear six percent higher than last week’s closing price as the ICE Dollar Index sank to a new 2010 low and has now lost nearly 15 percent of value in the last 5 months...


Cash grain prices soar, weather still mostly dry

Dow Jones Newswires

11/05/2010 @ 3:51pm

The cash-value of U.S. grain soared to its highest level in about 1-1/2 to 2 years this week, as strong interior basis added to further futures gains...

Soybeans
Farmgate soybean prices skyrocketed above $12 a bushel for the first time since June 2009, largely on the strength of a 46-cent rise in January CBOT futures...


Corn
Cash corn hit 27-month highs this week before succumbing to modest profit taking on Friday...


Wheat
Hard wheat prices scored 17-month highs, although cash soft red winter wheat could only manage a three-month top this week...




Edible-Oil Prices to Increase on Demand, Supply Constraints, Mistry Says

By Claire Leow - Nov 6, 2010 7:30 PM MT

Edible-oil prices may climb as growth in worldwide supply fails to keep pace with the rise in demand for a third year, with weather patterns hurting crops, according to Godrej International Ltd. Director Dorab Mistry.

Palm oil may gain to 3,300 ringgit ($1,072) per metric ton in the next few weeks and extend gains in 2011, according to remarks that Mistry prepared for delivery in Guangzhou, China today. The contract ended Nov. 4 at 3,191 ringgit. Soybean oil in Argentina, the largest exporter, may climb to $1,250 a ton by January, the remarks said, raising Mistry’s forecast from $1,050.

Higher edible-oil prices may add to costlier food, fanning inflation. World food prices climbed to the highest level in more than two years in October on more expensive meat, cereals, cooking oils and sugar, the United Nations’ Food and Agriculture Organization said...



Copper hits new 27-mth peak, eyes record after Fed

Fri Nov 5, 2010 7:41am GMT

SINGAPORE, Nov 5 (Reuters) - Metal prices rallied sharply
Friday with Shanghai zinc jumping 5 percent and London copper
rallying to fresh 27-month highs within $200 of a record peak...


Gold Prices Keep up a Record-Setting Pace


Gold sets record as investors seek safety while Federal Reserve's stimulus program unfolds

November 5, 2010 (AP)

Gold settled at another record high Friday as investors sought out its perceived safety while waiting to see how the Federal Reserve's new economic stimulus program will unfold...

...The dollar also rose, which is normally a negative for gold and other commodities, but traders remained focused on the potential of inflation with the Federal Reserve's plan to buy $600 billion of bonds by the middle of next year...

...Gold for December delivery settled at a record high of $1,397.70 an ounce, up $14.60...

[Kadriana]

Re: FED wants Hyper inflation?

This weekend was the first weekend where I found myself sitting in a restaurant wondering if this was the beginning of high inflation, stagflation or any other terms you want to use. Is this the time I will be telling my grandchildren about and how some people saw it coming but most decided to keep there heads in the sand. It's weird. It's like something in the air has changed.

[Starving Steve]

Re: FED wants Hyper inflation?

This weekend was the first weekend where I found myself sitting in a restaurant wondering if this was the beginning of high inflation, stagflation or any other terms you want to use. Is this the time I will be telling my grandchildren about and how some people saw it coming but most decided to keep there heads in the sand. It's weird. It's like something in the air has changed.

I am not a reader, but one book which you might skim-through is Erich Maria Remarque's, The Black Obelisk about the change in Germany from Weimar Republic to hyper-inflation to chaos, to nationalism, to xenophobia, to pure anti-semitism, and then to Adolf Hitler appearing with his nazis taking power. It all happened in just a few years, approximately from 1918 to 1923.

[ThePythonicCow]

Re: FED wants Hyper inflation?

There are two steps to figuring out whether one's local currency will inflate or deflate, whether it will do so a little or a lot, and when.

The first step is to figure out where the global financial elite are in what is roughly a 35 year cycle. The debt of the rest of us individuals, corporations and nations is owed to these global financial elite. They run a two phase cycle.

• The first phase is a major bull market in long bonds, lasting perhaps 30 years. During this period, new issues of high grade long bonds gradually decline in yield, which gradually increases the price of outstanding bonds. Those who obtain a large quantity of such debt early in that 30 year period gain both above market yields and increasing capital value in the bonds they hold.
  
