Newsflash: Deflation may be next threat!

[metalman]

Re: Newsflash: Deflation may be next threat!

This thread is so behind the curve! Deflation WAS the recent threat. The question is what next. The below chart could be instructive:

you mean...



http://www.itulip.com/kapoomtheory.htm

[photoncounter]

Re: Newsflash: Deflation may be next threat!

The fact that banks won't lend ---- for whatever reason ---- is deflationary in the extreme. Credit has been shut-off, and the alcoholic now has to sober-up.

I agree with you that banks now refuse to lend more because of their fear of loss of principal on a loan than on any fear about the interest rate of lending. But rising risk and fear is part of the deflation process.

Ok, may be the banks are scared of lending, but what about the Fed directly lending money to businesses and may be others in the future ?

http://www.latimes.com/business/nati...,2487306.story

Frantically trying to stop the bleeding on Wall Street, the Federal Reserve took a first-time step Tuesday to get cash directly to businesses and hinted that interest rates could come down soon.

The central bank invoked emergency powers to lend money to companies outside the financial sector and buy up mounds of commercial paper, the short-term debt that firms use to pay for everyday expenses like salaries and supplies.

The Fed, which has only loaned money to banks before, made the move as the gravest financial crisis in decades wore on and concern spread around the world.

Fed officials said they would buy as much of the debt as necessary to get the market functioning again but refused to say how much that might be. They noted that around $1.3 trillion worth of commercial paper would qualify.

The Treasury will provide money to the Federal Reserve Bank of New York to support the new program, the Fed said. The money would be separate from the $700 billion financial bailout package.

The Fed said it planned to stop buying the short-term debt on April 30 but may extend the program.

This, probably is the first instance of Ben's helicopter in action, IMO.

[photoncounter]

Re: Newsflash: Deflation may be next threat!

ej has proved a deflation CYCLE is impossible for a net debtor.

Metalman can you please provide a link for that theorem? I don't like to take anything as an article of faith. Maybe you wanted to say that EJ believes that a deflation cycle is impossible for a net debtor ... that is something different.;)

I think this is a pretty important point that EJ makes in quite a few articles. I have also been trying to understand this through. I don't quite believe that history is the only reason for this argument. Can someone elaborate on

Why a net debtor nation with debt denominated in it's own currency cannot experience deflation ?

or is it

Why any net debtor nation cannot experience deflation ?

I haven't come across any article that explains this through, but I am also new to itulip. If it has been explained, can someone please post a link.

Thanks in advance.

[GRG55]

Re: Newsflash: Deflation may be next threat!

I believe you are correct. The deflation danger has already started in mid July. My guess is that a short inflationary shock (controlled in US by the Fed and allowed to wreak havoc in ROW)) is to follow soon. Probably it will start while most of the people would still wear brown pants of deflationary spiral and talk about the catastrophic spectrum of a global deflation crisis.

Why "short"?

[metalman]

Re: Newsflash: Deflation may be next threat!

I believe you are correct. The deflation danger has already started in mid July. My guess is that a short inflationary shock (controlled in US by the Fed and allowed to wreak havoc in ROW)) is to follow soon. Probably it will start while most of the people would still wear brown pants of deflationary spiral and talk about the catastrophic spectrum of a global deflation crisis.

your theory is like ka-poom except executed on purpose by a clever and omniscient gov't vs a institutionally brain dead and ideologically (and actually) bankrupt wile e coyote gov't. does that about sum it up?

[Supercilious]

Re: Newsflash: Deflation may be next threat!

Why "short"?

Short because, I believe it will be followed by another deflationary shock etc that will allow the Fed to drill more US paper global financial system (that doesn't mean in the next cycle of shock therapy, the most desired form of dollars would be the treasuries ;))

[c1ue]

Re: Newsflash: Deflation may be next threat!

The problem I have with this idea of the Super Financial Cabal controlling everything is that I can't understand why any organization with so much power would have allowed the present situation to deteriorate to its present extent.

That's like saying the 1971 exit from Bretton Woods was merely a step in the master 100 year old plan to take over the world.

Why I say that is stupid? Because at the end of WW II, the US had 75% or more of the world's gold. And since gold was defined as money back then, that meant the US had 75% of the world's money.

Sorry, but we've gone downhill a long ways from there.

[Supercilious]

Re: Newsflash: Deflation may be next threat!

your theory is like ka-poom except executed on purpose by a clever and omniscient gov't vs a institutionally brain dead and ideologically (and actually) bankrupt wile e coyote gov't. does that about sum it up?

Basically yes. Also instead of POOM there is a succession of inflation deflation shocks engineered in order to dollarize the rest of the world. Once all the other national currencies become leveraged dollar ETF's ... well... global financial seignorage.

IMHO Ka-Poom is valid for nations in serfdom, from Albania to Iceland and Russia to Zimbabwe.

For the land were the Masters dwell (and oversee the work of house-slaves like you and me) I would think that, by contrast comparison,. my theory should be properly named Ka->Ra-Ta-Ra-Ta-Ta

Let's consider that things changed on this Earth, since Andrew Jackson his famous letters, and those words must be now put in a globalist context:
-"American people" should be replaced with "people of the World"
-"the continent" should be replaced with "the world"

Let's read again:

"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 them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered... I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

- Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)

Now it makes sense, isn't it ? ;)

[ASH]

Re: Newsflash: Deflation may be next threat!

