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Hypertiger

Deflation Doesn't Exist

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Yobob1

 

"One by one services will start to fall also"

 

Yes the "needed" services will be hard up so they will raise prices and/or cut costs until some poor starving bastard starts providing the service for a third of the cost and finishes them (My strategy in the IT world). Or they price themselves out of the market like you say and just self destruct.

 

I don't know how far it will go, it won't be pretty. Everyone around me is oblivious...

 

MJ

 

While Doc lets me...

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Everyone (The vast majority) on the face of the EARTH is dependent on inflation, 100% totally addicted to it. All of you reading this are addicted to and controlled by inflation?

 

I'm not addicted! I can quit whenever I want!

 

Right around Christmas, though, my beltline is usually addicted to inflation -- no argument there.

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Hey Doc,

 

In a time of hyperinflation, do you think merchants are really going to accept plastic? I wouldn't dispose of that wheelbarrow just yet.

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I shouldn't be trying to understand all these great ideas at this early hour but those 2 charts,household savings and debt, in Hypertigers post are all anyone needs to see. I'm convinced and will research buying some coins this week. In addition to gold I wonder what's the best way to own silver. Are silver coins even available anymore?

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IMO, the fed trying to ignite inflation simply won't work. Producers have no pricing power because of excess capacity. Increased costs due to commodity inflation will have to be eaten. Let say, the producers try to pass it along to the consumer who is tapped out. I see a decrease in demand from that scenario. Now imagine that consumer walking into his bosses office and saying " I know business is bad and you've been laying off ,but we're having a little inflation here and I 'd like a raise". Ain't gonna happen. So I think we"re going to have a tremendous death spiral profit squeeze for corporations. Which brings us back to Hypers debt deflation. I know the US is a service economy, but what services are "really needed"? There is a lot of repair work that I don't do myself right now because I'm working 12 hour days that I could/would do if neccessary. A lot of those services will be done by the individual, leaving service providers with decreased demand. Exception being needed services that the individual cannot do himself and even those services (healthcare for example) will decline. Does a family need 2 cars? how about 1 car to be serviced and insured. 2 phone lines and a cell phone? How about 1 phone and an answering machine.

I'm of the opinion that a try at an inflationary response to our problem will result in a quicker deflationary spiral as a short term pop in inflation robs the individual of his ability to repay debt. Wages simply will not be increasing. We're dead men walking.

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"Trust me on this one Doc, the debt will get us first"

 

Nah. Uncle Al will wall paper over it with lots of dollars.

 

Every creditor in the world will get screwed and tatooed.

 

Lesson: don't be a creditor when you've got a mad man at the helm of the economy.

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Guest

Great thread, excellent posts.

 

It used to be Canadians ridiculed immigrant Pakistanis, partly for their cultural habit of putting two dozen or more people up in one house in the ?burbs. We wondered why these crazy foreigners couldn?t learn to live like the rest of us.

 

Of course, the Pakistanis were bringing Third World subsistence living to the First World, against all reason ? or so we thought. This family dynamic, involving two or three, or even four generations, enabled them to support and uplift each other financially and otherwise.

 

In contrast, white culture had bought its premillennial security through negotiated wage settlements, government programs, and an economy with its boom/bust cycles tamed ? no need for this extended family business, which was regarded as the stuff of hillbillies and foreigners. A vision of the farm, not the future.

 

In actual fact, the Pakistanis and other ethnic groups that did the extended family thing had the jump on the WASP nuclear family, which is going to have to learn to amend the expression ?go big or go home.?

 

(It?s already happened to some degree. The average age of a child leaving home has increased by ten years over the past two decades.)

 

My point here is that with debt deflation and the mooted collapse of the money economy, North Americans are going to have to relearn community in a big way, if only to pool resources. The extended family aspect is only one element of this, but its an important one. The capitalistic ideal of being an ?isolated atom of consumption,? alone with your remote and the Home Shopping Network won?t cut it when the price of everyday commodities go through the roof.

 

In Argentina, the meltdown of the money economy has seen the emergence of bartering systems. There are huge flea-market-like operations, with haircuts traded for bread, bread for jewelry, or jewelry for tokens which act as a simple currency. These are very social spaces.

 

Obviously, this bartering system is hard to imagine for big, capital-intensive projects. But for the future scenario we?re likely heading for, outlined by Hyper and other Stoolies, we?re going to be scrambling for alternatives, and the shell game of croney capitalism will no longer be one of them.

 

In other words, the most pernicious aspect of urban living for great many people ? a sense of isolation through consumption, and overwork, and the decline of public spaces through private domination of the market ? will be partly addressed by the necessity of pooling resources under more communal living arrangements.

 

So I see a potential upside in the downside.

 

The other night I was returning on a ferry back to my home. I sat at the station looking at the advertisements around the station. Nearly all of them, in one way another, appealed to the basest human desires and impulses: jealousy, greed, self-absorption, and fear. It was a vomit of bad messages. Not only will all mad, ego-massaging, planet-robbing craziness come crashing down one in flames day, it deserves to. This will be accomplished with little prompting from activists. The only question is only how painful will the transition be to what will likely resemble a subsistence economy for all but the very rich.