• The second phase is a major bear market in long bonds, lasting perhaps 5 years. During this period, several things happen in rapid and tumultuous sequence.
  • First they move their holdings from long bonds to cash and short bonds (for the long bond market is about to get killed.)
  • Then they briefly give their debtors a whiff of inflationary monetary expansion as well as even more so jacking up the amount of outstanding short term, low interest rate debt held by those best able to pay (the U.S.A. in this go around). They use any economic panics or fears to jack up that high grade short term debt (T-Bills) as much as possible and to steal as much cash and T-Bills as they can (in the name of saving the Too-Big-To-Fail banks.)
  • Then they run a panic of inflation and excessive national debt through the populace, justifying a Volcker-like cram down of the long bond. This makes long bonds cheap and it deprives individuals, corporations and nations of reasonably priced debt. This crashes the economy and causes wide spread defaults, transferring ownership of resources and future income streams to those same global financial elite (as happened when Thatcher privatized large swaths of the UK economy.)

This provides the elite with an immense amount of high quality national debt, paid for with the cash and T-Bills they stole and extorted above, returning high yields and obtained cheaply. The old "buy low, sell high" begins again, with them buying high quality long maturity bonds cheap. The next 30 year bond bull market begins anew.

The second step is to relate how your local currency interacts with the above phases, which were carried out in whatever is the world's reserve currency of the time.

If your local currency is not the world's reserve currency (the currency in which the debt is predominantly held) then your currency may be destroyed with hyper-inflation or re-issued at a different exchange ratio during the 5 years of tumult.

If your local currency is the world's dominant currency, as the British pound was a century ago or the U.S. Dollar is now, then it will continue to weaken a while (the usual inflation), then that currency will become in short supply (because the debt that creates that currency will be in short supply!) during the Volcker-like period when long bond yields are jacked way up (their price crammed down) as the opportunity is setup for the global financial elite to go long the long bond once again.

During the year or two while the long bond is being crammed down, prices for goods that one might purchase in the market will split. Economic desperation will cause the prices of the things you need (such as food) to rise, as the prices for anything else (like the used flat screen TV my poor son is trying to sell on Craigs List) to collapse.

The stock market will gyrate in major volatile swings during the 5 years of volatility, depending on where the elite are in this and whether they have a large stash of cash and T-Bills that might as well be used to sweep up any spare change left in the stock market by not yet destroyed investors.

So ... no ... the Fed does not want hyper-inflation of the Dollar. They are the U.S. presence of the global financial elite. Their job is not to see that the U.S. can pay off its debt. Their job is to refinance that debt with long maturity usurious rate U.S. Treasury bonds.

The Fed's job is to make the national debt burden on American taxpayers more burdensome, not less.

[ThePythonicCow]

Re: FED wants Hyper inflation?

I left out one interesting detail in my previous post above. What happens if the currency of the debt is the dominate (reserve) currency going into the 5 years of tumult, but not so coming out. The U.S. Dollar may well be in this very situation this time around.

I left it out because I didn't know what to think of it when I wrote the previous post.

On reading more of Damon Vrabel (in his blog, website, and Canadian Free Press articles) my thoughts are clearer (though the following thoughts are partially mine, not entirely Damon's.)

The financial elite usually prefers that national debt not be issued in that country's own currency. This was a major motivation for the Euro, for example.

The basic principle is simple enough. The debtor prefers to lend in a currency that the debtor controls, while the lender prefers to extend debt in a currency that the lender controls. That detail can make a big difference on how painful repayment is to the debtor, and how rewarding it is to the lender.

So I have little doubt that the financial elite would like to have the next 30 year bull market in long maturity, high yield U.S. Treasury Bonds be funded in something other than the Dollar.

Now ... whether they can pull that off or not is unclear. If they did, I suppose that would mean that the U.S. refinanced in some sort of IMF/BIS/SDR/... concoction. I suppose first, to pull that off, that these elite would have to put the U.S. through one heck of a lot of economic pain, including probably major war on Iran and any country siding with Iran.

If they did pull it off (restructure long U.S. debt out of U.S. Dollars), then I would expect that the Dollar declined in trade value rather more rapidly and steadily (or violently?) over the subsequent 30 years. If they don't pull it off (U.S. debt remains denominated in U.S. Dollars), then once the elite made the transition back to holding long Treasury bonds, they would prefer that the Dollar hold its value tolerably close to steady.

In Damon's view, and I agree, what we (the little people) would really like would be to regain control of our currencies, meaning a sovereign issued currency rather than borrowing it all from the banks, which has ultimately given those banks and the senior private capital pools behind them control over most of the larger institutions of our civilization.

