Deflation: It's time to call a spade a spade.

[ajerimez2]

Re: Deflation: It's time to call a spade a spade.

what part of that don't you understand?

Between housing and the stock market, the US has lost something on the order of 10 trillion dollars, while the Fed has injected, what a few lousy trillion of liquidity? What part about DEFLATION being a CONTRACTION OF MONEY SUPPLY don't YOU understand?

What part about gold dropping to $685 from iTulip's $780 bottom call, and potentially heading for a 50% haircut as it did in 1975 don't YOU understand?

What part about the dollar's dramatic surge while iTulip called for sideways trading preceding an imminent plunge don't YOU understand?

[CanuckinTX]

Re: Deflation: It's time to call a spade a spade.

Well, an even better reason for Roubini and Jenzen to have a tete a tete!

I think you should give this up, that horse is dead.

Honestly, what would it solve? Do you think EJ would break down crying and admit he's a fraud? Is that what you hope for? :rolleyes:

[metalman]

Re: Deflation: It's time to call a spade a spade.

Between housing and the stock market, the US has lost something on the order of 10 trillion dollars, while the Fed has injected, what a few lousy trillion of liquidity? What part about DEFLATION being a CONTRACTION OF MONEY SUPPLY don't YOU understand?

What part about gold dropping to $685 from iTulip's $780 bottom call, and potentially heading for a 50% haircut as it did in 1975 don't YOU understand?

What part about the dollar's dramatic surge while iTulip called for sideways trading preceding an imminent plunge don't YOU understand?

yeh, not sideways. that was wishful thinking.

tolerable if all goes according to logic in the long run, tho.

counting trillions will get you nowhere. it's all about flows and add this.

that's the money NOT coming in.

here's the money going out...

get it?

ignore the noise. listen to the signal.

a better line of discussion... where the hell is all of that money going to... and NOT coming from?

[ricket]

Re: Deflation: It's time to call a spade a spade.

I hope this doesn't ramble on too long...

My opinion is that most people are not looking long enough at this trend and are only focusing on a rather short time frame. I feel like in order for "deflation" to really kick in then the prices have to revert back to how they were a LONG time ago, like in the 50s or 60s. After all you could buy a house for, what, like $15,000? In terms of true inflation, prices do indeed have a long way to go to actually be considered "deflation". This asset/equity bubble was so huge in my opinion that, based on fractional reserve banking, it could theoretically go to a 90% loss (since $9 is "defaulted on" for every $1 in deposits lent to the banks). So the markets could really only be just scratching the surface in terms of deflationary potential. If you loosely extrapolate this, then the DOW could theoretically go to 1,400 (as $9 is defaulted on for every $1 in deposits)

I truly believe that the Federal Reserve wont let their shareholders (ie the banks) get thrown under a bus and will surely resolve to "print" more money. The difference in today's technology world is that trillions of dollars can be created in an instant and most other third-world countries are limited by only the *speed* of the printing presses. When we have the capability to enter an electronic transaction that "prints" trillions of dollars in the blink of an eye and they are given the capabilities and the needs/desires to do so...what makes you think the Feds are not going to jump at the opportunity?

Another thing about the "reserve currency" status of the US Dollar. Is not a currency used in an economy technically *always* a reserve currency? After all, in any economy, there is usually one major "player" that is utilized in the exchange of goods and services (ie Gold, and to a lesser extent silver)? This just so happens to be, in this space and time, the US dollar. That is currently the currency of choice for most of the global economy at this point in time. In the Argentinian scenario, it was the peso, in Iceland it was the krona. Either way, the economies at that particular localized level all used a "currency" that was considered a major player on the "local" level used to exchange basic items such as food, housing, etc.

In the case of the United States, the "local" level just happens to be the entire planet. We have literally been feeding off the "fake demand" of the US Dollar and it has caused us to lose sight of how truly poor we really are. The US, in my opinion, really has no true economic input into the rest of the world. We contribute nothing to the world's economies, except for our own arrogance about how "smart" and "creative" we are at stealing other people's money. We are the welfare queen living off a check provided at the expense of someone else. It's going to be a rude awakening when people realize their $1 million dollar 401(k)s are actually sortof like welfare checks loaned to us by the rest of the world.

Regardless of your views, a planetary economy is still no different in fundamentals from any other local economy. There will always be scarce resources that are pursued by private and public interests for personal profit and gain. When you are using phony money (fiat money) to try and convince people to give up those goods and services in exchange for such monies...well that can only go on for so long. You can fool some people all the time, all people some of the time, but not all people all the time.

Whether you like it or not, our economy is f****d. I see a period of extreme dis-inflation/deflation and then an enormous amount of hyperinflation afterwards. After all, it will be even worse than just either one. Why not steal everyone's money by way of bank defaults and closing banks, then make the less-prudent ones be forced to file bankruptcy, and then hyperinflate away the savings of all those people who actually saved money and were actually going to be ok. Sounds like a sure possibility to me.

[phirang]

Re: Deflation: It's time to call a spade a spade.

I think you should give this up, that horse is dead.

