DrStool Posted February 22, 2004 Report Posted February 22, 2004 The Flatio Report Is it "In" or "De"? Doc exposes the truth on flation. In this free, and vividly illustrated Flatio report, Doc reveals the truth about flation. Get your free Flatio now, for a limited time only! See how the heads of government and The Fed are doing it to you. Only in The Flatio Report, and only at Capitalstool.com! The truth is shocking! See it for yourself! Normally only subscribers receive the Flatio report, but now, you can get it too, just this one time. The shocking nature of the truth about flation is too important. That's why Doc wants to share it with you now. The truth shall set you free, and Doc shows it to you in vivid detail. Get your free Flatio now! Then subscribe to the Anals. 15 Day trial just $2.99. But not for long! Act now before Flatio causes it to go up! You know the price of gas is going up. How much longer can Doc hold back the pressure? Not much, but if you get in before he gives in, you will be protected from the pressures on Flatio and rising gas prices. Take an Anals subscribatory RIGHT NOW, before it's too late! Get in now and get guaranteed protection against the pressures of Flatio and rising gas today!
DrStool Posted February 22, 2004 Author Report Posted February 22, 2004 Another Stall Money Supply and Loan Data Stall Out Again Fed Releases Turds Day update is now posted! Once a week Doc fills you in on the all important Fed Turdsday releases. Doc gives you his briefs, on the charts of the Fed's most important money and credit measures. Take a subscribatory and download your Fed Turdsday Releases RIGHT NOW! Fed Feed Report. How can you expect to know how things will come out if you don't know your Feed? It's in your Anals daily. Take a subscribatory and download your Feed report and analysis RIGHT NOW! 15 Day Intro Subscribatory. Just $2.99! Get In RIGHT NOW!
constantpated Posted February 23, 2004 Report Posted February 23, 2004 Doc, Thanks for the access to your flatio-report. I had a different take on the in- or de- debate. Price vs cost: Cost inflation, price deflation Inflation is only relevant when the producers are able to pass those prices onto the consumer. Although CRB is rising, that's not a problem for consumers when producers are keeping prices level or consumer prices are falling. Who's paying: Not a larger-pool of poorer consumers I remain unconvinced that the inflation in producer prices is relevant given the falling prices available: Closeout sales, discount stores, etc. Further, I remain unconvinced that producers are able to pass their costs onto the consumer. Higher prices are only a factor when they impact the consumer; that more people are out of work, have exhausted their savings, or have given up working is a seperate issue than in- or de-. Inflation v. inefficiency: Services are not mandatory Although the costs of services may be rising [education, legal, medical], those costs cannot rise and still attract customers. The poor simply stop buying. If there were truly inflation in housing, we would see rising rents, not "rent for free" at fractions of the monthly rent. Rising service-costs isn't a sign of inflation, but of the service-industry in denial about the shrinking pool of people who can afford those "inflated costs". In short, "rising service costs" are not a sign of inflation, but of the service-sector simply failing to realize they need to restructure. Services were one of the last sectors during the Great Depression to cut prices, and the amount cut was still in the 30-40% range [source]That the service sector is "in denial, and holding out" is not inflation, but merely being arrogantly in denial. Business cycles: No invisible barriers, Toto Law firms are not immune to the business cycle nor are they the "can't lose investment" of the 21st Century. Law firms continue to close shop because of problematic client-financing. Practice partners are just keeping their prices high because they have high mortgages to refinance. Why are partners making such stupid financial decisions? Well, they're lawyers, not stoolies. Lawyers can, and do make stupid personal financial decisions, when they believe the non-sense from their analcyst-brethren. Lawyers believe, write, and approved the non-sense coming out of Wall Street and believe in the new economy mantra: They keep prices high, buy expensive houses, and keep their head in the sand about deflation. Lawyers drafted the business plans for both the dot.com and real estate bubbles. Margins: Rising debt, falling ability to repay Inflation in producer prices