Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

[metalman]

here's your deflation!

[Mega]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

Now, Now.................Be a gent ;)
Mike

[Finster]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

here's your deflation!

[Image]

You are a little late to the deflation party, Mike. As I've said repeatedly, my deflation comments were not a forecast, but pertained to what has already happened. Moreover, that inflation was likely to return before long. Possibly gold is sniffing out just that eventuality...

[GRG55]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

You are a little late to the deflation party, Mike. As I've said repeatedly, my deflation comments were not a forecast, but pertained to what has already happened. Moreover, that inflation was likely to return before long. Possibly gold is sniffing out just that eventuality...

But interestingly enough, oil is not...

Is that "deflation" softly declaring "The rumors of my death have been greatly exaggerated"...

[FRED]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

Want to know how this will turn out?

Go to google.

Search: No deflation

[GRG55]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

Want to know how this will turn out?

Go to google.

Search: No deflation

For those with Japanese language skills this may be the most interesting thing that turns up on that search.

The rest of us will have to settle for something from an obscure website with a name carrying oblique reference to 17th Century Dutch history...;)

[c1ue]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

That Japanese paper is interesting - substitute iTulip/English economics terms and it is much more understandable:

The money multiplier{velocity of money} is in a continuous downward trend now since the bubble burst, and, in addition, the trend has accelerated after 2000. It is said that the monetary policy is difficult because the money multiplier{velocity of money} has declined. To think about the monetary policy for the future, we should think about the cause of the decline of the money multiplier{velocity of money}. I want to verify two typical hypotheses "Deflation Expectation Hypothesis" and "Financial System Hypothesis" for the decision of the money multiplier{velocity of money}.
I verified the Expected Deflation Hypothesis about a gradual money multiplier{velocity of money} downward trend in 90's. The cash ratio rise of the non-financial sector explains 90's decline of the money multiplier{velocity of money}. A significant influence of expected deflation on the money multiplier{velocity of money} was confirmed by observing the result recursive and structural VAR model. On the other hand, it was shown that the Financial System Hypothesis didn't have the interpretability{cannot explain} for the sharp fall of the money multiplier after 2000.
As mentioned above, the deflation expectation's having the key role as one of the causes of the decline of the money multiplier{velocity of money}. Therefore, the effect of the monetary policy was not lost due to the decrease in the money multiplier{velocity of money}. It is one circumstantial evidence with an improper monetary policy.

Or in other words, Japan's deflation is due to deflation expectations produced by bad monetary policies (i.e. ZIRP) in turn causing money velocity to fall to very low levels.

[Finster]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

You are a little late to the deflation party, Mike. As I've said repeatedly, my deflation comments were not a forecast, but pertained to what has already happened. Moreover, that inflation was likely to return before long. Possibly gold is sniffing out just that eventuality...

But interestingly enough, oil is not...

Hard to draw firm conclusions based on such short term divergences, GRG, but as you know gold is much more purely monetary, oil industrial. Rightly or otherwise, the markets at least see them that way and associate oil more with economic vigor and gold more with financial stress.

Is that "deflation" softly declaring "The rumors of my death have been greatly exaggerated"...

Okay. So how much longer do you think the deflation will last? ;)

[Supercilious]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

Okay. So how much longer do you think the deflation will last? ;)

The deflation will last as long as the rate of decay of derivatives and secured debt liquidity will be higher than the rate of pouring treasuries in the system.

Oil is going down now because of deleveraging in the Commodities Index Derivatives regardless of where the dollar is going or what a hurricane is hitting.

Nobody gets out of gold long positions as long as the market songs like a bag of popcorn in the microwave A moderate loss is much better than a total loss

[Guest]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

I think that Finster's "deflation-like conditions" can potentially last for two full years.

[sunskyfan]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

Inflation is born out of over-driven system and deflation is born out an under-driven system. The move on gold is due to emotional uncertainty and frustration in responce to headlines. People are sitting on their hands and understandbily so because they have lost confidence in the current regime and are exhausted. We are in an underdriven system. The Fed and the Treasury are beating a dead horse and thinking the flailing of legs are indications of new life. I am voting deflation untill all the failures are completely realized (including Bush et. al.) and then a "new confidence" is born and then watch out! Cash is King until January 20th.

[phirang]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

Inflation is born out of over-driven system and deflation is born out an under-driven system. The move on gold is due to emotional uncertainty and frustration in responce to headlines. People are sitting on their hands and understandbily so because they have lost confidence in the current regime and are exhausted. We are in an underdriven system. The Fed and the Treasury are beating a dead horse and thinking the flailing of legs are indications of new life. I am voting deflation untill all the failures are completely realized (including Bush et. al.) and then a "new confidence" is born and then watch out! Cash is King until January 20th.

dunno... this rate cut changes things big-time!

[GRG55]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

Hard to draw firm conclusions based on such short term divergences, GRG...

Agreed. But then [some] critics of the FDI seem to be taking the same line...;)

...but as you know gold is much more purely monetary, oil industrial. Rightly or otherwise, the markets at least see them that way and associate oil more with economic vigor and gold more with financial stress...

This is the expected outcome Herr Finster. But it seems that the market is currently treating both as some sort of commodity. As you state, gold, more than oil, is normally the refuge during times of fear. I can imagine few financial market scenarios that could engender more fear than the events this weekend. That gold has hardly moved up, while oil declines yet again, is [in my mind] hardly worthy of any material distinction between the two. Under these circumstances the surprise to me is that gold remains at such remarkably subdued prices.

Okay. So how much longer do you think the deflation will last? ;)

No idea if we are indeed in deflation and, if so, how long it may last. Whatever this is, it'll be over when its over, and not one moment sooner...

[Supercilious]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

dunno... this rate cut changes things big-time!

I'm not sure it changes anything significantly on a short-medium term. Of course if the Fed transforms the ailing banks in SIV's in disguise .... things may be delayed for a while.

They were talking last year about the super SIV . Maybe they will do it now in a more inconspicuous way.

[Master Shake]

Re: Bear, Fannie/Freddie, Lehman... DEFLATION? Bwah ha ha ha!

Want to know how this will turn out?

Go to google.

Search: No deflation

Well, energy prices are certainly experiencing deflation. And Treasuries aren't priced for inflationary expectations.