AuthorTopic: Hyperinflation or Deflation?  (Read 123441 times)

Offline RE

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Re: Re: Questions for Stoneleigh/Foss
« Reply #30 on: May 02, 2012, 10:30:55 PM »

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

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

I don't concern myself much with the problems that Pigmen have in trying to "secure wealth" in the Big Number category.  I don't pass out advice generally speaking on whether you should own Stocks or Bonds or even Gold, because really I know that more than 50% of the people out there have at best a few months worth of Bills in their Savings and Checking accounts.

Most of my concern is how to best spend $20K or so or less to prepare yourself, what kind of foods to buy you can store well, what Bugout Machines might help in different situations and so forth.  I take as a given that most people cannot afford to Buy and Outfit a Doomstead they probably cannot Protect & Defend anyhow.

In this category, IMHO you are best off in CASH right now, not Gold because its not as fungible.  IOW, you can't go down to Walmart at the last minute and take a Gold Eagle and buy $1600 worth of groceries still left on the shelves with it, you have to first convert it to FRNs.  You do have to be constantly AWARE of what is going on and be ready for possible hyperinflation of food prices, or the unavailability of food as JIT distribution breaks down.  The minute you Sniff this is occuring, you gotta be the FIRST one down to Walmart with CASH in hand and divest yoruself of it then and there for Hard Goods you have not yet purchased.

Its unreasonable to have too much more than say $20K in CASH around, so if you have more than that you look at Barterables first before Gold, and only add in the Gold if you are pretty flush with over say $30K or so in liquid assets.

Far as trying to protect "wealth" in the Big Numbers category, I do not think it is possible to do that for anyone below the level of Illuminati Apparatchiks, aka your Billionaire types like soros and Gates et al.  In reality, I do not think they will be able to protect their wealth either once the monetary system hits the complete crapper, but that may take some time to complete.  When the cascade really gets underway though, its going to be a great leveller throughout society.  Then REAL wealth will become very important. RW is your connections to your community and the resilience of said community and the resources they have access to and can Protect & Defend as a Community.

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Offline Golden Oxen

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Real Unemployment 22% Hyperinflation on Track for 2014 John Williams
« Reply #31 on: May 08, 2012, 03:52:32 AM »
The coming fiscal cliff: hyperinflation on track for 2014
John Williams


Jim welcomes back John Williams from Shadow Government Statistics. John believes the real unemployment rate is 22%, not 8.1%, which is why it still feels like a recession. He also calculates the CPI at 6%, not 2.8%, and explains how the government manipulates the rate of inflation. Lastly, John believes the US is still on track for hyperinflation in 2014 as we near the coming fiscal cliff.  :-\

James J Puplava CFP with John Williams
Sponsored by: PFS Grouphttp://www.financialsense.com/financial-sense-newshour/guest-expert/2012/05/08/john-williams/the-real-unemployment-rate-the-coming-fiscal-cliff

Offline ross

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Re: Hyperinflation or Deflation?
« Reply #32 on: May 08, 2012, 05:17:22 AM »
THIS IS ME SHOUTING.

HYPERINFLATION IS A POLITICAL CHOICE. IT IS THE OUTCOME OF A SERIES OF FISCAL DECISIONS AND RESULTING SOCIAL REACTIONS. IT IS A POLITICAL PHENOMENON; IF NOT DIVORCED FROM ECONOMICS, THEN AMICABLY SEPARATED.

IF YOU BELIEVE WE WILL SEE HYPERINFLATION, YOU MUST JUSTIFY WHY WE HAVEN'T SEEN IT YET.

MOREOVER, YOU HAVE TO EXPLAIN HOW THE DEFLATIONARY EFFECTS OF THE BUSTING OF THE DEBT SUPER-CYCLE, A DEFLATIONARY EFFECT BASED ON ECONOMIC FUNDAMENTALS, WILL BE OVERCOME BY A HYPERINFLATION.

JUST BECAUSE YOUR PURCHASING POWER IS DESTROYED IN AN ASSET PRICE COLLAPSE DOESN'T MEAN EVERYTHING HYPER-INFLATED. IT MEANS YOUR PURCHASING POWER WAS INFLATED AND NOW... IT IS DEFLATED TO A MORE ECONOMICALLY REASONABLE LEVEL, BASED ON YOUR NET WEALTH CREATION IN THE ECONOMY.

THIS IS ME SHOUTING A LITTLE LOUDER:

THERE WILL BE NO HYPERINFLATION BEFORE A MASSIVE DEFLATIONARY DISLOCATION.

