Posted on 10/02/2011 4:05:19 PM PDT by blam
Deflation in salary is right small companies not offering benefits healthcare.Healthcare up 6-9% and rising.Small companies cutting all benefits out and cutting salaries and the bank wants they’re mortgage money but it all went into the gas tank and stomachs.
FUBO
And there is a headline on drudge that some paid protesters on BOA want totalitarianism and Obama re elected.
Thank you all.
People aren’t buying. Nor “buying” into this scheming. Now think for a moment:
What happens if govt. pensions, govt. contractors, govt. dependents (in the trillions) also go south? Where goes their retirements?
Don’t think they don’t know this.
The counterfeit market will be propped (or deceptively bailed out)....UNTIL ..... the massive leverage of Vampire-”Care”. Look out for Vampire-”Care”.
[anybody with an ounce of a brain knows what is going on right now. ]
True - but unfortunately the majority of the population lacks even an ounce.
The sheeple on the left are waiting for their free government pie.
Those on the right are waiting for the Rapture to rescue them before the ARM on the McMansion explodes.
Neither are taking RESPONSIBILITY for their role in manufacturing the reality that exists behind the dialectic facade - and oligarchic kleptocrats like Penny Pritzker (billionaire Obama Campaign National Finance Chairwoman) & Co are quietly fanning the flames and waiting for the fire sale.
“Deflation?”
-No
“How is that possible?”
-It’s not
“With all the extra money being pumped into the economy via QE I, QE II and now soon-to-be-announced, QE III, we shall be AFLOAT in Monopoly money.”
-Absolutely correct. Real estate is still coming out of it’s ridiculous bubble. Dollars will be printed in an effort to drive up the costs of everything non-credit related (houses, etc.), to make sure you ncan’t afford anything without government assistance, and that people lose their jobs (through regulations, etc.) and cannot afford the falling real estate, which will in turn be snapped up and used as housing projects to ensure more votes for socialism.
“Anything we can/should do now?”
Stock up for what you will need ahead, now. Don’t expect anything you have (Real estate, especially) to go up in price (it’s still in a bubble, and will drop until it reaches levels people can afford, between 50%-20% of what they cost now—that is, barring the Chinese,e tc. buying the rest of the real estate). Things will cost more if you need them (necessities), and initially, less if you don’t (luxuries), until the necessities cost more money than you have and everything else is unavailable.
Be in debt as little debt as possible as cash will be more valuable. Get in cash as much as you can.
I had been putting away spare cash in nickels as it was a no-risk "investment", even if in a chump-change way. I started as the nickel was slightly above melt value and went all the way to 7c, so I figured I was going to do OK via inflation. Lately nickel has collapsed and it's down to 4.7c melt, the lowest I've seen it in a couple of years. It now sure looks like deflationary times are ahead, even as many are still worried about inflation.
Yeah, I know groceries are still going up, but that might be a lagging indicator - or perhaps stagflation. Whichever way it goes, a couple of months canned/dried food is a good investment as well.
Like you, I fully expected the fan to get dirty in the mid 1990s and remember trying to warn anyone and everyone who would listen to me rant about it. They didn't and when things turned around they laughed.
Well...no one is laughing right now, not after the near daily market beatings they're learning to deal with.
Interesting times...
Sure, we'll see an occasional upside fake so the big institutions can try to get out, but deflation and cash are KING.
Gold at $1200 by the end of the year...and $600 by the end of 2012.
The Fed is not capable of injecting enough money into the economy to create real demand inflation unless they issue a check for $10k or more to every man, woman and child in the country. Even then many folks would pay debt and save it rather than spend it.
The Velocity of Money is in the toilette taking the Fed out of the game.
Debt Deflation on a scale nobody alive has ever seen before.
The simple answer: during deflation, hold cash because its purchasing power increases.
During inflation, purchase hard goods because dollar purchasing power decreases.
So if the leading citizens of the world go through with the deflationary squish, we’ll have more freedom. If they chicken out, we’ll have more time to prepare. Whichever...
