Comments on: The Great Inflation / Deflation Debate http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/ Financial War Reports Mon, 13 Feb 2012 03:36:58 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Upper US http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-28452 Upper US Thu, 24 Sep 2009 02:47:28 +0000 http://maxkeiser.com/?p=2938#comment-28452 Oh hey, everybody, Mish is correct. Don't protest your government, the problem LIES in these fraudulent banksters. M1, M2 or 3 doesn't matter? really? Take your dollars out of your bank and keep them in your pillowcase. See if it matters then. Do not trust central bankers that can play shell games with massive "electronic funds". Oh hey, everybody, Mish is correct. Don’t protest your government, the problem LIES in these fraudulent banksters. M1, M2 or 3 doesn’t matter? really? Take your dollars out of your bank and keep them in your pillowcase. See if it matters then. Do not trust central bankers that can play shell games with massive “electronic funds”.

]]> By: Robert Baird http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-28377 Robert Baird Wed, 23 Sep 2009 15:00:13 +0000 http://maxkeiser.com/?p=2938#comment-28377 It could be we have both inflation and deflation. A credit collapse leads to deflation. Governments print money to create inflation to try and offset. Eventually they have to stop and then the deflationary collapse resumes. Even Zimbabwe is now in deflation after abandoning its own destroyed currency. There seems to be an awful lot of imponderables that preclude any precise predictions regarding timelines etc. Thankfully we have websites such as this to help us laypeople decipher the situation somewhat. It could be we have both inflation and deflation. A credit collapse leads to deflation. Governments print money to create inflation to try and offset. Eventually they have to stop and then the deflationary collapse resumes. Even Zimbabwe is now in deflation after abandoning its own destroyed currency. There seems to be an awful lot of imponderables that preclude any precise predictions regarding timelines etc. Thankfully we have websites such as this to help us laypeople decipher the situation somewhat.

]]> By: Slappy http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-28209 Slappy Tue, 22 Sep 2009 21:22:38 +0000 http://maxkeiser.com/?p=2938#comment-28209 I think we will first continue down the deflationary road with a new collapse of commodities and the stock market coming sometime around Sept/Oct or Feb/March. The money that the fed is creating is nothing compared to the true credit destruction that has and is occurring. Just because the banks aren’t reporting it doesn’t mean it isn’t real. The U.S government will continue to run ridiculous deficits as a response to each new downturn (and military conquest). While that is happening the global community will come up with some other system to use as a world reserve currency. Then the international community will reject our government debt and the dollar will crash. That is when we will see hyperinflation followed by the real deflationary collapse. Just in time for the boomers retirement. Everyone acts like the U.S. government is printing money, it is not. The bankers at the fed are printing money, the government borrows money. We would be better off if the government would print at least some money so that it could be spent into the system with no interest attached. Then maybe we could avoid the credit crash that seems to happen every 60 years or so. CREDIT BASED MONETARY SYSTEMS ALWAYS COLLAPSE! Even if it is backed by gold! The reason is that the interest is never created so ever greater quantities of loans have to be issued until they can not be repaid. Then the collapse and the bankers start over again. I think we will first continue down the deflationary road with a new collapse of commodities and the stock market coming sometime around Sept/Oct or Feb/March. The money that the fed is creating is nothing compared to the true credit destruction that has and is occurring. Just because the banks aren’t reporting it doesn’t mean it isn’t real.

The U.S government will continue to run ridiculous deficits as a response to each new downturn (and military conquest). While that is happening the global community will come up with some other system to use as a world reserve currency. Then the international community will reject our government debt and the dollar will crash. That is when we will see hyperinflation followed by the real deflationary collapse. Just in time for the boomers retirement.

Everyone acts like the U.S. government is printing money, it is not. The bankers at the fed are printing money, the government borrows money. We would be better off if the government would print at least some money so that it could be spent into the system with no interest attached. Then maybe we could avoid the credit crash that seems to happen every 60 years or so. CREDIT BASED MONETARY SYSTEMS ALWAYS COLLAPSE! Even if it is backed by gold! The reason is that the interest is never created so ever greater quantities of loans have to be issued until they can not be repaid. Then the collapse and the bankers start over again.

