AuthorTopic: Hyperinflation or Deflation?  (Read 108022 times)

Online Surly1

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Re: Hyperinflation or Deflation?
« Reply #15 on: April 13, 2012, 10:35:33 AM »
Link, anyone?
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline JoeP

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Re: Hyperinflation or Deflation?
« Reply #16 on: April 13, 2012, 10:46:46 AM »
Certainly Surly1 -

http://theautomaticearth.org/index.php?option=com_kunena&func=view&catid=14&id=2205&Itemid=96

comment #2215
just my straight shooting honest opinion

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Re: Hyperinflation or Deflation?
« Reply #17 on: April 13, 2012, 11:06:06 AM »
I just responded to this thread on TAE.  I also put up the original article from FT a couple of days ago

http://www.doomsteaddiner.net/forum/index.php?topic=167.0

I didn't have time to write an article on this one, so Ash beat me to it :-)

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Offline reanteben

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Re: Hyperinflation or Deflation?
« Reply #18 on: April 13, 2012, 11:20:54 AM »
Ben,

Yeah, if you're talking about Steve's reply in the TAE "Downstream Demand Destruction for Oil" thread...that was a doozie.

joe, i was talking about his essays in general but yes did read that great comment last night. he really knows how to drop in on a thread and show up the OP.

as i like to say nobody does the dynamics of pornographic credit culture like SFV. here's a classic:

http://www.economic-undertow.com/2010/10/24/culture-change-broken-chains/

 

Offline Jb

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Re: Hyperinflation or Deflation?
« Reply #19 on: April 13, 2012, 11:49:28 AM »
JoeP beat me to the link! Thanks for that comment about Steve's post.

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Re: Hyperinflation or Deflation?
« Reply #20 on: April 13, 2012, 12:04:36 PM »
Thanks for the link. Excellent thread. And I take your point about Steve.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline JoeP

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Re: Hyperinflation or Deflation?
« Reply #21 on: April 13, 2012, 12:22:12 PM »
You're most welcome guys.  Glad you enjoyed. 

Ben,  I agree.  The only writing I knew of from Steve was TAE and maybe another blog that I can't remember now....then I was reading the comment section from a NY Times article a couple of weekends ago and all of a sudden - BOOM! ... Steve's comment showed up and blew the Times up!
just my straight shooting honest opinion

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Re: Hyperinflation or Deflation?
« Reply #22 on: April 13, 2012, 12:43:42 PM »
You're most welcome guys.  Glad you enjoyed. 

Ben,  I agree.  The only writing I knew of from Steve was TAE and maybe another blog that I can't remember now....then I was reading the comment section from a NY Times article a couple of weekends ago and all of a sudden - BOOM! ... Steve's comment showed up and blew the Times up!

Steve has a very interesting spin.  His blog is Economic Undertow.  I republished one of his articles here on DD already.  Still working on getting him over here :-)

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Offline ross

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Re: Hyperinflation or Deflation?
« Reply #23 on: April 13, 2012, 02:43:18 PM »
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Is it conceivable we do not end up in the deflation or hyperinflation horror shows and just continue on our merry way of constant currency debasement?

That sounds like the path we've been on since we went off Bretton Woods. We had a bout of severe inflation in the first decade as the Fed figured it out on the fly, so to speak. A decade of stabilization and experimentation under Reagan. And then they started to get creative in the 90s, manipulative in the 00s and then reactionary in the 10s

I'm not totally there yet, but I'm settling into the notion that this is Collapse, as we'll know it. The Fast Collapse/Mad Max/Blade Runner scenario would be a historical anachronism at this stage.

But, there's never been a global empire at this scale, nor has there been the level of total physical dependence that most people have on stable continuation of the present paradigm. That's what keeps this debate interesting.
« Last Edit: April 13, 2012, 02:46:05 PM by ross »

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Re: Hyperinflation or Deflation?
« Reply #24 on: April 13, 2012, 03:34:06 PM »

I'm not totally there yet, but I'm settling into the notion that this is Collapse, as we'll know it. The Fast Collapse/Mad Max/Blade Runner scenario would be a historical anachronism at this stage.

