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Old 04-09-2009, 08:12 AM
 
Location: Heartland Florida
9,324 posts, read 23,251,727 times
Reputation: 4895

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Quote:
Originally Posted by sheenie2000 View Post
How can you say that? Oil went down and so did milk. While grocery store prices haven't gone down as a whole, commodities futures did crash.



Yes the money supply increased, but much of that money hasn't gone into the hands of people. Do you have more money? The money that people lost is wayyyy more than the money injected by the Fed.

In Zimbabwe, their wages went up so they had more money in their accounts. That's why they were taking wheelbarrows of money to purchase bread.




No, we are not inflationary right now, we are deflationary.
There's many companies that have cut wages. Here's a slew of articles showing wage deflation. Not only are wages cut, people's work week's have reduced also as well as hours.

Mish's Global Economic Trend Analysis: Wage Deflation Sets In


You hyperinflationists keep preaching for years about hyperinflation. Maybe in 30 years you will be right finally. I guess even a broken watch is right twice.
This is how the inflationary depression works. Incomes deflate and expenses inflate. It is all due to government expanding when it should be shrinking. Government is a non-productive parasite and the bigger it gets the sicker the host gets. Of course the new money does not go to us, that's the plan. Those at the top want to maintain their status while everyone else does down with the ship. You just watch, inflation will continue to accelerate this summer and by next year will be in excess of the inflation we have had the last 7 years.
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Old 04-09-2009, 10:54 AM
 
17,750 posts, read 15,043,922 times
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Quote:
Originally Posted by floridasandy View Post
The US, when it went off the gold standard entirely, pretended a dollar had the same ‘weight’ as gold even though the gold was removed from the equation. This was a lie.
Hi floridasandy,

It has more weight than gold. Thats why FDR was able to confiscate gold. At no time does an inert yellow metal exceed political power somewhere. All currency is supported by force and it is force that prevents outright stealing of precious metals. We either have political access or we don't.



Quote:
The next lie was worse: debts are assets!
Well I agree with this, a debt should be treated as a credit to something and not an asset but unfortunately we quantify assets with debt.

Quote:
ONLY TO THE CAPITALIST. we now have a negative GDP and no wealth. individually the debt-to-disposable income ratio of American households more than doubled from 60% in 1980 to 133% in 2007. If there is no capital, the debt is pure poison! It is a destroyer, not a creator force. We owe money to China and China does have capital! So they are the ones who are getting wealth out of debt. Not anyone or anything in the US. If any banker was to make money this way, it will be owed to China.
Nothing happens without the consent of both parties. The system we have is very similar to a Roman Patriarch and his slaves verse the freeman. A freeman found it difficult to compete with free slave labor in Rome thus the economy was between the rich Roman and the slave just like Wall Street uses Chinese slave labor. Its nothing new. Its not necessarily even debt unless we agree to pay it. Most countries just defaulted and the one's that did not were usually controlled by the creditors.
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Old 04-09-2009, 11:04 AM
 
17,750 posts, read 15,043,922 times
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Quote:
Originally Posted by GregW View Post
I own my house with the mortgage nearly paid off and I am about to retire on a fixed income. Inflation is anathama to me because it reduces my purchasing power every year. I want a deflating economy where dollars become more valuable not an inflation where they loose value. maybe it is about time we tried an economy that ran on savings and wealth creation not mortgage and credit card debt and funny money. Might do most of us some good although the financiers would take a hit because they would have to repay loans with real money not inflated paper.
Hi GregW,

We should have stable prices, end of story. You may very well see a nominal advantage in deflation but it would be due to capital starved of liquidity. It tends to destroy capital. If you were the last one on earth you could have it all for nothing. The result may very well be that medical technology that was to extend your life another 10 years in retirement is destroyed. Static analysis is a tricycle, dynamic analysis is a dragster.
There is a big difference between saving corn in a tower, which is saving, and hoarding a currency that is just a tool of commerce. Currencies should never increase in value.
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Old 04-09-2009, 11:25 AM
 
17,750 posts, read 15,043,922 times
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Quote:
Originally Posted by tallrick View Post
This is how the inflationary depression works. Incomes deflate and expenses inflate. It is all due to government expanding when it should be shrinking. Government is a non-productive parasite and the bigger it gets the sicker the host gets. Of course the new money does not go to us, that's the plan. Those at the top want to maintain their status while everyone else does down with the ship. You just watch, inflation will continue to accelerate this summer and by next year will be in excess of the inflation we have had the last 7 years.

Hi tallrick,

I don't really like that model. If wages go down its simply a shift in demand for labor which drives down its price. If circulating capital goes up in price then it is likely that there has been consolidation/destruction in the fixed capital.
If government does create demand for labor that business must compete for then yes we will see fewer goods and services and relative inflation. However increasing housing prices did little to add to goods in services either.