Basically yes. Also instead of POOM there is a succession of inflation deflation shocks engineered in order to dollarize the rest of the world. Once all the other national currencies become leveraged dollar ETF's ... well... global financial seignorage.

What I like about this is that there are testable differences between KA-POOM and your theory. In one future, we have an end to the dollar's status as the paramount reserve currency. In the other future, the role of the dollar becomes even larger.

[due_indigence]

Re: Newsflash: Deflation may be next threat!

No one's in control. That's the scariest thing of all. Of course monied interests will advantage themselves best in a chaotic enviroment. But not by great prescience, rather because money tends to adhere to more money --regardless of the macro climate.

http://www.webdelsol.com/The_Potomac...mac-nball2.htm

[metalman]

Re: Newsflash: Deflation may be next threat!

Basically yes. Also instead of POOM there is a succession of inflation deflation shocks engineered in order to dollarize the rest of the world. Once all the other national currencies become leveraged dollar ETF's ... well... global financial seignorage.

IMHO Ka-Poom is valid for nations in serfdom, from Albania to Iceland and Russia to Zimbabwe.

For the land were the Masters dwell (and oversee the work of house-slaves like you and me) I would think that, by contrast comparison,. my theory should be properly named Ka->Ra-Ta-Ra-Ta-Ta

Let's consider that things changed on this Earth, since Andrew Jackson his famous letters, and those words must be now put in a globalist context:
-"American people" should be replaced with "people of the World"
-"the continent" should be replaced with "the world"

Let's read again:

Now it makes sense, isn't it ? ;)

you are assuming that jackson meant that bankers and the pols they elect are smart enough to run an inflation/deflation racket for fun and profit.

do you see in the pic below a series of successes? you may be right. the euros and asians have been steady losers... europe ruined by war, china sent back to the stone age by communism...



i buy the notion of the euro as an extension of the dollar. but what of the chinese? they strike me as self-interested, unlike usa's euro lap dogs. will they knuckle under or are they, er... insufficiently defended?
Airbases

Naval Bases

Army Facilities

[Guest]

Re: Newsflash: Deflation may be next threat!

An eminently commonsense and pragmatic question which has (quite disingenously) remained unanswered. Not glamorous enough as a thesis, I suppose. Too pedestrian. :rolleyes:

The problem I have with this idea of the Super Financial Cabal controlling everything is that I can't understand why any organization with so much power would have allowed the present situation to deteriorate to its present extent. That's like saying the 1971 exit from Bretton Woods was merely a step in the master 100 year old plan to take over the world.

[ASH]

Re: Newsflash: Deflation may be next threat!

The problem I have with this idea of the Super Financial Cabal controlling everything is that I can't understand why any organization with so much power would have allowed the present situation to deteriorate to its present extent.

Quite.

Prior to their recent difficulties, I would have concluded that the "Masters of the Universe" were prime candidates for being the puppet masters in any such conspiracy. They were doing quite well, thank you, during the run-up in the FIRE economy. The system works for those on top, and therefore those on top typically try to preserve the system. If the cabal wasn't on top earlier, one wonders why, given their supposed powers. If the cabal was on top, then why break the system? Throwing the global financial system into chaos -- and hazarding the catbird seat on the odds that a slightly more advantageous position can be engineered -- doesn't sound like the policy of a cabal destined to last a decade, much less centuries.

[Guest]

Re: Newsflash: Deflation may be next threat!

$#* - Why not offer some simple, direct reply to these arguments about plausibility, and resist the temptation to merely dance around the question. After all, in our present highly dangerous global situation, it's important that we can see the bottom line reality of what our Fed and Wall Street have accomplished. In the context of high present danger, it is doubly dangerous to harbor illusory ideas about what they are capable of going forward, as it would tilt our own analyses of how best to protect ourselves. Getting down to the bottom line becomes somewhat important, no? In the interests of securing that understanding, perhaps the rational objections really should be answered plausibly, or your thesis should be shelved?

Short because, I believe it will be followed by another deflationary shock etc that will allow the Fed to drill more US paper global financial system (that doesn't mean in the next cycle of shock therapy, the most desired form of dollars would be the treasuries ;))

[ASH]

Re: Newsflash: Deflation may be next threat!

$#* - Why not offer some simple, direct reply to these arguments about plausibility, and resist the temptation to merely dance around the question.

Well, you know, plausibility is in the eye of the beholder, to some extent. If we rely upon plausibility arguments, we who have an allergy to conspiracy theories are unlikely to agree with those who are more open to them.

However, I think that $#* has made a prediction which can be tested. $#* should correct me if I am mistaken, but my understanding is that he predicts the dollar will become more important -- not less so -- as a result of this crisis. If events take that course, it will not be proof that $#*'s theory is correct (because there could be alternate explanations), but it will tend to support his theory. If, on the other hand, the dollar becomes less important over, say, the next decade, then that would seem to falsify $#*'s theory.

I feel that any theory that is both predictive and falsifiable deserves its opportunity to be tested. Rather than debating plausibility, we should maybe agree upon the time frame in which the dollar's role in the world is to be examined, and then sit back and watch events unfold.