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The Deflation Monster Has Arrived
Zero Hedge ^ | 16 Jan 16 | Tyler Durden

Posted on 01/16/2016 10:19:48 AM PST by SkyPilot

As we’ve been warning for quite a while (too long for my taste): the world’s grand experiment with debt has come to an end. And it’s now unraveling.

Just in the two weeks since the start of 2016, the US equity markets are down almost 10%. Their worst start to the year in history. Many other markets across the world are suffering worse.

If you watched stock prices today, you likely had flashbacks to the financial crisis of 2008. At one point the Dow was down over 500 points, the S&P cracked below key support at 1,900, and the price of oil dropped below $30/barrel. Scared investors are wondering: What the heck is happening? Many are also fearfully asking: Are we re-entering another crisis?

Sadly, we think so. While there may be a market rescue that provide some relief in the near term, looking at the next few years, we will experience this as a time of unprecedented financial market turmoil, political upheaval and social unrest. The losses will be staggering. Markets are going to crash, wealth will be transferred from the unwary to the well-connected, and life for most people will get harder as measured against the recent past.

It’s nothing personal; it’s just math. This is simply the way things go when a prolonged series of very bad decisions have been made. Not by you or me, mind you. Most of the bad decisions that will haunt our future were made by the Federal Reserve in its ridiculous attempts to sustain the unsustainable.


(Excerpt) Read more at zerohedge.com ...


TOPICS: Business/Economy; Extended News; Government; News/Current Events
KEYWORDS: debt; deflation; depression; economy; fed
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To: Jim Noble

I do get what you’re saying, but isn’t that really a transfer of fixed wealth, not the destruction thereof? If the wealth isn’t backed, it means somebody loses, but the fixed wealth remains only to be acquired by its creditors. No?


21 posted on 01/16/2016 10:42:21 AM PST by Up Yours Marxists
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To: Sequoyah101
In the last 40 years the oil industry has had busts and some massive layoffs in 1979 that few remember, 1982, 1986 through at least 1994 and it may not have ended because another came in 1998, 2001 and 2008 and again now in 2015. It has not been a steady life at all.

Yep. It has been one heck of a ride.

22 posted on 01/16/2016 10:42:35 AM PST by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing.)
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To: ClearCase_guy

...Makes no sense to me. The money doesn’t go anywhere. It just changes hands. ...

What is happening is that governments expand the money supply by issuing bonds, or just plain printing more money. The result is you actually expand the amount of money in circulation, while at the same time devaluing its worth. The expected results are that the economy will expand with the added liquidity and you will be able to retire the additional debt (bonds) with the added taxes from the expanded economy.
The problem that emerges is if you expand the money supply faster than the economy grows, you run into the problems of inflation, or if the economy, does not react to the added stimulous, is deflation, which is the big concern now.


23 posted on 01/16/2016 10:42:51 AM PST by WILLIALAL
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To: Cringing Negativism Network

Jeremiah 17:5.


24 posted on 01/16/2016 10:44:00 AM PST by Olog-hai
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To: All
I'd LIKE to see some deflation.

Any of you guys bought groceries lately?

Nearly everything I buy (food and over-the-counter medicine, etc.) regularly has gone up 10-100% in the last year.

25 posted on 01/16/2016 10:44:38 AM PST by LegendHasIt
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To: ClearCase_guy

Because the first guy to loan you money printed it and promised it was worth something. 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.


26 posted on 01/16/2016 10:44:58 AM PST by Glad2bnuts (Go Cruz GO, scare the RINO's to death)
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To: LegendHasIt

Stop eating. You are food addict.


27 posted on 01/16/2016 10:45:27 AM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: SkyPilot

We are in a stock market correction.

Stocks are being re-priced closer in general to their true value.

Stocks are supposed to be merely a means of buying future income. Stocks are not race horses, sports teams or beautiful paintings. In valuing stocks, unemotional reasoning should be applied.

Oil is in a temporary decline due to Saudi population pressures and the desire of US producers to meet agreed upon debt repayments.

Oil can not be produced in the US in the long term at the prices now being obtained , so it won’t be. Government need o nothing. However, it could buy domestic oil wells cheaply.

As for deflation, doctors and dentists aren’t lowering their prices and they won’t be. Plumbers and other repairmen won’t be charging less in my town.

Do you think health insurance will be getting cheaper? Only if your name is Barack.

If house prices fall by twenty percent in my town, houses will still be overpriced.

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.