WHAT WILL HAPPEN:

OIL PRICES WILL BE CUT IN HALF (FROM TODAY'S PRICES) OR MORE
AND
PHYSICAL SHORTAGES WILL APPEAR AT THE LOWER PRICE LEVELS.

ONLY THEN, AFTER PHYSICAL SHORTAGES APPEAR, SHOULD ONE ANTICIPATE A HYPERINFLATIONARY EVENT.

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Re: Hyperinflation or Deflation?
« Reply #33 on: May 08, 2012, 05:55:44 AM »
John seems not only divorced and separated from reality, but he's divorced ans separated his neurons, too.
HOW ON EARTH CAN YOU HAVE HYPERINFLATION WITH 22% UNEMPLOYMENT?! HUH?! GIVE THE UNEMPLOYED 100K/YEAR?! FOODSTAMPS DON'T HYPERINFLATE THE TENS OF TRILLIONS OF DEBT DENOMINATED IN USD.
Geez, some people really have no idea what having no money really means.

Offline Jb

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Re: Hyperinflation or Deflation?
« Reply #34 on: May 08, 2012, 06:05:55 AM »
Quote
OIL PRICES WILL BE CUT IN HALF (FROM TODAY'S PRICES) OR MORE

Ross, I agree with you but I have one question.

I think we're all assuming that if the price of oil collapses by 50% or more, the KSA will see massive uprising.

Won't China and/or the US step in and agree to buy KSA oil at some negotiated price ($85/b?) to keep the kingdom from collapsing? Or do we buy massive amounts of oil still in the ground to provide KSA with enough cash to hold them over until the price returns ala Chris Cook?

Or in the blink of an eye, do we simply end up in a structural crisis with shortages leading to riots, martial law...?

My understanding is that in order for hyperinflation to occur, you also need a second currency to circulate in the economy for people to switch to. Without that, you only get high prices (not hyperinflation) on consumables as cash chases limited goods. Although I wonder if we could have a global version of hyperinflation if say, China, were to introduce a gold backed currency and the world starts dumping their dollars into the market.

Thoughts?


Offline Golden Oxen

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Re: Hyperinflation or Deflation?
« Reply #35 on: May 08, 2012, 06:16:44 AM »
They have already made the political choice, you missed it. That is what TARP and quantitative easing are all about. Deflation is not an option any longer, a couple of hundred million people standing in soup lines and singing "Brother Can You Spare a Dime", do not work any anymore than the austerity plan for Greece is working. The inflation mechanism is working, it took the price of oil from 30 back to 120 while the world is mired in recession and pumped the stock market from 6000 back to 13000. Food prices and basics have been doing nicely also. You had your whiff of deflation in 2008. The 2014 timeline sounds right  for the lift off into space. Rome wasn't built in a day. The inflation program has been a resounding success so far. Helicopter Ben specialized in this field while at Princeton. He has a doctorate in how to stop deflation, give the gentleman his due.    :icon_study:

Offline Golden Oxen

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Re: Hyperinflation or Deflation?
« Reply #36 on: May 08, 2012, 06:30:54 AM »
@ p01 Hyperinflation is a monetary event, it has nothing to do with the state of the economy. The four greatest hyper inflations of recent decades, China, Germany, Argentina, Zimbabwe, took place in collapsing economies. While hardly infallible Mr. Williams is a Summa Cum Laude graduate of Amos Tuck. Usually not a title handed out to buffoons.  GO     :icon_study:

Offline ross

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Re: Hyperinflation or Deflation?
« Reply #37 on: May 08, 2012, 06:54:49 AM »
@JB

Oil, seemingly, is that second currency. KSA, Russia, Iran, Venezuela - they all depend on high oil prices to sustain a bloated and inefficient public sector. There is no love for the KSA. It is like a marriage where the spouses sleep in separate bedrooms - for appearances only. We need their oil. They need our fungible currency to buy our toys.

Also, the U.S. is the marginal buyer of oil, globally. Our economy set's the market price b/c most every other national price level is manipulated by subsidy or tax. Just like in 2008, those producer countries got an awful pinch when the price tanked but there was nothing they could do except take supply off the market and wait for demand to firm up. It did once the stimulus arrested the collapse of the banking system and people returned to more "normal" patterns of waste.

@GO

You cannot justify hyperinflation based on "money printing." Main Street didn't directly see a nickel from TARP or QE. They didn't rain down greenbacks from the helicopter or give them out to the poor by the fistful. Those esoteric programs were meant to backstop bank capital by allowing the TBTF to do balance sheet repair via interest rate arbitrage and forestall the severity of the ARM reset. They have nothing to do with a hyperinflationary outcome.

