It amazes me that many people do not realize that part of the reason banks are not lending money is that the Feds have increased their borrowing so greatly, it overwhelms the rest of the private sector borrowing funds.
As foreign countries resist the idea of financing more and more US Government borrowing, the US Treasury Department had to do something.
In effect, the Federal Reserve was forced to go along and expand their balance sheet or see itself implode.
What has happened is that the Federal Reserve has essentially ceased to exist and now acts as off balance sheet financing for the US Treasury Department. The independence of the Federal Reserve has been mostly destroyed.
Those who crusade against the existence of the Federal Reserve do not realize that the Federal Reserve has really ceased to exist except as a pawn of the US Treasury Department. Almost no one realizes what has happened in the last 8 months! It has been a totally unexpected and incredible development!
Private sector credit has almost entirely collapsed and in its place is public sector credit.
Hyperinflation to me is inflation of over 18% per year. That means prices double every 4 years. if you know the rule of 72, inflation of 18% before daily compounding means prices double every four years!!
If inflation hits 36% before compounding, prices double every TWO YEARS. Do the math!
Will we have hyperinflation? Possible. There is still time for the Federal Reserve to slam the brakes on credit if they see the banks lending more money and the velocity of money rapidly accelerating (that would be the sign of inflation) but will Bernanke have the guts to do it as previous Federal Reserve Chairman Volcker did back in 1979 and 1980? Not too likely.
I do see eventual 12% inflation which means prices will double at least every 6 years. That is frightening in itself.
By the way, I took 10 economics courses in College over 30 years ago and I am still sorting it all out!
Another comment. The current economy is very similar to an old forest that needs to die in various patches before it can enjoy a rebirth. We must endure either a massive fire in various patches or a massive clearing in various patches so that new growth can begin again.
The laws of nature cannot be repealed. It applies to economics as well.
The Feds are trying to keep the "old forest" alive by massive borrowings to keep things in place. While that will keep the politicians in office, it will not clean out the overgrowth and allow a rebirth to occur.
The US government has to let the US economy "fail" at this time. Massive cutbacks in borrowing and fed government employment has to begin immediately.
I am sorry to say but I do see that the Feds will have to partially renege on their promise to pay social security and medicare as such promises to pay is not sustainable. I see FUTURE recipients of social security will have to wait until 70 before they are entitled to full social security. At age 66 a reduction of 40% of full benefits. Those who are collecting social security now may see a freeze on future increases. I also see an incredible explosion of people applying for social security disability which is a serious problem.
"<< What if the house is only worth 150k now and the buyer has a 150k loss? >>
In your example, the house was purchased for $300k. The seller has the money from the original transaction"
But you said you got 100K on the sale and now the buyer has a 150K loss. The seller (you) dont have the additional 50k. Are you going all they back to the first owner of the house? Lets say the first own had the house built for 100k and sold it to you for 200K. Where did the price increase (money creation) come from?
What if the house burns to the ground and the owner has no insurance so the value is 0. The owner is left with a 300k mortgage so there is a minus 300k. You got 100K and the first owner got 100k. There is still a minus 100k.
How about this...
In 2007 the entire worth of the USA was 65 trillion. Today it is 54 trillion. Where did the 11 trillion go? It wasnt transferred to anyone. No one has it.
I have this same conversation with my Dad every 6 months. He doesnt see it either. He always says, "someone must have the money."
I think you are being confused by the creation of money--(wealth, value) through inflation. If inflation creates value, then deflation surely takes it away.
"<< What if the house is only worth 150k now and the buyer has a 150k loss? >>
In your example, the house was purchased for $300k. The seller has the money from the original transaction"
But you said you got 100K on the sale and now the buyer has a 150K loss. The seller (you) dont have the additional 50k. Are you going all they back to the first owner of the house? Lets say the first own had the house built for 100k and sold it to you for 200K. Where did the price increase (money creation) come from? >>
You have examples crossed here, so it is confusing. In my example I referred to a $200k home, he mentioned a $300k deal. Regardless, there was no money created. A buyer with $200k in his pocket (regardless of the source) purchased the home.
<< <i>What if the house burns to the ground and the owner has no insurance so the value is 0. The owner is left with a 300k mortgage so there is a minus 300k. You got 100K and the first owner got 100k. There is still a minus 100k. >>
Still, no dollars are created or destroyed. A house was destroyed, but no USD.
