Summers Warns Deflation Is ‘Real Risk’, promises capital infusions for Wall $treet

[Raz]

Re: Summers Warns Deflation Is ‘Real Risk’, promises capital infusions for Wall $treet

"What goes up, must come down,
Spinning Wheels, got to go round..."

Blood, Sweat & Tears - 1968


FIRST of all, Mr. Summers and the U.S. Government are NOT infusing capital into the banking system. That would take assets with real value. What they are infusing is fiat paper/electronic "money". This whole episode/enterprise is complete bulls*#!

Deflation is painful and most unpleasant. So are hangovers. What is far worse is the deliberate inflation by this present corrupt and thieving government. Inflation/currency manipulation is designed to allow political cowards to spend money buying votes without the need to face an angry electorate who have just had their taxes increased. Pure and simple.

I can protect myself to a large degree, but the employees of American businesses who receive a paycheck are the ones being robbed, raped and left for dead. The ones who prosper are the US Government, followed by bankers, wealthy owners of real estate, et cetera, et cetera, et cetera.

The big irony [to me at least], is that the very people Harry Reid and Nancy Pelosi claim to represent ("the average Joe and Jane") are the very ones who are in mass receiving the Golden Fid right in their posterior.

"Give us hard times, give us hard choices, give us anything but inflation; when the Mark is strong men plant oak trees, but when the Mark is weak they only plant cabbages". Ludwig Erhard, 1947

[Starving Steve]

Re: Summers Warns Deflation Is ‘Real Risk’, promises capital infusions for Wall $treet

I think Japan is the model to follow. Enshrine a mild deflation. Follow the policies of the Bank of Japan.

Also, build atomic power plants, build dams, drill for oil everywhere, and tighten-up on fuel efficiency standards for motor vehicles. Then, raise taxes, raise interest rates, and let's all tough this thing out.

That is the solution; that austerity plus free trade and open borders.

[Munger]

Re: Summers Warns Deflation Is ‘Real Risk’, promises capital infusions for Wall $treet

Why do we have to fear a general deflation, especially when debtors are paying very low interest rates and savers are getting zero?

Wouldn't a general deflation be LOVELY? If not, why not? Spell it out.

Of course, an orderly and slow deflation is exactly what the doctor ordered, and everyone outside of the economics classes has always known this. Maybe even the world's central bankers have known this too, and if they haven't known this too, why not? (How dumb could they be?)

The bottomline is that the pending stimulus bill in the U.S. Congress should be killed. Endless bail-outs should be killed. Let the deflation continue, everywhere in the world.

So uninformed it does not merit a response.

[Munger]

Re: Summers Warns Deflation Is ‘Real Risk’, promises capital infusions for Wall $treet

Deflation is FANTASTIC.

...

[I am] either completely stupid, brainwashed, or just propagandizing. Probably all three.

Fixed your post.

[santafe2]

Re: Summers Warns Deflation Is ‘Real Risk’, promises capital infusions for Wall $treet

the value of the currency is a factor of the credit... no?

Yes agreed, I need to learn to use smilies when I'm mostly having fun.

I don't understand the mechanism by which the Fed will buy the US Treasury's long term debt and any other entity will feel that our debt is safe or somehow a viable investment.

[GRG55]

Re: Summers Warns Deflation Is ‘Real Risk’, promises capital infusions for Wall $treet

Yes agreed, I need to learn to use smilies when I'm mostly having fun.

I don't understand the mechanism by which the Fed will buy the US Treasury's long term debt and any other entity will feel that our debt is safe or somehow a viable investment.

I doubt there is a single foreign investor in US Treasuries that thinks their investment is either "safe" or "viable" in the sense that you or I would make that determination as a private investor. I suspect every single foreign government/central bank understands that Treasuries and the comparative value of the US $ [the index] are both about as good as it gets, and there's nowhere to go from here but down. Either they suffer capital losses as US interest rates rise, or they lose money because the bonar's purchasing power declines [compared to the home currency].

But if they wish to sell they must first find a buyer:

Hello, Ben. How's the family? Ya, I heard winter in Washington is a bitch. No, the weather here is just as bad. Thanks for asking. Sorry you're stuck there this year breaking in the new boss. Too bad really, 'cause Hank was just getting on a roll. I agree, I wouldn't want to work for someone who used to work for me either. Of course there's no danger of that here because we just send them for a little laojiao [background laughter].

Listen, I was just reading the WSJ Asia and it says you may be in the market for a few Tbills. Surprised the hell out of me. I thought you were giving those things away almost free of charge to the banks. Now the WSJ sez you want to buy them? I asked myself WTF? Look, if you're serious we've got more than a trillion of the damn things. Think it over. I'm sure there's a deal in here somewhere. Gawd knows we need to export something to you people. Look, make us a fair offer and I promise we'll deliver them to you by the container load. Make some jobs for those dock workers in Long Beach. Okay, look forward to hearing from you next week. My regards to Anna and the kids. Ciao.

[aps1087]

Re: Summers Warns Deflation Is ‘Real Risk’, promises capital infusions for Wall $treet

What about the person that owns the store? What about the people that work at the store? Do their paychecks dwindle? When does it stop?

It doesn't like a good alternative either.

Yes, their paychecks do "dwindle"...in NOMINAL terms. What happens when your paycheck decreases 1% YOY but the cost of living decreases 2% YOY? Your purchasing power increases. This is what is important. Not the number of 1s and 0s in your account.

It is natural for the cost of living to decrease as productivity increases and new efficiencies are created.