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Goldilocks

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I hate when he's right......

 

"....

"The basic message from the Ahearne paper is that deflationary risks must be taken more seriously than deflationary evidence. A radical script flows from this simple realization: Inasmuch as traditional stabilization policies lose their effectiveness in deflationary periods, the authorities must be early and aggressive in avoiding such an endgame. That means if the probability of deflation rises into the "non-trivial" zone -- say anything above 25% -- then policy makers are obligated to treat this outcome as their central case. The consequences of a policy error at low levels of inflation are not to be feared -- central banks long to return to their comfort zone as inflation fighters and would relish the chance to do battle with an inflation rate of say 3-4%. "

 

- A-HA! They DO understand the true inflection point. The true inflection point in the deflation/inflation price scenarios is that of perception. Long before price deflation gains a trend or even becomes entrenched. It is ALL about perception. If people begin perceiving that holding off on purchases means they will be cheaper down the road....... IT WILL HAPPEN. It is that most infamous beastie: "The self-fulfilling prophecy". The trouble is... They wouldn't even be announcing the fight was on if the perception wasn't already 'out there'. They would never mention it before it actually was 'out there'. This is because they would never want to be seen as responsible for triggering beliefs that it was possible. Logically (Or what passes for logically in my crazed, delusional, paranoid mind) it is already to late and you options are now limited thusly:

1. The 'Buy a Ferrari for a Kruggerand' scenario: The Deflationary Depression happens.

2. The 'Holy crap where did this war come from so fast?' scenario: The coming Hyper-inflationary attempts get out of control.

3. The Perma-Bull Pollyanna scenario: They continue the status quo until the next emergency.

 

- Any way you cut it, it is not a pretty picture in the end.

 

"Sure Fed officials continue to couch the possibility of deflation as "remote." Their shift to a neutral policy bias after the early November easing was intended to send a confident message that all was under control -- that the appropriate medicine had now been administered. That?s standard operating procedure for policy makers wishing to calm financial markets. Yet courtesy of the just-released minutes of the early November FOMC meeting, there is little question as to what the Fed is really up to: "?a faltering economic performance would increase the odds of a cumulatively weakening economy and possibly even attendant deflation. An effort to offset such a development, should it appear to be materializing, would present difficult policy implementation problems." Their words -- not mine. I rest my case. "

 

- Sheesh, Roach went through all this ages ago. He saw this coming when it wasn't even on the horizon. Kudos to a great mind. My most heartfelt appreciation goes out to people like him for sharing with all of us the depth of their knowledge. I thank whatever is out there on a daily basis for people like him. Doc, Yobob1, MachineHead, Easy Al, Thorass, Contrarian, etc.... thanks for sharing y'all. It is appreciated."

 

Goldilocks

 

Sine veritate nullus honor

Sine viribus nulla veritas

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The recovery to 1999 in the second quarter is the inflationary propaganda and when it is realized that it will never show up. Deflation will magically appear...

 

But Debt Deflation has been running now for many years already and it is beginning to grow very strong. Due to the expoenential nature of deflation and inflation, 2003 is going to be worse than the last 2 years and 2004 will be worse than 2003. There are only months left at the "speed" we are moving now. No escape...

 

 

Or I'm wrong and they will have enough time to invent a machine that makes gold out of thin air... Ha ha ha...

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Goldi:

 

There is another interesting article by K. John, D. Small and R. Tyron tilted Monetary Policy and Price Stability (in PDF format). The paper was written prior to July 1999. The three Fed researchers discuss various ways and measures that can be taken to influence the outcome of markets -- whether it is currencies, interest rates and bond prices or the stock market. The following are notable quotes from that research paper that outline steps to be taken when interest rates are at zero or when real interest rates are negative. (It is interesting that many people inside Fed knew the stock market was a bubble for many years. But their leader, Sir Print A Lot openly talking about the new economy and made many innocent small poor investors to throw their money to their friends at Banks and Wall Street.)

 

The paper is a long one (40 pages). Jim Puplava of Financial Sense Online last Tuesday quoted some most significant points of the paper. Here are what Jim quotes:

 

"Purchasing Treasury Bonds

 

Perhaps the most obvious extension of a central bank?s policy actions beyond the purchase of T-bills is to engage in the open market purchase of longer-maturity government debt. The effects that such actions can be expected to have on longer-term Treasury rates depend on how one sees interest rates as being determined. Following fairly standard views, we view long-term Treasury rates as composed of expectations of future short-term interest rates and term premiums. To have an impact, open market operations would have to affect at least one of these two components?.