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"Trust me on this one Doc, the debt will get us first"

 

Nah. Uncle Al will wall paper over it with lots of dollars.

 

Every creditor in the world will get screwed and tatooed.

 

Lesson: don't be a creditor when you've got a mad man at the helm of the economy."

 

 

 

When are they going to start?

 

2001 = disintergration of the economy

 

2002 = disintergration of the economy X2

 

2003 = disintergration of the economy X4

 

Sometime between 2003 and 2004 the Economy will enter a "state of emergency".

 

The only way this will end is "Bank"ruptcy of the World banking system.

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Guest yobob1

PDoody, my preference in silver is in 90% pre 65 dimes and quarters. commonly reffered to as "junk". Junk is commonly sold at face value. In other words a dealer will quote you a price for $1000 face (10,000 dimes or 2500 quarters) or $500 face. A $1000 face is 715 ounces of silver and weighs about 50 pounds total. The coins are typically bagged in $500 face quantities. Buying less than a bag will generally cause the premium to be higher. Current prices will peg that at about $3500 With silver I'm seeking maximum leverage, so the less I pay in "premium" over spot the more bang for the buck if silver does decide in the next 500 years to go up. :angry: It's like watching the water waiting for it to boil...never happens till you glance away for half a nanosecond. :o

 

I would avoid any bars of any size. These may require an assay at sale time depending on where you bought them and where you sell them. Avoid numismatic coins at all costs. The premium is illiquid. 1 ounce rounds can be had for about double the premium over spot as compared to "junk", however once again if you need to sell it to someone other than you bought it from, assaying can become an issue unless the round is a well recognized mint.

 

Best bet in all PM purchases, IMO, is to try and do it locally thereby establishing a relationship. Don't hesitate to spread it around a little if you have more than one dealer that is competitive. I use Honest Internet Dealer - Colorado Gold - Don Stott to establish a price before I buy. I've found I can get a price very close to Don's locally while becoming known to the dealers. BTW I deal strictly in cash and without names.

 

This type has one other advantage if things really go bonkers.....it's already a recognized "money".

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I see this strategy of junk silver coins a lot and Id just like to take issue with it for for the sake of discussion. If our US currency goes through an extreme devaluation (or should I say a more extreme...) is anyone really going to be interested when you say 'but look this 25 cent piece was made before 1965!' On Main St Idaho USA 25 cents most likely wont buy you the time of day regardless of when it was minted. As you know its all about confidence. Personally, even though I understand the 'value', I will probably just laugh if someone tries to pay me in junk coins. I will be looking for something that I can actually trade. Now as far as rounds and bars, the US Treasury having sold all of our silver reserves, has many different styles available in the market. They produced 'silver trade unit' rounds as well as US strategic reserve bars complete with the city they resided in stamped on them. I would be much more interested in trading with you if you showed me some of these. There are also many different private lable bars with serial numbers and lots of tarnish. All you gotta do is weigh it and size it up and you can be pretty sure its legit. Same with gold. These items give me confidence. If I have to choose between you ("come on man this is silver!"), a guy whos hawking a 'gold' Sacagawea ("come on man this is gold!"), and a guy with trade rounds or bars (*whistling*), I'll be choosing the pure option. You can get bars in 1,5,10,20,50, 100 oz etc why not get an assortment? Plus the 100 oz bars are fun to sit and hold while mumbling 'there you are my precious'. Just my 2 oz worth...

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$1,000 face would be 4,000 pre-1965 quarters (4,000 x $0.25 = $1,000).

 

If that bag of old 90% silver quarters sells for $3,500 as yobob mentioned, then each quarter contains silver valued at $0.875 FRNs. That's why they replaced silver coins with cheap 'n nasty 'sandwich' counterfeits in 1965 - the value of the silver exceeded the face value of the coin. Now it's risen to 3.5 times face value.

 

Flaming Turds, I thought the significance of "pre-'65" was not numismatic, but simply that old 90% silver coins are easily recognized, rarely counterfeited, and therefore don't need to assayed.

 

Like non-market economies where people forget basic business skills, 37 years of counterfeit U.S. currency has destroyed folk memories of how to use and value precious metal coins in daily trade. When Uncle Al's Ponzi scheme goes down, this lore will be relearned. And there will be plenty of willing takers for pre-'65 coins, in exchange for labor, goods, or wheelbarrow loads of FRN counterfeit currency (it's good for getting your fireplace going).

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In other words, the most pernicious aspect of urban living for great many people ? a sense of isolation through consumption, and overwork, and the decline of public spaces through private domination of the market ? will be partly addressed by the necessity of pooling resources under more communal living arrangements.

 

Unabonkers, that is exactly the good I see coming out of this mess. Don't underestimate the power of communal living and its social and educational benefits. Living simply can also be living happily. Taking out a chess board or a deck of cards for entertainment is not going to be the end of the world. Knitting/sewing , home cooking, and other "past household chores or events" adds a social element and interaction to family life and its effect will be rewarding

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