<< <i>In 2007 the entire worth of the USA was 65 trillion. Today it is 54 trillion. Where did the 11 trillion go? It wasnt transferred to anyone. No one has it. >>
The "worth of the USA" is not related to the country's money supply or the number of US Dollars in existence. It's a valuation based on an estimate of the sum of an estimate of the FMV of assets. Those estimates can easily exceed the total number of dollars in existence.
<< <i>I have this same conversation with my Dad every 6 months. He doesnt see it either. He always says, "someone must have the money."
I think you are being confused by the creation of money--(wealth, value) through inflation. If inflation creates value, then deflation surely takes it away. >>
I think you are confused about the value of an asset having anything to do with the country's money supply.
If I have a bottle of water, I can probably sell it to you anytime/anywhere for $1. However, if you and I were stranded in the desert, I could probably sell that water bottle to you for $100. That doesn't mean that inflation has ocurred, and that doesn't mean that the US money supply suddenly increased by $99 because you were willing to pay $100 for water. And when you drink that water, it doesn't mean that $100 has vanished from the money supply.
Ok. You are talking about paper money. I am talking about anything that can be turned in to paper money. Wealth is destroyed whether you call it paper or not.
The simple printing of money does not create inflation. If you disagree then we will just have to leave it at that.
There are many assumptions here, of course. I believe that the overall world trend is to diminish the US militarily, monetarily, spiritually, economically, and socially.
I agree, and think that the benefits of globalism are always touted (e.g. lower prices) but not the negative effects (job dislocation and lower wages). The shift of jobs to lower cost countries will at best stagnate US wages. It's hard to see too many dollars chasing too few goods any time soon. I think that's what's holding down the price of pm's. Also, every time I turn on Fox Business or CNBC, someone is wringing their hands about the coming hyperinflation once the economy recovers. That seems like a contrary indicator to me.
<< <i>Ok. You are talking about paper money. I am talking about anything that can be turned in to paper money. Wealth is destroyed whether you call it paper or not. >>
Of course we're talking about paper money, this thread is about inflation. If you're talking about wealth as defined as "anything that can be turned into paper money" then what are you claiming has been destroyed? All of the foreclosed homes and non-foreclosed homes are still standing. All of the shares of stock still exist. So please clarify, what wealth has been destroyed?
<< <i>The simple printing of money does not create inflation. If you disagree then we will just have to leave it at that. >>
Whether you believe in the monetarist explanation of inflation or the Austrian School's explanation of inflation, the increase in the supply of money is directly related to inflation. One way to increase the money supply is to print it. Now if you want to argue that in today's world there are factors offsetting the effect of printing money, then that could be a valid argument. I think many here would say that once those mitigating factors change we will start to see hyper-inflation. An example would probably be the velocity of money which has decreased and is deflationary - although some day it will turn around. Other factors like a drop in imports is inflationary because less money is leaving the country. Foreign countries who decide not to re-invest their funds from maturing treasury notes into more notes is also inflationary.
<< <i>< In 2007 the entire worth of the USA was 65 trillion. Today it is 54 trillion. Where did the 11 trillion go? It wasnt transferred to anyone. No one has it. >> >>
Just look at the countries in the middle east and in Asia. You will be amazed.
The USA is an aging giant similar to that of England in the first half of the 20th century For example, New York City is no longer the center of the world.
India and China alone probably increased their net worth by almost half of what the USA lost in the last three years.
The United States better be careful. In less than 10 years it will fall way behind China in being able to keep modernizing and maintaining their military.
<< <i>< In 2007 the entire worth of the USA was 65 trillion. Today it is 54 trillion. Where did the 11 trillion go? It wasnt transferred to anyone. No one has it. >> >>
Just look at the countries in the middle east and in Asia. You will be amazed.
The USA is an aging giant similar to that of England in the first half of the 20th century For example, New York City is no longer the center of the world.
India and China alone probably increased their net worth by almost half of what the USA lost in the last three years.
The United States better be careful. In less than 10 years it will fall way behind China in being able to keep modernizing and maintaining their military. >>
The last part about the military is the most frightening. When I was in the Marines we read "secret" briefings about the future of china in the 21st century, guerilla warfare and terrorism. That was back in mid 1980's. No so secret because it all has happened.