without rising consumer prices isn't inflation: It's shrinking margins. That's not inflation, but a symptom of too much capacity chasing too few solvent buyers. "Inflation in costs" simply means the risks of debt-default are rising. That's a symptom of deflation, not inflation. It remains to be seen whether the margins are rising faster than the debts are falling. The debt-burden is irrelevant only if they can pass on the higher costs in the form of both higher margins and higher prices, not costs. Given the unreliable financial reporting and the ever-imploding operation cashflows, I remain skeptical this is phenomena is real, much less occurring. Whose problem: Theirs, not mine The producer's price-inflation problem isn't my cost-deflation problem. They're stuck with the debt and imploding margins, not the consumer. Market share v. margins: Both paths lead to deflation If they want to raise prices sufficiently to offset the falling margins, they're going to lose market share. Yet, even factoring in the weaker dollar for imported goods, I remain unconvinced consumers are going to shift back to US goods over Chinese goods. Chinese imports are pegged to the dollar-yen, which remains fixed; the dollar-depreciation makes Chinese-imported goods no cheaper or expensive on the basis of the imploding dollar-phenomena. That more homes are heated at higher costs is irrelevant to the homeless. Saturation: Some choose market share over margins Moreover, given that the "cheap Fed financicing" is self-evidently creating additional excess capacity, I fail to see how the rising CRB is relevant to a consumer who can continue to access cheaper prices in this "new economy." Rising CRB is simply shrinking margings and minds. Market forces: Producer suffers, consumer benfits Believing that "we are stuck with inflation" despite the excess capacity would have us believe that free market principles only apply when the prices are rising in favor of the producer; but those same market forces do not apply when the margins are falling in favor of the consumer. If they choose to pass on margins and fight for sales, the only way they'll maintain market share is if they lower prices. yet, if "lower prices" are not the furit of the "new economy," then "free capital markets" have achieved the opposite objective of the market economists. Indeed, that the "price of higher education" keeps rising, implies there is greater demand for this absurd logic. We are not comforted. It remains to be explained how an economy that "freely operates to pass on higher costs" would not also freely choose to exploit cheaper sources of raw materials, labor, and financing: Buy American at closeout prices. Yes, they did close the doors on Argentina; apparently the moats are only located on one side of the castle, Toto. Summary: Doom for all Deflationary forces are whipping the Fed's folio. They've run out of illusions. The consumer is naive, but not so stupid, to continue buying higher priced goods when there remain cheaper alternatives. The invisible barriers to financial collapse are not located on the other side of the castle.
DrStool Posted February 23, 2004 Author Report Posted February 23, 2004 Nice work, Constant. Thoughtful, and thought provoking. I dunno the answer. Just seems to me the stuff we have to buy i.e. food, gas, utilities, local taxes and service fees, etc. are going up a lot faster than the Fed says is the rate of inflation. I guess the bottom line is that the CPI doesn't measure anything real, nor does it represent inflation, nor relate to anything that matters. Prices of most things measured in dollars are going up fast because there are too many dollars around, pockets of deflation notwithstanding. Transaction volume may be declining in relative terms, and that means that the next step may be deflation. In my article I was not attempting to make a forecast about whether inflation, as I saw it, would continue. My only point is that the government indicators are a deliberate fraud. CPI is not an accurate measure of inflation. And that if we want to know anything the only alternative is to watch the markets. The deflationary forces of too much debt and too much capacity will eventually take a toll, whether it be in terms of a real deflation or hyperinflation, I don't know. Negative real interest rates arde deflationary in that they devalue money, cause too much of it to be created and cause to much of it to be "invested" where it isn't needed, like building mreo chp fabs in China. I therefore agree with you in that I think the "muddle through" scenario highly unlikely.
