So, when do you think the printing press will start?

[phirang]

Re: So, when do you think the printing press will start?

I agree with that, and this is a fairly common knowledge. Now, most people assume that it means high inflation and low dollar.

But what if this spells big deflation a la 1929 or worse? Don't believe it?

Lets think about it. What would happen today if Fed raised rates today instead if easing 50 pts? The hell would brake loose with equities loosing 1000's, dollar and yen skyrocketing and gold and commodities cratering. Well, this is what it will happen if bonds burst, maybe in a slow motion though. Be careful what you wish for.

I hate to say it, but looks like itulip has it all backwards. The fact that EJ did not predict the rocket rise of $ since the summer wories me a lot. In retrospect, it was an easy call if one understood the mechanics of credit bubble bursting. Of course, I did not make that call but some people did (Marc Faber cames to mind).

We just saw it with then Yen... it's a trader's market: anything else and you're hosed.

[GRG55]

Re: So, when do you think the printing press will start?

FFR is 1%.

This was a key catalyst seen by most inflationistas.

We're there, and gold hasn't budged.

What's the next cataylst to make gold go higher?

When Wall Street starts a Peak Gold hype cycle??? ;)

[phirang]

Re: So, when do you think the printing press will start?

When Wall Street starts a Peak Gold hype cycle??? ;)

I'm still waiting for peak office supplies...

[GRG55]

Re: So, when do you think the printing press will start?

I agree with that, and this is a fairly common knowledge. Now, most people assume that it means high inflation and low dollar.

But what if this spells big deflation a la 1929 or worse? Don't believe it?

Lets think about it. What would happen today if Fed raised rates today instead if easing 50 pts? The hell would brake loose with equities loosing 1000's, dollar and yen skyrocketing and gold and commodities cratering. Well, this is what it will happen if bonds burst, maybe in a slow motion though. Be careful what you wish for.

I hate to say it, but looks like itulip has it all backwards. The fact that EJ did not predict the rocket rise of $ since the summer wories me a lot. In retrospect, it was an easy call if one understood the mechanics of credit bubble bursting. Of course, I did not make that call but some people did (Marc Faber cames to mind).

Your whole premise is based on an event that hasn't happened in the past. Can you recall the Federal Reserve Board of the United States of America actually leading market rates up or down? Only one example I can recall. Volcker. And that was more than a quarter century ago.

When the Fed starts raising interest rates you can be assured, just as virtually every instance in the past, inflation is already rampant, market rates have already started to price it in, and the Fed will be chasing with their administered interest rate...behind the curve all the way up. As always. Only exception was Volcker. Bernanke is no Volcker. Not by a long shot.

Finally, your expectation [shared by some others here] that EJ/iTulip can somehow magically predict in advance every move in every market [including stocks, bonds, derivatives, all major currencies, commodities, precious metals, deflation, inflation, money supply, sun spots, your mother-in-law's birthday...] complete with beginning and end timing, amplitude, and of course an infallible investment strategy to take advantage of same, is completely ridiculous.

By all means hold him to the calls he makes, but to expect anyone to somehow be accountable for not making a call is a bit much. Ranks right up there with people calling a press conference to announce they are not running for President...

[Starving Steve]

Re: So, when do you think the printing press will start?

Normally, a popping of the treasuries bubble would mean strong de-flation, but you have a nut running the Fed in the U.S and he is intent on flooding the world with U.S. dollars.

Some possible causes of a popping of the treasuries bubble:

a.) assassination in the U.S,
b.) a disputed election in the U.S,
c.) a gold-backed currency introduced such as the gold dinar,
d.) a recovery of the world economy but not in the US,
e.) a recovery of the oil market,
f.) negative fed funds rates introduced by Bernankee and the Fed,
g.) another shoe dropping like a state default on bonds,
h.) a dishoarding by China or Japan of some U.S.treasuries,
i.) grid-lock in the U.S. Congress resulting from the election,
j.) another terrorist attack in the U.S,
k.) a run on U.S. municipal bonds,
l.) a co-ordinated financial attack on the U.S. by Russia and Iran,
m.) the U.S. getting into another war,
n.) the failure of an Obama Administration to solve this mess,
o.) any worsening of the depression in the world,
p.) more problems in the U.S. being swept under the rug,
q.) any sovereign default in the world, especially a U.S. sovereign default,
r.) the appointment of Volcker to head the Fed, instead of Bernankee.

[friendly_jacek]

Re: So, when do you think the printing press will start?

Normally, a popping of the treasuries bubble would mean strong de-flation, but you have a nut running the Fed in the U.S and he is intent on flooding the world with U.S. dollars.

Steve, do you know how Fed budget compares with the size of bond markets?

BTW, I like you listing of sentinel events. This reminds me that Israel was supposed to attack Iran before elections. What happened to that plan?

[friendly_jacek]

Re: So, when do you think the printing press will start?