]]> By: Adam C http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-28101 Adam C Tue, 22 Sep 2009 13:04:50 +0000 http://maxkeiser.com/?p=2938#comment-28101 The deflationists seem neither willing nor able to factor the irrationality of central bankers and politicians into their models. This is why they can't/won't anticipate massive monetary inflation. @cb Max and Stacy would be the best to ask for more analysis of SPECFLATION. I'm certainly looking forward to more. All fiat currencies are going to get sucked into this perfect storm (which happens to be located in the Bermuda Triangle, btw) because they'll appreciate/depreciate depending on the flows of the carry trade as well as having to adjust for the purchase of commodities and capital goods priced in dollars to balance trade accounts. Chaos is the only proper word to describe this situation. The seas will be made all the more choppy due to the hot air and bluster of politicians and central bankers. I'm now imagining the speculative surface of these vast fiat waves being covered in quantum foam: http://www.zamandayolculuk.com/cetinbal/AE/E_Expanding-spacetime-foam-01.gif Both savers and speculators will begin to self-identify with the currencies they cling to as dollarism, yenism, yuanism, etc replace feelings of nationalism. The currency wars could evolve into fighting wars as the most 'sane' way to psychologically deal with all the uncertainity and the only meaningful predictions will be who is most likely to survive those wars and how. Much or very little depends on what the next G20 comes up with on 24/25 September. The deflationists seem neither willing nor able to factor the irrationality of central bankers and politicians into their models. This is why they can’t/won’t anticipate massive monetary inflation.

@cb

Max and Stacy would be the best to ask for more analysis of SPECFLATION. I’m certainly looking forward to more.

All fiat currencies are going to get sucked into this perfect storm (which happens to be located in the Bermuda Triangle, btw) because they’ll appreciate/depreciate depending on the flows of the carry trade as well as having to adjust for the purchase of commodities and capital goods priced in dollars to balance trade accounts. Chaos is the only proper word to describe this situation. The seas will be made all the more choppy due to the hot air and bluster of politicians and central bankers.

I’m now imagining the speculative surface of these vast fiat waves being covered in quantum foam:
http://www.zamandayolculuk.com/cetinbal/AE/E_Expanding-spacetime-foam-01.gif

Both savers and speculators will begin to self-identify with the currencies they cling to as dollarism, yenism, yuanism, etc replace feelings of nationalism. The currency wars could evolve into fighting wars as the most ‘sane’ way to psychologically deal with all the uncertainity and the only meaningful predictions will be who is most likely to survive those wars and how.

Much or very little depends on what the next G20 comes up with on 24/25 September.

]]> By: Freudian Slit http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-28046 Freudian Slit Tue, 22 Sep 2009 08:58:19 +0000 http://maxkeiser.com/?p=2938#comment-28046 Logic would suggest deflation followed by inflation due to the monetary supply being inflated. The new money created by the fed wont just disappear. It is just a matter of time until enters into circulation. The Weimar-Republic experienced it's deflationary collapse in 1920; hyperinflation peaked in 1923. My deflated 2c Logic would suggest deflation followed by inflation due to the monetary supply being inflated. The new money created by the fed wont just disappear. It is just a matter of time until enters into circulation. The Weimar-Republic experienced it’s deflationary collapse in 1920; hyperinflation peaked in 1923.

