I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Posted: Fri Oct 10, 2008 3:57 pm Post subject: Re: Deflation It Is
When I first became aware of politics and 'the economy' we had the 74 UK problems. Inflation was high, and wage policy was imposed.
but....
My (very poor) working class family got ' better ' wage increases under 'wage restraint' and when wages were 'capped' than when there was no wage control.
Us at the bottom might benefit from crisis! _________________ Live, Love, Learn, Leave Legacy.....oh and have a Laugh while you're doing it!
Joined: Aug 03, 2006 Posts: 4331 Location: Graceland
Posted: Fri Oct 10, 2008 3:59 pm Post subject: Re: Deflation It Is
I don't think it's either/or. It will be BOTH. Just don't get headfaked by the whole process.
TIPS in a tax deferred account look like a pretty good bet right now. They're way down on deflation expectations (I mean like 15% or so--check out the ETF TIP), but they will do well when the inflation story kicks in--there should be good dividends and capital gains to be had.
I think that these liquidity injections are going to act like a laxative for a badly constipated person. No action for a while...but then it's gonna get real ugly. _________________
Posted: Fri Oct 10, 2008 3:59 pm Post subject: Re: Deflation It Is
sittinguy wrote:
ALRITE, I will reluctently, admit this looks like deflation. But just wait, me and all the other inflation believers will get our day in the sun. After you deflationist are done laughing it up you better go out and get some sun screen.
Oil will probably come back up soon. We all know they will slow supply to get the higher price, it just takes time to feel it.
I was VERY confused with gold and silver today.. And sad, I want to see gold and silver go up,, UP
It's part of an economic cycle. Of course there will be inflation but not until the $58 trillion dollar house of cards comes crashing down. Deflation, there's a long way to go yet!
(but at the rate the fed keeps pumping money into the system it truly could be 6 months down the road...) _________________ got cash?
Posted: Fri Oct 10, 2008 4:07 pm Post subject: Re: Deflation It Is
I think Tex is saying it right. IF they continue to print money, it will END in hyperinflation.
However, they haven't printed enough for that yet. In fact, what they've mostly done is created more DEBT, which will wind up making a deflationary spiral even worse.
Ultimately they will probably mess up and print money. Maybe.
Kondratieff says that's about 2-3 years from now. The deflation has to run its course first. I think you'll see $250 gold and $40 oil well before that happens. _________________ Welcome to the Kondratieff Winter
Posted: Fri Oct 10, 2008 4:17 pm Post subject: Re: Deflation It Is
sittinguy wrote:
I was VERY confused with gold and silver today.. And sad, I want to see gold and silver go up,, UP
There was a big spike up in the dollar index this morning. Very likely due to manipulation. That pulled oil, gold, and silver down. Now the index has recoiled, and the commodities have recovered a bit.
It seems there is a huge disconnect between physical PMs and the paper price right now. I just bought some silver eagles for $17 each. I was looking back, and I sold some for about the same price when silver was $16. _________________ "So while you sit and whistle Dixie with your money and your power.
I can hear the flowers a-growin in the rubble of the towers.
I hear leaders quit their lying
I hear babies quit their crying.
I hear soldiers quit their dying, one and all." - OCMS
Joined: Jul 02, 2008 Posts: 550 Location: Canterbury, UK
Posted: Wed Oct 29, 2008 6:58 pm Post subject: Re: Deflation It Is
Went to a seminar today, the speaker was David Blanchflower, from the Bank of England's Monetary Policy Committee- the guys that set interest rates in the UK. Blanchflower is a labour economist, and he's the only member of the MPC that's been crying for rate cuts - even as the CPI inflation hit 5.1%.
He puts a compelling case: there's no wage pressure on inflation, 80% of all inflation rise in 2008 is due to climbing fuel and food prices (that's oil, between you and me; the food commodities market is essentially a function of the oil markets). Add to that that the Baltic Dry Index (measures transportation prices of everything except oil) dropped 90% since last May (12% in the last 12 days), credit crunch stopping investment... and you have a strong case for deflation.
Bank of England policy maker David Blanchflower said U.K. interest rates need to fall soon and ``significantly'' to stave off the threat of deflation as the economy endures a recession throughout the next year.
``Interest rates do need to come down significantly -- and quickly,'' Blanchflower said in a speech at the University of Kent in Canterbury, England, yesterday. ``If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession.''
Posted: Wed Oct 29, 2008 7:35 pm Post subject: Re: Deflation It Is
Maybe, instead of the inflation/deflation debate that has been raging for so long, we ought to look at the relative values of currencies, since they all seem to be fiat anyway, and subject to the same ills to various degrees. In short, who goes down the tubes first, next, and last?
There seems to be some agreement that the $US is the current benefactor of settling out of malinvestments by Europeans, and others, but that this phenomena won't last. Result is the dollar will take a drubbing, some say fairly soon. GEAB/LEAP 20/20 says the US will default on its' debt by summer 2009. (Sorry, lost the link, but Google has it.)
I guess to me it looks like each country is riding its' own rollercoaster, some coincide with ups and downs, and some don't, so bet on the outcome at your own peril. Scares meto death and I thought I was fearless.... _________________ Local fix-it guy..
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