Quote from: Winston Churchill
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.

<a href="http://www.youtube.com/v/pdRH5wzCQQw" target="_blank" class="new_win">http://www.youtube.com/v/pdRH5wzCQQw</a>


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Offline JoeP

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Re: Hyperinflation or Deflation?
« Reply #25 on: April 14, 2012, 02:26:11 PM »
RE,

Thanks for the point to Steve's blog - great stuff.  Enjoyed your comment from the "Being Greek …" thread:
 

Reverse Engineer says:
March 19, 2012 at 5:02 pm

“– Gold is a natural resource, unlike petroleum it isn’t burned up driving in circles: it is both durable and valuable!”-Steve

Unlike petroleum also, Gold hasn’t the capacity to do Work. I’ll cop to its Durability, its Value is another question entirely. You can arbitrage the value of human labor against the value of oil to do work, but you can’t do the same thing with Gold.

No doubt with failing fiat of course there will be a migration toward Gold, but one wonders how many margin calls will need to be covered by said Gold piles, and what happens if large amounts of Gold start moving around the system? What will really be scarce and what will hold “value” in the electronic markets?

In the real world of course, Food, Guns and Ammo.

RE

 
 
Yes - it sure is hard to tell what has value in the "unreal" re-hypothecathed world.


« Last Edit: April 14, 2012, 03:11:12 PM by JoeP »
just my straight shooting honest opinion

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Re: Hyperinflation or Deflation?
« Reply #26 on: April 14, 2012, 04:19:03 PM »

Yes - it sure is hard to tell what has value in the "unreal" re-hypothecathed world.

This is probably the major problem, and one area where Steve and I have some disagreement.  He often speaks of creating a monetary sytem where money is a "risk free asset", but I can't imagine any such monetary sytem being possible.  Even Physical Gold is not a risk free asset, since Gold can be hoarded and taken out of circulation, which then can cause Da Goobermint to Confiscate it or ban its use.  This obviously has occurred before.  Land is not a risk free asset, since you have climate issues of all sorts to deal with, not to mention Goobermint Taxation and the costs involved in protecting and defending said asset from others.  Any form of Paper or Digital "Wealth" or Assets have the obvious Risk that you have to work through Middlemen (Banksters) who will go MF Global on you the minute THEY get in a monetary bind.

Food is probably as Risk Free an Asset as there is, but it generally doesn't keep all that well and having large supplies of it on hand is pretty cumbersome.  Perhaps when they start "printing" Soylent Green Wafers  if they keep as long as Twinkies do these will make a viable form of "money" and an asset you can keep around a while.

I don't know how deep you have read so far into Economic Undertow, but you should read Steve's "Debt-o-nomics" series.  That one is very good.  I don't agree with everything in it, but its very good nonetheless.

http://www.economic-undertow.com/?s=Debt-o-nomics

In fact, I think I'll start a thread here in Epicurean Delights specifically for discussion of the concepts Steve presents in this series.

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Offline EndIsNigh

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Re: Questions for Stoneleigh/Foss
« Reply #27 on: May 01, 2012, 04:53:58 PM »
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Quote
Helicopter Ben isn't REALLY printing bills like Weimar, so there isn't an excess of the FRNs out there.

Does this mean you agree with Nicole that deflation is the direction we'll go first?  How might that play out in international markets, particularly Australia?  Do  you agree with the recommendation to hold cash and/or short term gov't bonds (Australian), wait for deflation to drop asset prices, then swoop in and pick up some productive land at hugely discounted prices?  My concern is if things move too quickly, this may not be possible if basic commerce structures break down and people are more concerned with what they're going to eat than who will buy their land.