28 posted on 01/16/2016 10:45:36 AM PST by Brian Griffin
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To: SkyPilot

History shows markets always correct themselves. We knew it was coming, just when, how bad, and how long will it last is always unpredictable.

Considering corrections are enevitable, better now than in a year or two simply because it will happen on obamas watch.

I see recovery about the time Trump or Cruz is sworn in, and whatever they do can only make it better.


29 posted on 01/16/2016 10:49:11 AM PST by redfreedom (Voting for the lesser of two evils is still voting for evil.)
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To: central_va

True.

If I would just stop eating, completely, all of my other problems would just fade away.


30 posted on 01/16/2016 10:50:32 AM PST by LegendHasIt
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To: Brian Griffin
Stocks are supposed to be merely a means of buying future income.

The way my professor explained it to my the true value of a stock is a moving target but it can be roughly calculated as the total assets of a corporation minus it's liabilities divided by the total number of outstanding shares. If you pay more than that price you speculating on future earnings which isn't bad , just realize what you are doing.

31 posted on 01/16/2016 10:50:49 AM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: Up Yours Marxists
the fixed wealth

Fixed wealth has become a very difficult concept to define with the advent of electronic debt booked as assets.

To me, "fixed wealth" implies something you possess which cannot be simultaneously possessed by another (I have this double eagle, therefore you don't have it) AND which cannot be taken from you other than by force.

Not sure how much fixed wealth there is, but it's a lot less than most people seem to believe.

32 posted on 01/16/2016 10:51:38 AM PST by Jim Noble (Diseases desperate grown Are by desperate appliance relieved Or not at al)
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To: ClearCase_guy

“Makes no sense to me. The money doesn’t go anywhere. It just changes hands. And yet we seem to live in a world in which every country on the planet is broke and in debt.”

Respectfully;

The people who took received the money are not broke and in debt. It’s the government entities that decided that spending money and printing it would be possible forever with no consequences who are obliged to repay it.

The money is in vehicles, homes, food markets, “investments” in solar collector companies, “saved” automotive companies, “infrastructure” projects that never took place, “free” phones, “free” food, “youth” programs, “free” school breakfasts, lunches and dinners, “free” tuitition, and every other excuse for government taxing, spending and borowing that results in debt that must be paid off.

The money has to be repaid but there’s noone left to repay such astronomical amounts of money that were thrown out with no hope of return, camouflaged as “investments”.

IMHO


33 posted on 01/16/2016 10:51:48 AM PST by ripley
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To: Brian Griffin

....As for deflation, doctors and dentists aren’t lowering their prices ....

Deflation is just a surplus of any commodity vs demand. Doctors and dentists may not lower their prices, but if people just don’t go to a doctor or a dentist, there will be an economic impact on those practices. I may just decide to have a tooth pulled, at a cost of $200, vs the alternative of a dental implant $2-3000. Big difference. Deflation can cut a deep groove everywhere.


34 posted on 01/16/2016 10:53:22 AM PST by WILLIALAL
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To: Psalm 73

When the local governments collapse, the militia will rise to take care of business


35 posted on 01/16/2016 10:53:39 AM PST by DownInFlames
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To: Up Yours Marxists

The velocity with which transactions take place has as much to do with the “value” of the unit of exchange as the intrinsic factor of that medium of exchange.

Velocity of transactions has slowed TREMENDOUSLY as of recent times. The “go-go” factor is missing, drowned in red tape, bureaucracy and a growing fear factor.

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

Can you say, “Bubble burst”?


36 posted on 01/16/2016 10:53:50 AM PST by alloysteel (If I considered the consequences of my actions, I would rarely do anything.)
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To: ClearCase_guy

Not with fractional reserves. The banks lend out much more money than what really exists. It is only appear wealth. True wealth is out right ownership of tangible assets.


37 posted on 01/16/2016 11:00:19 AM PST by Rusty0604
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To: LegendHasIt

My theory is that if the 50% who are concerned with CO2 production were to expire, many “problems” would be solved.


38 posted on 01/16/2016 11:01:36 AM PST by Paladin2
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To: ClearCase_guy
You're confusing economics with finance.

Economics is a "science" (I use the quotes because it is a human science, not a traditional science of the physical world), while finance involves mechanisms of trade that relate to economics.

39 posted on 01/16/2016 11:05:17 AM PST by Alberta's Child (My mama said: "To get things done, you'd better not mess with Major Tom.")
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To: ripley

Not to speak of promised future “benefits” that are currently unfunded.


40 posted on 01/16/2016 11:07:37 AM PST by Paladin2
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