Your whole premise is based on an event that hasn't happened in the past. Can you recall the Federal Reserve Board of the United States of America actually leading market rates up or down? Only one example I can recall. Volcker. And that was more than a quarter century ago.

When the Fed starts raising interest rates you can be assured, just as virtually every instance in the past, inflation is already rampant, market rates have already started to price it in, and the Fed will be chasing with their administered interest rate...behind the curve all the way up. As always. Only exception was Volcker. Bernanke is no Volcker. Not by a long shot.

Finally, your expectation [shared by some others here] that EJ/iTulip can somehow magically predict in advance every move in every market [including stocks, bonds, derivatives, all major currencies, commodities, precious metals, deflation, inflation, money supply, sun spots, your mother-in-law's birthday...] complete with beginning and end timing, amplitude, and of course an infallible investment strategy to take advantage of same, is completely ridiculous.

By all means hold him to the calls he makes, but to expect anyone to somehow be accountable for not making a call is a bit much. Ranks right up there with people calling a press conference to announce they are not running for President...

C'mon, I was talking about bond rates!. The Fed example was to visualize the concept.

Speaking of EJ, from the tone of his writing I assumed he knew it all. He is an expert in disinflation, no? I didn't sense any hedging. Did I miss it?

[Starving Steve]

Re: So, when do you think the printing press will start?

Steve, do you know how Fed budget compares with the size of bond markets?

BTW, I like you listing of sentinel events. This reminds me that Israel was supposed to attack Iran before elections. What happened to that plan?

A war in the Middle East could prick the U.S. treasuries bubble especially if Saudi-Arabia, Kuiwat, or the U.A.E. gets upset at the U.S. The bigger the treasuries bubble gets, the more vulnerable the U.S. is to blackmail, and the more likely the outcome will be a popping of the treasuries bubble.

[Guest]

Re: So, when do you think the printing press will start?

FJ - these observations about EJ don't advance my understanding of where you see deflation emerging from the bursting of American bonds. I'd really like to know. OK, I know the bond rate is the premium America pays to borrow longer maturity. When it "bursts" borrowing costs rise due to an external lender perception of currency risk. I have yet to understand what you are describing in this event is deflation. Can you help me out here?

Speaking of EJ, from the tone of his writing I assumed he knew it all. He is an expert in disinflation, no? I didn't sense any hedging. Did I miss it?

[c1ue]

Re: So, when do you think the printing press will start?

But what if this spells big deflation a la 1929 or worse? Don't believe it?

FJ,

The US was on a gold standard in 1929.

And in fact there was eventually a massive inflation - a fiat one.

So perhaps I'm unclear on why your postulated example is valid.

Lets think about it. What would happen today if Fed raised rates today instead if easing 50 pts? The hell would brake loose with equities loosing 1000's, dollar and yen skyrocketing and gold and commodities cratering. Well, this is what it will happen if bonds burst, maybe in a slow motion though. Be careful what you wish for.

FJ,

You are confusing Treasury effective rates vs. Fed lending rate.

They are not directly correlated.

The Fed raising rates would reduce the already low chance of banks lending even further. There might be some capital inflow benefits, but I have repeatedly pointed out that "He who has the strongest currency, loses". The one sector in the US economy which has kept the debt ratios within sight has been exports - further continued strengthening of the dollar will change that.

With FIRE dead, auto/airlines dead, food prices down, what then will anyone make money on in the US? Besides selling picks and shovels to those cherry picking foreclosures?

As for bonds bursting - if they do it is because no one will want them anymore unless the effective interest rate. Thus a high Treasury interest rate is a consequence, not a result.

[hayekvindicated]

Re: So, when do you think the printing press will start?

I agree with that, and this is a fairly common knowledge. Now, most people assume that it means high inflation and low dollar.

But what if this spells big deflation a la 1929 or worse? Don't believe it?

Lets think about it. What would happen today if Fed raised rates today instead if easing 50 pts? The hell would brake loose with equities loosing 1000's, dollar and yen skyrocketing and gold and commodities cratering. Well, this is what it will happen if bonds burst, maybe in a slow motion though. Be careful what you wish for.

I hate to say it, but looks like itulip has it all backwards. The fact that EJ did not predict the rocket rise of $ since the summer wories me a lot. In retrospect, it was an easy call if one understood the mechanics of credit bubble bursting. Of course, I did not make that call but some people did (Marc Faber cames to mind).

If the Government and the people are up to their eyeballs in debt, you cannot jack up short term interest rates in that way or the economy would collapse. Look at debt levels for corporates, individuals and governments in the early years of Volcker era and now.

Secondly, long term interest rates would go through the roof but that would not be deflationary - it would simply reflect (accurately) the interest rate that the world expects to be paid if it lends money to a bankrupt nation. That is what has happened to Iceland. They cannot find lenders at ANY rate right now - but that has NOT resulted in deflation in Icelandic currency.