Honestly, what would it solve? Do you think EJ would break down crying and admit he's a fraud? Is that what you hope for? :rolleyes:

It's his call: if he confronts Roubini and is right, he'll be truly vindicated. Otherwise, he's no better than the noise out there.

[phirang]

Re: Deflation: It's time to call a spade a spade.

I hope this doesn't ramble on too long...

My opinion is that most people are not looking long enough at this trend and are only focusing on a rather short time frame. I feel like in order for "deflation" to really kick in then the prices have to revert back to how they were a LONG time ago, like in the 50s or 60s. After all you could buy a house for, what, like $15,000? In terms of true inflation, prices do indeed have a long way to go to actually be considered "deflation". This asset/equity bubble was so huge in my opinion that, based on fractional reserve banking, it could theoretically go to a 90% loss (since $9 is "defaulted on" for every $1 in deposits lent to the banks). So the markets could really only be just scratching the surface in terms of deflationary potential. If you loosely extrapolate this, then the DOW could theoretically go to 1,400 (as $9 is defaulted on for every $1 in deposits)

I truly believe that the Federal Reserve wont let their shareholders (ie the banks) get thrown under a bus and will surely resolve to "print" more money. The difference in today's technology world is that trillions of dollars can be created in an instant and most other third-world countries are limited by only the *speed* of the printing presses. When we have the capability to enter an electronic transaction that "prints" trillions of dollars in the blink of an eye and they are given the capabilities and the needs/desires to do so...what makes you think the Feds are not going to jump at the opportunity?

Another thing about the "reserve currency" status of the US Dollar. Is not a currency used in an economy technically *always* a reserve currency? After all, in any economy, there is usually one major "player" that is utilized in the exchange of goods and services (ie Gold, and to a lesser extent silver)? This just so happens to be, in this space and time, the US dollar. That is currently the currency of choice for most of the global economy at this point in time. In the Argentinian scenario, it was the peso, in Iceland it was the krona. Either way, the economies at that particular localized level all used a "currency" that was considered a major player on the "local" level used to exchange basic items such as food, housing, etc.

In the case of the United States, the "local" level just happens to be the entire planet. We have literally been feeding off the "fake demand" of the US Dollar and it has caused us to lose sight of how truly poor we really are. The US, in my opinion, really has no true economic input into the rest of the world. We contribute nothing to the world's economies, except for our own arrogance about how "smart" and "creative" we are at stealing other people's money. We are the welfare queen living off a check provided at the expense of someone else. It's going to be a rude awakening when people realize their $1 million dollar 401(k)s are actually sortof like welfare checks loaned to us by the rest of the world.

Regardless of your views, a planetary economy is still no different in fundamentals from any other local economy. There will always be scarce resources that are pursued by private and public interests for personal profit and gain. When you are using phony money (fiat money) to try and convince people to give up those goods and services in exchange for such monies...well that can only go on for so long. You can fool some people all the time, all people some of the time, but not all people all the time.

Whether you like it or not, our economy is f****d. I see a period of extreme dis-inflation/deflation and then an enormous amount of hyperinflation afterwards. After all, it will be even worse than just either one. Why not steal everyone's money by way of bank defaults and closing banks, then make the less-prudent ones be forced to file bankruptcy, and then hyperinflate away the savings of all those people who actually saved money and were actually going to be ok. Sounds like a sure possibility to me.

This will sound mean, but you really have no idea wtf you're talking about.

[drumminj]

Re: Deflation: It's time to call a spade a spade.

Between housing and the stock market, the US has lost something on the order of 10 trillion dollars, while the Fed has injected, what a few lousy trillion of liquidity? What part about DEFLATION being a CONTRACTION OF MONEY SUPPLY don't YOU understand?

I believe this has been discussed here before, but it's possible that it was elsewhere. However, my understanding is that defaulting on debt != destruction of money in a fractional reserve system. Money is created by the banks via lending w/ a reserve ratio < 1.0. This money is only destroyed if the debt is paid back. If the debt is defaulted on, the money is still in existence in the system. I don't understand the argument that this is deflationary?

Also, I'm not sure one can exactly say that asset values == money. Just because asset values rise doesn't mean that money was created. Likewise, declining values do not mean that money has been destroyed.

What part about gold dropping to $685 from iTulip's $780 bottom call, and potentially heading for a 50% haircut as it did in 1975 don't YOU understand?

From my recollection (I'm too busy to search for it right now), EJ never claimed $780 was an absolute bottom, or intermediate bottom, or any such thing. I think you might be reading into that one too much.

What part about the dollar's dramatic surge while iTulip called for sideways trading preceding an imminent plunge don't YOU understand?

This, I do think, is a valid criticism. However, I think it's important that we acknowledge that the rules of the game keep changing. Theoretically, everything that's playing out should have happened some time ago. Obviously the gov't (and FED) have stepped in and bailed out banks, outlawed short-selling, nationalized FNM and FRE, etc. Certainly this can affect possible outcomes as well as the timing of such outcomes.

J

[phirang]

Re: Deflation: It's time to call a spade a spade.

