Stacy Summary: Good mornin’ y’all. Yes thanks for all the great links in the latest jibber jabber. Here is what I am reading this morning. The second link from Jesse is very interesting. Read it and let me know your thoughts in comments please!
- The case for deflation, stagflation & implosion (must read)
The monetary stimulus of the Fed and the Treasury to help the economy is similar to relief aid sent to a suffering Third World country. It is intercepted and seized by a despotic regime and allocated to its local warlords, with very little going to help the people.
By far this presents the most compelling case for a deflationary episode. As the money that is created flows into financial assets, it is ‘taxed’ by Wall Street which takes a disproportionately large share in the form of fees and bonuses, and what are likely to be extra-legal trading profits.
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Well, I can assure everybody that MSM is about to wake up. Not saying they will provide full picture of the situation but they are getting aware of the BS surrounding the recession-bull-crap.
Keep up the good work!
Jan. 2, 1939 – Time Magazine – Adolph Hitler, Man of the Year
http://www.time.com/time/covers/0,16641,19390102,00.html
Interesting MSM scoop indeed !
@Mongo,…..Thing with propaganda, is it persuades over a long period of time incrementally.
What is actually happening is,…the “capitalist” system is being destroyed with the intent to bring forth the new.
Think about it!
Personally, I’ve no preference, as long as no-one takes away my freedoms,…we’ll see,…
@Dedo
Yeah, it is difficult to ‘barrack for’/'root for’ a new system that we have no idea about.
If its going to be better bring it on, if it ain’t……
I guess its up to us to demand that it be a better system.
I know we are supposed to believe that this is fate and that we have no control. However, I believe that we need to take individual responsibility and actually play a part in formulating this new system.
People like Max & Stacy and other people who have taken on the education/information role should be applauded. Now its up to us to spread it and be part of whats coming.
That is why we need something drastic to happen before people wake up. As we know most people don’t ‘get’ anything is happening yet.
Someone here asked me if ‘Fiat Currency’ was what you paid the mechanic. He was joking of course, but didn’t know what it was.
Uphill battle I’m afraid folks. Good stuff everyone. I am learning heaps from all of you
well the next step in bernanky to jai;, Greenspan to jail, etc. etc.
We have jails vacant in Holland. So send them over to the hagey as criminals of mass destruction
@Dedo, It might be my perception of media but it still feels like MSM is catching up. Of course events evolve and unfold and media will always be far behind but as the global ponzy scheme gets undressed people will catch the foul smell of the corps underneath and with that media will no longer be able to, intentionally or not, ignore whats actually going on. Albeit they would not cover it as we might expect but still people will get some hint of whats going on.
my 2 cents , i think the hyperinflationists have it wrong ,there may be a brief but intense round of hyperinflation but not until deflation has thoroughly run its course as there is so much debt and the debts are so HUGE , almost unquantifiable, so there is a long ,long way to go before hyperinflation kicks in ,also hyperinflationists like Marc Faber have recently been criticised for confusing ‘money supply’ with ‘credit supply and expansion ‘[something that as an armchair economist i have trouble understanding as well ] trying to re-inflate the bubble by printing money is like trying to re inflate a party balloon with your lips. it’s stagflation at best and deflation at worst for me. cann’t help but wonder what that ‘exogenous event ‘ needed to break the stalemate might be? [ sounds like they would welcome some sudden bad news ? ]. i agree ‘war is a way of transferring your misery onto others’ ,same as when someone is in a bad mood and they can only feel good about themselves by making others around them bad or miserable, i am certain that we have all meet people like that, work with people like that,may be unfortunate to have some one like that as a relative. seems like people like that make good economists and political leaders. strange how we keep voting them back in? not happy larry.
@stacy ,..as for your previous guest [jim willie] calling deflationists ‘knuckleheads ,’ don’t you think that language like that is a bit strong for a forum like this ?