constantpated Posted February 23, 2004 Report Posted February 23, 2004 My only point is that the government indicators are a deliberate fraud. CPI is not an accurate measure of inflation. Point well taken. The failure to spread the news in the form of accurate CPI information suggests that although producer prices are rising, the actual margin-crunch remains real, and the current money-flows are based on another bubble, not a recovery or an improvement in economic conditions. Indeed, there are many plateaus on the way to the bottom. Confirmation of another breakout? Why not use "reality": Lied before, why start using facts? Silence is telling. There is potentially "good news" in the "real CRB numbers" which the Fed and Administration are not exploiting. But, that "good news" is really bad news for margins, and says nothing about the real costs which are, indeed rising, more quickly than the debt-repayment ability. Reality behind the reality. I view PPI as a bogus measure of inflation. Producer costs for energy such as airline fuel costs are rising [rising expenses for the airline] at the same time that consumer are enjoying falling ticket prices [falling income for the airline]. Rising expenses + falling income = Excuse for a honey pot. Failure to develop messages: Telling silence in the spin machine Failure to exploit an illusion implies a greater crisis looms. Putting aside CPI and reality for the moment, because CRB is rising I'm convinced the Fed-White House spin machine is making two errors: First, for failing to use this otherwise irrelevant number to sway more sheeple that there's a recovery; and second, for failing to share the "real news" about inflation which "should give the Fed" a cause for celebration to say, "Crisis over." On both counts, they have failed, implying a greater fear that they have yet to share. Never one to pass up an excuse for a parade. They have at their disposal the opportunity to say, "We're making progress" but choose to stick with the representation of data most at odds with their objective: Of creating a credible threat of inflation. Crisis delayed by spinning the spinned-spin. If "the real risk is that there is deflation," then the government would advertise the "accurate number of inflation" [Doc's version of CRB-inflation-news] to say, "There's inflation out there, we're not like Tokyo, and Argentina is irrelevant." But they do not say this. The real concern has yet to surface. That the government fails to advertise "the real good news about inflation" [in that there's no need to worry about deflation] implies the Fed-White House spin machine is truly messed up, and diverted with other priorities. Summary: Failure to share "good news" about inflation confirms deflationary risks weigh heavy on the Fed Failure to exploit favorable news is noteworthy. The Fed-White House fails to use the "accurate-real good news about CRB" because it more concerned with deflation. Indeed, the mental gymnastics require too much brain power to both deconstruct reality, and explain this "good news" to the wider public, still mesmerized with other fanciful tales based on non-sense. But why would they digress and discuss illusory profits or the unreliable and inconsequential financial reporting-regulatory system. Too late to start using logic. The country is mired in the proverbial bowel-movement that it is too late to initiate rationale discourse about the "implications of CRB-inflation statistics relative to the government's goal to create a credible threat of deflation." The situation is so stinky, it's too late to start spraying the room with disinfectant. Confirmation of greater problems. Thus, the failure to spread the news [in the form of "accurate CPI" information] suggests that although producer prices are rising, [a] the actual margin-crunch remains real; and the current money-flows are based on another bubble, not a recovery or an improvement in economic conditions. Indeed, there are many plateaus on the way to the bottom. Thus, the market rises, burning holes the shorts' wallet.
rayok Posted February 23, 2004 Report Posted February 23, 2004 In an economy free of monetary inflation, prices would constantly decline due to productivity improvements of approximately 2.5%/year. The lying pricks have everyone believing that proof of monetary inflation starts at zero.
constantpated Posted February 23, 2004 Report Posted February 23, 2004 ...prices would constantly decline due to productivity improvements of approximately 2.5%/year. This assumes productivity improvements are real.. I remain unconvinced. Moreover, Philips Curve explains "high growth, high employment without inflation" due to productivity; but if there are no ~real~ productivity gains, the magic behind "high growth and high employment without inflation" is simply deflationary pressure.
rayok Posted February 23, 2004 Report Posted February 23, 2004 ...prices would constantly decline due to productivity improvements of approximately 2.5%/year. This assumes productivity improvements are real.. I remain unconvinced. Moreover, Philips Curve explains "high growth, high employment without inflation" due to productivity; but if there are no ~real~ productivity gains, the magic behind "high growth and high employment without inflation" is simply deflationary pressure. Would you believe 2% It sure isn't zero!
