God damnit, when will these clowns get a clue. The Fed using all of its bag o tricks, does NOT HAVE THE POWER TO GIVE US HYPERINFLATION. At least not in the next 3 years.
Absent some “executive order” telling all businesses to raise pay by 20% and printing $4T in money…
IT IS DEFLATION!!! Just read Mish’s latest piece on this. The destruction of money is occurring at a rapid pace. It’s as if they were standing at the printing press and burning all that money.
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# 19 June 2009 at 6:59 PM
MJ said:
Well the latest Fed Flow of Funds Report is saying that deflation and credit collapse is huge!
From the stats of the Fed Flow of Funds Report for Q1 of 09(Author comments)
# We witnessed one of the biggest collapses of all time in “open market paper” — mostly short-term credit provided to finance mortgages, auto loans, and other businesses. Instead of growing as it had in almost every prior quarter in history, it collapsed at the annual rate of $662.5 billion. (See line 2.)
# Banks lending went into the toilet. Even in the fourth quarter, when the meltdown struck, banks were still growing their loan portfolios at an annual pace of $839.7 billion. But in the first quarter, they did far more than just cut back on new lending. They actually took in loan repayments (or called in existing loans) at a much faster pace than they extended new ones! They literally pulled out of the credit markets at the astonishing pace of $856.4 billion per year, their biggest cutback of all time (line 7).
I was a believer in green shoots until I read this article:
Granted this was for Q1 and the market has rallied since then but I dont think stockpiling of copper and iron ore by China can counter balance the objective evidence of the Fed Flow of Funds Report that shows a continuing credit meltdown in the private sector of the USA.
We may well have this inflation in the long term. The short term looks like grim deflation. Take your profits if you are in the market and buy in much lower because a major pull back could be imminent.
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# 20 June 2009 at 7:49 AM
prescient11 said:
MJ, thank you, that is the article. Damn straight.
5 years seems like a long, long time from now.
I think we will see a major Stagflation drama descend upon us well before that !
And the UK will see it (the drama) hitting them first, well before the USA
Most inflation vs. deflation debates rarely spell out the complex variables involved in our rapidly shrinking global economy. For example, as Marc Faber correctly points out, a simultaneous MIX of deflation and inflation can change the realities of life for the typical American. We are witnessing massive deflation in real estate yet we still have very high inflation in health care, higher education, and on the long term front in oil and natural gas.
Monetary inflation by the Federal Reserve is running at insane levels, yet, is temporarily being offset by deflation in housing, stock, pensions, etc. In many respects, what this translates to is a massive transfer of wealth from the middle class to the banking sector and their cronies. However, we should ponder the notion that at some point when prices on most things bottom out, an inflection point will be reached in which monetary inflation will overtake the deflation inputs and the overall result will be significant inflation that further reduces Americans’ standard of living.
The inflationary factors from a collapsing dollar as the world continues to move away from the dollar as the world’s reserve currency and issues related to resource scarcity (particularly fossil fuels) are two other enormous inflationary drivers that cannot be overlooked. To further compound the issue, as the dollar loses its hegemony as the world’s reserve currencies the price of oil will rise faster for those of us holding dollars and dollar dominated assets since the dollar has been effectively supported (backed by oil) by its central role in the world’s oil trade.
God damnit, when will these clowns get a clue. The Fed using all of its bag o tricks, does NOT HAVE THE POWER TO GIVE US HYPERINFLATION. At least not in the next 3 years.
Absent some “executive order” telling all businesses to raise pay by 20% and printing $4T in money…
IT IS DEFLATION!!! Just read Mish’s latest piece on this. The destruction of money is occurring at a rapid pace. It’s as if they were standing at the printing press and burning all that money.
Well the latest Fed Flow of Funds Report is saying that deflation and credit collapse is huge!
http://www.moneyandmarkets.com/new-hard-evidence-of-continuing-debt-collapse-34202
From the stats of the Fed Flow of Funds Report for Q1 of 09(Author comments)
# We witnessed one of the biggest collapses of all time in “open market paper” — mostly short-term credit provided to finance mortgages, auto loans, and other businesses. Instead of growing as it had in almost every prior quarter in history, it collapsed at the annual rate of $662.5 billion. (See line 2.)
# Banks lending went into the toilet. Even in the fourth quarter, when the meltdown struck, banks were still growing their loan portfolios at an annual pace of $839.7 billion. But in the first quarter, they did far more than just cut back on new lending. They actually took in loan repayments (or called in existing loans) at a much faster pace than they extended new ones! They literally pulled out of the credit markets at the astonishing pace of $856.4 billion per year, their biggest cutback of all time (line 7).
I was a believer in green shoots until I read this article:
http://www.moneyandmarkets.com/new-hard-evidence-of-continuing-debt-collapse-34202
Granted this was for Q1 and the market has rallied since then but I dont think stockpiling of copper and iron ore by China can counter balance the objective evidence of the Fed Flow of Funds Report that shows a continuing credit meltdown in the private sector of the USA.
We may well have this inflation in the long term. The short term looks like grim deflation. Take your profits if you are in the market and buy in much lower because a major pull back could be imminent.
MJ, thank you, that is the article. Damn straight.
Marc Faber is still talking about Hyperinflation
MARC FABER: HYPERINFLATION IS COMING
19 JUNE 2009 – Good interview here with Marc Faber:
http://pragcap.com/marc-faber-hyperinflation-is-coming
But if you listen to it, he is saying:
“10-20% inflation within 5-10 years”
5 years seems like a long, long time from now.
I think we will see a major Stagflation drama descend upon us well before that !
And the UK will see it (the drama) hitting them first, well before the USA
THIS THREAD seems to have it right, “Serious Stagflation” lies ahead, if the US can escape from a deflationary trap. And that may be WORSE is some important ways:
http://www.greenenergyinvestors.com/index.php?showtopic=6903
Most inflation vs. deflation debates rarely spell out the complex variables involved in our rapidly shrinking global economy. For example, as Marc Faber correctly points out, a simultaneous MIX of deflation and inflation can change the realities of life for the typical American. We are witnessing massive deflation in real estate yet we still have very high inflation in health care, higher education, and on the long term front in oil and natural gas.
Monetary inflation by the Federal Reserve is running at insane levels, yet, is temporarily being offset by deflation in housing, stock, pensions, etc. In many respects, what this translates to is a massive transfer of wealth from the middle class to the banking sector and their cronies. However, we should ponder the notion that at some point when prices on most things bottom out, an inflection point will be reached in which monetary inflation will overtake the deflation inputs and the overall result will be significant inflation that further reduces Americans’ standard of living.
The inflationary factors from a collapsing dollar as the world continues to move away from the dollar as the world’s reserve currency and issues related to resource scarcity (particularly fossil fuels) are two other enormous inflationary drivers that cannot be overlooked. To further compound the issue, as the dollar loses its hegemony as the world’s reserve currencies the price of oil will rise faster for those of us holding dollars and dollar dominated assets since the dollar has been effectively supported (backed by oil) by its central role in the world’s oil trade.
An economy built on DEBT is a false economy.
http://www.debtdeflation.com/blogs/
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