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Re: Re: Questions for Stoneleigh/Foss
« Reply #28 on: May 01, 2012, 10:44:37 PM »
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Quote
Helicopter Ben isn't REALLY printing bills like Weimar, so there isn't an excess of the FRNs out there.

Does this mean you agree with Nicole that deflation is the direction we'll go first?  How might that play out in international markets, particularly Australia?  Do  you agree with the recommendation to hold cash and/or short term gov't bonds (Australian), wait for deflation to drop asset prices, then swoop in and pick up some productive land at hugely discounted prices?  My concern is if things move too quickly, this may not be possible if basic commerce structures break down and people are more concerned with what they're going to eat than who will buy their land.

I generally fall into the Deflationato Camp with Stoneleigh, yes.  Overall we most certainly are experiencing deflation through the main asset class of Real Estate as well as a collapse in credit which makes money on Main Street more scarce.  This doesn't mean we won't see price inflation in energy and food prices, just that on balance its a deflationary event here not an inflationary one.

You should read the Hyperinflation vs. Deflation thread here.
http://www.doomsteaddiner.net/forum/index.php?topic=133.0
I will probably move this post and yours into that thread anyhow.

I also maintain the position that a HYPERinflation of the Dollar won't happen until Da Goobermint starts handing out Free Money to J6P and engages in large scale Goobermint Workfare projects.  As long as the end consumer doesn't have money to spend, a hyperinflation isn't supported.  As the prices go up here, less will be bought and margins will be squeezed, putting more Biznesses Outta Biz.

The fact that AUSTERITY is being so heavily pushed over in Europe and to a slightly lesser extent here pretty much guarantees a further deflationary spiral as more Goobermint workers are laid off, default on their mortgages and further drive RE Assets down in price.

Far as where the gobs of fresh liquidity are currrently going, its mainly into the Stock Market, that is what is propping that up.  Eventually though I think there will be a capitulation event in Equities, and a whole lot of Paper Wealth will once again go Up in Smoke, in what I like to call the Greatest Bonfire of Paper Wealth in all of Recorded History.

Far as where you put your "wealth" if you have some excess, it depends a whole lot on the scale of your savings.  If you are small fry with less than $100K or so, I'd keep at least half in CASH.  Then I'd go with Barterable items which have been discussed before, Booze, Diapers, cannisters of Propane (they go about $2.50 each up here now and you can cook for a few days with one on a camping stove) and of course Ammo.  Then if you are a Gold Bug, feel free to take some savings and buy some Gold Eagles if you like.

If you have the Big Bucks, your problems are greater.  Diversification would seem to be wisest, and you can buy some Hedging instruments and hope they work when TSHTF.  If you have No Shame, you might buy Illuminati Stock in companies like Monsanto and Conagra, unlikely to go Outta Biz too soon.

Insofar as diversifying in Currencies, that is a real crapshoot.  I obviously do not think Yen or Euros are a good choice here to be holding.  Swissies maybe, Oz Dollars, Loonies, Norwegian Krone maybe.  This would depend a lot on where you live also.  I don't think Krone will do you much good in Oz.

Finally, with a lot of excess you might consider raw land also, but that is a real crapshoot in terms of Taxation issues and possible Nationalization of land holdings by individuals in either a full on Fascist or Communist Solution.

In any event, over the longer term here, I think most if not all of the monetary instruments are going to fail.  The main question there remains the timeline for this.  It seems to me the Dollar still has at least a couple of years left in it, barring some major Black Swan.  An explicit World War would be very Bullish for the Dollar.  People will RUN full on to the currency of the Big Ass Military.

Real Endgame scenarios may result in the Hyperinflation of the Dollar Speedy Gonzalo, John Williams and other Inflationistas predict.  I still think that is a ways off, and Deflation overall is running the show here.

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Re: Re: Questions for Stoneleigh/Foss
« Reply #29 on: May 02, 2012, 05:38:38 AM »

If you have the Big Bucks, your problems are greater. [...]

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100K?! You're jesting again, RE. Even more?! I say let them have problems.