 

Therefore, it would seem, that bond purchases would have to affect interest rates through impacting term premiums. Purchasing bonds, and decreasing the public?s holding of bonds, can decrease the term premium if bonds and other assets are imperfect substitutes in the public?s portfolio. In order to induce the public to hold fewer bonds, the central bank would bid up the price of those bonds and thereby lower their yield. However, historical evidence, such as Operation Twist in the United States in 1961, does not seem to support this notion of significant interest rate effects stemming from changing the relative supplies of assets. But, it remains an open question as to what the effects would be of truly massive purchases of government bonds. A central bank could presumably overwhelm the markets and raise Treasury bond prices. Indeed, the Federal Reserve fixed the yields on U.S. Treasury securities during and immediately after World War II. Presumably, bond purchases on a large enough scale could drive Treasury bond rates to zero, or nearly so." [international Finance Discussion Paper No. 641, July 1999 Monetary Policy & Price Stability link to pdf report] (p. 24)

 

"Writing Options

 

With long-term interest rates importantly affected by expectations of future short-term rates, a central bank may find interest rate options a valuable tool for affecting longer-term interest rates. With options, a central bank can convey its intentions regarding the future course of short-term rates. In particular, the central bank could enter options contracts in a way so that if future short-term interest rates rose above a specified level, the central bank would be obligated to make a payment to its counterparty. Not only would this inject reserves when interest rates rose, it would penalize the Federal Reserve for its failure to keep rates low. And the private market would gain financially --- the options would essentially be providing some insurance should short rates rise above the specified levels.

 

To accomplish these goals, the central bank would be the party to write the option and would set the strike price to correspond to the particular interest rate ceiling (i.e. a specific floor for T-bill prices) it desired to convey to the market. Then, if market rates were to rise above the ceiling rate, the price of the Treasury bill would fall and the holders of the option would have an incentive to exercise the option---purchasing a T-bill at a low price in the market and ?putting? it to the central bank at the higher strike price.

 

Options not only provide a way for the central bank to specify its ceiling for a particular interest rate over a specified future period, but the day-to-day changes in the price of the option also provide a market-based index of the credibility of the particular interest-rate ceiling specified in the options contract. Should the central bank?s commitment to low interest rates be questioned in the market, the central bank could read this from the option prices and could attempt to provide a policy response--either with options or other instruments." (p. 25)

 

On Influencing Exchange Rates

"Purchasing Foreign Exchange

 

By purchasing foreign exchange, a central bank could hope to depreciate its currency and spur net demand for domestic goods and services. When interest rates are above zero, unsterilized intervention causes more depreciation than sterilized intervention.21 This is because an unsterilized intervention lowers the domestic interest rates, whereas a sterilized intervention does not. However, at the zero bound, the two types of intervention have the same effects because the unsterilized intervention cannot lower the interest rate.

 

With risk neutrality and current U.S. interest rates fixed at zero, foreign exchange intervention could cause the dollar to depreciate in the current period if (and only if) it caused private agents to expect the dollar to be depreciated more in the future than they expected it to be before the intervention. At issue is whether U.S. authorities could create expectations of a future depreciation by credibly signaling their intentions for the future course of the short-term nominal interest rate. If U.S. authorities sold dollar assets in the current period and used the proceeds to purchase foreign assets, they would stand to gain if the dollar were to depreciate in the future. Observing current foreign exchange purchases by U.S. authorities, market participants might expect the U.S. authorities to lower interest rates in the future to bring about this depreciation. If so, with interest rates in the current period fixed at zero, the dollar must depreciate in the current period in order to maintain interest rate parity. The empirical literature provides only limited support for the existence of such signaling effects and suggests that if they are present at all, they vary from episode to episode and disappear fairly quickly.

