Home › Forums › Financial Markets/Economics › Worth reading: latest from Robert Prechter
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cyphire.
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July 6, 2010 at 1:44 PM #576868July 6, 2010 at 8:16 PM #575950
Anonymous
GuestI fully agree with Rich that the social mood can change fast towards government spending (although the wind is now blowing in the opposite direction). When Lehman collapsed, many people that would in a typical situation never had agreed to the bank bailouts, were swayed by the seriousness of the situation and thought that although the bailouts were against their values, the exceptionally grave circumstances justified them as necessities. If the economy worsens, more people will become un-employed and more people will have been out of work for a very long time. Although most of these people would like to see a balanced budget, they prefer to have food on the table and will demand the government to help them out. When the choice is between ideology and hardship many people may ease up their ideologies.
If the recession worsens the government’s revenue will decrease further and they can therefore only help if they borrow even more money. At some point of time it could be that the only one willing to lend is the Federal Reserve, which it does by creating the money out of thin air. A depression is self reinforcing, the less people in the work force, the less consumption, the less production, which mans less people needed for work and less revenue for the government. Taxing the people will further suppress consumption and tax revenues so the government therefore needs more loans from the Federal Reserve. At some point of time all the money creation could cause a very large inflation. The inflations in Weimar Germany, Argentina and Zimbabwe were results of economic downturns with the ability to create money out of thin air. As Rich pointed out our ability to do that was not there during the great depression (although the dollar was devalued by adjusting the gold standard). I therefore believe that the final outcome of this recession/depression must be inflation rather than deflation, but not all inflation will be reflected in higher wages. We probably will need to monetize a large part of the debt, which will dilute the value of the dollar. When said and done we will wake up to realize that we as a nation is much less wealthy compared to others than what we used to believe.
Of course the question is how long the deflation will last before inflation takes over.
July 6, 2010 at 8:16 PM #576047Anonymous
GuestI fully agree with Rich that the social mood can change fast towards government spending (although the wind is now blowing in the opposite direction). When Lehman collapsed, many people that would in a typical situation never had agreed to the bank bailouts, were swayed by the seriousness of the situation and thought that although the bailouts were against their values, the exceptionally grave circumstances justified them as necessities. If the economy worsens, more people will become un-employed and more people will have been out of work for a very long time. Although most of these people would like to see a balanced budget, they prefer to have food on the table and will demand the government to help them out. When the choice is between ideology and hardship many people may ease up their ideologies.
If the recession worsens the government’s revenue will decrease further and they can therefore only help if they borrow even more money. At some point of time it could be that the only one willing to lend is the Federal Reserve, which it does by creating the money out of thin air. A depression is self reinforcing, the less people in the work force, the less consumption, the less production, which mans less people needed for work and less revenue for the government. Taxing the people will further suppress consumption and tax revenues so the government therefore needs more loans from the Federal Reserve. At some point of time all the money creation could cause a very large inflation. The inflations in Weimar Germany, Argentina and Zimbabwe were results of economic downturns with the ability to create money out of thin air. As Rich pointed out our ability to do that was not there during the great depression (although the dollar was devalued by adjusting the gold standard). I therefore believe that the final outcome of this recession/depression must be inflation rather than deflation, but not all inflation will be reflected in higher wages. We probably will need to monetize a large part of the debt, which will dilute the value of the dollar. When said and done we will wake up to realize that we as a nation is much less wealthy compared to others than what we used to believe.
Of course the question is how long the deflation will last before inflation takes over.
July 6, 2010 at 8:16 PM #576572Anonymous
GuestI fully agree with Rich that the social mood can change fast towards government spending (although the wind is now blowing in the opposite direction). When Lehman collapsed, many people that would in a typical situation never had agreed to the bank bailouts, were swayed by the seriousness of the situation and thought that although the bailouts were against their values, the exceptionally grave circumstances justified them as necessities. If the economy worsens, more people will become un-employed and more people will have been out of work for a very long time. Although most of these people would like to see a balanced budget, they prefer to have food on the table and will demand the government to help them out. When the choice is between ideology and hardship many people may ease up their ideologies.
If the recession worsens the government’s revenue will decrease further and they can therefore only help if they borrow even more money. At some point of time it could be that the only one willing to lend is the Federal Reserve, which it does by creating the money out of thin air. A depression is self reinforcing, the less people in the work force, the less consumption, the less production, which mans less people needed for work and less revenue for the government. Taxing the people will further suppress consumption and tax revenues so the government therefore needs more loans from the Federal Reserve. At some point of time all the money creation could cause a very large inflation. The inflations in Weimar Germany, Argentina and Zimbabwe were results of economic downturns with the ability to create money out of thin air. As Rich pointed out our ability to do that was not there during the great depression (although the dollar was devalued by adjusting the gold standard). I therefore believe that the final outcome of this recession/depression must be inflation rather than deflation, but not all inflation will be reflected in higher wages. We probably will need to monetize a large part of the debt, which will dilute the value of the dollar. When said and done we will wake up to realize that we as a nation is much less wealthy compared to others than what we used to believe.
Of course the question is how long the deflation will last before inflation takes over.