Inflation and hyper inflation are totally, completely different. Hyperinflation is not severe inflation. Hyperinflation is the complete loss of confidence in a specific monetary instrument, leading to collapse in it's purchasing power. The reason you've seen uptick in food prices is because the energy to produce food is more expensive now. The same oil goes into every bushel of corn. It is just that the oil costs twice as much. That is not hyperinflation. That is "inflation" of food prices, or the "deflation" of your purchasing power relative to energy.

The inflation mechanism has worked so far for oil and commodities. Leveraged speculators and social cuing from the FRB haven't hurt the bit either. That level of inflation, even at John Williams 6% CPI, doesn't precede any hyper-inflationary outcome. In fact, it foretells the deflationary outcome. Demand is destroyed as prices move higher, ultimately leading a kneejerk reaction in the opposite direction is supply overwhelms demand forcing the market to move lower in order to clear the excess supply.

I know this is the stick in the eye for a lot of Collapsniks - they latch on to the fantasy that hyperinflation will vindicate their accumulation of physical metal, their hoarding and their prepping. When everyone leans so hard to one side of an argument and their arguments take on a whiff of religious conviction, I look to the unexpected.

What would completely FUCK all these gold bugs, preppers and doomers? What would completely soil the plans of the FRB to inflate our price level to make the debt burden more reasonable? A deflationary dislocation. The deflationary dislocation is self-evident in demographic trends and reasonable economic growth projections. The deflationary outcome is what the Fed is desperate to avoid because it would leave a gigantic swath of the population destitute. Hyperinflation is not a reasonable alternative, it would leave us all destitute, if not dead.

Inflation in "life support" AKA food, water, energy is also be deflationary for asset prices AKA stocks, bonds, industrial metals and bullion. That was the feedback mechanism you witnessed in 2008. I spend less on things I want because I spend more on things I need. Oh shit, no one is going to buy anything but food and fuel. Sell Mortimer, SELL!

Hyperinflation solves nothing. It is the single most destructive outcome (politically, socially, economically) for what we're going through: the unwinding of a debt supercycle.

Deflation allows the market to clear, albeit in extreme pain and distress.

Hyperinflation allow the market to disintegrate and explode, forcing us to start at the beginning. The wet dream for gold bugs and preppers and sadistic Mad Max murderers.

I repeat, hyperinflation is a political choice. It is a policy decision. An attempt to arrest the government's inability to service its obligations. There is feedback into the monetary system, but it is not a monetary event - it is a political event motivated by the government's bankrupt financial position.

We are more likely to see a debt jubilee before we see hyper inflation. 

Offline ross

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Re: Hyperinflation or Deflation?
« Reply #38 on: May 08, 2012, 07:04:22 AM »
Googled "John Williams Hyperinflation"

A few results:

"John Williams: Hyperinflation Will Start in the Next Couple Months" Dated 12/10/2010
http://www.shtfplan.com/headline-news/john-williams-hyperinflation-will-start-in-the-next-couple-months_12102010

"Hyperinflation Special Report (Update 2010) Dated 12/2/2009 UPDATED 3/15/2011"
http://www.shadowstats.com/article/hyperinflation-2010

A hyper-inflationary event is only possible after a deflationary dislocation. The thing that is overlooked about Germany, Argentina, Zimbabwe is that they all faced a deflationary depression with attendant attempts to devalue the currency, and consequently deflate asset values, numerous times before the hyperinflation took hold.

Offline Surly1

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Re: Hyperinflation or Deflation?
« Reply #39 on: May 08, 2012, 07:59:01 AM »
I know this is the stick in the eye for a lot of Collapsniks - they latch on to the fantasy that hyperinflation will vindicate their accumulation of physical metal, their hoarding and their prepping. When everyone leans so hard to one side of an argument and their arguments take on a whiff of religious conviction, I look to the unexpected.

What would completely FUCK all these gold bugs, preppers and doomers? What would completely soil the plans of the FRB to inflate our price level to make the debt burden more reasonable? A deflationary dislocation. //

Inflation in "life support" AKA food, water, energy is also be deflationary for asset prices AKA stocks, bonds, industrial metals and bullion. That was the feedback mechanism you witnessed in 2008. I spend less on things I want because I spend more on things I need. Oh shit, no one is going to buy anything but food and fuel. Sell Mortimer, SELL!

Hyperinflation solves nothing. It is the single most destructive outcome (politically, socially, economically) for what we're going through: the unwinding of a debt supercycle.

Deflation allows the market to clear, albeit in extreme pain and distress.

Hyperinflation allow the market to disintegrate and explode, forcing us to start at the beginning. The wet dream for gold bugs and preppers and sadistic Mad Max murderers.
 