 

Alternatively, foreign exchange purchases could succeed in causing the dollar to depreciate if U.S. and foreign assets are imperfect substitutes because agents are risk averse. In effect, changes in relative supplies of assets would then affect relative returns, and by purchasing foreign exchange, the Federal Reserve would be increasing the supply of dollar-denominated assets relative to foreign assets. However, an extensive empirical literature has almost universally concluded that such relative supply effects have little or no lasting impact on exchange rates." (p. 25-26)

 

Intervening IN the Private Sector

"Purchasing Private-Sector Securities

 

While using a credible rule to set short-term interest rates, purchasing government bonds, and using options may all help to lower and flatten the Treasury yield curve, the yield curves for private sector securities could remain somewhat elevated. In particular, if short-term Treasury rates are at zero and the economy is floundering, credit risk premiums could be quite high. If these risk premiums are holding back an economic recovery, the central bank could potentially unlock credit flows and jump start the economy by taking this credit risk onto its balance sheet, for example, through purchases of private sector securities. The key issue for a central bank contemplating such actions, however, is whether it is authorized to and whether it wants to take such private-sector credit risk onto its balance sheet.

 

The Federal Reserve, for example, faces some important restrictions regarding the type of private-sector securities that it is authorized to purchase. The current statutory authority for open market operations is still strongly influenced by the intent of the original framers of the Federal Reserve Act. One intent of the Federal Reserve Act was to spur the development of the bankers? acceptance market. It was thought that if the Federal Reserve could purchase and sell bankers? acceptances and similar types of securities, this would stimulate the development of private markets for these types of credit instrument. Accordingly, even today, while the Federal Reserve can purchase virtually all types of Treasury and agency securities, it can purchase only certain types of private sector securities---bankers? acceptances and bills of exchange. Accordingly, the Federal Reserve is not authorized to purchase notes, such as corporate bonds and mortgages; nor can it purchase equities or real property such as land or buildings..."(p.26-27)

 

As mentioned above, a key aspect of the purchase of any asset by a central bank would be whether the central bank can take onto its balance sheet the credit risk inherent in the asset. For open market purchases, there does not seem to be any explicit instruction that the Federal Reserve can not take credit risk onto its balance sheet. The limitation to taking on credit risk would seem to stem from the types of instruments that it can purchase--namely bankers? acceptances and bills of exchange arising out of real commerce. In practice, the Federal Reserve has stipulated that, as stated by Woelfel (1994), ?a bill of exchange is not eligible for purchase until a satisfactory statement has been furnished of the financial condition on one or more of the parties.? This condition, if not changed subsequently by the Federal Reserve, would seem to limit the private-sector credit risk the Federal Reserve would be taking onto its balance sheet by way of open market operations." (p. 27)

 

On Creating Wealth

 

"Printing Money to Induce Wealth Effects

 

When interest rates are positive and policy actions lower them, one channel through which aggregate demand is raised is the wealth effect generated by higher asset prices. But if interest rates are at the zero bound, then there are no wealth effects from the open market operations in these assets. This leaves wealth effects operative only if the central bank can directly engineer increases in wealth either by purchasing assets at above market values or by ?printing? money and somehow distributing it to the public as a transfer payment. Regarding the purchase of assets at above market values, this would appear to be problematic, at least on the political level if not on legal grounds. Deciding which types of assets to purchase at above market value would entail distributing wealth to some members of the public and not others based solely on their asset holdings. However, on strictly legal grounds it would seem possible for the Federal Reserve to purchase assets at above-market prices even if this results in negative interest rates on those purchased assets.

 

Printing money and distributing it to the public probably is not legal under the Federal Reserve Act. Under the act, after all expenses have been paid and the stockholders have received a dividend of 6 percent, the net earnings of the Federal Reserve must be put into a surplus account. It appears that direct transfers from the surplus account are not authorized by the Act. Even if allowed, the printing of money would entail issues of fairness and equity: would checks be mailed out to individuals, or would money be given to deposit holders through depository institutions? Questions affecting the distribution of wealth may best be left to the political process. The printing and distribution of money could have to be achieved in conjunction with the political process by means of a money financed reduction in income taxes. But any such action can be seen as composed of two components--a tax cut financed by new issuance of Treasury bills and an open market purchase of the bills. Since the later effects are likely to have little effect at the zero bound, the total effect would come from the fiscal stimulus. Of course, if the fiscal stimulus were large enough to raise the nominal interest rate above zero, then standard open market operations would regain their stimulative impact." (p. 17-28)

 

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In the end the only tool they will have left is dumping money out of helicopters...........and they can't legally do that, not that that would stop them since it's only a technicality.

This is the major flaw in reflation, the lack of a transmission mechanism putting money into the hands of those that will spend it. If you simply deposit (unearned) money into people's accounts, you would get instant hyperinflation psychologically speaking. "Hey, they're giving this stuff away it can't be worth anything". How could you decide what the right amount was and who was going to receive it? The fed is cooked.

