patrick.net

indigenous says

True dat. But it is also true that capital goes where is treated best. Which is not going to be in the US for long, for all the aforementioned reasons.

Time will tell all. So how are you playing this game and making money based on your methodology?

zzyzzx says

No. But I don't see how that is relevant here.

Clearly, otherwise you wouldn't pretend like you would enjoy deflation.

There is a very strong correlation between deflation and high unemployment.

indigenous says

for the moment

Could you quantify what your moment of time represents.
My moment is what price will give me or spanks me.

Graybox says

Time will tell all. So how are you playing this game and making money based on your methodology?

Cash benefits from the strong dollar and the 10yr treasury, both are safe.

Stocks = no

Bonds are a bigger bubble than stocks.

I know nothing about options trading, and not sure want to based off the long list of apparent options burnouts I see.

I think mining stocks will have a return as inflation gets going.

I think emerging markets next year might be good maybe in India. India might go from terrible to not too bad as they have a new leader.

When the stock market does adjust and maybe QE really does stay gone stocks in SMEs might have a few good choices.

Graybox says

Could you quantify what your moment of time represents.

My moment is what price will give me or spanks me.

next qtr or so.

If all the money comes to the US how is it going to produce yield on an economy that desperately needs to shed malinvestment. IOW it is not fertile ground for investment to get return as it is so thoroughly saturated with over-investment.

Stay with whats making money and working for you.

I don't care for options at all and it's a fact most don't posses enough knowledge and skill in market theory or the mechanics to make a dime. It's sold as a risk management tool (lol) but nothing beats skill set, self control and discipline. Ask all the broke options players..

This will not be as much about investment as it will risk management. Will have to come visit this April 1st and see if your view is holding water.

The amt of capitol investment coming our way will take more than a qtr to work its way threw the system. Will be seeing new record highs in equities next year and broken highs in the USD.

RE in the median range and below will stay range bound as will unemployment.

indigenous says

how is it going to produce yield on an economy that desperately needs to shed malinvestment

That question you will have to ask the banksters.

Graybox says

That question you will have to ask the banksters.

Depends on whether we have seen peak QE? If so then the whole deal will begin to deflate.Graybox says

The amt of capitol investment coming our way will take more than a qtr to work its way threw the system. Will be seeing new record highs in equities next year and broken highs in the USD.

I'm talking about the leading edge the "do the opposite as the crowds part"

This economy is not in good shape...

indigenous says

'm talking about the leading edge the "do the opposite as the crowds part"

LOL the crowd. What did "they" have to say...lol

I believe in rowing my own canoe across the pond.

Call it Crazy says

Please explain in detail how that is now.

I'm not even sure what the means--is that English?

Call it Crazy says

Please explain in detail how that is now.

here are 2 such examples:

zzyzzx says

I love deflation!

The Fed does not share your sentiment and will do what they can to prevent it.

Analyzer says

The Fed does not share your sentiment and will do what they can to prevent it.

i believe it was once said that it would send "helicopters of money"

Isn't deflation just the hangover from malinvestment that was induced by improper inflationary policies such as QE, bailouts, etc? So I don't think it's deflation that's inherently bad, it's just the medicine we all have to take for taking too much risk.

By the way, deflation is great for those that continue to have jobs.

debyne says

Isn't deflation just the hangover from malinvestment that was induced by improper inflationary policies such as QE, bailouts, etc? So I don't think it's deflation that's inherently bad, it's just the medicine we all have to take for taking too much risk.

By the way, deflation is great for those that continue to have jobs.

Sactly

landtof says

here are 2 such examples:

Correlation is not causation. Tatpoop spews what the Fed told him to say, and feels smart whenever he echoes the Fed verbatim. In reality, unemployment causes deflation, not the other way around.

curious2 says

Correlation is not causation. Tatpoop spews what the Fed told him to say, and feels smart whenever he echoes the Fed verbatim. In reality, unemployment causes deflation, not the other way around

Wow--tatpoop? Are you 5?

And you are 100% incorrect, of course. Which came first in 1929--unemployment or deflation?

Regardless it's why I was VERY clear in my post:

tatupu70 says

There is a very strong correlation between deflation and high unemployment.

Do you see the word causation in there? It's typical for you to fight, fight, fight the opposite of anything I post, but it's really best to read it first.

In any event, deflation and unemployment are caused by the same thing, so if you have deflation, unemployment comes along for the ride. (unless you think we're suddenly going to enjoy huge productivity gains across the entire economy. Good luck with that.)

Call it Crazy says

Huh??

My thoughts exactly

debyne says

Isn't deflation just the hangover from malinvestment that was induced by improper inflationary policies such as QE, bailouts, etc? So I don't think it's deflation that's inherently bad, it's just the medicine we all have to take for taking too much risk.