July 6, 2010 at 8:16 PM #576679Anonymous
GuestI fully agree with Rich that the social mood can change fast towards government spending (although the wind is now blowing in the opposite direction). When Lehman collapsed, many people that would in a typical situation never had agreed to the bank bailouts, were swayed by the seriousness of the situation and thought that although the bailouts were against their values, the exceptionally grave circumstances justified them as necessities. If the economy worsens, more people will become un-employed and more people will have been out of work for a very long time. Although most of these people would like to see a balanced budget, they prefer to have food on the table and will demand the government to help them out. When the choice is between ideology and hardship many people may ease up their ideologies.
If the recession worsens the government’s revenue will decrease further and they can therefore only help if they borrow even more money. At some point of time it could be that the only one willing to lend is the Federal Reserve, which it does by creating the money out of thin air. A depression is self reinforcing, the less people in the work force, the less consumption, the less production, which mans less people needed for work and less revenue for the government. Taxing the people will further suppress consumption and tax revenues so the government therefore needs more loans from the Federal Reserve. At some point of time all the money creation could cause a very large inflation. The inflations in Weimar Germany, Argentina and Zimbabwe were results of economic downturns with the ability to create money out of thin air. As Rich pointed out our ability to do that was not there during the great depression (although the dollar was devalued by adjusting the gold standard). I therefore believe that the final outcome of this recession/depression must be inflation rather than deflation, but not all inflation will be reflected in higher wages. We probably will need to monetize a large part of the debt, which will dilute the value of the dollar. When said and done we will wake up to realize that we as a nation is much less wealthy compared to others than what we used to believe.
Of course the question is how long the deflation will last before inflation takes over.
July 6, 2010 at 8:16 PM #576978Anonymous
GuestI fully agree with Rich that the social mood can change fast towards government spending (although the wind is now blowing in the opposite direction). When Lehman collapsed, many people that would in a typical situation never had agreed to the bank bailouts, were swayed by the seriousness of the situation and thought that although the bailouts were against their values, the exceptionally grave circumstances justified them as necessities. If the economy worsens, more people will become un-employed and more people will have been out of work for a very long time. Although most of these people would like to see a balanced budget, they prefer to have food on the table and will demand the government to help them out. When the choice is between ideology and hardship many people may ease up their ideologies.
If the recession worsens the government’s revenue will decrease further and they can therefore only help if they borrow even more money. At some point of time it could be that the only one willing to lend is the Federal Reserve, which it does by creating the money out of thin air. A depression is self reinforcing, the less people in the work force, the less consumption, the less production, which mans less people needed for work and less revenue for the government. Taxing the people will further suppress consumption and tax revenues so the government therefore needs more loans from the Federal Reserve. At some point of time all the money creation could cause a very large inflation. The inflations in Weimar Germany, Argentina and Zimbabwe were results of economic downturns with the ability to create money out of thin air. As Rich pointed out our ability to do that was not there during the great depression (although the dollar was devalued by adjusting the gold standard). I therefore believe that the final outcome of this recession/depression must be inflation rather than deflation, but not all inflation will be reflected in higher wages. We probably will need to monetize a large part of the debt, which will dilute the value of the dollar. When said and done we will wake up to realize that we as a nation is much less wealthy compared to others than what we used to believe.
Of course the question is how long the deflation will last before inflation takes over.
July 6, 2010 at 8:24 PM #575955scaredyclassic
Participantand the answer is 4.2 years.
July 6, 2010 at 8:24 PM #576052scaredyclassic
Participantand the answer is 4.2 years.
July 6, 2010 at 8:24 PM #576577scaredyclassic
Participantand the answer is 4.2 years.
July 6, 2010 at 8:24 PM #576684scaredyclassic
Participantand the answer is 4.2 years.
July 6, 2010 at 8:24 PM #576983scaredyclassic
Participantand the answer is 4.2 years.
July 6, 2010 at 9:29 PM #575965paramount
ParticipantIt sounds like most here believe we are Heading for a HeartBreak (remember that awesome Winger tune?) one way or another (inflation or deflation).
Given those probable realities, I guess the next step is to prepare:
1. Capital preservation
2. Food stores
3. Strategic default
etc, etc….
July 6, 2010 at 9:29 PM #576062paramount
ParticipantIt sounds like most here believe we are Heading for a HeartBreak (remember that awesome Winger tune?) one way or another (inflation or deflation).
Given those probable realities, I guess the next step is to prepare:
1. Capital preservation
2. Food stores
3. Strategic default
etc, etc….
July 6, 2010 at 9:29 PM #576587paramount
ParticipantIt sounds like most here believe we are Heading for a HeartBreak (remember that awesome Winger tune?) one way or another (inflation or deflation).
Given those probable realities, I guess the next step is to prepare:
1. Capital preservation
2. Food stores
3. Strategic default
etc, etc….
July 6, 2010 at 9:29 PM #576694paramount
ParticipantIt sounds like most here believe we are Heading for a HeartBreak (remember that awesome Winger tune?) one way or another (inflation or deflation).
Given those probable realities, I guess the next step is to prepare:
1. Capital preservation
2. Food stores
3. Strategic default
etc, etc….
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