I believe this has been discussed here before, but it's possible that it was elsewhere. However, my understanding is that defaulting on debt != destruction of money in a fractional reserve system. Money is created by the banks via lending w/ a reserve ratio < 1.0. This money is only destroyed if the debt is paid back. If the debt is defaulted on, the money is still in existence in the system. I don't understand the argument that this is deflationary?

Also, I'm not sure one can exactly say that asset values == money. Just because asset values rise doesn't mean that money was created. Likewise, declining values do not mean that money has been destroyed.



From my recollection (I'm too busy to search for it right now), EJ never claimed $780 was an absolute bottom, or intermediate bottom, or any such thing. I think you might be reading into that one too much.



This, I do think, is a valid criticism. However, I think it's important that we acknowledge that the rules of the game keep changing. Theoretically, everything that's playing out should have happened some time ago. Obviously the gov't (and FED) have stepped in and bailed out banks, outlawed short-selling, nationalized FNM and FRE, etc. Certainly this can affect possible outcomes as well as the timing of such outcomes.

J

Let's do this: EJ ignores Roubini and writes whatever he wants.

The sheeple following EJ then may make or lose money, but it's basically a function of chance.

Why are you people insisting that EJ doesn't stress-test his theories?

[CanuckinTX]

Re: Deflation: It's time to call a spade a spade.

It's his call: if he confronts Roubini and is right, he'll be truly vindicated. Otherwise, he's no better than the noise out there.

How can anyone be right in a debate when the events have yet to be played out?

[CanuckinTX]

Re: Deflation: It's time to call a spade a spade.

Let's do this: EJ ignores Roubini and writes whatever he wants.

The sheeple following EJ then may make or lose money, but it's basically a function of chance.

Why are you people insisting that EJ doesn't stress-test his theories?

Every time you question EJ we get a post from Fred who lays out data to support their thesis. What do you provide other than 'Roubini says...'?

[metalman]

Re: Deflation: It's time to call a spade a spade.

This will sound mean, but you really have no idea wtf you're talking about.

not only mean, but arrogant and ignorant... an awful combination.

ricket is offering a very reasonable opinion here. you may not agree with his arguments or conclusion but that does not justify your insult.

i hope fred steps in to restore some civility to this forum. this is getting ugly.

[drumminj]

Re: Deflation: It's time to call a spade a spade.

Why are you people insisting that EJ doesn't stress-test his theories?

Not sure if this is directed at me or not. I've never said that I'd not like to see EJ address what Roubini has to say. I've just been speaking up about what I think are unfair criticisms of EJ and his theory, as well as people holding their trading decisions against him.

Personally, I think the fundamental problem is as you put it - people "following" EJ, Schiff, Roubini, etc. These guys are great as they are willing to put forth a theory for all to discuss/criticize/adopt/ignore. However, we must not lose sight of the fact they're simply sharing their interpretation of events and what they think it all means going forward. "Following" any of these people is a mistake. Listen to what they have to say, and see if their interpretation makes sense to you. If you buy the theory, then act on it. But anyone who simply buys gold because some guy "EJ" says so, or dumps all US currency holdings because Jim Rogers says to get out of the $US, without considering the reasoning behind these conclusions and agreeing with them, is approaching things in the wrong way, IMO.

We're all here to discuss what has happened, what is happening, and what is likely to happen in the future. EJ puts forth his theories for us to discuss - THAT Is what we pay for. If EJ doesn't happen to be 100% right, that doesn't mean it's not worth paying for. And just because someone else puts forth a theory that is in disagreement with EJ's doesn't mean he's obligated to address it for us here.

That being said, it doesn't mean that it wouldn't be appreciated should he decide it's worth the time and effort to do so...

[phirang]

Re: Deflation: It's time to call a spade a spade.

not only mean, but arrogant and ignorant... an awful combination.

ricket is offering a very reasonable opinion here. you may not agree with his arguments or conclusion but that does not justify your insult.

i hope fred steps in to restore some civility to this forum. this is getting ugly.

Ok, I'll compliment him and then gently guide him to the guillotine that awaits. He's falling into the same group-think that lost many here 30%.

Then again, we're all hosed because the Fed will "print" money, right?! :rolleyes:

[metalman]

Re: Deflation: It's time to call a spade a spade.

Ok, I'll compliment him and then gently guide him to the guillotine that awaits. He's falling into the same group-think that lost many here 30%.

Then again, we're all hosed because the Fed will "print" money, right?! :rolleyes:

sorry you bought energy stocks. sorry you held stocks at all.

if you are off 30% you obviously did NOT follow the 'groupthink'

looks like you followed your own phirangthink.

[phirang]

Re: Deflation: It's time to call a spade a spade.

sorry you bought energy stocks. sorry you held stocks at all.

if you are off 30% you obviously did NOT follow the 'groupthink'

looks like you followed your own phirangthink.

Sorry you won't be owning certain stocks post-election. Some firms are going to REALLY surprise on the upside.

Oh, I forgot, though: now everyone is a credit derivatives expert, and it's clearly TEOTWAWKI. Too bad they never bothered to learn about "netting"...