My deflated 2c

]]> By: cb http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-28018 cb Tue, 22 Sep 2009 02:03:36 +0000 http://maxkeiser.com/?p=2938#comment-28018 Thank you for that, Adam C Sep 21, 2009 at 5:01 am Powerful imagery, and helpful at that. Would you mind following up with some comments on the following, please: 1. how about other currencies, or assets of non-us countries? How are these accounted for in a SPECFLATION theory of asset price movements? 2. Do you think that a SPECFLATION based theoretical framework could have greater predictive power than the traditional approaches, or do you see the almost senseless and incalculable bobbing of currency and asset values to be its sole prediction? 3. What, if any, implications do you see for investor borrowing to purchase assets, gold, property, etc.? Should all debt be shunned while this chaotic state lasts? If you are tempted to say YES, then perhaps most people could not buy a home for who knows how long, and if you agree, would this implication bother you as, perhaps, extreme and a potential reductio threat to your argument? Thanks. Thank you for that, Adam C
Sep 21, 2009 at 5:01 am
Powerful imagery, and helpful at that.
Would you mind following up with some comments on the following, please:
1. how about other currencies, or assets of non-us countries? How are these accounted for in a SPECFLATION theory of asset price movements?
2. Do you think that a SPECFLATION based theoretical framework could have greater predictive power than the traditional approaches, or do you see the almost senseless and incalculable bobbing of currency and asset values to be its sole prediction?
3. What, if any, implications do you see for investor borrowing to purchase assets, gold, property, etc.? Should all debt be shunned while this chaotic state lasts? If you are tempted to say YES, then perhaps most people could not buy a home for who knows how long, and if you agree, would this implication bother you as, perhaps, extreme and a potential reductio threat to your argument? Thanks.

]]> By: Tony http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-27997 Tony Mon, 21 Sep 2009 23:25:14 +0000 http://maxkeiser.com/?p=2938#comment-27997 Very much enjoyed the deflation vs inflation debate. As Mich said the listener was the winner. As a small consumer it says with deflation the money you pay back a year from now is worth more than today the obverse is true with inflation...as of now Shedloch is right...Marc Faber as always is a total stud. I like him because he speaks to fundamentals but hes not in love with his ideas and like all good traders he understands that the market is right. Very much enjoyed the deflation vs inflation debate. As Mich said the listener was the winner. As a small consumer it says with deflation the money you pay back a year from now is worth more than today the obverse is true with inflation…as of now Shedloch is right…Marc Faber as always is a total stud. I like him because he speaks to fundamentals but hes not in love with his ideas and like all good traders he understands that the market is right.

]]> By: Tony http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-27995 Tony Mon, 21 Sep 2009 23:15:26 +0000 http://maxkeiser.com/?p=2938#comment-27995 Very much enjoyed the deflation vs inflation debate. As Mich said the listener was the winner. As a small consumer it says with deflation the money you pay back a year from now is worth more than today the obverse is true with inflation...as of now Shedloch is right... Very much enjoyed the deflation vs inflation debate. As Mich said the listener was the winner. As a small consumer it says with deflation the money you pay back a year from now is worth more than today the obverse is true with inflation…as of now Shedloch is right…

]]> By: Sugar (Hill) Daddy http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-27986 Sugar (Hill) Daddy Mon, 21 Sep 2009 21:32:27 +0000 http://maxkeiser.com/?p=2938#comment-27986 Mish makes a good argument for deflation. I get it that debt comes first, printing fresh crisp container ships of Federal Reserve monopoly money, at taxpayer expense, comes second. But so what? What am I supposed to do with statements like "we are going to get more deflation and this is what people have to prepare themselves for?" Prepare ... how? Buy stocking up on really good Center Cut Pork Chops at 1.83 a pound? I live in New York. $1.83 gets you NOTHING in this town, even in a 99-cent store! If Mish is critical of the Banking Oligarchy's use of all that fresh Ponzi Panini, I can't find it. If it's there to be found, I suspect it occurs some 15 minutes after my eyes glaze over and I go into a freakin' COMA listening to yet another reason why my Incredible Shrinking Dollar is DEflation, not inflation. (deflation 104, deflation 105, defla ... zzzzzzz!) As a result, Mish's arguments for deflation and the continued need to print more money sounds like 5-Star Praise of Bernanke & Geithner's plan to continue to play the Beta version of Grand Theft Taxpayer on the Fed's computer. I'm not saying Mish's analysis is wrong. I'm saying Speak to me in a Language I can understand. If Deflation is what happened in the Great Depression then let's talk about Depression! C'mon Mish. Say it! Deeeee ... Pressshhhhh ... sshhhhuuuuun! We're in a Depression! And the only way out is to wipe out the Debts of ALL Americans so that ordinary citizens can go about the all-important business of making Lloyd Blankfein rich by going into DEBT ,,, Again!" And don't show me anymore charts. The only visual I want to see on my computer screen is the Live Feed of Lloyd Blankfein and Larry Summers IMPALED on the horns of that Big Brass BULL in Bowling Green! Mish makes a good argument for deflation. I get it that debt comes first, printing fresh crisp container ships of Federal Reserve monopoly money, at taxpayer expense, comes second. But so what? What am I supposed to do with statements like “we are going to get more deflation and this is what people have to prepare themselves for?”