I want to add....about a year ago I read that chinese boys starting in grade school go to military summer camps...almost every year. They grow up to be soldiers. It's part of their culture. And we need to take note. At some point when China sees us as weak...e.g. a wishy-washy president and S. of State, they will just take Taiwan and wait to see what happens. Look, what are we doing about North Korea's intent of launching an ICBM except for lip service. That needs to be shot down as soon as it gets off the rails, imo.
Brazil's president Lula da Silva says the fault of the current financial storm is "white people with blue eyes." What a Richard Cranium. I was flying down in Brazil a lot in 2003 after he was elected in 2002. The Brazilians really loved him at first. I remember driving around Sao Paulo and points further west and looking at the intense poverty living in cardboard shacks along the hillsides for miles. In contrast I would run across small enclaves with beautiful modern homes surrounded by 12 foot fences and an armed guard in a tower. Our layover hotel in Campinas was like a resort until you walked out the front gate...cameras everywhere. I remember telling my wife back then that this will come to America some day.
<< <i>Ok Proof why does a stock go down i won't write a book here but short answer more short sellers then buyers so the money flows to the sellers of the stock not the buyers that's the way the market works for ever dollar lost the short seller gains a dollar so how much is lost thats how it works the cash is their but were >>
You are under the false assumption that buying and selling stocks is a zero sum gain. yes short sales generally are but the vast majority of stock sells are NOT short sales.
there has been actual capital destruction that is simply gone with the wind
<< <i>Ok Proof why does a stock go down i won't write a book here but short answer more short sellers then buyers so the money flows to the sellers of the stock not the buyers that's the way the market works for ever dollar lost the short seller gains a dollar so how much is lost thats how it works the cash is their but were >>
You are under the false assumption that buying and selling stocks is a zero sum gain. yes short sales generally are but the vast majority of stock sells are NOT short sales.
there has been actual capital destruction that is simply gone with the wind >>
Exactly.
Here is another example.
On Monday a stock is valued at $20 per share. Overnight it is discovered that the company is a massive fraud. On Tuesday morning the stock opens at $1. There were no sales or exchanges overnight. Where did the $19 go?
Japan has been flooding its economy with currency for the last 20 years. And it has had deflationary pressure since.
And CHINA, INDIA, RUSSIA, SAUDI ARABIA, have also lost massive amounts of wealth in the last 12 months.
I may have unconventional views of how things work and have written examples in various threads over the years, but those views have had an uncanny way of proving. We can only hope for inflation.
On Monday a stock is valued at $20 per share. Overnight it is discovered that the company is a massive fraud. On Tuesday morning the stock opens at $1. There were no sales or exchanges overnight. Where did the $19 go? >>
Whoever sold the stock for $20 on Monday still has their $20. No US Dollars are destroyed when the price of a share of stock declines.
It's no different than the water bottle analogy I gave.
On Monday a stock is valued at $20 per share. Overnight it is discovered that the company is a massive fraud. On Tuesday morning the stock opens at $1. There were no sales or exchanges overnight. Where did the $19 go? >>
Whoever sold the stock for $20 on Monday still has their $20. No US Dollars are destroyed when the price of a share of stock declines.
It's no different than the water bottle analogy I gave. >>
I have to agree here. It took me a while to wrap my head around it. I think proof is right.
In order to own that 20 dollar per share stock you had to pay someone 20 dollars.
Overnight the price has gone down by 19.
Someone has 20 dollars and you have a stock that at one time was valued at 20 dollars. Just because the price changed does not mean money was destroyed. The seller has your 19 bucks that you just lost.
------------
Why use something complicated like a stock? How about a coin!
You pay 1000 dollars for a new mint product that everyone is speculating on.
Someone has your 1000 dollars and you have a coin at that moment in time is worth 1000 dollars.
Just because tastes change and you can no longer sell that coin for 1000 does not mean money was destroyed.
Since the coin is only worth 100 dollars now... someone has your money that you lost.
so if the money is still their in stocks coins or what ever what does the new money were printing do to your old dollars ??? same items more cash so sorry for my bad english i'm chinese and i have your cash LOL!!