[Kadriana]

Re: FED wants Hyper inflation?

I am not a reader, but one book which you might skim-through is Erich Maria Remarque's, The Black Obelisk about the change in Germany from Weimar Republic to hyper-inflation to chaos, to nationalism, to xenophobia, to pure anti-semitism, and then to Adolf Hitler appearing with his nazis taking power. It all happened in just a few years, approximately from 1918 to 1923.

Thanks for the recommendation.

[GRG55]

Re: FED wants Hyper inflation?

Oh, I almost forgot...

[Good thing we are still in deflation. Aren't we?]


Cotton prices at 140-year high


Copyright 2010 by United Press International

10/16/2010


NEW YORK (UPI) -- Floods in China and Pakistan, currency fluctuations and recovering demand pushed the price of cotton to a high unseen since the U.S. Civil War Friday.

Cotton prices have jumped 56 percent since July and reached $1.198 a pound on the IntercontinentalExchange at the end of the week, a 140-year high, The Wall Street Journal reported Saturday...

[Kadriana]

Re: FED wants Hyper inflation?

Does anyone watch fao.org and global food prices. I'm not sure where I got the link from but looking at the chart, it doesn't look good for global food prices. We're not terribly far from 2008 highs.

http://www.fao.org/worldfoodsituation/en/

[Starving Steve]

Re: FED wants Hyper inflation?

The reading in the book is boring as hell, and the author goes on and on and on, but if you would read certain pages, here and there throughout the book, I think you might find it interesting. The events came up like storm clouds, in a gathering storm. The story goes on and on, but the storm gets darker and darker. And no-one seemed to notice until it was too late to do anything about it. Everyone was swept-up in the storm.

[ThePythonicCow]

Re: FED wants Hyper inflation?

[Good thing we are still in deflation. Aren't we?]

Not at the present moment. We had a brief spell of it a couple years ago, and I predict we have another sharper spike of it coming sometime in the next few years with a shortage of money in the land due to absence of bank lending, leading to higher food prices, a collapse in other prices and massive defaults on individual debt, corporate debt, and state and local government debt.

Here's a gruesome analogy for you.

Think of the elite as milk drinkers and meat eaters, and the rest of us as cows. They fed us with debt in great quantities for many decades, fattening us up and enjoying the milk of fees and interest payments. They were also anticipating butchering us for our meat (discounting and booking those anticipated future earnings as current profits.)

In 2008 we had a major heart attack (not too surprising, given how fat we were). Our blood pressure ("inflation") dropped precipitously, but just briefly, as they put us on an IV of sugar water. EJ has long pointed out that they could keep us on that IV feed of sugar water money in perpetuity if they wanted to. I would ask - do they want to? Anyway, now they are getting us to sign over all we own, unto the 7th generation, in our last wills and testaments, in a final orgy of senior (AAA Treasury) debt generation.

Once that is done, they plan to move the dairy farm financial headquarters from Wall Street to Hong Kong and the political headquarters from Washington to Beijing, yank the IV feeding the Americans, butcher the older cows for our meat (another greater economic collapse), and begin once again with the American calves, raising them for their milk (beginning another long bull market in long Treasury bonds.)

First however our young bulls are serving them (the 'elite') well, trampling the unruly shrubs in a patch (Syria through Pakistan) that should make a fine pasture (for gas, oil and minerals), once those dang shrubs (unruly people) are tamed or removed. (Let us hope once again that that region of the world is where great empires go to die.)

When they yank the IV on us old baby boomers (rather literally, as Medicare becomes rationed medicine, as well as economically) there will be a shortage of money in the land (collapsing prices for all except essential food.) Our young calves will sell dirt cheap (long bond collapse, interest rate spike), and the elite will buy all these young calves (newly issued, high yield, long maturity U.S. Treasuries) with the money and T-Bills they stole from us baby boomers.

[bill]

Re: FED wants Hyper inflation?

Not at the present moment. We had a brief spell of it a couple years ago, and I predict we have another sharper spike of it coming sometime in the next few years with a shortage of money in the land due to absence of bank lending, leading to higher food prices, a collapse in other prices and massive defaults on individual debt, corporate debt, and state and local government debt.

Here's a gruesome analogy for you.

Think of the elite as milk drinkers and meat eaters, and the rest of us as cows. They fed us with debt in great quantities for many decades, fattening us up and enjoying the milk of fees and interest payments. They were also anticipating butchering us for our meat (discounting and booking those anticipated future earnings as current profits.)

