Deflation is winning

[Fearful]

[quote=barnaby33]
Fearful, all things are temporary care to hazard a guess? As to the unwinding of the carry, that is a knock on effect of the deflation. The Japanese have sustained enough losses that they are saying no mas. That currency is being repatriated yes, or rather parts of it are. I suspect that many of the Japanese banks that have been doing this are sustaining losses though which chills lending, which shrinks the money supply. Though I say up front I have no proof or insight.
Josh[/quote]
The Fed and Treasury are trying to keep the financial systems functioning. That is a much more pressing problem than inflation or the economy. One guess would be that once some semblance of financial system stability is reached, attention will be turned to the economy. This might happen over a month or so.

We are in such chaos that anything can happen. There are factions in China that are pushing for a move away from an export based economy – decoupling. The economic situation is weakening fast in China, and why would not the country start spending its $1.8 trillion in foreign exchange reserves to bolster the internal economy?

Conversely, the rest of the world could fall apart and the U.S. is the only economy left (relatively) standing – and the interested parties wish to preserve the financial status quo. The dollar would rise pretty rapidly in that case.

Whatever happens, it seems to be accelerating. Feedback loops galore! I thought of another one: Homeowner bailouts could worsen the situation, as the prospect of a bailout will increase the propensity for people to simply stop paying their mortgages. I, for one, would love to be in an underwater house right now.

Eric

[barnaby33]

I, for one, would love to be in an underwater house right now.

Somehow I have to feel you are being sarcastic. I think you’ve hit on something. The deflation is unprecedented and as such the playbooks of all the players don’t really cope with whats happening. This makes it (deflation) very dynamic. We could have all sorts of weird or unpleasant outcomes. I don’t claim to be a psychic. This thread was really intended to highlight something that I see as being a direct effect of the deflation, namely the increasing strength of the dollar.

The way I am seeing it, we are screwed, but everyone else is screwed worse. Australia may have no budget deficit, and a surplus, but that will evaporate in the face of slack demand for the commodities they export. The US has huge current account deficits, but the world needs to keep selling it crap to keep its factories going. Lots of ugly, very few rays of sunshine.
Josh

[barnaby33]

I, for one, would love to be in an underwater house right now.

Somehow I have to feel you are being sarcastic. I think you’ve hit on something. The deflation is unprecedented and as such the playbooks of all the players don’t really cope with whats happening. This makes it (deflation) very dynamic. We could have all sorts of weird or unpleasant outcomes. I don’t claim to be a psychic. This thread was really intended to highlight something that I see as being a direct effect of the deflation, namely the increasing strength of the dollar.

The way I am seeing it, we are screwed, but everyone else is screwed worse. Australia may have no budget deficit, and a surplus, but that will evaporate in the face of slack demand for the commodities they export. The US has huge current account deficits, but the world needs to keep selling it crap to keep its factories going. Lots of ugly, very few rays of sunshine.
Josh

[barnaby33]

I, for one, would love to be in an underwater house right now.

Somehow I have to feel you are being sarcastic. I think you’ve hit on something. The deflation is unprecedented and as such the playbooks of all the players don’t really cope with whats happening. This makes it (deflation) very dynamic. We could have all sorts of weird or unpleasant outcomes. I don’t claim to be a psychic. This thread was really intended to highlight something that I see as being a direct effect of the deflation, namely the increasing strength of the dollar.

The way I am seeing it, we are screwed, but everyone else is screwed worse. Australia may have no budget deficit, and a surplus, but that will evaporate in the face of slack demand for the commodities they export. The US has huge current account deficits, but the world needs to keep selling it crap to keep its factories going. Lots of ugly, very few rays of sunshine.
Josh

[barnaby33]

I, for one, would love to be in an underwater house right now.

Somehow I have to feel you are being sarcastic. I think you’ve hit on something. The deflation is unprecedented and as such the playbooks of all the players don’t really cope with whats happening. This makes it (deflation) very dynamic. We could have all sorts of weird or unpleasant outcomes. I don’t claim to be a psychic. This thread was really intended to highlight something that I see as being a direct effect of the deflation, namely the increasing strength of the dollar.

