The Deflation Monster Has Arrived

Zero Hedge ^ | 16 Jan 16 | Tyler Durden

[Alberta's Child]

But then you find out no one is willing to pay more than $200k for it. Essentially that $300k never existed, but you made assumptions that depended on it.

Very importantly, a mortgage lender may have made assumptions that depended on it, too -- like extending a $400k mortgage on a property that had an appraised value of $500k but an actual value of only $200k.

In this case, it's the lender that has the strongest incentive to prop up the value of the asset, not the borrower.

[sparklite2]

"electronic debt booked as assets."

Never heard of that.  I do remember when AOL was capitalizing expenses,  though. That was hooey then and it's hooey now. They were fined $3.5 million for it.

Debts are liabilities, not assets, and if you define liabilities as assets, you can throw the balance sheet away.  Don't see that happening.

[SaxxonWoods]

ZeroHedgers hasn’t been this excited since 2007.

They think they will rule with their little piles of gold when everything collapses.

They wish for suffering on a planetary scale and they will continue to be disappointed. There will be no collapse. There will be a slow sinking into a dark age with Islam eventually ruling the world by sheer force of numbers.

Their gold will not save them. Nothing will save them or the rest of us.

[SkyPilot]

That is why the globullists are hell bent on a one world system, it will necessitate the destruction of old currencies and start the cycle of deception anew.

Bingo.

[P.O.E.]

Welfare has destroyed the work ethic for too many here in the US.

[Up Yours Marxists]

Inflation is a form of penalty. A tax is collected by the government, whereas inflation is collected by banks.

Obviously the government dictates a fair amount of inflation and gets a piece of the pie on income tax. But ultimately the financial markets and costs of goods and services themselves drive it.

The end result is also different. With a tax, we’re supposed to get some sort of benefit, whereas with inflation we don’t. Except for the rich elite that is.

[TalBlack]

Back around the last big crash I read of the M-something (don’t remember the number) which is the designation for the amount in dollars of printed physical money. It was a VANISHING fraction of the amount of the money people “have” in the bank. It was NOTHING really.

[Up Yours Marxists]

I like that analogy. Thanks for sharing!

[catnipman]

Weirdly enough it was the market and subsequent economic collapse right prior to obama’s election that was most likely the issue that put obama over the top.

Same thing appears to be happening now. Looks like “the market” doesn’t want Hillary to be elected.

[Axenolith]

Because in the real world the room has 6 people and a bank. The bank has $100 and under the current reserve requirements is able to lend ~$95+ to each of the 6 guys. Voila, the “money supply” has just expanded by close to 6X...

[catnipman]

“And if the $20,000 that I have in bank CDs buys more when the CDs mature, I won’t complain if I should be so lucky”

Indeed, we savers of cash would be king.

[RKBA Democrat]

Deflation is really, really bad for an economy. I will say this, though. There has been a huge increase in the amount of cash in the economy since 2008. That (probably) indicates a thriving shadow economy. Outside of first world countries, most of the action is in the unofficial economy anyway. I think its changing here as well.

[RKBA Democrat]

One of the most hilarious clips from South Park.

[Axenolith]

Stocks are supposed to be merely a means of buying future income

Exactly, a stake and share in the fruits of a producer. Not a "war chest" to hype up in value in order to facilitate borrowing egregious sums to conquer and cannibalize.

[Chode]

[SkyPilot]

South Park Clip....And It's Gone

[Toddsterpatriot]

If people have cash, they are sitting on it, and for those who do not have cash, their credit cards are about maxed out.

The actual data doesn't agree with your claim.

[Toddsterpatriot]

Not with fractional reserves. The banks lend out much more money than what really exists.

Banks can't lend out more than they take in.

[masadaman]

'Looks like the market doesn't want Hillary.' Possibly, but the events which 'crashed' the markets worldwide in 2008 were more than likely engineered by those having short positions and politically motivated by the left. Soros et al are often mentioned. Recall McCain was ahead in the polls in September and then foolishly out of a bizarre false sense of honor decided to stop campaigning.

Perhaps a similar but more severe 'crash' next summer will make it easier for Obama to stay in the saddle to 'save' us.

[steve86]

Or, in very simply terms, the bank opens for business, takes in a $5 deposit from the guy who just sold his corn, then lends out $100 with $95 of that bring created out of thin air by fractional reserve banking. Most of that is binary digits but a truck from NYC does bring by some currency that the corn farmer borrows to buy another corn field from his neighbor for cash.