Mish: (Price) Deflation Has Gone Global

[gasull]

Re: Mish: (Price) Deflation Has Gone Global

no, no, no... No Deflation! Disinflation then Lots of Inflation - Janszen ...

20 posts - 8 authors - Last post: Sep 14, 2006
Disinflation then Lots of Inflation The "Ka" phase of "Ka-Poom" has officially begun by Eric Janszen There will be no deflation. ...

There is already deflation and not just disinflation. Maybe not a deflation spiral (yet?), but deflation. No doubt.

ever heard of google?

Been there / done that. My understanding is that EJ thinks that inflation will happen because of:

1. Dollar repatriation.
2. Banks lending.

I would like to understand more about the first one, and I don't see the second one happening (I don't think people will borrow as they did).

Metalman please, elaborate. Thank you.

[Spartacus]

Re: Mish: (Price) Deflation Has Gone Global

There have been substantial mine closings.

There was a short period where stockpiles got built up - as industrial demand dried up and mines kept producing for a little while, but last time I read about this, the supplies were dropping like a rock as mine closures picked up.

Lots of juniors have been shaken out, exploration and "proving up" projects shelved or abandoned.

GRG55's thread was mostly about petroleum, but there were a couple of other things in there.


http://itulip.com/forums/showthread....ht=destruction

I don't see how the supply of commodities and raw materials could crash. The only supply that I see going down in the future is oil.

[metalman]

Re: Mish: (Price) Deflation Has Gone Global

There is already deflation and not just disinflation. Maybe not a deflation spiral (yet?), but deflation. No doubt.

Been there / done that. My understanding is that EJ thinks that inflation will happen because of:

1. Dollar repatriation.
2. Banks lending.

I would like to understand more about the first one, and I don't see the second one happening (I don't think people will borrow as they did).

Metalman please, elaborate. Thank you.

dollar repatriation, yes. banks lending, not relevant. read the economic face plant article... many roads to inflation.

[WildspitzE]

Re: Mish: (Price) Deflation Has Gone Global

dollar repatriation, yes. banks lending, not relevant. read the economic face plant article... many roads to inflation.

Totally agree.

That said, I personally believe that the banks will be forced to lend or purchase securities -- not necessarily because of political pressure (although it is there), but because they face a certain and slow death if they don't ... they have huge liabilities on the other side of the equation.

[FRED]

Re: Mish: (Price) Deflation Has Gone Global

In times of inflation, central banks seeks to encourage markets to believe inflation is higher than it is in order to push up interest rates to push inflation down. They want high interest rates while lowering inflation expectations.

In times of deflation, central banks seeks to encourage markets to believe inflation is lower than it is in order to push down interest rates to push inflation up. They want low interest rates while increasing inflation expectations.

Given this, why believe the inflation data that show deflation today and more than inflation data in 2008 that showed low inflation then?

Pay attention to prices:

Oil: $50 vs $20 during the last verified deflation
Platinum: $1200 vs $450 during the last verified deflation
Commodities: On average two times prices from the last deflation

Get the idea?

[rjwjr]

Re: Mish: (Price) Deflation Has Gone Global

It's about time for Metalman to make an apperance.

Btw: Biflation it is.

I think biflation is only legal in Vermont.;)

[occdude]

Re: Mish: (Price) Deflation Has Gone Global

This argument between inflationists and deflationists is pointless due to the fact that both events are going to occur at different times.

Even in the "disinflation then lots of inflation" scenario there will be a turning point at which inflation will be dealt with probably a currency devaluation which will cause an immediate healing deflationary process if adhered to.

It's important to note at this point that deflation is a market force whereas inflation is the governments response to a valid the aforementioned market force. If not for the governments interventions I have no doubt we could have seen a financial armegeddon and if EJs prognosis may be optimistic at 2ozs of gold to the DOW which would put it at around 1800-2000 would put the industials at 1800-2000 which would be a quite a haircut. Unemployment would be in the 30 percent range and things would get very nasty on a social front, thats the real reason for inflation is fear of the torch burning mobs. However, after the grief and anger stage we could be on our way to recovery in a year or two.

This cycle however is gonna take awhile and shift back and forth between the two forces of inflation and deflation till deflation finally wins by capitulation and then they can start inflating again lol.

I think nothing short of a currency crisis is going to end this thing.

[nero3]

Re: Mish: (Price) Deflation Has Gone Global

I like to add the fact that booms in the US stock market is usually collorated to credit inflation, and commodity deflation. We have commodity deflation. What is lacking for a boom in the US stock market, a real type dow 30000 boom, is now credit inflation, with the strong dollar. I think there is an overestimation, of the negative aspects of deflation, especially after an inflationary period, as deflation then have the potential to increase profit margins and promote recovery. it's different when you get it after an era like year 2000, or deflation after deflation. I think there will be the second wave of inflation, before you get to a secular bull, but who knows. the CRB index over the last 10 years have not been that different from the seventies, and we know what came after that.

[metalman]

Re: Mish: (Price) Deflation Has Gone Global

I like to add the fact that booms in the US stock market is usually collorated to credit inflation, and commodity deflation. We have commodity deflation. What is lacking for a boom in the US stock market, a real type dow 30000 boom, is now credit inflation, with the strong dollar. I think there is an overestimation, of the negative aspects of deflation, especially after an inflationary period, as deflation then have the potential to increase profit margins and promote recovery. it's different when you get it after an era like year 2000, or deflation after deflation. I think there will be the second wave of inflation, before you get to a secular bull, but who knows. the CRB index over the last 10 years have not been that different from the seventies, and we know what came after that.

confusion of correlation for causation.

why have booms in the US stock market is usually correlated to credit inflation and commodity deflation?

are the conditions/forces that caused the correlation in the past still true today?