The way I am seeing it, we are screwed, but everyone else is screwed worse. Australia may have no budget deficit, and a surplus, but that will evaporate in the face of slack demand for the commodities they export. The US has huge current account deficits, but the world needs to keep selling it crap to keep its factories going. Lots of ugly, very few rays of sunshine.
Josh

[barnaby33]

I, for one, would love to be in an underwater house right now.

Somehow I have to feel you are being sarcastic. I think you’ve hit on something. The deflation is unprecedented and as such the playbooks of all the players don’t really cope with whats happening. This makes it (deflation) very dynamic. We could have all sorts of weird or unpleasant outcomes. I don’t claim to be a psychic. This thread was really intended to highlight something that I see as being a direct effect of the deflation, namely the increasing strength of the dollar.

The way I am seeing it, we are screwed, but everyone else is screwed worse. Australia may have no budget deficit, and a surplus, but that will evaporate in the face of slack demand for the commodities they export. The US has huge current account deficits, but the world needs to keep selling it crap to keep its factories going. Lots of ugly, very few rays of sunshine.
Josh

[Fearful]

There is some truth behind it; if I were in an underwater house, I would be sorely tempted to stop making payments and wait for the sheriff to come. I could easily see it being a year until they get around to me, and in the meantime, there may well be a bailout headed my way.

I think we are seeing asset deflation on an tremendous scale; how quickly that translates to consumer price deflation is a complete mystery to me.

Can’t Fed and Treasury directly pump the (consumer) money supply by distributing a stimulus payment, issuing Treasury notes, and then buying those Treasury notes right back? It seems to me that the money supply can be pumped in a number of different ways, especially if deflationary expectations have not yet taken hold. If deflationary expectations have taken hold, then if Treasury issues stimulus payments, consumers will save the money, or use it to pay down debt, and the money supply will not be inflated. This was Japan’s trap, no?

The speed with which dollar strength subsequently changes will illustrate the extent to which we are in consumer price deflation. I do not think either inflation or deflation sets in as quickly as exchange rates have recently changed.

Chaos. We are in the midst of chaos that I find frankly alarming. The Nikkei is down 5% as I write this. I suspect the drop in the Nikkei is partly due to Sony’s poor forecast, which is partly due to increasing Yen strength, which makes Japanese exporters less competitive.

Eric

[Fearful]

There is some truth behind it; if I were in an underwater house, I would be sorely tempted to stop making payments and wait for the sheriff to come. I could easily see it being a year until they get around to me, and in the meantime, there may well be a bailout headed my way.

I think we are seeing asset deflation on an tremendous scale; how quickly that translates to consumer price deflation is a complete mystery to me.

Can’t Fed and Treasury directly pump the (consumer) money supply by distributing a stimulus payment, issuing Treasury notes, and then buying those Treasury notes right back? It seems to me that the money supply can be pumped in a number of different ways, especially if deflationary expectations have not yet taken hold. If deflationary expectations have taken hold, then if Treasury issues stimulus payments, consumers will save the money, or use it to pay down debt, and the money supply will not be inflated. This was Japan’s trap, no?

The speed with which dollar strength subsequently changes will illustrate the extent to which we are in consumer price deflation. I do not think either inflation or deflation sets in as quickly as exchange rates have recently changed.

Chaos. We are in the midst of chaos that I find frankly alarming. The Nikkei is down 5% as I write this. I suspect the drop in the Nikkei is partly due to Sony’s poor forecast, which is partly due to increasing Yen strength, which makes Japanese exporters less competitive.

Eric

[Fearful]

There is some truth behind it; if I were in an underwater house, I would be sorely tempted to stop making payments and wait for the sheriff to come. I could easily see it being a year until they get around to me, and in the meantime, there may well be a bailout headed my way.

I think we are seeing asset deflation on an tremendous scale; how quickly that translates to consumer price deflation is a complete mystery to me.

Can’t Fed and Treasury directly pump the (consumer) money supply by distributing a stimulus payment, issuing Treasury notes, and then buying those Treasury notes right back? It seems to me that the money supply can be pumped in a number of different ways, especially if deflationary expectations have not yet taken hold. If deflationary expectations have taken hold, then if Treasury issues stimulus payments, consumers will save the money, or use it to pay down debt, and the money supply will not be inflated. This was Japan’s trap, no?

