Discussion on Debate Over: It's Hyperinflation (and US Econ

Schumpeter Reincarnate Joined: 24 May 2008 Posts: 46268

http://ml-implode.com/viewnews.....lapse.html

Dud? Joined: 30 Jun 2008 Posts: 1

Excellent article, so very well put together. Sounded like, shock horror... the "truth".

Dud? Joined: 30 Jun 2008 Posts: 2 Location: Berlin

Hi,

I am thinking about an unsolvable problem:

-- The Broken System

I agree about the idea, but can anyone tell how a new system would look like regarding the fact that there is a high percentage of the population (building a sort of a foundation of the current system) who are working for the system (and depend on the system).

As for Germany, only 40 per cent of the population able to work does "real" (i.e. "produces" s.th.) work, so one could say that each working person is feeding one bureaucrat -- but when the fiat money is needed to pay the bureaucrats what will the bureaucrats do if there is no fiat money? Go to work? Question

Dud? Joined: 01 Aug 2007 Posts: 15

The pronouncement of hyperinflation might be a little premature. If inflation were really the big threat then why are T-bills trading with such low yields? Back in the early '70s, right when stag-flation was getting started, t-bill yields were above 10%. We aren't anywhere close to that yet.

Even more importantly, why are housing prices falling? In every hyper-inflationary period I've heard about real-estate has always been one of the biggest appreciating asset classes. It would be very strange indeed for us to experience hyper-inflation at the same time that real-estate prices were tanking. It's never happened before.

Lastly, if we were really experiencing hyper-inflation, then debt should be expanding and delinquincies ought to be falling. During inflation people can easily earn more cash to pay down debt, and take on even more.

In short: there are still too many deflationary indicators in the economy to make the call for hyper-inflation.

Dud? Joined: 01 Jan 1970 Posts: 1

Don't know why all laissez-faire economists want the govt to be involved in infrastructure? The Free-Ways and Free-Roads destroyed railroads and caused pollution. Only Free markets can best decide the infrastructure that is cost effective.

We should also have free market elections. So here is an idea. Taxation is voluntary in a laisssez faire economy and the highest tax payer is the President of the Nation or state or city. No election circus.

Schumpeter Reincarnate Joined: 11 Dec 2007 Posts: 4625

Deflation. What has become unsolvable will be replaced. Like the article from earlier today it's been eighty years and we have forgotten. We are near overdose. Hopefully we can make rehab work well for us.

Posted: Tue Jul 01, 2008 6:31 am

sniglet:

Your main point of confusion seems to be asset markets vs. real economy money (I would argue Mish shares that). My contention is that "inflation" and "deflation", as normally discussed, refer (mostly) to what is going on with the real economy of goods and services, not asset markets.

Asset markets going up and down is a relatively normal thing. In the last housing bear market, price declines also coincided with inflation in the CPI sense. No one called this "deflation".

Other asset markets go up and down routinely. When commodities stocks as a sector go down, is this called "deflation"? How about tech stocks? The answer is "no".

Something could be argued along the lines that ALL forms of credit and all securities should go into the monetary "count" that makes up the inflation vs. deflation call. But then, by that metric, we ARE hyperinflating -- hence the quadrillion dollars of derivatives.

If you stick to what everyone means when they talk about "inflation", I contend it is pretty obvious we are ramping up into something that looks very "hyper". When you connect the outcome with the dynamics (flight from dollar financial markets), the thesis makes a lot of sense.

Dud? Joined: 04 Jul 2008 Posts: 5

Hi Aaron,

I think your thesis is important and novel. I'd like to take it for a drive. My take is that there are very large hidden pools of black liquidity, which have developed unchecked over the past 20 years due to disinflationary trends including technology and cheap oil. Now those pools are under threat due to (1) the end of said disinflationary trends and (2) credit contraction. As this money starts to die, the rest of it will seek a home in commodities. OK, I buy it.

I wonder how you see this trend vs the related trend of the Fed to forgive all large debts (that are too big to default). Do you see this as part of, auxiliary to or irellavent to your thesis?

Dude, this was a good article that hasn't widely appeared. I only found it through Russ' blog. Its really good. I think you should get it posted on dollarcollapse or whathave you.

Best, MatCha

Posted: Sat Jul 12, 2008 5:49 am

MatCha wrote:

I wonder how you see this trend vs the related trend of the Fed to forgive all large debts (that are too big to default). Do you see this as part of, auxiliary to or irellavent to your thesis?

Thanks for the compliments, MatCha.

I am not really sure what you mean by the Fed "forgiving" large debts. They haven't forgiven anything. However, they have been "laundering" dodgy assets, which appears that it will terminate in taxpayer financed "forgiveness", which is what I assume you mean.

If that is the case, it would be inflationary, so it would just underscore my argument. In essence, with all this laundering the Fed is just exchanging some credit deflation for eventual monetary inflation (unless they're real lucky and the whole crisis just "blows over").

-Aaron

Dud? Joined: 04 Apr 2009 Posts: 1 Location: Fort Worth,TX

The solution to this economic crisis must be a moral one. The root of the problem lies in the unbridled greed,that has grown exponentially in the las t 50 years. Each person and party sit, hoard, and meticulously guard their own possessions without any concession for others. We are totally submerged in indifference as though nothing has happened. The entire world is in a frozen state. Everything is coming to a screeching halt. this is happening because our intentions are not aimed at benefiting each other. An interesting book I happened on, has some much needed insight. "From Chaos to Harmony" by Michael Laitman. Good Reading.