By the way, deflation is great for those that continue to have jobs.

Nope, I know that's what the Austrians would have you believe, but it's not how the economy works in the real world. The economy is not black and white with improper and proper policies that can be easily specified. Deflation is not "medicine" in any sense of the word. Look at the 1930s--would you suggest we just let deflation take over and do nothing then? Allow the "medicine" to work?? How did that work out?

Only when driving over sand...

mell says

As It Turns Out Deflation Is Good After All

Of course deflation is good for anyone but a Congressman that has his retirement tied up in a floundering stock.

As far as being poor during deflation it's the best time to be broke and poor. Your welfare dollars actually go far. And when you panhandle a dollar, it can actually buy something.

tatupu70 says

here is a very strong correlation between deflation and high unemployment.

YEAH! Just like the high unemployment we had while the government was pretending there wasn't any inflation. But there wasn't one single damn item that hasn't inflated by more than 50% over the last 7 years?

You know what!? Give me that good ole fashioned deflation and laid off any day over what we had 2007 to beyond now.
Fuck if we would have had deflation I would still have 75% of my nest egg, that Obamacare bills ripped right though in weeks if not months.

tatupu70 says

Deflation is not "medicine" in any sense of the word. Look at the 1930s--would you suggest we just let deflation take over and do nothing then? Allow the "medicine" to work?? How did that work out?

I would suggest that we not overly inflate in the first place so that massive deflation doesn't become the inevitable end result. Are you suggesting we proverbially "kick the can" by continuing to inflate, inflate and inflate so as to temporarily avoid the deflationary medicine that's necessary to bring balance to the force? It's going to eventually happen anyway and only get worse when it does happen.

If we maintained discipline in our monetary and fiscal policies, I doubt we would have these wild swings as much...but I suppose that's how the elites make their money given they're the few that are "in the know".

Deflation is great - why do you think the Germans are strongly opposing QE? Why do you think the Swiss want a vote on repatriating their gold and the bankstas are opposing it and running propaganda against it? But what about he droves of freshly unemployed because of the Oil price crasht!! Oh wait, there haven't been any.. People are Fed up with the Fed induced stagflation and have become rightfully distrustful of their fiat backed by nothing. It's not gonna stop here, people will continue to demand repatriation of their governments gold and a return to sound money policies. In the meantime, enjoy the lower prices at the pump!

debyne says

Are you suggesting we proverbially "kick the can" by continuing to inflate, inflate and inflate so as to avoid the deflationary medicine that's necessary to bring balance to the force?

Nope--I'm suggesting that there is no such thing as deflationary medicine and that it is incorrect that you ever need deflation to "right" things. Or balance anything. That's not how the economy works.

debyne says

If we maintained discipline in our monetary and fiscal policies, I doubt we would have these wild swings as much...but I suppose that's how the elites make their money given they're the few that are "in the know".

History shows different. On the gold standard before the Fed, wild swings were MUCH more common.

tatupu70 says

Nope--I'm suggesting that there is no such thing as deflationary medicine and that it is incorrect that you ever need deflation to "right" things. Or balance anything. That's not how the economy works.

How does it work then? If you take out large amounts of debt and just keep borrowing and borrowing to cover your original interest payments, how can you avoid the deleveraging (resulting in deflation) that must eventually occur? Continuing to borrow and print doesn't seem like sound policy to me.

debyne says

How does it work then? If you take out large amounts of debt and just keep borrowing and borrowing to cover your original interest payments, how can you avoid the deleveraging (resulting in deflation) that must eventually occur? Continuing to borrow and print doesn't seem like sound policy to me.

By deleveraging, in this case, you mean defaulting--right?

I'm assuming you are talking about the Federal Government? There are two ways in which you can avoid defaulting--reduce spending and increase revenues. Both will be required. Raise taxes on the 1% and cut military spending are two good places to start. Add some tariffs to bring jobs back, redistribute wealth and income to the 99% and you'd be amazed at how quickly the budget deficit would turn into a surplus.

The reason you borrow is to enable you the time to fix things. Defaulting is the worst of all possible outcomes.

debyne says

How does it work then? If you take out large amounts of debt and just keep borrowing and borrowing to cover your original interest payments, how can you avoid the deleveraging (resulting in deflation) that must eventually occur?

The Wogster is conspicuous by his absence...

tatupu70 says

By deleveraging, in this case, you mean defaulting--right?

I'm assuming you are talking about the Federal Government?

I mean paying down debt, and I'm referring to any entity involved in creating inflation such as the Federal Gov't, the Fed or banks.

tatupu70 says

There are two ways in which you can avoid defaulting--reduce spending and increase revenues.