Bluelobster i disagree most if not all traders [bank brokers traders] have stop losses trailing only the long time little guy get dinking and short sellers make the cash on them cash just my thoughts
<< <i>so if the money is still their in stocks coins or what ever what does the new money were printing do to your old dollars ??? same items more cash so sorry for my bad english i'm chinese and i have your cash LOL!! >>
printing physical money is creating money by the fed. i agree this will cause inflation if it keeps up past the point of just replacing old worn bills and enough to keep the growing population needs.
but keep in mind that when the feds gives money to the banks and the banks do not create new loans... it is not going to lead to inflation. fractional lending is not taking place. Old loans are being paid off as we speak.
deflation is taking place.
proof has won me over. printing actual physical money or creating new loans is the only way to create money.
the only way to destroy it is to pay those loans off or actually burn some 100 dollar bills to keep warm.
<< <i>printing physical money is creating money by the fed. i agree this will cause inflation if it keeps up past the point of just replacing old worn bills and enough to keep the growing population needs.
but keep in mind that when the feds gives money to the banks and the banks do not create new loans... it is not going to lead to inflation. fractional lending is not taking place. Old loans are being paid off as we speak.
deflation is taking place.
proof has won me over. printing actual physical money or creating new loans is the only way to create money.
the only way to destroy it is to pay those loans off or actually burn some 100 dollar bills to keep warm. >>
Do not forget the supply side of the equation. If supply simply grows only to the extent of population growth then the above makes sense. if supply of goods and services grows more or less than population changes, then you will have supply caused inflation or deflation on one of the elements of inflation/deflation.
It is not as simplistic as we would like it to be:
The five major predictive components of inflation/deflation are:
many could argue that velocity of credit could also affect inflation/deflation. That is true. But in a sense, the velocity of ANY of the five of the major predictive components of inflation/deflation could affect inflation/deflation. Furthermore, the velocity of any of the other four predictors is intertwined definitionally with the increase/decrease terminology used above.
Only money really could have the same amount in existence and by being used 10 times a day instead of once per day could have a separate multiplier effect apart from the increase/decrease in quantity of money.
The reality is that as usage of credit cards possibly decline, the usage of old fashioned money will have to increase or you have a deflationary bias to the predictive model.
Last point; I have not been able to predict with any accuracy the degree of importance each of the five predictor expressed as a percentage.
For arguments sake, each predictor could easily be a flat 20% but we all know that it is not. For example, we know that table salt is price inelastic so that in the case of table salt, a halving the money and credit supply is not going to affect the price of table salt all that much. It is one of the best examples used in academia. When table salt goes on sale at even 90% off, consumers do not rush to he store to buy more. Too often, they don't even buy one. It is a ho-hum product. Yet compare it to rock salt used in the wintry months in the north. Very different.
I realize it's a very abstract concept, but it is facinating, that If anyone thinks that trading in most assets(gold, stocks, houses ect.) OTHER than contractual selling. ie futures contracts, promises to deliver, without owning(borrowing), or any other ACTUAL shortsell is a zero sum gain and that money will always be somewhere, sloshing around in the system, they are are making an error. I think this explains why so many people, think that there could be hyper inflation.
Physical owners of assets, like most of the precious metals enthusiasts on this board are all subjected to the risk of capital destruction AND creation....whether they believe it or not
fc, oreville is right, it is more complicated because there are supply and demand factors.
For instance, if an annoucement comes out with a definitive plan to replace the USD as the world's reserve currency, it would create a sudden oversupply of USD as everyone rushes to abandon the USD. And as we saw last year when the price of gold first dropped below $1000 on the strengthening dollar, investors were unwinding some investments and that created a strong demand for the dollar.
<< <i>the price of gold is determined by a market that I believe to be international and too big for any companies or banks or even governments to control.
the unemployment numbers and the CPI numbers are determined by a survey method and a reporting method which is contrived by government.
show me that the gold market is not a "fair market" -- in other words, prove to me that it's manipulated -- and I will be very attentive. >>
I agree.
"Poets are the unacknowledged legislators of the world." PBShelley
Do not forget the supply side of the equation. If supply simply grows only to the extent of population growth then the above makes sense. if supply of goods and services grows more or less than population changes, then you will have supply caused inflation or deflation on one of the elements of inflation/deflation.