constantpated Posted February 23, 2004 Report Posted February 23, 2004 It sure isn't zero! We'll have to agree to disagree; yes, I've read the link. Need to also consider the real "costs" of productivity. It's all fine and good to talk about "what we've created with fewer workers," but also need to look at the real costs of "not having those workers around": Fewer people means fewer people: - Doing audits [how much money that doesn't exist is created out of thin air; of the productivity miracle was real, we wouldn't need fraud to perpetuate an illusion]. If we had a productivity miracle, the efficiencies of output should also be translating into more reliable information. We do not have that. - Available during an emergency [if the productivity miracle were real, we could have fewer people at NORAD to monitor more threats; but despite 50 minute warning on 9-11, NORAD had their head up their proverbial smoke-hole]. If we had a true productivity miracle, technology would have been used to communicate the warning, rather than use "technology" as the excuse for inaction in re 9-11. If we truly had a productivity miracle, law enforcement would not be "coming up with new excuses" not to take complaints, and not respond to valid concerns about crime. - Available verifying the numbers are valid [i'm not persuaded that the information is reliable, given the abysmal auditing track records, poor oversight, and the meaningless consequences for fraud]; if we had true productivity miracle we would have more reliable information, we do not. - Ensuring the real output numbers are valid [how the world can create more with less energy, is beyond reason; it's impossible to make more with less money, those energy consumption rates should be slowing, not going negative]. If we had a true productivity miracle, we would simply slow the rate of energy consumption, not have a drop off in energy consumed/unit of output. - Available to cover overtime, overlaps, and training [if we stretch the machine to the breaking point, we can achieve all sorts of efficiencies, but there's little persuasive evidence that excessive overtime and training requirements can be adequately covered by rested personnel when there's the requirement to have many people doing many jobs just to make ends meet]. If we had a true productivity miracle, there would be less demand for overtime, and fewer requirements to retrain corporate personnel on recurring problems with accounting fraud. Skeleton Corporations: How much experience was lost? Those early retirements mean, "adios" to the experienced engineers who can solve the problem faster. If we truly had a "productivity miracle" there's be no reason for companies like Boeing to have to use espionage to win a contract against the competition. Further, "if the productivity miracle were real," we wouldn't need to dip into the pool of "retired personnel" [at a higher cost] in order to solve the problems that have eluded the available engineers [translating into higher program costs, schedule delays, program overruns]. The productivity miracle is simply shifting costs from one bucket to another, and then focusing only on the "costs in a selected cost group." That's not improvement, but better smoke and mirrors. Hidden debt: Disconnect between reported throughput and actual energy consumption is a proxy for the scale of the hidden debt-bomb It's possible to gut a corporation and "make it really efficient" on paper, but the output and results need to be considered: What was the real cost to achieve that output. I'm not talking just the physical output, but also the "smoke and mirrors" required to achieve the financial results. I'm not persuaded that the 'results" are all that stellar given the abysmal earnings, poor operating cashflows. We may be "making more," but why the hug financial blow-ups, and the massive hidden debt problem? [Only way to explain these abysmal margins despite being called a going concern.] If we're truly "getting all this for less cost" by going overseas, then it really isn't the US that's more efficient, but foreigners. Prices may fall when the "quality of the goods is rising", yet that is an excuse to explain away inflation; now the "we don't have deflation, it's really productivity gains that explains high growth, high output without inflation"-crowd wants to use the same argument to say, "The falling prices isn't deflation, but a sign of improving quality. Either way, prices are falling. In my opinion, the "productivity miracle" is simply a way of "not admitting that deflation is here." The argument that "there's good deflation" simply acknowledges that prices are falling.
rayok Posted February 23, 2004 Report Posted February 23, 2004 It sure isn't zero! We'll have to agree to disagree; yes, I've read the link. Need to also consider the real "costs" of productivity. It's all fine and good to talk about "what we've created with fewer workers," but also need to look at the real costs of "not having those workers around": Fewer people means fewer people: You are right. Let us destroy all bulldozers, and pass out the shovels. Productivity, is but a cruel joke. We must have full employment.
Hypertiger Posted February 23, 2004 Report Posted February 23, 2004 In case you did not know...the renting out of what in society is considered money is inflationary... That is the key flaw...The living off the renting out of money has been an accepted and legitimized practice in it's current form for 400+ years... Can you imagine a world without compound interest or as it is really known as "constant interest" I doubt it...It has been 100's of years since such a reality existed and the current system which is 100's of years old is hoplessly dependant on constant interest to function... Simple intrest is the only form of interest that should be allowed in the system... Figure out which is more inflationary... the borrowing of 1,000 oz of silver to buy a house... The compound interest way... 1,000 oz of silver at 5% for 30 years = 1,932 oz to service the loan...or pay it off. Theoretical profit is 932 oz The simple interest way... 1,000 oz of silver at 5% for 30 years = 1050 oz to service the loan...or pay it off...Theoretical profit is 50 oz X the profit by 100,000,000 people and you arrive at the following... Under the compound interest system the actuall money supply must expand by 3,191,781 short tons of silver in 30 years to sustain itself... Under the simple interest rate system the actuall money supply must expand by 171,233 short tons of silver in 30 years to sustain itself... lets say the total money supply is 6,849,315 short tons for 100,000,000 people Monetary inflation in 30 years in the constant interest scheme = 47% Monetary inflation in 30 years in the simple interest scheme = 2% Which is more inflationary? One encourages non productivity and one does not... The easy life of the few is at the expense