In 2008 we had a major heart attack (not too surprising, given how fat we were). Our blood pressure ("inflation") dropped precipitously, but just briefly, as they put us on an IV of sugar water. EJ has long pointed out that they could keep us on that IV feed of sugar water money in perpetuity if they wanted to. I would ask - do they want to? Anyway, now they are getting us to sign over all we own, unto the 7th generation, in our last wills and testaments, in a final orgy of senior (AAA Treasury) debt generation.

Once that is done, they plan to move the dairy farm financial headquarters from Wall Street to Hong Kong and the political headquarters from Washington to Beijing, yank the IV feeding the Americans, butcher the older cows for our meat (another greater economic collapse), and begin once again with the American calves, raising them for their milk (beginning another long bull market in long Treasury bonds.)

First however our young bulls are serving them (the 'elite') well, trampling the unruly shrubs in a patch (Syria through Pakistan) that should make a fine pasture (for gas, oil and minerals), once those dang shrubs (unruly people) are tamed or removed. (Let us hope once again that that region of the world is where great empires go to die.)

When they yank the IV on us old baby boomers (rather literally, as Medicare becomes rationed medicine, as well as economically) there will be a shortage of money in the land (collapsing prices for all except essential food.) Our young calves will sell dirt cheap (long bond collapse, interest rate spike), and the elite will buy all these young calves (newly issued, high yield, long maturity U.S. Treasuries) with the money and T-Bills they stole from us baby boomers.

Subject: economic models explained with cows....



SOCIALISM: You have 2 cows, and you give one to your neighbor.



COMMUNISM: You have 2 cows. The State takes both and gives you some milk.



FASCISM: You have 2 cows. The State takes both and sells you some milk.



NAZISM: You have 2 cows. The State takes both and shoots you.



BUREAUCRATISM: You have 2 cows. The State takes both, shoots one, milks the other, then throws the milk away...



TRADITIONAL CAPITALISM: You have two cows. You sell one and buy a bull.

Your herd multiplies, and the economy grows. You sell them and retire on the income.



SURREALISM: You have two giraffes. The government requires you to take harmonica lessons



AN AMERICAN CORPORATION: You have two cows. You sell one, and force the other to produce the milk of four cows. Later, you hire a consultant to analyse why the cow has dropped dead.



ENRON VENTURE CAPITALISM: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. Sell one cow to buy a new president of the United States , leaving you with nine cows. No balance sheet provided with the release. The public buys your bull.



THE ANDERSEN MODEL: You have two cows. You shred them.



A FRENCH CORPORATION:

You have two cows. You go on strike, organize a riot, and block the roads, because you want three cows.



A JAPANESE CORPORATION: You have two cows. You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You then create a clever cow cartoon image called 'cowkimon' and market it worldwide.



A GERMAN CORPORATION: You have two cows. You re-engineer them so they live for 100 years, eat once a month, and milk themselves.



AN ITALIAN CORPORATION: You have two cows, but you don't know where they are. You decide to have lunch.



A RUSSIAN CORPORATION: You have two cows. You count them and learn you have five cows. You count them again and learn you have 42 cows. You count them again and learn you have 2 cows. You stop counting cows and open another bottle of vodka.



A SWISS CORPORATION: You have 5000 cows. None of them belong to you. You charge the owners for storing them.



A CHINESE CORPORATION: You have two cows. You have 300 people milking them. You claim that you have full employment, and high bovine productivity, and arrest the newsman who reported the real situation.



AN INDIAN CORPORATION: You have two cows. You worship them.



A BRITISH CORPORATION: You have two cows. Both are mad.



IRAQI CORPORATION: Everyone thinks you have lots of cows. You tell them that you have none. No-one believes you, so they bomb the **** out of you and invade your country. You still have no cows, but at least now you are part of a Democracy....



WELSH CORPORATION: You have two cows. The one on the left looks very attractive.



CANADIAN. You have two cows, one french one english, both want to have the're own field. One cow gets ill, you wait for the authorities to pay for the vet to come out.



AUSTRALIAN CORPORATION: You have two cows. Business seems pretty good. You close the office and go for a few beers to celebrate.


The above is for you cow.
As far as the debt processing plant, I said.
http://www.itulip.com/forums/showthr...46106#poststop

[shiny!]

Re: FED wants Hyper inflation?

Subject: economic models explained with cows....

Awesome! Thanks for the laugh :-)