 

By failing to allow the system to purge itself they have maintained excess capacity in the the things (and services in the near future) that people already have too much of. There is virtually no pricing power in anything. Raw material increases will only cleave what little profit is left.

 

Deflation is real. Sunday I bought some very nice shirts that 2 or 3 years ago would have been in the $30 range. they averaged $16 and they weren't on the sale rack...that was the normal price. Car prices are in a steep decline with no way to turn it around, their spiral has already started. Want to sell a car? Better have a damn good incentive package or I'll wait until you do have. Why are gasoline prices so sticky? Oil has increased over 25% this year and yet prices at the pumps here in town have gone down????????? When was the last time you haven't seen higher oil prices instantly reflected at the pump? Try never. Food prices in my area are stable with beef being volatile. I have noticed over the last few weeks better meat prices showing up, especially in the pricier cuts. Too many carcasses swinging?

 

 

More and more call centers in the US & Europe are being shuttered and moving to India, the Phillipines and anywhere they can find a reasonable quantity of English speaking people. With global telecommunications why pay someone $8 an hour to answer the phone when you can get the same thing for $1 an hour or less? Most workers have no pricing power either, many are facing pay cuts(airline workers and soon I would guess telco and IT) reduced hours or through job loss forced to take lower paying jobs.

 

I understand all the excitement over falling bonds, higher gold and a CRB that is being driven by speculative hot money flows, but I will stick to my guns and say that it is a short term false signal. The fun is only beginning.

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Easy Al. I love it when others make me think. But amigo, you make my little cranium come to close to overheating sometimes. Crikey, I had to think hard enough just to put my little paragraph together. Your research and analytical skills.... scheize... As a good American I hate you simply out of pure envy. Ya bastard....lol.

 

Yoyo,

"I understand all the excitement over falling bonds, higher gold and a CRB that is being driven by speculative hot money flows, but I will stick to my guns and say that it is a short term false signal. The fun is only beginning. "

 

- What are your thoughts on Gold then if you believe the CRB will fail? I have the impression that you are a gold bug and real money fan but what do you see in the next 2-3 years for Gold? Will we eneter a price deflation for all assets or will Gold and it's prettier little sister (my opinion only) manage to perform spectacularly?

I am of the opinion that I think the old paradigm of inflation of prices being directly tied to inflation of the money supply may not be working due to the total fiat dominance in the world right now. The grand experiment, as it unfolds, is leading in unimagined directions.

What used to be a mathematical certainty is no longer.

More money chasing the same amount of goods always led to inflation. Now, with Nations racing to competitively devalue and goods only priced in terms of their national fiat currencies and the dollar you may have actual price deflation in combination with rampant monetary inflation all around as a means of weakening currencies (IE - The Japanese Central Bank buying bad Bank debts, the massive US deficits and statements by Snow/Bernanke, and now even the Euro's have joined in by cutting rates).

This all leads to the possibility of Gold rising against all currencies as it rises against the dollar and all currencies try to fall against the dollar. This could be an unbelievable best of all worlds for Gold Bugs. I, for one, find it very hard to imagine though. It just seems implausible that Gold could be allowed to run when the net short position is what it is. The Bullion banks would be ruined and the Central bankers would never get their gold back.

Scenarios like this, of course, could be why Warren Buffet took physical delivery of his 140 million ounces of silver. The systemic risks are to great to play the game any other way. Who knows.

 

Goldi

 

Sine veritate nullus honor

Sine viribus nulla veritas

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I expect precious metals to do well regardless of what happens to prices. An inflationary outcome would mean that your purchasing power is maintained. A deflationary outcome would mean actual gains in purchasing power assuming PM's remain stable or increase in price. It's difficult to envision PM prices declining drastically with the digital fiat presses running wide open. The question is will monetary infaltion pass through to everyday prices. I'm having a hard time figuring out how that will happen without supplier pricing power. The CRB should be stripped of oil and PM's for a clearer look at what's really happening. I am not aware of any shortages of basic materials and that is where the rubber meets the road. Our boom went on so long that it caused excess capacity to be created all the way down to resources on a global scale. I am of the belief that ultimately demand on many things will fall faster than excess supply is removed.

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Machinehead is a lost cause..he's a died in the wool monetarist and can't be saved. :lol:

 

Here's another good indicator of slowing commerce:

 

S&P reports on global transportation industry

 

We had one of the nation's largest trucking outfits go belly up and close the doors and yet we still have more trucking capacity than we can use. The remaining competitors are not making out like bandits, they are still struggling and looking for ways to cut costs.