Lastly, there is too much confusion around inflation and deflation I think. Falling asset prices is NOT deflation. Deflation means a contracting money supply. In the 1930s, the money supply shrank quarter after quarter, year after year. This time there has been no shrinkage in the money supply. Of course property prices and stock prices have tumbled - in the same way that stock prices crashed after the dotcom debacle. That is NOT deflation in and of itself if money supply doesn't also begin to shrink simultaneously. The evidence is to the total opposite.

Check out the following link:

http://www.shadowstats.com/article/292

[hayekvindicated]

Re: So, when do you think the printing press will start?

Look at what is happening to the Dollar.

When I was looking to close my Pound short, the Dollar was trading at around $1.50 to Sterling. Not it is at $1.66!!! That's a 10 percent decline in a matter of days. So who is still rooting for a strong Dollar?

[Tulpen]

Re: So, when do you think the printing press will start?

My guess...................they already have!

We see it in Dec (Happy Xmas)....then in force in Jan/Feb.

Mike

Will start? :confused:

Technically it already has for a long time, around 2001 when the US started to borrow like there is no tomorrow.

Now there are only two options, default or print.

[Chris]

Re: So, when do you think the printing press will start?

I'd say your're right. I expect to see serious inflation in Jan. Hell, what am I saying... I've just come back from Tesco to do a two week shop. Wanted to stock up on washing liquid (for clothes). Wife tested it last week before we stocked up. I remember the price being 2.69 Euro (2 weeks ago). Went to buy 5 months worth (all they had in stock)... now costs 3.15 Euro each. WTF!

I'm guessing i'm seeing the old oil prices in the product (as it probably takes months for oil to turn into finished washing up liquid product).

Tesco may say when they have reduced prices for special offers but they sure as hell don't mention when they rack them up either.

It's a good job tight arse here notices these things.

In my local supermarket they are slashing prices! Must be deflation..

[D-Mack]

Re: So, when do you think the printing press will start?

A war in the Middle East could prick the U.S. treasuries bubble especially if Saudi-Arabia, Kuiwat, or the U.A.E. gets upset at the U.S. The bigger the treasuries bubble gets, the more vulnerable the U.S. is to blackmail, and the more likely the outcome will be a popping of the treasuries bubble.

As I posted somewhere else, Joe Biden is preparing some of his friends for a generated crisis

He then talked about the Afghanistan-Pakistan border.

"It's where al Qaeda lives. It's there. It's real. We focus so much on the bad policy on Iraq, we sometimes seem to think that somehow there isn't a real problem. Our CIA has pointed out that bin Laden is alive and well, Iraq, excuse me, in the mountains between Pakistan and Afghanistan

...

"And here's the point I want to make. Mark my words. Mark my words. It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We're about to elect a brilliant 47-year old senator president of the United States of America. Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy. And he's gonna have to make some really tough - I don't know what the decision's gonna be, but I promise you it will occur. As a student of history and having served with seven presidents, I guarantee you it's gonna happen. I can give you at least four or five scenarios from where it might originate. And he's gonna need help. And the kind of help he's gonna need is, he's gonna need you, not financially to help him, we're gonna need you to use your influence, your influence within the community, to stand with him. Because it's not gonna be apparent initially, it's not gonna be apparent that we're right. Because all these decisions, all these decisions, once they're made if they work, then they weren't viewed as a crisis. If they don't work, it's viewed as you didn't make the right decision, a little bit like how we hesitated so long dealing with Bosnia and dealing with Kosovo, and consequently 200,000 people lost their lives that maybe didn't have to lose lives. It's how we made a mistake in Iraq. We made a mistake in Somalia. So there's gonna be some tough decisions. They may emanate from the Middle East. They may emanate from the sub-continent. They may emanate from Russia's newly-emboldened position because they're floating in a sea of oil."

http://blogs.suntimes.com/sweet/2008...nd_raiser.html

http://blacklistednews.com/news-1974-0-20-20--.html



I believe they got away from Iran, because it would have helped countries like Russia with skyrocketing oil prices, now with oil around 60$ it's difficult for oil producers.

It's not like the Neocons didn't try

SFRC Testimony -- Zbigniew Brzezinski
February 1, 2007

...


If the United States continues to be bogged down in a protracted bloody involvement in Iraq, the final destination on this downhill track is likely to be a head-on conflict with Iran and with much of the world of Islam at large. A plausible scenario for a military collision with Iran involves Iraqi failure to meet the benchmarks; followed by accusations of Iranian responsibility for the failure; then by some provocation in Iraq or a terrorist act in the U.S. blamed on Iran; culminating in a “defensive” U.S. military action against Iran that plunges a lonely America into a spreading and deepening quagmire eventually ranging across Iraq, Iran, Afghanistan, and Pakistan.

...

http://www.senate.gov/~foreign/testi...mony070201.pdf