Janet Travakoll is pretty [blush] she’s prettier than marc faber but everyone prettier than marc faber but cann’t help but like him. perhaps the hyperinflatinionsts are the more extroverted group [they tend to make more you tube videos?] and the deflationists are more thoughtful/ introverted / better looking group of people ?
max ,..when i was younger i lived in the countryside , i noticed on my visits to the city that people were better looking ,especially anyone who worked around the financial zone or lived in more affluent areas of the city [this always troubled me as no one ever spoke about this even though it was obvious, ] it seemed to me a form apartheid based upon looks or Beauty was at work, good looking people at one end of the beach or city, ugly overworked people at the other end of the beach or city ,seemed to me the further you travelled away from the financial centre of the city the less care people took of themselves ,people just seemed to let themselves go completely , i really hate it when rich people are`also good looking . another reason to bring about change. to help foster a deeper apprecaition of what it means to be not just good looking but truely Beautiful.?
Hi Stacy. I just remind everyone that Simon Johnson made a similar statement with regards to the US economy resembling a Third World economy in his now famous article “The Quiet Coup”.
“The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.”
This is clearly a systemic problem – our current system allows a small group of individuals to make backroom deals, and benefit, at the expense of the common man. What *I’m* curious to see is whether this person is used as a patsy, to take a very public fall, and pacify the outraged public while other corrupt beneficiaries escape unscathed, or whether the icelanders will demand further investigation, and further prosecution of less readily ideantifiable criminals.
The Iceland microcosm is immensely important, to my way of thinking – whether or not the Icelandic public will be pacified by the prosecution of a few minor players, or demand systemic change, will likely indicate the response of the rest of the world, when the coming collapse is inflicted upon them.
Stacy
Article does not support the headline of “deflation, stagflation & implosion” In fact I did not even see “implosion” anywhere in the body of the article. The facts stated are correct but the words in the headline are just INSERTED out of the blue with no corresponding evidence.
I state, my and Marc Fabers conclusion on this debate: Although there was a intense round of world deflation in Oct-Mar of the past year this was due to the credit contraction caused by Bear Strearns and Lehman and was brought to an end by massive FED inflation and credit expansion which goes on still.
As Faber points out regarding the Weinmar deflation this only appeared in Germany after they established a new currency and ended inflation on a massive scale.
The equivalent here would be the establishment of a new world reserve currency [by intention or default] which would have the effect of devaluing the dollar on a massive scale.
Hyper-inflation is the prelude to this series of events, how big and how long, who can tell.
I believe I remember Max stating that a gold backed dollar would cause a massive deflation in US assets [falling inflation and credit] and I agree that this would cause this event.
Also, credit expansion is going wild today as all financial institutions are hiding bad assets in an Enron fashion while they pump up their “public” balance sheet.
In addition, based upon my trading experience there has been massive buying of equities on a regulasr basis since Mar 2009. Who and where is this stuff being parked, can you spell [smell] “Goldman Sachs.”
I don’t have the resources, but check out the number of days that the Dow, S&P and NASDAQ have been within a few tenths of a percentage point of each other all day long and at the close [especially true in the premarket to "condition" the opening market tone].
I have wached markets trade since the late 1960′s and have never seen this happen, EVER. Goldman Sachs must have a very good computer program to pull the off over so long a period of time.
@y’all:
Didn’t Max say twice that there was going to be severe dollar volatility? Like twenty percent in a day up or down? In which case, inflation/deflation won’t be playing by the rules. Pricing will be the difficulty, and with it all the corruption of gouging and theft. We haven’t seen it yet as the crank (sdr manipulation) has just begun on the organ grinder. (of course IMHO)
The P/E ratios alone are proof the economy is one big fat Lie waiting for a bullet to the head.
140 to 1?!?! Even their mark to model/mark to fantasy 30 to 1 is insane! Whatever happened to 10-14 to 1?
Would you buy a restaurant that does $1M/year sales for $150M?
This can’t on much longer. It’s gonna be a repeat of 1932 – 85% devaluation.