Ross,
Not sure I am well informed enough to have an opinion on the merits of your argument, but what you have expressed is pure gold, you'll pardon the expression. Ought to be on the blog page, IMHO.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

nobody

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Re: Hyperinflation or Deflation?
« Reply #40 on: May 08, 2012, 09:13:36 AM »
 (Surly) 'Ross,
Not sure I am well informed enough to have an opinion on the merits of your argument, but what you have expressed is pure gold, you'll pardon the expression. Ought to be on the blog page, IMHO'

I second that heartily.  Could you specifically define the "dislocation" part of deflationary.. or provide link or reference to some more basic info regarding this parlance (for the profoundly uneducated such as myself).  If I could follow you better it might provide me with a long hungered for understanding of how "pretend and extend"  seems like it might outlive us all.  and thanks.

Offline JoeP

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Re: Hyperinflation or Deflation?
« Reply #41 on: May 08, 2012, 10:06:19 AM »
I have to agree with Ross...and CHS:

"My own position is that hyper-inflation is first and foremost a political phenomenon--it is necessarily the result of specific political policies and choices.

In my view, there are two keys to understanding deflation and hyper-inflation: one is cui bono, to whose benefit? Who benefits from a hyper-inflation that wipes out all cash and cash-equivalent financial assets?

If we take it as axiomatic that hyper-inflation is a political process, then we have to conclude that hyper-inflation serves some powerful interests who would support the policies that would bring it to fruition.

My problem with the "hyper-inflation is inevitable" school of thought is that I cannot identify what powerful interests would gain from the destruction of the currency and all financial wealth. A hyper-inflationary wipeout certainly wouldn't benefit the Financial Power Elites who hold the vast majority of the financial wealth. Yet it is this very Elite which wields the preponderance of political power.

Thus you end up with this untenable conclusion: the politically powerful Financial Elite will consciously choose to self-destruct. I don't buy that as a likely scenario. If inflation started destroying their wealth, then they would instantly influence political policy to reverse course to preserve their wealth."


full post here
 
just my straight shooting honest opinion

Offline Golden Oxen

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Re: Hyperinflation or Deflation?
« Reply #42 on: May 08, 2012, 10:18:38 AM »
If that were the case JoeP. Why are the history books full of hyperinflations? Who benefitted from them all? :icon_study:

nobody

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Re: Hyperinflation or Deflation?
« Reply #43 on: May 08, 2012, 10:33:55 AM »
thanks, JoeP, that was helpful.  Quoting further from OTM,

 "I suspect this may explain Great Britain's abrupt and profound policy reversal from extreme Keynesian stimulus via sovereign borrowing to severe austerity."

Austerity can be experienced as inflation and the deepening of austerity perhaps as severe or hyper inflation.  I know that's not technically correct but on the receiving end of all this policy, the effect is our reality.

Offline RE

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Re: Hyperinflation or Deflation?
« Reply #44 on: May 08, 2012, 10:42:14 AM »
Googled "John Williams Hyperinflation"

A few results:

"John Williams: Hyperinflation Will Start in the Next Couple Months" Dated 12/10/2010
http://www.shtfplan.com/headline-news/john-williams-hyperinflation-will-start-in-the-next-couple-months_12102010

"Hyperinflation Special Report (Update 2010) Dated 12/2/2009 UPDATED 3/15/2011"
http://www.shadowstats.com/article/hyperinflation-2010

A hyper-inflationary event is only possible after a deflationary dislocation. The thing that is overlooked about Germany, Argentina, Zimbabwe is that they all faced a deflationary depression with attendant attempts to devalue the currency, and consequently deflate asset values, numerous times before the hyperinflation took hold.

The only Nostradamus who calls imminent Hyperinflation more often than John Williams is Speedy Gonzalo Lira.

The issue with hyperinflating any currency is it has to have another currency to hyperinflate against.  What is the Dollar going to hyperinflate against?  Euros?  Yen?

A "Gold Backed" Renminby by the Chinese is a joke.  If they actually backed Renminby with Gold, every Chinaman in Beijing and Shanghai would head to the Bank to redeem the notes and the Basement Safe of the PBoC would empty out of Gold inside of 2 days.  If the PBoC would NOT redeem the Notes for Gold, nobody would believe the currency was backed with Gold.  Catch-22!

Anyhow, until Helicopter Ben starts handing out Free Money to the end consumers, a hyperinflationary event can't be supported.  Prices go too high, consumer is tapped out, people stop buying, biznesses go outta biz, products disappear from shelves.  Deflation.

RE
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