Home › Forums › Financial Markets/Economics › The Deflation that dare not speak it’s name
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September 19, 2009 at 8:52 AM #459092September 19, 2009 at 10:18 PM #459266
Arraya
Participant[quote=barnaby33]
Deflation & Dollar Devaluation will co-exist.
Please explain? Deflation means scarcity of dollars, relative to demand. Falling prices just mean less people buying less stuff. A devalued dollar implies more dollars than demand for them. While this is possible I’d like to see, in your opinion, it comes about.
Josh[/quote]Ok, from the looks of the data we are mildly deflating. Meaning consumer credit is contracting and x rate and the Fed is offsetting the deflation with creating public debt, however, not more than the contraction in consumer credit. So we have a net contraction. i.e deflation Chris Martenson quantifies it pretty well here.
However, as many outside of the main economic echo chambers have already divined, it may simply be that there is a “new normal” out there that does not include a return to the former trajectory of borrowing. If so, then the government attempts to “plug the gap,” while crossing their fingers and waiting for everyone to get back in the race, will fail.
I have resolved myself to a new normal, a much lower normal, and my main concern centers on whether the government will arrive at the same conclusion before the dollar is ruined, or after.
The structural problems are still intact and there is no reason we will stop consumer credit deflation. It’s very easy to see that it is going to go on for years. Basically, the Feds measures have a shelf life with the world and really are not doing us any good besides putting of the problem of too much debt until later.
In the meantime the rest of the world has set up bilateral trade agreements to not use the dollar for international settlements because of the these deflation fighting measures.
The reserve currency status gives the dollar a good portion of it’s value. If the world goes away from the dollar it will devalue regardless of whether we are inflating or deflating.
http://www.atimes.com/atimes/China_Business/JG30Cb01.html
Dollar hegemony is a geopolitically constructed peculiarity through which critical commodities, the most notable being oil, are denominated in fiat dollars, not backed by gold or other species since then president Richard Nixon took the US dollar off gold in 1971. The recycling of petro-dollars into other dollar assets is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since 1973. After that, everyone accepts dollars because dollars can buy oil, and every
economy needs oil. Dollar hegemony separates the trade value of every currency from direct connection to the productivity of the issuing economy to link it directly to the size of dollar reserves held by the issuing central bank. Dollar hegemony enables the US to own indirectly but essentially the entire global economy by requiring its wealth to be denominated in fiat dollars that the US can print at will with little in the way of monetary penalties.
IMO, we are deflating(mildly) and their is a crisis of confidence brewing around the world which will cause devaluation coming soon.
The Fed can’t print confidence in their system and I believe their job is in trouble. They are private government contractors that role should be re-evaluated if this happens.
September 19, 2009 at 10:18 PM #459600Participant[quote=barnaby33]
Deflation & Dollar Devaluation will co-exist.
Please explain? Deflation means scarcity of dollars, relative to demand. Falling prices just mean less people buying less stuff. A devalued dollar implies more dollars than demand for them. While this is possible I’d like to see, in your opinion, it comes about.
Josh[/quote]Ok, from the looks of the data we are mildly deflating. Meaning consumer credit is contracting and x rate and the Fed is offsetting the deflation with creating public debt, however, not more than the contraction in consumer credit. So we have a net contraction. i.e deflation Chris Martenson quantifies it pretty well here.
However, as many outside of the main economic echo chambers have already divined, it may simply be that there is a “new normal” out there that does not include a return to the former trajectory of borrowing. If so, then the government attempts to “plug the gap,” while crossing their fingers and waiting for everyone to get back in the race, will fail.
I have resolved myself to a new normal, a much lower normal, and my main concern centers on whether the government will arrive at the same conclusion before the dollar is ruined, or after.
The structural problems are still intact and there is no reason we will stop consumer credit deflation. It’s very easy to see that it is going to go on for years. Basically, the Feds measures have a shelf life with the world and really are not doing us any good besides putting of the problem of too much debt until later.
In the meantime the rest of the world has set up bilateral trade agreements to not use the dollar for international settlements because of the these deflation fighting measures.