“There will be a mix of falling and rising prices, depending on the elasticity and source (imported content) of the products, with a wildly staggering dollar that could destabilize other parts of the world, and pernicious underemployment and growing civil unrest domestically.”
Here’s Jesse agreeing with Max’s prognosis concerning dollar volatility.
@Illya Kuryakin …” The P/E ratios alone are proof the economy is one big fat Lie ”
Agree 100% …
I have asked myself a few times …. “who buys at this price ?”
You hear people saying it’s the Day-Traders , bu these DTs only make up maybe 5% of the day’s trade volume IMO – if even that !
No .. I think it’s simply the PTB ( whether FED, IBs, Funds or whatever ) that need to pump the market up make their phoney balance sheets look better.
I suppose it’s the final game of musical chairs …and guess who will end up holding the bag when the music stops … us !
Check this new Kitco “basket of currencies” pricing for the “REAL GOLD PRICE”
http://in.biz.yahoo.com/091007/137/bauaxq.html
Excellent TAM btw.
I suspect some journalist could have a field day by looking into private equity firm Cerberus (appropriate name) Capital Management.
Their list of corporate acquisitions is remarkable.
Where does all this ‘capital’ come from?
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=139449
@Phil,…..musical chairs,…holding bag,..huh?
you’re playin’ two games simultaneously ,…only chicks can do that,…: )
@Phil,..Ilya and Frances,……that’s the best summary of the situation to date,…..cheers!!
One thing that’s gone missing from society is the use of paragraphs. Its the beginning of the end.
Max Max Max!
Must read:-
http://news.bbc.co.uk/1/hi/business/8301418.stm
Mike
That article deflation article was weak. Though the facts may be correct, they not only miss other facts but do not logically reach a deflation conclusion. Also, hyperinflation is a completely different animal, its a loss in confidence.Think about Zimbabwe, the price of goods that people need rises dramatically, yet goods that are not needed drop in price, you could argue inflation and deflation in goods.
Here is a much better summary of the inflation deflation debate
http://www.netcastdaily.com/broadcast/fsn2009-1003-3a.mp3
and Jim Sinclair: He claims both are correct depending how you define it
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/9/25_Jim_Sinclair.html
In any point in history, has a debtor nations currency ever increased in value during an economic implosion ?
I think not so that is why Jim Willie is calling the deflationists knuckleheads.
Venezuela confirms coltan deposits, $100 billion in gold reserves
Caracas, Oct 10, 2009 (EFE via COMTEX) — The Venezuelan government has confirmed the existence of “significant” coltan deposits south of the Orinoco River, as well as proven gold reserves valued at $100 billion.
Basic Industries and Mining Minister Rodolfo Sanz told a press conference that only seven countries in the world have reserves of coltan – a valuable black mineral that combines niobite and tantalite and is used in cell phones and computer chips – in sufficient quantities for export.\
….
He also referred to gold resources and said Venezuela has the world’s largest reserves of that precious metal after South Africa.
According to the minister, Venezuela’s potential reserves total some 15,500 tons and its certified reserves are valued at some $100 billion..
Time for the Pentagon to revise the Venezuela Invasion Scenario. They hate countries that actually have their shit together.
“Calendars released by the Treasury Department in response to a Wall Street Journal Freedom of Information Act request show more than 80 contacts between Mr. Geithner and financial titans such as Lloyd Blankfein of Goldman Sachs, James Dimon of J.P. Morgan, Citigroup Chairman Richard Parsons and Laurence Fink of BlackRock from January through July.”
http://online.wsj.com/article/SB125502308629073925.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
Soros says EU “wrong” to push austerity on Latvia
http://www.reuters.com/article/newsMaps/idUSTRE5991LJ20091010
@fransics
yeah they said the same thing to that fool shakespear…Maan he couldn’t evem spell his own name!
That’s just Soros ingratiating himself to Latvia. like he did in Ukraine and Georgia, to rig their next election and bring in even more neo-liberal vermin.