of the many...eventually the many can not afford to support the few...Then the system implodes... But Hyper how will bankers and Oprah make enough to exist? Answer: They will actually have to work for a living I guess... Oprah makes 20 million a year...Now lets say the Government imposes a 20 cent tax on 100,000,000 people to pay for universal health care...The population begins to cry...But everyone pays the Oprah tax without question..."Just making a point" Why did the FED close the GOLD window in 1971? Took all the silver out of circulation in 63-64? Ran out of GOLD and silver to sustain the system you say? This is just a simple off the top of my head expose...It has taken us 100's of years to inflate into the current system so we would have to go back 100's of years for a baseline to start from...also there are other complex issues that would need to be explored also in designing a proper or new system...which is what we need because the current system is the end result of a long multi century death march to oblivion...like all other previous civilizations...All we have really learned in 6000+ years is how to lengthen the lifespan of a civizational system...Treat the symptoms instead of finding a cure... It is like a criminal who gets caught...He or she has two choices...stop being a criminal or learn to be a better criminal... So far in 6000+ years we have not stopped being criminals...Fractional reserve banking is not new...primitive forms always showed up in the terminal phases of previous civilizations... The current system is fractionally reserved debt (Which is the final or most refined of all the systems starting with barter, then commodity, Gold, silver, copper then fractionally reserved commodity and finally fractionally reserved debt) which commercial banks are allowed to create out of thin air and attach compound or constant interest to...a double hit not only does the act of borrowing (Consumer requested creation of debt out of thin air by a commercial bank) increase the money supply but the attachment of constant interest to the created out of thin air money supply basically "compounds" the inflation... The current system is designed to be inflationary and is in fact dependant on the perpetual creation of the required amount of debt inflation to stay solvent or prevent implosion... Like all previous systems there is a maximum potential to perpetuate the constant interest which the system is dependant upon to prevent collapse/default... The only reason the FED has reached what they call "price stability" is because we are at the top of the debt inflationary curve...Soon we will start to go down and like the ride up has been unstoppable so to will the ride down... It is inevitable... The problem with my stance is once you comprehend the truth...There is no going back...You will be ruined or find it hard to function once you realize the true gravity of the situation... I started my serious study of fractional reserve banking in 93...by 98 I began prepairing for the inevitable bad times to come... It was not until I found capitalstool in late 2001 that the final piece in the puzzle in the sad quest for comprehension begame crystal clear... I studied the mechanics of FRB from 93 until late 2001 and had no idea that the system itself was the cause of the effect known as a hyperdeflationary implosion of debt...Imagine stareing at a rock for 8 years until it dawns on you that you have been stareing at a rock...I knew how the system worked for 8 years...It was not until 2 years ago that I comprehended it... I'm not a fool I fully realize that I have no chance of reversing the effect of 100's of years of social engineering on 100's of millions of people...This is just my last gasp before I drift into obscurity... When my children ask me why I did not do something I will tell them I tried harder then most...something will not be done until the most try harder... The most don't want to or refuse to...If given the chance or not. The system is so far gone that no one alive really has a clue how to get back to sanity...I don't...I tried to design a system...It would work if you were reduced to square one cavemen, starting from scratch...To even reveal it now would shock/sicken people...As soon as you say compound interest must be made against the law you would have 100's of millions of people that would consider you a threat...The top could not exist without compound interest of one form or another...or Tribute...
The brown one Posted February 23, 2004 Report Posted February 23, 2004 Brilliant,Constant. I too lean toward the deflation argument on the basis of your first posting.Also the rising CRB in the last 9 months is purely a USD devaluation phenomenon.CRB has decreased slightly in Euro terms in the last 3 quarters but there was a large rise against both USD and Euro from April 02 until April 03. Your argument regarding the price rise in certain services and the eventual unsustainability of it all makes a lot of sense.
rayok Posted February 23, 2004 Report Posted February 23, 2004 I too lean toward the deflation argument on the basis of your first posting.Also the rising CRB in the last 9 months is purely a USD devaluation phenomenon.CRB has decreased slightly in Euro terms in the last 3 quarters but there was a large rise against both USD and Euro from April 02 until April 03. Monetary inflation is currency devaluation .
Hypertiger Posted February 23, 2004 Report Posted February 23, 2004 I too lean toward the deflation argument on the basis of your first posting.Also the rising CRB in the last 9 months is purely a USD devaluation phenomenon.CRB has decreased slightly in Euro terms in the last 3 quarters but there was a large rise against both USD and Euro from April 02 until April 03. Monetary inflation is currency devaluation . Yes if the dollar is dropping it means that too many dollars are being produced relative to what it is dropping (Floating) against...The dollar going up in current conditions means that either someone else is out debting the US or the US debt creation has slowed...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.