The reserve currency status gives the dollar a good portion of it’s value. If the world goes away from the dollar it will devalue regardless of whether we are inflating or deflating.
http://www.atimes.com/atimes/China_Business/JG30Cb01.html
Dollar hegemony is a geopolitically constructed peculiarity through which critical commodities, the most notable being oil, are denominated in fiat dollars, not backed by gold or other species since then president Richard Nixon took the US dollar off gold in 1971. The recycling of petro-dollars into other dollar assets is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since 1973. After that, everyone accepts dollars because dollars can buy oil, and every
economy needs oil. Dollar hegemony separates the trade value of every currency from direct connection to the productivity of the issuing economy to link it directly to the size of dollar reserves held by the issuing central bank. Dollar hegemony enables the US to own indirectly but essentially the entire global economy by requiring its wealth to be denominated in fiat dollars that the US can print at will with little in the way of monetary penalties.
IMO, we are deflating(mildly) and their is a crisis of confidence brewing around the world which will cause devaluation coming soon.
The Fed can’t print confidence in their system and I believe their job is in trouble. They are private government contractors that role should be re-evaluated if this happens.
September 19, 2009 at 10:18 PM #459672Participant[quote=barnaby33]
Deflation & Dollar Devaluation will co-exist.
Please explain? Deflation means scarcity of dollars, relative to demand. Falling prices just mean less people buying less stuff. A devalued dollar implies more dollars than demand for them. While this is possible I’d like to see, in your opinion, it comes about.
Josh[/quote]Ok, from the looks of the data we are mildly deflating. Meaning consumer credit is contracting and x rate and the Fed is offsetting the deflation with creating public debt, however, not more than the contraction in consumer credit. So we have a net contraction. i.e deflation Chris Martenson quantifies it pretty well here.
However, as many outside of the main economic echo chambers have already divined, it may simply be that there is a “new normal” out there that does not include a return to the former trajectory of borrowing. If so, then the government attempts to “plug the gap,” while crossing their fingers and waiting for everyone to get back in the race, will fail.
I have resolved myself to a new normal, a much lower normal, and my main concern centers on whether the government will arrive at the same conclusion before the dollar is ruined, or after.
The structural problems are still intact and there is no reason we will stop consumer credit deflation. It’s very easy to see that it is going to go on for years. Basically, the Feds measures have a shelf life with the world and really are not doing us any good besides putting of the problem of too much debt until later.
In the meantime the rest of the world has set up bilateral trade agreements to not use the dollar for international settlements because of the these deflation fighting measures.
The reserve currency status gives the dollar a good portion of it’s value. If the world goes away from the dollar it will devalue regardless of whether we are inflating or deflating.
http://www.atimes.com/atimes/China_Business/JG30Cb01.html
Dollar hegemony is a geopolitically constructed peculiarity through which critical commodities, the most notable being oil, are denominated in fiat dollars, not backed by gold or other species since then president Richard Nixon took the US dollar off gold in 1971. The recycling of petro-dollars into other dollar assets is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since 1973. After that, everyone accepts dollars because dollars can buy oil, and every
economy needs oil. Dollar hegemony separates the trade value of every currency from direct connection to the productivity of the issuing economy to link it directly to the size of dollar reserves held by the issuing central bank. Dollar hegemony enables the US to own indirectly but essentially the entire global economy by requiring its wealth to be denominated in fiat dollars that the US can print at will with little in the way of monetary penalties.
IMO, we are deflating(mildly) and their is a crisis of confidence brewing around the world which will cause devaluation coming soon.
The Fed can’t print confidence in their system and I believe their job is in trouble. They are private government contractors that role should be re-evaluated if this happens.
September 19, 2009 at 10:18 PM #459072Participant[quote=barnaby33]
Deflation & Dollar Devaluation will co-exist.
Please explain? Deflation means scarcity of dollars, relative to demand. Falling prices just mean less people buying less stuff. A devalued dollar implies more dollars than demand for them. While this is possible I’d like to see, in your opinion, it comes about.
Josh[/quote]Ok, from the looks of the data we are mildly deflating. Meaning consumer credit is contracting and x rate and the Fed is offsetting the deflation with creating public debt, however, not more than the contraction in consumer credit. So we have a net contraction. i.e deflation Chris Martenson quantifies it pretty well here.
However, as many outside of the main economic echo chambers have already divined, it may simply be that there is a “new normal” out there that does not include a return to the former trajectory of borrowing. If so, then the government attempts to “plug the gap,” while crossing their fingers and waiting for everyone to get back in the race, will fail.
