Posted on 05/01/2010 10:33:11 AM PDT by Errant
...if you start to see a great depreciation of the U.S. currency or a tremendous increase in lack of confidence in the soundness of the government's fiscal condition, there is a problem. You mentioned Greece, for example. The sovereign solvency issues there are minuscule compared to what we have with the United States, which is the elephant in the bathtub. The markets know it's there. The central bankers know it's there. Again, with the downturn in the economy, all the issues are going to be brought to a head. As they come to a head, there will be that effort to dump the dollar...
(Excerpt) Read more at marketoracle.co.uk ...
The inflation is a certainty.
Hyper? probably not. The rate will managed for as long as possible to < 10%.
A rising tide raises all boats and saves the bacon of debtors who worry about prices but get raises and get by.
Governors have used inflation as a tool since the beginning
Before we argue in circles, you may find this article informative:
What do you see happening that leads you to believe that we are in a deflationary period and that the deflationary cycle will continue and ultimately be the cause of our implosion?
.......or that they’re value is actually increasing?.....
You have it backwards. Gold is the standard and all other things are valued accordingly. For the past thirty years or maybe 50 years, we have pretended the US$ was the standard but it really was not.
To establish the value of all the currencies in the world you must ascertain their relative valuations as fraction of the total gold supply. After that is done, other hard assets like silver and real estate can be valued.
There is never enough gold to be used as currency to carry on trade. The same is true of silver. Paper money will be reevaluated in terms of gold and of silver so trade can take place.
$1000/oz. is optimistic, but it’s not outside the realm of possibility. Care to impart additional supporting data to your projection?
That's an easy one.
Credit destruction is causing a massive movement downwards on the M2 money supply, which is only being counteracted for the time being through huge amounts of new Federal government debt creation and consumer incentives.
I expect the banks to keep the "credit valve" closed for the foreseeable future (probably 10 years) and I don't believe the Federal government can keep creating debt at such an incredible pace. When they stop is when the public will realize the size of the deflationary spiral that we're in.
(Okay, before you introduce a FIREARM into the mix.. LOL.. Let's just say everyone is armed and it's a "mutual assured destruction" setting..) Really, though.. You'll need 3 things to survive the "end" times.. God, Gold (or Silver) & Guns.
It’s all relative. For instance if you compare the DOW to the price of gold, the DOW has been in free fall as well the average American’s salary. Some commodities like copper, building materials, farm supplies and foods have recently doubled or tripled in cost measured in dollars.
The euro may be falling relative to the dollar but the dollar is losing ground to the Australian and Canadian currencies. I suspect the currency of any country burdened with excessive debt (i.e. Greece, Spain, Portugal, UK, US) will continue to loose ground in relation to PMs and essential commodities and services.
What has happened in Iceland and Greece may serve as models though each nation will experience differences. The common denominator being debt and cost of government.
We’re going to see the pendulum swinging back and forth for the foreseeable future. One should cover as many bases as possible by diversifying your assets, resources, network, knowledge and skills. I figure most here have already.
The problem is the title of this thread. Hyperinflation and depression are contradictory terms.
The reason inflation isn't a problem now is the low velocity of money.
Right, but until the bad debt is cleared out of the system, that shut-down credit valve does not cause deflation.
There is always a lag between the fiscal action and the result.
So, I’d agree, the shutting down of credit (I believe credit cards will become a thing-of-the-past within a few years) can and will cause deflation...if other factors do not come in to play.
They would have to contract the money supply in addition to increasing the interest rate, neither of which do I see happening. If they did that, yes, you are right, deflation would result.
I guess I just don’t see the real (this hurts the common man) effect of deflation. Yes, credit is being shut down, but the people don’t care, because the citizens of this country are contracting their debt at a pretty good rate, which works against the “increased consumer spending” lie the government keeps spewing.
If and when it happens ... I want to be long on toilet paper, coffee and pet food.
I think those will be great barter items ;-)
The yourDictionary Web site defines an economic depression as a prolonged period of recession, or a significant and prolonged downturn in the economy. Characteristics of an economic depression include declining business activities, falling prices, rising unemployment, increasing inventories, public fear and panic.
Economists differ in their opinion of what exactly constitutes recession and depression. Many define recession as two or more quarters of reduced Gross Domestic Product (GDP). GDP measures national income and output for a country’s economy. Per capita GDP is often used to measure the standard of living, with the thought being that as GDP rises, so too does each citizen’s standard of living. Hence, measuring GDP provides clues as to the overall health of the economy and a glimpse into the health of an individual’s wallet.
When the economy moves into a recession, the country’s economy enters a period of negative growth. Real income declines, unemployment rises, and industrial production wavers. If a recession continues for a long time, the economy moves into an economic depression.
Hyperinflation is inflation that is very high or “out of control”, a condition in which prices increase rapidly as a currency loses its value.
John Williams of ShadowStats in this interview is predicting both will occur. I’m afraid he may be right.