Prepare … how? Buy stocking up on really good Center Cut Pork Chops at 1.83 a pound? I live in New York. $1.83 gets you NOTHING in this town, even in a 99-cent store!

If Mish is critical of the Banking Oligarchy’s use of all that fresh Ponzi Panini, I can’t find it. If it’s there to be found, I suspect it occurs some 15 minutes after my eyes glaze over and I go into a freakin’ COMA listening to yet another reason why my Incredible Shrinking Dollar is DEflation, not inflation. (deflation 104, deflation 105, defla … zzzzzzz!)

As a result, Mish’s arguments for deflation and the continued need to print more money sounds like 5-Star Praise of Bernanke & Geithner’s plan to continue to play the Beta version of Grand Theft Taxpayer on the Fed’s computer.

I’m not saying Mish’s analysis is wrong. I’m saying Speak to me in a Language I can understand. If Deflation is what happened in the Great Depression then let’s talk about Depression!

C’mon Mish. Say it! Deeeee … Pressshhhhh … sshhhhuuuuun! We’re in a Depression! And the only way out is to wipe out the Debts of ALL Americans so that ordinary citizens can go about the all-important business of making Lloyd Blankfein rich by going into DEBT ,,, Again!”

And don’t show me anymore charts. The only visual I want to see on my computer screen is the Live Feed of Lloyd Blankfein and Larry Summers IMPALED on the horns of that Big Brass BULL in Bowling Green!

]]> By: harry_w http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-27982 harry_w Mon, 21 Sep 2009 20:55:29 +0000 http://maxkeiser.com/?p=2938#comment-27982 @ naomi, "Reality and true valuation is a moving target set afloat on a sea of pirates…." :D The price that dare not speak its name. The 'market' was abolished along with mark-to-market. Since then all prices are, as you put it, 'a moving target set afloat on a sea of pirates…' @ naomi,

“Reality and true valuation is a moving target set afloat on a sea of pirates….”

:D

The price that dare not speak its name.

The ‘market’ was abolished along with mark-to-market. Since then all prices are, as you put it, ‘a moving target set afloat on a sea of pirates…’

]]> By: naomi http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-27953 naomi Mon, 21 Sep 2009 17:11:32 +0000 http://maxkeiser.com/?p=2938#comment-27953 I listened to all three segments and by the end of the hairsplitting on definitions of inflation and deflation and what is included in the calculation of each I came away with a feeling that all of these models and terms used are fluid and the rules of the game can be changed. But there are basics that remain, we are a debtor nation with nothing to sell except toxic paper including the dollar. Nations that are not in debt and have products to sell, will move away from the US model and its currency and do well. I am not educated in finance and find it gobblygook most of the time. Especially with statistical manipulation and computer programs written to drive markets where they please. Reality and true valuation is a moving target set afloat on a sea of pirates.... I listened to all three segments and by the end of the hairsplitting on definitions of inflation and deflation and what is included in the calculation of each I came away with a feeling that all of these models and terms used are fluid and the rules of the game can be changed.

But there are basics that remain, we are a debtor nation with nothing to sell except toxic paper including the dollar.

Nations that are not in debt and have products to sell, will move away from the US model and its currency and do well.

I am not educated in finance and find it gobblygook most of the time. Especially with statistical manipulation and computer programs written to drive markets where they please. Reality and true valuation is a moving target set afloat on a sea of pirates….