I have resolved myself to a new normal, a much lower normal, and my main concern centers on whether the government will arrive at the same conclusion before the dollar is ruined, or after.
The structural problems are still intact and there is no reason we will stop consumer credit deflation. It’s very easy to see that it is going to go on for years. Basically, the Feds measures have a shelf life with the world and really are not doing us any good besides putting of the problem of too much debt until later.
In the meantime the rest of the world has set up bilateral trade agreements to not use the dollar for international settlements because of the these deflation fighting measures.
The reserve currency status gives the dollar a good portion of it’s value. If the world goes away from the dollar it will devalue regardless of whether we are inflating or deflating.
http://www.atimes.com/atimes/China_Business/JG30Cb01.html
Dollar hegemony is a geopolitically constructed peculiarity through which critical commodities, the most notable being oil, are denominated in fiat dollars, not backed by gold or other species since then president Richard Nixon took the US dollar off gold in 1971. The recycling of petro-dollars into other dollar assets is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since 1973. After that, everyone accepts dollars because dollars can buy oil, and every
economy needs oil. Dollar hegemony separates the trade value of every currency from direct connection to the productivity of the issuing economy to link it directly to the size of dollar reserves held by the issuing central bank. Dollar hegemony enables the US to own indirectly but essentially the entire global economy by requiring its wealth to be denominated in fiat dollars that the US can print at will with little in the way of monetary penalties.
IMO, we are deflating(mildly) and their is a crisis of confidence brewing around the world which will cause devaluation coming soon.
The Fed can’t print confidence in their system and I believe their job is in trouble. They are private government contractors that role should be re-evaluated if this happens.
September 19, 2009 at 10:18 PM #459868Participant[quote=barnaby33]
Deflation & Dollar Devaluation will co-exist.
Please explain? Deflation means scarcity of dollars, relative to demand. Falling prices just mean less people buying less stuff. A devalued dollar implies more dollars than demand for them. While this is possible I’d like to see, in your opinion, it comes about.
Josh[/quote]Ok, from the looks of the data we are mildly deflating. Meaning consumer credit is contracting and x rate and the Fed is offsetting the deflation with creating public debt, however, not more than the contraction in consumer credit. So we have a net contraction. i.e deflation Chris Martenson quantifies it pretty well here.
However, as many outside of the main economic echo chambers have already divined, it may simply be that there is a “new normal” out there that does not include a return to the former trajectory of borrowing. If so, then the government attempts to “plug the gap,” while crossing their fingers and waiting for everyone to get back in the race, will fail.
I have resolved myself to a new normal, a much lower normal, and my main concern centers on whether the government will arrive at the same conclusion before the dollar is ruined, or after.
The structural problems are still intact and there is no reason we will stop consumer credit deflation. It’s very easy to see that it is going to go on for years. Basically, the Feds measures have a shelf life with the world and really are not doing us any good besides putting of the problem of too much debt until later.
In the meantime the rest of the world has set up bilateral trade agreements to not use the dollar for international settlements because of the these deflation fighting measures.
The reserve currency status gives the dollar a good portion of it’s value. If the world goes away from the dollar it will devalue regardless of whether we are inflating or deflating.
http://www.atimes.com/atimes/China_Business/JG30Cb01.html
Dollar hegemony is a geopolitically constructed peculiarity through which critical commodities, the most notable being oil, are denominated in fiat dollars, not backed by gold or other species since then president Richard Nixon took the US dollar off gold in 1971. The recycling of petro-dollars into other dollar assets is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since 1973. After that, everyone accepts dollars because dollars can buy oil, and every
economy needs oil. Dollar hegemony separates the trade value of every currency from direct connection to the productivity of the issuing economy to link it directly to the size of dollar reserves held by the issuing central bank. Dollar hegemony enables the US to own indirectly but essentially the entire global economy by requiring its wealth to be denominated in fiat dollars that the US can print at will with little in the way of monetary penalties.
IMO, we are deflating(mildly) and their is a crisis of confidence brewing around the world which will cause devaluation coming soon.
The Fed can’t print confidence in their system and I believe their job is in trouble. They are private government contractors that role should be re-evaluated if this happens.
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