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To: olrtex
"The absence of a QE3 will not reverse the previous debt monetization, which will continue to spur inflation for awhile. All this absurd borowing the federal government is doing will eventually lead to much higher inflation and interest rates; and the longer the fed delays that effect, the greater the effect will be."

While the Fed and the Treasury have done everything in their power to create a real inflation, they have essentially failed.

The velocity of money is about where it was in 1930...if not the slowest ever.

These surges of printed fiat money (QE whatever) are going into what the banks and institutional players see as "safe bets"...which has been gold, oil and agricultural commodities. And the will preserve some value there.

But once the last hurrah of the last QE event has circulated through the system with a sub 1.0 velocity, everyone will turn around and find not buyers at their back, but a cold wind.

That's when the "fun" starts. The previous, natural and healthy deflation that has been put on hold by endlessly low interest rates, exotic instruments, QE and the purchase of financial assets...will be augmented by the NEW deflationary pop.

Combined with the crushing psychological despair that comes with realizing you've been screwed and lied to...and that everything everywhere is now gone...this will be a tough one.

When Bill Gross believes cash is better than treasuries...you can BET the S is about to HTF.

83 posted on 03/09/2011 2:44:25 PM PST by Mariner (USS Tarawa, VQ3, USS Benjamin Stoddert, NAVCAMS WestPac, 7th Fleet, Navcommsta Puget Sound)
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To: Mariner

It’s really hard to believe deflation is, or will be, a threat. The government debt cannot be paid unless there is first a severe devaluation in the dollar, which means lots of inflation.

At least one of us is wrong (I hope it’s both of us, but I’m confident it’s not).


89 posted on 03/09/2011 3:21:15 PM PST by olrtex
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To: Mariner

It’s really hard to believe deflation is, or will be, a threat. The government debt cannot be paid unless there is first a severe devaluation in the dollar, which means lots of inflation.

At least one of us is wrong (I hope it’s both of us, but I’m confident it’s not).


93 posted on 03/09/2011 3:33:57 PM PST by olrtex
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To: Mariner
"That's when the "fun" starts. The previous, natural and healthy deflation that has been put on hold by endlessly low interest rates, exotic instruments, QE and the purchase of financial assets...will be augmented by the NEW deflationary pop."

The Coming Rout (In Stocks, Bonds, Commodities and Precious Metals)

110 posted on 03/09/2011 5:52:50 PM PST by blam
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