I’m with you. I try to keep about 30 lbs of coffee on hand at all times. TP is a no brainer but there are substitutes available... ;)
When have both ever happened concurrently in the past?
You do realize that during hyperinflation, people pretty much have to spend all of their money as soon as they get it before it becomes worthless? It's difficult to have a depression in that environment.
I agree that bad debt needs to be cleared.
However, the is a metric TON of debt that is defaulting all around us from residential and commercial foreclosure, bankruptcies, and other loan and credit defaults.
All of those defaults cause the M2 money supply to shrink. That's why the Federal government is so busy creating new debt as fast as they can.
It's not a matter of "when" bad debt gets cleared. It's happening right now at the consumer and business level. Our nation's GDP needs to shrink to around the $9 - $10 trillion level in order to get things righted in our debt-based economy. No way will the Federal government allow that to happen voluntarily. Instead, they will continue to take the place of the consumer - and we'll see more Marxist policies as a result of it.
The one with the loaded gun.
But the 1st phase of the new money is being used to prevent the bad debt from clearing out. That is the problem. They are taking water from the deep end of the pool and pouring it into the shallow end.
The cost of the essentials is increasing. The value of the dollar is decreasing.
We don’t know what they are going to do tomorrow. They could raise the interest rates to 3% at the discount window, call back the unspent stimulus, and contract the money supply and cause serious deflation.
Or they could continue down the path they are on, and when the money hits the streets and foreign nations bail on the dollar, inflation hits in a big way. I think this will be the course of events.
I think we’ll just have to agree to disagree on what is the cause and what are consequences of the cause, and agree that the economy is in bad shape and the current Statists don’t really give a damn about fixing the problem. As long as they have this “crisis,” they can grab more power.
Hmmm.....a bounty hunter for the ahole America-hating DemocRats that caused the current and ongoing devastation and destruction of our economy and our country. And the leftist media traitors that enabled them.
I LIKE IT!!!
I bet a lot of people would be willing to volunteer (work for free).
Argentina is probably the best example we have.
But the fact of the matter is that we're in uncharted territory. Many well known economist are predicting the same. Maybe the following will help with understanding the situation we find ourselves in now.
Peter Schiff 3/25/09 - MSNBC Morning Joe
Walter Zimmerman on Glenn Beck: The Possibility of a Hyper-Inflationary Depression
Ron Paul at SRLC: Predicts an Inflationary Depression and Dollar Crisis
So basically the Dave Ramseys of the World our leading us to our doom?
Money is so weird.
Also known as "kicking the can down the road". You're correct, the Federal government is creating massive amounts of new debt to fool the public into thinking that we're not in the deflationary depression spiral that we're in.
But then again, what would you do if you were the government. The "cleansing" that we need to go through will be extremely painful for a whole lot of people - and could easily lead to panic and violence. It would also cause the Federal government to cut back on their power structure that they so deeply crave.
The cost of the essentials is increasing. The value of the dollar is decreasing.
No, the purchasing power of the US dollar is increasing on a macro level, even though the Federal government desparately wants to see it decrease to make their debt cheaper. The international banks withholding credit is what is driving this.
We don’t know what they are going to do tomorrow. They could raise the interest rates to 3% at the discount window, call back the unspent stimulus, and contract the money supply and cause serious deflation.
You're making a very common mistake of mixing the Federal government with the Federal Reserve. They're two different animals with two different agendas. The international banks have no desire to increase rates and the Federal government can't force them to. The Federal government will not leave stimulus dollars sitting unspent. They will seek to create as much new debt as possible. It's their only option to maintain their power structure. Deflation (actually a depression) is already here. It's just being masked by the Federal government deficit spending.
Think about this. The Federal government will run an almost $2 trillion dollar deficit this fiscal year. Our nation's fake GDP is around $14 trillion. This means that the Federal government is masking about 14% of a drop in GDP so that the citizenry can be propagandized that everything is becoming A-OK. It's a lie.
Or they could continue down the path they are on, and when the money hits the streets and foreign nations bail on the dollar, inflation hits in a big way. I think this will be the course of events.
Foreign nations aren't going to bail on the US dollar. Quite the opposite. They will be sprinting to buy US Treasury securities. Have you wondered why the yields are so low? Or the US Dollar Index is gaining so much strength against foreign currencies? I simply don't understand why people hold so forcefully to the inflation argument when no such thing exists or will be existing until the banks decide to release the "credit valve". Even then, inflation will be very moderate. Deflation is the monster that people don't seem to understand - and it's appetite is much larger than inflation.
I think we’ll just have to agree to disagree on what is the cause and what are consequences of the cause, and agree that the economy is in bad shape and the current Statists don’t really give a damn about fixing the problem. As long as they have this “crisis,” they can grab more power.
It's been a good debate my FRiend! We have two evil entities coming against us as a nation: 1) the international banks, and 2) the Federal government.
I wonder what Patrick Henry might have said about the Federal government if he were speaking before the Virginia delegation today?
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