 

The next time you are stuck at a railroad crossing watching a freight train go by, take a close look at the condition of the rail cars. Most are rusting and beat up as are most of the containerized units riding their flatbeds. Hardly the picture of a healthy industry. Our roads are crumbling, railbeds get attention only after the accident, airplanes running around with tape on the wings. We will have no money to put into our infrastructure. No it will be far too important to keep prosecuting war after war, playing the shell game with social security and medicare, and funding the bogus homeland security "program". Politicians will only cut spending that doesn't impinge on their electibility and freely cut those things they think they can get away with. Hard to imagine a politician running on the "We need to fix our roads" platform.

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"machinehead ... he's ... died"

 

The reports of my demise are greatly exaggerated!

 

Remember the Phillips curve? All mainstream economists accepted in the 1960s and 1970s that the price of lowering unemployment was higher inflation. Or to lower inflation, you had to put more people out of work. The dismal science, indeed.

 

Well the 1980s and 1990s blew that theory apart. Unemployment and inflation fell together to levels that nobody in the 1970s ever expected to see again.

 

The "yobob curve" asserts that capacity utilization and inflation are linked arm-in-arm. If capacity utilization rises, suppliers gain pricing power and prices rise. If capacity utilization is low (as it is now), then prices must fall.

 

Yet if you take a dismal economy with only 50% capacity ute (say Argentina) and double the quantity of pesos, prices will roughly double too, even in a "buyers' market" where suppliers have nearly zero pricing power.

 

Give me the power to control the money supply (on second thought, DON'T) and I'll peg prices wherever you want them!

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I didn't say you were dead. Just highly confused. :P

 

You trying to convert me to a monetarist would be as successful as me trying to convert you to an Austrian. Rotsa ruck in either case.

 

You cannot compare any other countries conditions to the US at this point in history. There is only one world reserve currency, and we're it. That alone makes a whole bunch of difference and the very reason I expect that Uncle Buck's demise is prematurely reported. Competitive devaluation will be the result, unless we go to total global fiat melt down on a global scale first. We'll eventually get the total wipe-out but it could take years or even decades to get there. Or it could happen next week.

 

Just how would you plan to distribute those funds to the people who will spend them and what if they instead, God forbid, paid down debt or stuck them under the mattress?

 

Did ya notice Shrub out talking up the dollar today? So much for a new weak dollar policy. I think this current weakness is mostly due to the ESF (Economic Stabilization Fund) being off line. Unlike the PPT (Plunge Protection Team) the ESF is real and has funding as well. The problem lies with the fact that the only authority to operate it lies with the Treasury Secretary. Shrub killed off O'Neil without thinking about it, I'm sure. So we wait and twiddle our thumbs until we have a new Treasury Secretary.

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Yobob:

 

For near term, I tend to agree with Machinehead. Certainly, the expansion of (the fiat) monetary supplies takes place by creating additional debts. Since debts requires the payment of interest and princinpal, one can argue that, at some stages, the cost of service and repayment of debts become so large that the whole proccess will clapse. On the other hand, the cost of service and repayment of debt would decrease if the value of the currency depreciates. Thus, one can view inflation as an important mechanism to prevent or delay the clapse of the fiat monetary scheme, which is another way to say inflate or die.

 

We all know that the structure of the US government has bias of running deficiency. The Federal Reserve system was set up to buy US treasury debts so that government can incur the deficiency as large as it wants (or as majority of people can tolerate). Currently, there are few restrictions on how much the US government can over spend. I do not see what would prevent it from inflating via fiscal means.

 

Another thing I would like to point out is that the bubble in 1990s has resulted in mis-allocation of capital. Because of the interest rate was artificially held low by Uncle Al, a lot of hot money went into "investments" in capital goods, instead of consumer goods. The price of the goods whose price declines are those where over investment took place. The consequence of massive mal-investment must be the decline of the national standard of the living. Because the political structure of the nation make it unfeasible to have large scale wage decrease, the easy way out is via inflation.