Won't a reduction in spending lead to deflation since less dollars are entering circulation and going toward savings or debt?

tatupu70 says

Wow--tatpoop? Are you 5?

Sorry. I got annoyed because we had already covered this topic, but I am old enough to remember stagflation, which you seem not to recall.

tatupu70 says

Which came first in 1929--unemployment or deflation?

In 1929? I would be very interested to see if you can find good data on that. People talk about the stock market crash in October 1929, but actually the full year 1929 had a 20% increase in the DJIA, and the unemployment rate was under 4%.

During the period 1929-33, a global depression including widespread unemployment caused deflation in America; prior to the FDIC, defaults were also a serious problem, causing bank runs and panic. In Germany, monetary expansion caused hyperinflation and political instability including widespread violence. Increasing the CPI does not generally cause greater employment or prosperity, as the people of Zimbabwe and countless Latin American countries can tell you. (The people of the Weimar Republic could have told you the same, but many died in the following years.) Increasing CPI is more likely to cause stagflation, malaise, and instability.

BTW, as the experience of the 1930s showed, the Fed system does not appear to reduce the severity of downturns compared to the prior system. The Great Depression was probably the worst in American history, even worse than the recession of the 1870s, which was probably the worst of the 19th century. In the current century, the Fed system has shown its real function: keeping in place the one group of bankers who proved they cannot be trusted to run a bank.

The problem with deflation is that debt becomes very expensive.

FortWayne says

The problem with deflation is that debt becomes very expensive.

A high debt can result in a deflation. And a deflation can cause liquidation/elimination of those debts. The bondholders lose shirts in that case.
But yes, this is exactly why they are trying hard to avoid a deflation.

curious2 says

landtof says

here are 2 such examples:

Correlation is not causation. Tatpoop spews what the Fed told him to say, and feels smart whenever he echoes the Fed verbatim. In reality, unemployment causes deflation, not the other way around.

Exactly. According to Tatupu's logic, wet roads cause rain. If we are in drought, we just need to wet our roads more with *borrowed* water.

debyne says

Won't both a reduction in spending lead to deflation since less dollars are entering circulation and going toward savings or debt?

It is deflationary, which is why it is usually done slowly and during periods of growth so its effects can be moderated.

curious2 says

During the period 1929-33, a global depression including widespread unemployment caused deflation in America; prior to the FDIC, defaults were also a serious problem, causing bank runs and panic. In Germany, monetary expansion caused hyperinflation and political instability including widespread violence. Increasing the CPI does not generally cause greater employment or prosperity, as the people of Zimbabwe and countless Latin American countries can tell you. (The people of the Weimar Republic could have told you the same, but many died in the following years.) Increasing CPI is more likely to cause stagflation, malaise, and instability.

You need to learn your history again. First off--Weimar's problem is that their debt wasn't in their own currency. As is the case with almost all hyperinflationary environments. w.r.t the Great Depression, it was Austrian thinking that made it longer and deeper than it would have been had FDR continued his policies. Observe what happened in 1937 under "austerity" or "taking our medicine". Second, are you implying that the Great Depression in the US was caused by a global recession? As in, reduced overseas trade caused unemployment in the US?

Increasing CPI only causes problems if wages don't keep up, such as what happened when the price of foreign oil rose quickly in the 70s. Low levels of inflation is much preferable to deflation.

curious2 says

BTW, as the experience of the 1930s showed, the Fed system does not appear to reduce the severity of downturns compared to the prior system. The Great Depression was probably the worst in American history, even worse than the recession of the 1870s, which was probably the worst of the 19th century. In the current century, the Fed system has shown its real function: keeping in place the one group of bankers who proved they cannot be trusted to run a bank.

History once again disagrees with you.

Shaded areas are recession/depressions. (there are a LOT of shaded areas, aren't there?)

Or go here--there's a good chart here showing inflation before and after the Fed--it looks a LOT better after the fed to me. More predictable, more controlled.

http://www.24hgold.com/english/contributor.aspx?article=4269461978G10020&contributor=Tim+Iacono

gsr says

Exactly. According to Tatupu's logic, wet roads cause rain. If we are in drought, we just need to wet our roads more with *borrowed* water.

Wow, another poster who can't read. For the record, here's what I said:

tatupu70 says

There is a very strong correlation between deflation and high unemployment.

Seriously Wogster, did you have a come to Jesus epiphany or what?

Government bonds are what 25% of the bond market?

The could pay them off as well...

Back to my question, you stated that infation is bad. Have you changed your view?

marcus says

What you end up with is [an indebted majority wanting] inflation [because they like to "buy now" but don't like to "pay later"]. But this is sort of like everyone being [short] a stock. Now all you have is [buyers].

There, fixed that for you.