]]> By: WL http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-27944 WL Mon, 21 Sep 2009 16:45:57 +0000 http://maxkeiser.com/?p=2938#comment-27944 It all depends how you define inflation/deflation. This complete butchering of the definition has created the arguments and confusion. You must separate Asset price inflation/deflation and wage inflation/deflation from global money and credit. If you define inflation as the growth in the global supply of money and credit then without any constraint on the creation of such then you can only have inflation and disinflation (a slowing rate of inflation which feels like deflation). The issue becomes muddy when you try to define money and credit, IMF SDRs, derivatives, gov stimulus packages, rebates cash for clunkers, rebate cheques, etc. It is just like the US debt ceiling, whenever it gets close they raise it, so it really has no meaning. Globally, the ability to create money and credit in all forms is unlimited and without constraint. To add a layer of complexity there is a push and flow between international entities as in Japan, expanding their money and credit had little effect as the carry trade took it offshore and created inflation outside Japan. Now, the US is becoming the carry trade... As Schiff said recently, inflation in $$s and deflation in Gold, real money. http://www.netcastdaily.com/broadcast/fsn2009-0912-3b.mp3 It all depends how you define inflation/deflation. This complete butchering of the definition has created the arguments and confusion.

You must separate Asset price inflation/deflation and wage inflation/deflation from global money and credit. If you define inflation as the growth in the global supply of money and credit then without any constraint on the creation of such then you can only have inflation and disinflation (a slowing rate of inflation which feels like deflation). The issue becomes muddy when you try to define money and credit, IMF SDRs, derivatives, gov stimulus packages, rebates cash for clunkers, rebate cheques, etc. It is just like the US debt ceiling, whenever it gets close they raise it, so it really has no meaning. Globally, the ability to create money and credit in all forms is unlimited and without constraint. To add a layer of complexity there is a push and flow between international entities as in Japan, expanding their money and credit had little effect as the carry trade took it offshore and created inflation outside Japan. Now, the US is becoming the carry trade… As Schiff said recently, inflation in $$s and deflation in Gold, real money.

http://www.netcastdaily.com/broadcast/fsn2009-0912-3b.mp3

]]> By: Teresa http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-27934 Teresa Mon, 21 Sep 2009 16:18:41 +0000 http://maxkeiser.com/?p=2938#comment-27934 That was an engrossing debate. I wish the audio had been better on the second hour though. That was an engrossing debate. I wish the audio had been better on the second hour though.

]]> By: Adam C http://maxkeiser.com/2009/09/20/the-great-inflation-deflation-debate/#comment-27885 Adam C Mon, 21 Sep 2009 12:01:37 +0000 http://maxkeiser.com/?p=2938#comment-27885 As I understand it, SPECFLATION is looking at the volatility of all things priced in dollars due to currency flows in the dollar carry trade. It's not about the inflation/deflation debate, though bailouts of the short-squeezed will likely be paid with inflation. For SPECFLATION I'm imagining a rough sea that completely covers the entire globe. The sea represents dollars with bobbing boats and tilting tankers representing various classes of dollar-denominated assets. As the sea gets increasing rough and choppy nobody can really know what wave will rise or lower them next. All measures of value (altitude of wave) are completely relative and limited to only being able to see the horizon and no further. The only way to escape this madness is to be in a submarine – gold – swimming below the surface. The only way to sustainably survive is to build on the sea bed, scavenging any real assets that sink down below the surface and whilst being willfully oblivious to the chaos and destruction above. As I understand it, SPECFLATION is looking at the volatility of all things priced in dollars due to currency flows in the dollar carry trade. It’s not about the inflation/deflation debate, though bailouts of the short-squeezed will likely be paid with inflation.

For SPECFLATION I’m imagining a rough sea that completely covers the entire globe. The sea represents dollars with bobbing boats and tilting tankers representing various classes of dollar-denominated assets. As the sea gets increasing rough and choppy nobody can really know what wave will rise or lower them next. All measures of value (altitude of wave) are completely relative and limited to only being able to see the horizon and no further.

The only way to escape this madness is to be in a submarine – gold – swimming below the surface. The only way to sustainably survive is to build on the sea bed, scavenging any real assets that sink down below the surface and whilst being willfully oblivious to the chaos and destruction above.

]]>