Or they’ll resume enormous money printing after having temporarily lowered freight fuel and foreign prices on their Asian slaves’ junk. Yep. So we’ll get a little of both.
YUP.
So, we're in a Liquidity Trap?
[That’s some interesting reading:]
Thanks for the plug blam. I did some pretty innovative writing, I go into biflation, debt bondage, proxy armies, a whole lot of ways to look at a new style civil war.
However, it'll do in this case.
The bottom line is the Western Consumer is unable/unwilling to take on more debt. Western governments are politically unable to accelerate their assumption of debt and are being forced to cut back.
This causes the "loaned" money from the Fed to stop at the banks.
Of course the banks will take the opportunity to try to make a dime off of it...so they invest in commodities, stocks and foreign bonds/currencies.
Right now the markets, banks and governments are in one big circle jerk together...and the REAL economy continues to deflate.
Eventually, once all the QE monies stop moving...all these folks will turn around to find nothing but a cold wind at their back. NO BUYERS. They'll be left holding the bag and will start to liquidate at any price.
That's when the bubble burst will sound like a bomb going off.
Don't make the mistake so many are making...do NOT anticipate inflation in the mid-term or short term. It's not there. We have only temporary inflation in the markets due to QE.
If you want to know where the economy is going, watch the single largest asset class in the world: US Real Estate.
Daily. The Fed is trying to stimulate inflation daily, and failing just as badly as Japan which has been trying to gin up inflation there since 1989.
The money supply is all cash plus all credit. The problem with printing money in a credit-based economy is that it destroys leverage as private credit disappears commensurate with the money-printing.
Bankers, after all, don't want to lend today's valuable Dollars only to be repaid in debased currency next year.
Now, after you've destroyed all private credit availability, then yes, further money-printing would cause inflation because you would no longer have a credit-based economy.
Keep in mind, however, that our economy is 90% credit and 10% cash. You'd have to destroy 90% of the wealth in the U.S. first before even more money-printing would finally resemble Zimbabwe.
That's unlikely to happen as Revolutions are fought over much less.
In the meantime, money-printing simply dries up private credit.
Japan has printed far more money than has the U.S., and Japan has been doing it every year since 1989.
It's never worked. You don't get stimulus from money-printing in a credit-based economy.
Credit is the missing ingredient to the current global crisis soup. Destroying credit causes deflation. The yen, for example, is up.
Modern economists can't explain why the Yen is up after so much Japanese money-printing. They cite ridiculous things like export-economy, shrinking population, and a culture of savings even though the U.S. saves more than Japan (and has since 1999) and even though the Japanese are net importers from China now.
What the pin-heads can't grasp is the missing ingredient: credit.
Everyone sits around *wishing* that magic printing presses can stimulate global economies without anyone having to suffer any financial pain.
It's a fairy tale that has failed every year since 1989.
Government printing presses, whether running raw or via the convenient fiction of “borrowed” money, trigger deflation up until all private credit is destroyed.
Of course, at that point entire economies are vaporized and you are left with a Zimbabwean wasteland of a cash or barter economy.
Print money at your own peril; it won't stimulate. It won't solve the current global crisis.
On the contrary, printing more money will exacerbate the economic downturn.
The U.S. has legacy debt-overhang at the city/state/federal government level. Ditto for over-spending. Same again for over-regulation.
Those are structural issues that must be resolved.
The U.S. also has a severe real-estate problem. Commercial real-estate has greater than 20% vacancies nationwide. Residential real-estate has over 19 million vacant homes, millions more homes in default, and tens of million more homes underwater.
Pension plans are unfunded. Social Security is terminal. Fannie Mae and Freddie Mac are so far past “insolvent” that they must remain in government conservatorship, begging and stealing taxpayer funds in the Billions every month.
You could Stimulate until every woman in the country was orgasmic and still not put a dent in any of the above.
Thus, more Stimulus will simply fail (or make matters worse).
You have to resolve the above structural economic issues first before tossing money at the problem has a chance of working.
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