Worth reading: latest from Robert Prechter

[Arraya]

Speaking of doomsayers

http://theautomaticearth.blogspot.com/
Is it merely an ironic twist of fate, or is it more, to see the New York Times feature Robert Prechter prominently over the weekend? Prechter, after all, is the man whose economic theories are based to a very large extent on public mood and herding behavior. Does the paper’s sudden attention for him then indicate a major mood swing by itself?

When you see that the new UK government plans to cut its spending by up to 40%, you’d be inclined to think so. The fact that some 750.000 Americans simple dropped out of the work force in June, a near record, -while 100.000 entered- can also serve as a sign of a changing public perception of the economy and their lives in general. As can the 30% plunge in pending home sales that was announced recently.

While US states and counties need to cut $180 billion, or even more, over the next year. Illinois comptroller Daniel W. Hynes says his state owes $5 billion to schools, rehabilitation centers, child care, the state university — and it’s getting worse every single day. [..] “This is not some esoteric budget issue; we are not paying bills for absolutely essential services. [..] That is obscene.” And there is nothing that points to improvement. So Illinois will have to go where Britain is going: massive cuts to essential services, which always and inevitably will hit the weakest citizens first.

There are now 9.2 million unemployed Americans who don’t get a penny in financial help, says Jeff Weniger at Harris Private Bank. If they all have one dependent, that’s nearly 20 million people in the US with no means of even bare survival other than charity. Moreover, those massive cuts will mean massive additional lay-offs, which through positive feedback mechanisms will lead to more lay-offs and more budget cuts. This will happen in Illinois, in California, in Greece, Spain, Italy, and eventually all over the world.

[Anonymous]

I 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.

[Anonymous]

I 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.

[Anonymous]

I 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.

[Anonymous]

I 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.

[Anonymous]

I 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.

[scaredyclassic]

and the answer is 4.2 years.

[scaredyclassic]

and the answer is 4.2 years.

[scaredyclassic]

and the answer is 4.2 years.

[scaredyclassic]

and the answer is 4.2 years.

[scaredyclassic]

and the answer is 4.2 years.

[paramount]

It 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….

[paramount]

It 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….

[paramount]

It 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….

[paramount]

It 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….

[Author]

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