 

Most of the main stream observations of the deflation can be traced backed to the price decline in goods whose production capacities were over-invested and some consumer goods that can be imported easily because of free trade with China. The price declines, however, are short-term because I do not think Chinese will be forever happy to send us physical goods for a piece of fiat paper. Furthermore, as the over-invested projects are liquidated (via bankruptcy or merge), the manufacturers for these goods will eventually regain the pricing power. Moverover, the prices of services which can not be outsourced to foreign countries and goods that can not be cheaply imported are already moving up significantly. Finally, for the past few years, business has not made much investment recently and many consumers are consuming their savings (the most obvious one is to take money out of their inflated home equities). This just like a farmer not only consumes all his havested crops but also eat the seeds for next year. When farmers in this nation are all doing like this, what do you think will happen eventually for the price of food?

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I never said they wouldn't try, nor do I fail to understand the concept of inflating the debt away. I simply think the task will be daunting and the amount of monetary pumping necessary to do it would have absolutely devastating affects on the dollar, something I'm sure that hasn't escaped the fed's notice. The criticial difference is the total dominance of the dollar on a global basis. Virtually the rest of the world is reliant on the US consumption of their goods which is facillitated by the strength of the dollar relative to their respective currencies. This isn't the seventies. Japan cannot tolerate the Yen going any higher and even the Europeans are beginning to think about the Euro's effects on exports if you look at today's comments by Daimler Chrysler. If there were another major economy ready to take the lead it would be a different matter. There isn't.

 

I have always allowed for a brief period as we seem to be in now if you'll look back at previous posts. I just don't think it will last very long nor will it be successful. All things are intertwined and when the stocks take another serious nose dive, note how quickly things come unraveled.

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Yobob, After the companies selling goods cheaply, fail, who will take their place? What novice will be able to enter a game where even the most able athletes have killed each other in a competetive slaughter? Only those carefully poised to take advantage of an increasingly bifurcated society will be able to play at all. Who will sell goods to the vast armies of the poor? I know what you're saying about cheap stuff. It's fascinating to me to see the split occuring, and it takes on a weird physical reality, as I live on an upper middle or lower upper (who knows?) island separated by a small bridge from a working class peninsula. Goods are so cheap on the peninsula, it feels like stealing. I was shocked when I went shopping on the island today to see prices have gone up, by quite a bit. This is in an environment of many retail business failures, right near ground zero of the tech collapse. The businesses that have taken the place of the failures, are marketing exclusively to those who have wealth, and lots of it. I was surprised because I expected this to happen, but not so soon. There were no markdowns for the Christmas season.

 

As far as the inexpensive peninsula goes, I wonder how China marts will be able to maintain their cheap prices when distribution costs go up, and American dollar weakens,( even a little), against other currencies. They're going to have to hike their prices, or go under eventually.

 

Maybe I'm flogging a dead horse, and forgive me for constantly repeating myself. I have to agree though,with Machinehead drawing a comparison with our future and Argentina's present. We will be running at much lower capacities, production will plummet, and a counter-intuitive situation will occur, with many prices rising, when we feel they should be falling.

 

In this atmosphere, asset bubbles will deflate. Housing, will return to prices that reflect the poverty or wealth of their particular market. The overall trend will be down.

Services, professional and otherwise, may plateau or soften. It will depend on what segment of the population they're serving, the rich or the working poor.

 

You guys know much more about fiat money and gold and how they interact than I do, so I thank you for all the wisdom about those. My ideas are generated just by what I'm seeing on the street.

 

I don't think its possible to get a fix on the inflation versus deflation debate without having an appreciation that the fabric of a healthy economy is not just unravelling, it has almost torn in two. Part of the remnant is rich, the other is composed of the poor. This has to factor into any forecast regarding inflation and deflation

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Given what Machine has been warning us of, this reflation thing, and the various opinions on how such attempts will be inflationary or deflationary, I think the "inflection point" is happening right before our eyes. The spin on this from mainstream infomercial media seems to be geared to convincing us that the rise in the CRB and gold is visible evidence that the reflatulation is working. Mainstream media hasn't given commodities or gold 3 seconds of coverage until yesterday and the instantaneous crapola coverage is now brainwashing us that reflatulation is now working and boom, boom bully is right around the corner. We'll see about that though. We'll see it right before our eyes as it all unfolds and those who place their bets accordingly will do very well. I hope I'm one of them. With the FEED index right at the top of the 8% growth channel and poised for a nice DUMP [so much for reflatulation] I know how I'm going to trade this thing. :D The last time the FEED hit that mark was December 2, and I don't have to tell you what happened then. I know how I will trade this. Do YOU?

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