Technically, I am not certain which is most accurate: deflation or inflation…yet it appears to me that since we are all aware that the massive monetization by the central banks will eventually bring on a hyperinflationary condition lying in wait in the background that is the long range call,,,,clearly asset values are deflating and devaluing…while a slow creep in inflationary pricing is being felt in the daily marketplace of consumer goods….so in the end …yes..it then becomes that hyperinflation that supercedes the deflation ( and the rush to the bottom ) as the most troubling..thus the many analysts who support the inflationary angle….Quite possible both may be announced at the same time…IMHO this is why the FED refuses to move in raising the interest rate ( either the FED funds rate or the Prime rate )…..in either move the momentum will tip the balance and this move will bring a selling spree in the global equity/bond markets…..a rush to metals will ensue and the Chinese will gain a stronger position at the table…all this is being curtailed for as long as the PTB can hold their position…sorry if this isn’t a technical analysis but it makes sense to me…
Why do I get the feeling that EU, IMF or somebody.. will send hitmen after Vaclav Klaus if he continues to defy to sign the lisbon treaty?… well I wouldn’t be surprised anyway. Of course.. this would be arranged so it would seem to be of “natural causes”…
democracy is for wankers.. long live the republic.. (irony)
The creature from Jekyll Island redux, for newbies
http://www.silverbearcafe.com/private/3.08/secondlook.html
Celente on Inflation / Deflation from today …
pt 1/2 Gerald Celente on the The Gary Null Show 07 Oct 2009
http://www.youtube.com/watch?v=TgKhBFxOzJw&feature=sub
pt 2/2 Gerald Celente on the The Gary Null Show 07 Oct 2009
http://www.youtube.com/watch?v=xpFg1EwdqWM&feature=sub
@Mongo: along those lines…” assassinate Klaus”….is he the last holdout??? And wasn’t it in his country that the ferret radiation test disclosed that in fact the vaccines sent to 18 countries were contaminated with live H1N5 flu virus???…Maybe he not only distrusts them but his signature eliminates any sovereign citizen lawsuits against a EU corporation…If I am not mistaken…or maybe he requires a monetary handout…..politics is not always so subtle….Christopher Story still promotes the idea that the Lisbon Treaty vote in Ireland was a fraud..( he claims ballots were carried in and out of the counting facility without supervision)….where did we see that before???Vermont???during the ’08 primary election???
Too many news lately that dollar is going down the drain ( IT IS going down the drain) but seems news lately dissipated on media are tailored for EQUITY PUMPING scheme. Watch out for correction in following months.
Asset price inflation vs monetary/credit inflation
This article explains why there is such a disconnect between the asset price inflation of things like equities and reality.
James Turk: The Fed’s blueprint for market intervention
Submitted by cpowell on Sat, 2009-01-17 03:26. Section: By James Turk
Copyright 2009 by James Turk. All rights reserved.
Friday, January 16, 2009
http://www.gata.org/node/7096
Notice that the links pointing to the secret FED documents are now DEAD !
@Richard@lattitiude
here is the actual historic chart of gold in USD vs. gold in other currencies by Kitco:
http://www.kitco.com/kitco-gold-index.html
Look at 10 y comparison and it does look like gold has increased only relative to USD and not other currencies since Jan of this year
Can someone repost the avatar link? I was going to get around to it but i never did and now i cant find it…
http://en.gravatar.com/
Re Jesse’s arguments
First of all, great visuals.
This stagflation resolution makes sense to me, although it could be argued that it begs the question.
Stagflation, from my own recollection, was a neologism from the seventies. It comes from the splicing of two words in response to the combination of two phenomena, economic stagnation and price inflation, occurring (unexpectedly) at the same time. What I also recall is that the inflation part of this phenomenon is more salient than the stagnation part. The effects of inflation tend to exacerbate the effects of stagnation, which without the inflation would be a steady state of misery but, with it, becomes increasingly miserable.
It’s also true that inflation in the stagflation scenario has to come from
a growth in money supply (per Schiff) since the stagnation component stifles any demand-generated inflation (in other words, the whole point of the term in the first place).
