When I heard this on the News Radio, I wondered how long it would take you to post something on this. Now I know!
Don't tell JQP
Of course it's deflation. Come on, Nate, when are you going to start drinking the kool-aide?
Of course all countries with sense want to dump dollars, but hey, it's all good. Something else to consider is that high roller elites hold lots of stocks, bonds and real estate. No way in hell they want deflation. It will break them fast. At least with inflation prices will rise and they might have a chance to dump their holdings and move to something else. Elites shiver at the idea of deflation. Fixed income people will pay with inflation. Now, which way do we assume this mess will be pushed? Elites? Or Average people?
OTOH, there's an obvious move to dump the dollar as a major player. How could it be any other way? It's entirely possible that all these plans for inflation won't matter because the rate of currency collapse will increase causing as foreign holdings will flee the dollar at ever increasing rates.
OK, gold holds it's value, the dollar deflates, the relative difference between the two will go up.
On the other hand, there's inflation, more dollars on the street, their value goes down and it'll take more to buy an oz. of gold.
The economy will probably be able to fake it till the holiday shopping season fails and then the panic may start.
I don't know if Panic is the right word. By some reports, many businesses are already not investing when they would normally want to because they just don't know if the Obama administration will loot all the profits from their hard work.
In a lot of sectors, consumer spending is way down and consumer credit levels are matching. This is masked a little by those unemployed people who are paying alltheir bills on credit. but overall, the larger part of America is financialy hunkering down to wait out the storm.
and then the panic may start.
Just as the sun MAY be bright and water MAY be wet...
I'm certain January 2010 will see the complete and utter folding of most major retail operations, and that'll be the year's high point.
Hope no one here owns any shopping malls...
Yup. All time high and barely getting started.
Real money always wins... eventually.
Two good reads.
Inflation and the Fall of the Roman Empire - http://mises.org/story/3663
When Money Dies: The Nightmare of the Weimar Collapse - http://mises.org/resources/4016
TheWesman
Our economic situation and Weimar have 1 major difference.
The Weimar Republic went straight from printing to giving the money away. The Fed's printed money is ostensibly loaned. It will be interesting who the Fed decides to have there debt forgiven.
Because the Fed created all the money and then loaned it with interest gives the Fed 110% calm on all the money be cause the cash to pay the interest doesn't exist.
This results in a game of musical chairs where there is more debt than money.
The music has stopped playing.
TheWesman
TheWesman
From the Financial times:
"Gold prices continued to surge on Wednesday, hitting a fresh record close to $1,050 a troy ounce"
Christmas season is already here boys... stores start stocking up in september for Black Friday... but not this year.
Restocking is at the bear minimum... much less an accumulation of inventory to sell off for Christmas. its just not happening.
There will be hundereds of big name retail chains that will go out of business just after Christmas this year.
You do realize that when stores go out of business it means their customers are either no longer borrowing to buy from them or they are saving more? Out-of-business stores don't borrow or spend themselves, either. This means deflation.
No ben. It usually means their customers have no fucking money in the first place.
I'm not sure I follow you. If they didn't have any money in the first place, how did they buy? Other than borrowing, that is, which I mentioned in my first post.
Anyway, the German citizenry had plenty of money during the Weimar Republic; they couldn't get rid of it fast enough.
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