The speed with which dollar strength subsequently changes will illustrate the extent to which we are in consumer price deflation. I do not think either inflation or deflation sets in as quickly as exchange rates have recently changed.

Chaos. We are in the midst of chaos that I find frankly alarming. The Nikkei is down 5% as I write this. I suspect the drop in the Nikkei is partly due to Sony’s poor forecast, which is partly due to increasing Yen strength, which makes Japanese exporters less competitive.

Eric

[Fearful]

There is some truth behind it; if I were in an underwater house, I would be sorely tempted to stop making payments and wait for the sheriff to come. I could easily see it being a year until they get around to me, and in the meantime, there may well be a bailout headed my way.

I think we are seeing asset deflation on an tremendous scale; how quickly that translates to consumer price deflation is a complete mystery to me.

Can’t Fed and Treasury directly pump the (consumer) money supply by distributing a stimulus payment, issuing Treasury notes, and then buying those Treasury notes right back? It seems to me that the money supply can be pumped in a number of different ways, especially if deflationary expectations have not yet taken hold. If deflationary expectations have taken hold, then if Treasury issues stimulus payments, consumers will save the money, or use it to pay down debt, and the money supply will not be inflated. This was Japan’s trap, no?

The speed with which dollar strength subsequently changes will illustrate the extent to which we are in consumer price deflation. I do not think either inflation or deflation sets in as quickly as exchange rates have recently changed.

Chaos. We are in the midst of chaos that I find frankly alarming. The Nikkei is down 5% as I write this. I suspect the drop in the Nikkei is partly due to Sony’s poor forecast, which is partly due to increasing Yen strength, which makes Japanese exporters less competitive.

Eric

[Fearful]

There is some truth behind it; if I were in an underwater house, I would be sorely tempted to stop making payments and wait for the sheriff to come. I could easily see it being a year until they get around to me, and in the meantime, there may well be a bailout headed my way.

I think we are seeing asset deflation on an tremendous scale; how quickly that translates to consumer price deflation is a complete mystery to me.

Can’t Fed and Treasury directly pump the (consumer) money supply by distributing a stimulus payment, issuing Treasury notes, and then buying those Treasury notes right back? It seems to me that the money supply can be pumped in a number of different ways, especially if deflationary expectations have not yet taken hold. If deflationary expectations have taken hold, then if Treasury issues stimulus payments, consumers will save the money, or use it to pay down debt, and the money supply will not be inflated. This was Japan’s trap, no?

The speed with which dollar strength subsequently changes will illustrate the extent to which we are in consumer price deflation. I do not think either inflation or deflation sets in as quickly as exchange rates have recently changed.

Chaos. We are in the midst of chaos that I find frankly alarming. The Nikkei is down 5% as I write this. I suspect the drop in the Nikkei is partly due to Sony’s poor forecast, which is partly due to increasing Yen strength, which makes Japanese exporters less competitive.

Eric

[kewp]

The way I am seeing it, we are screwed, but everyone else is screwed worse.

Yup. Or so I hope.

America has everything it needs to be self-sufficient. We have natural resources, an abundance of food and the best *human* resources on the planet.

We can afford to sit this thing out. Gonna suck for those whom have never known hard times.

[kewp]

The way I am seeing it, we are screwed, but everyone else is screwed worse.

Yup. Or so I hope.

America has everything it needs to be self-sufficient. We have natural resources, an abundance of food and the best *human* resources on the planet.

We can afford to sit this thing out. Gonna suck for those whom have never known hard times.

[kewp]

The way I am seeing it, we are screwed, but everyone else is screwed worse.

Yup. Or so I hope.

America has everything it needs to be self-sufficient. We have natural resources, an abundance of food and the best *human* resources on the planet.

We can afford to sit this thing out. Gonna suck for those whom have never known hard times.

[kewp]

The way I am seeing it, we are screwed, but everyone else is screwed worse.

Yup. Or so I hope.

America has everything it needs to be self-sufficient. We have natural resources, an abundance of food and the best *human* resources on the planet.

We can afford to sit this thing out. Gonna suck for those whom have never known hard times.

[Author]

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