Typically hyper-inflation occurs when capital and labor is destroyed whole sale sort of like printing money to buy water in a desert. Zimbabwe did not delicately transition their farming class and destroyed it, then the dollars were printed. Whatever it is they choose to do its entirely up to them and they can have inflation or deflation. It was not until the Fed began to purchase treasuries that I saw any measure against deflation which is why we have had it until this point and I expect to see it flatten out for now. I am interested in seeing this month's CPI. The only problem is that paying down debt is still the best investment which may mean another round of treasury purchases.
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Old 04-09-2009, 08:07 PM
 
48,519 posts, read 81,113,623 times
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Well we certainly have deflation for now. But the interest rates are low because of they Fed. Even during realtively slight slowdowns the Fed never raise inflation soon enouhg to stop a inflation cycle;so with that and the stimulus coming with demands it creats I look for high inflation. Prepare for that and if by some miracle it does not happen you will be well off.
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Old 04-09-2009, 09:18 PM
 
17,750 posts, read 15,043,922 times
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Quote:
Originally Posted by texdav View Post
Well we certainly have deflation for now. But the interest rates are low because of they Fed. Even during realtively slight slowdowns the Fed never raise inflation soon enouhg to stop a inflation cycle;so with that and the stimulus coming with demands it creats I look for high inflation. Prepare for that and if by some miracle it does not happen you will be well off.
Hi texdav,

The Fed can stop inflation anytime it wants to do so. If it is allowed it is an intentional act. I could teach a 5th grader to stop inflation. 20% interest rates and double the reserve ratio and inflation is stopped on a dime. Paul Volker demonstrated how easy it is. The recent bailouts only had the effect of allowing banks to remain solvent according to bank accounting rules. Stopping deflation is what the Fed cannot do well aka pushing on a rope. The question is a political one and I will agree the Fed has shown that it will not act to stop inflation mostly because it does not include real estate in the CPI.
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Old 04-09-2009, 09:21 PM
 
Location: Fly-over country.
1,765 posts, read 6,246,544 times
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deflation is worse because it drives a cycle that leads to depression

inflation will be used (soon) when the fed starts to raise the rates (see the rates in the US back in 79-80 or whenever that was, I was just a kid)
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Old 04-10-2009, 06:22 AM
 
Location: Londonderry, NH
41,505 posts, read 49,604,613 times
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Low basic interest rates benefit the folks that work with money because it facilitates their gambling. Higher rates shut off their supply of free money they use to buy paper from each other. The circulation of monetary paper, with no inherent value, creates the inflation because the price of the paper continues to increase while the value does not.

High basic interest rates shut off this wealth destroying financial trade. High basic loans rates require the loans be made to build things that create wealth like more efficient farm and mining machinery and newer or reconfigured high tech factories. It makes speculating in houses nearly impossible because it limits loan amounts loaned to non productive items like houses, cars and recreation travel. High basic interest will convert this economy to an investment and production base and away from the unproductive FIRE economy that has nearly destroyed out country. The new (old) economy will require investment in assets not liabilities. A better harvester is an asset while a fancier house and TV are just more liability. It is the difference between a frugal life and an economy and the life and economy of a gambler.
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Old 04-10-2009, 12:30 PM
 
17,750 posts, read 15,043,922 times
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Quote:
Originally Posted by GregW View Post
Low basic interest rates benefit the folks that work with money because it facilitates their gambling. Higher rates shut off their supply of free money they use to buy paper from each other. The circulation of monetary paper, with no inherent value, creates the inflation because the price of the paper continues to increase while the value does not.

High basic interest rates shut off this wealth destroying financial trade. High basic loans rates require the loans be made to build things that create wealth like more efficient farm and mining machinery and newer or reconfigured high tech factories. It makes speculating in houses nearly impossible because it limits loan amounts loaned to non productive items like houses, cars and recreation travel. High basic interest will convert this economy to an investment and production base and away from the unproductive FIRE economy that has nearly destroyed out country. The new (old) economy will require investment in assets not liabilities. A better harvester is an asset while a fancier house and TV are just more liability. It is the difference between a frugal life and an economy and the life and economy of a gambler.
Hi GregW,

The financial industry has beguiled and swindled most of the public. Most people believe that government deficits are bad and low interest rates are good. A low Fed rate is free money for banks that drive up long term interest rates all at interest to banks. The only reason why government deficits are bad is because the treasury cannot create its own currency and relies on an entity controlled by the banking cartel. Thus deficits do cause interest rates to rise if the Fed does not purchase bonds. If the treasury ran deficits and created its own currency we would have a positive effect if done in moderation of around 3% inflation.

All that would be need to fix a deflationary problem would be to lower taxes and spend money into circulation by the normal functions of government with low taxes. If inflation increased all they would need to do is raise taxes.


Going back to our present reality, why on earth have we not seen taxes cut across the board while the Fed buys bonds? That would end this farcical manufactured crises of the banks. Instead what we have seen is the interest rate drop which is a banker tax cut that also is designed to spew money into the system at interest, all of which goes or is to go into more asset inflationary sponges and rarely go into new productive capital.
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Old 04-10-2009, 12:39 PM
 
Location: Chino, CA
1,458 posts, read 2,900,278 times
Reputation: 546
Quote:
Originally Posted by gwynedd1 View Post
Going back to our present reality, why on earth have we not seen taxes cut across the board while the Fed buys bonds? That would end this farcical manufactured crises of the banks. Instead what we have seen is the interest rate drop which is a banker tax cut that also is designed to spew money into the system at interest, all of which goes or is to go into more asset inflationary sponges and rarely go into new productive capital.
You already know the answer gwynedd1.

-chuck22b
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