So, I conclude that Jesse is, in the end, using the integrative term stagflation to soften the landing his thesis makes in the inflationary camp. I also conclude that this is a proper treatment because the stagflation of the seventies never really ended but has been covered up by phony statistics, the massive importation of cheap, slave-produced goods, and a phony, deficit driven investment economy. Current trends and conditions (especially collapse of the dollar, which Jesse predicts) are not going to produce stagflation anew but are going to force removal of the coverup, so we will see and feel, in its full expression, what has been there eating away all along.
THanks Illya!
Reading Jim Willie, Zero Hedge, Jim Sinclair, Martin Armstrong, and by extension, GATA, I just get the feeling that they are specific to great opportunity cost, and that they are desirous ever so much to draw in as many as they can into their pov. (though I must admit to have learned historical lessons from Armstrong.)
None of them have a crystal ball. All are fallible and human. All of them typify the inflationist band wagon. I can’t wait to read what shrill prognostications and armageddonist drivel they are willing to embarrass themselves with.
Nowandfutures.com is the only website with very serious factual data and solid arguments, and is an inflationist point of view, without the wholesale nonsense.
Here is a chart of the British Pound leading up to, and during the depression:
http://www.nowandfutures.com/d2/pound1910-1950.png
Judging by this, the dollar as world reference currency will experience a bottom during the collapse of the inflationary trend, what is called a deflationary episode, but should become chronically firm during the depths of the depression.
Nobody watches the Yen and can’t explain why the Yen is in a multi year bull market. It is the most cogent example of why inflationistas are pot smoking enthusiasts at best, and financially illiterate oompa loompa political pygmies desperately desiring to push the system’s buttons at worst.
The drunks are let off the hook.
@Phil
THX for Celente link.
He’s great – no BS:
“It is a matter of historical fact: When people are homeless, helpless, desperate, jobless and hungry, sooner or later they will rebel. And it won’t be any different in America…..”
http://www.trendsresearch.com/index.htm
@Canada/JK …. Gerald Celente
Yes, I like his “common sense” too .. he talks straight – like Max. ALso, it must take a lot of energy to keep repeating oneself .. especially when the establishment is deaf !
RE: Jesse’s Article
His words seemed fluffy,
but the graphs told the story…
Marc Faber was right when he stated back in July that the “Money Printing” would augment the equity prices…
(this graph backs up FABER’s comments)
http://2.bp.blogspot.com/_H2DePAZe2gA/StC3AkKFALI/AAAAAAAAJ-0/ORS-Ic2Plvg/s1600-h/ambandsppe.JPG
However, I don’t trade the American Markets, and the CDN markets don’t seem to be following the trend…
In fact, I am seeing something of a de-coupling on the TSX and TSX-V from the USA mkts….
The CDN P/E valuations may be high in many cases (30:1) but they certainly aren’t obscene in the S&P500 sense…
As well, I don’t look to P/E ratios very often… I prefer Price/Book when considering valuation…
(after which, I’ll dive into the SEDAR filings and read the MD&As, Fin Reports, and NRs before I throw a penny down on any stock)
My question, in the end, is how will a new american crash ripple across the globe?
My gut tells me it won’t have as much power as it did in the past…
(Jibber Jabber supplement)
Check out Jim Willie’s commentary on Mexico from the most recent Zapata George radio broadcast (the 2nd part, Oct 10)
http://www.zapatageorge.com/zapatag/web_radio
Was Watching George Green and he has a very clear story here. Was a bit offset by a former interview with him but this is very inforamtive stuff.
NEW GEORGE GREEN! – Awake and Aware in LA – Economy http://tinyurl.com/yjj8g54
Maybe you should consider all factors when trying to figure the “why” of gold….and I would not consider this guy a drunk..probably more like “drunk” on the history of the markets.
Friday October 09, 2009 10:00 AM EST
http://events.startcast.com/events6/122 … Event.aspx
http://events.startcast.com/events6/122/C0018/Event.aspx
Holy Hockey Stick, Batman!
I just scrolled through the article, but did anyone notice almost all the graphs and charts had hockey-stick shaped curves? As per Chris Martenson, this portends bad things to come (exponential “growth”).
@Dante … very good audio … Thanks
Your link again :
http://events.startcast.com/events6/122/C0018/Event.aspx
Hyperinflation can only follow deflation. Hyperinflation is the end – it will be game over – no more economy. The Fed is not “printing money”. Bank reserves are where the Feds balance sheet expansion has gone. Money supply numbers like M2 are actually showing negative growth. Bank lending is shrinking at an alarming pace. Unemployment very high. US trade deficit half of what it was last year – probably will halve again – less dollars being sent out into the world.Foreign central banks may well intervene to support the dollar – this will be the source for buying US Treasuries – solves that problem for a few weeks.Seems like deflation for now.Boat heavily tilted towards Dollar bears – all the panicky headlines probably the icing on the cake. Dollar probably has a sharp rally – and probably goes up higher and for longer than anyone now expects.
Current Numbers Dont Add Up To Recovery http://tinyurl.com/ylsjk5a
Dollar Devaluation A Means To Cope With Debt http://tinyurl.com/yzvv44f
Daughter saves mother, 80, left by doctors to starve http://tinyurl.com/ygtrd8a
Carry on carrying on: Carry trading is hot again but it will end in tears just like last time as exchange rates.. http://bit.ly/rkl5U
Where’s My Economic Recovery? http://bit.ly/1QxGbn
Where will they get the money to help all these people? Try the printing press and if not overtly then through the subterfuge of another government program….
Unemployment’s Continued Climb and the Effect on Commercial Real Estate
The job losses now exceed the net jobs gained over the previous nine years, making this the only recession to wipe out all job growth from the previous expansion since the Great Depression. Private sector payrolls today are lower than they were at the end of 1999.
The stress in the job market appears to be understated by the BLS as the calculation of unemployment was modified during the Clinton administration to make the numbers appear more benign. Nearly 2 million people are unemployed but have given up the search for work. If they have not been actively looking for a job within the 4 weeks preceeding the latest survey, they are no longer counted as unemployed.
If we add those who have given up the search for a job and the underemployed to the government’s estimate of 9.8%, the unemployment rate jumps to over 17%. And even this does not tell the entire story.
http://knakalstreetwise.wordpress.com/2009/10/10/unemployments-continued-climb-and-the-effect-on-commercial-real-estate/
Delusional disorder or BIG ONIONS ?
The Bank Everyone Loves to Hate
Goldman Sachs’s CEO says the firm got no special treatment during the bailout—and he intends to pay bonuses this year.
Sitting across from me now in his comfortable office on the 30th floor of company headquarters in lower Manhattan, Goldman’s CEO Lloyd Blankfein professes to be more bemused than hurt by the slurs. I suppose his serenity may be helped by the fact that the events we’re discussing—Goldman’s brush with death—appear to be firmly in the past.
“He defends all that he considers exemplary about the firm: its disciplined risk taking; that 90% of its revenue and profits are generated in service to clients; that it’s not just a giant hedge fund, as some critics say; that it plays a vital social role in matching those who have capital with those who need it; that its partners frequently retire young to devote themselves to philanthropy or public service.”
http://tinyurl.com/yhk5ans
“Time Magazine had even named Hitler their “Man of the Year” for this economic miracle, even though it was a fraudulent house of cards.”
Correct if I’m wrong but didn’t the German miracle happen because Hitler said no to borrowing money to the bankers and printed German money based on the “1 mark shall be issued for 1 mark worth of work done”? So even though his currency was fiat at least the government printed it and therefore didn’t have to pay interest to the bankers? So it was the people’s money?
that’s right norcalkid, what goes up must come down
it happened just before the Great Depression (the ‘roaring’ 20′s) and deflation was the outcome
it’s happening again
http://www.thedeflationtimes.com/2009/10/06/credit-crisis-and-deflation-devaluation/