--------
When I read this part of oreville's post I thought of the millions of dollars sent to Mexico from illegal aliens every year for decades. I was aware of this back in the 1970's-2005 when I lived in SoCal and Central Coast. How many dollars were sent to Mexico? I don't know but I remember Pres. Vicente Fox saying that these "immigrants" are Mexico's greatest asset because of this act of dollars sent back. That makes me think that the millions were significant. The money orders sent back to Mexico were to support families, pay off "coyotes", pay off drug cartel, guns,...
I had heard that there are more USD circulating outside of the US that inside. So you can imagine a scenario where all foreign holders of USD start trying to spend their USD on our goods and services. While that would be good for the economy, it would be very inflationary, especially if they stopped or reduced their acceptance of our debt or dollars in return for their exports.
I thought the point of this thread was hyper inflation. I dont care how many "dollars" are in circulation, if asset values decline we will not have inflation.
If joe blow still has the $20 from the stock sale and doesnt do anything with them then there will be no inflation.
Thinking that inflation is only caused by the number of US dollars in circulation will lead to erroneous assumptions. Believing that increases in the money supply causes inflation will also lead to erroneous assumptiions.
<< <i> I thought the point of this thread was hyper inflation. I dont care how many "dollars" are in circulation, if asset values decline we will not have inflation. >>
cohodk: Your thinking is faulty in that you are not allowing for the possibility that even if asset values decline, if owners of such assets withhold them from the market as they do not like the new lower prices there will be acute shortages then defeat the disinflation scenario you stated.
It is impossible to generalize in the way you have done.
The United States better be careful. In less than 10 years it will fall way behind China in being able to keep modernizing and maintaining their military.
We have over 500,000 troops stationed throughout the world. 50,000 alone in Germany. Not to mention Japan. We are over extended and its time to stop playing the policeman of the world. This can no longer be sustained when we are borrowing trillions of dollars to prop up are failing economy.
<< <i>The United States better be careful. In less than 10 years it will fall way behind China in being able to keep modernizing and maintaining their military.
We have over 500,000 troops stationed throughout the world. 50,000 alone in Germany. Not to mention Japan. We are over extended and its time to stop playing the policeman of the world. This can no longer be sustained when we are borrowing trillions of dollars to prop up are failing economy. >>
--------
That's an important side point to this thread. Once BHO or whoever pulls troops from all of our bases the writing is on the wall. We will have passed on the baton on to the Chinese. And America will be in survival mode dictating nothing but just reacting. I think this is in the offing, when? Our debt will neuter this country. And the social re-engineers are hard at work. Be it hyper- or de-flation I don't think it is a healthy outcome for the America we once knew.
England ruled not too long ago. They had huge war debt among other social issues and had to pass the baton on to us. At least at the time of passing we were a country of principles and ideas and individualism. America is what inspired the world. Can you imagine was this world will be like if Russia had won the Cold War...or if Germany won WWII. Or what it will be like when China dictates global policy. I know that it hasn't been a bouquet of flowers while America has been the police force...mistake are abound. I would like to blame Corporatism, Big Government, arrogance... The downfall has been coming for some time. We are now seeing the final stages.
I don't like being D&G. I try to see optimistic solutions but I don't have much faith in the 535+ "leaders".
<< <i> I thought the point of this thread was hyper inflation. I dont care how many "dollars" are in circulation, if asset values decline we will not have inflation. >>
cohodk: Your thinking is faulty in that you are not allowing for the possibility that even if asset values decline, if owners of such assets withhold them from the market as they do not like the new lower prices there will be acute shortages then defeat the disinflation scenario you stated.
It is impossible to generalize in the way you have done. >>
Actually your thinking is faulty. If goods are services are withheld yet demand stays constant, prices WILL rise thus bringing those "strong hands" to market and establishing price discovery.
But lets say you are a farmer and have 1000 tons of corn. You dont like the price so you keep it off market. It gets moldy is now worthless. Maybe you shoulda sold at those depressed prices and at least have gotten something. Now you it will cost you to dispose of the moldy corn. Or if you are a cattle farmer, how long will you hold out for higher prices? How long does a cow live?
If you own gold then surely you can hold onto it. If the price is down it probably means no one wants it or that demand is insufficient to support prices. Eventually you might need to buy some corn or meat so you will have to bring some to market. Just hope the farmer wants it.
Point is, just because something is withheld from the market does not mean prices will go higher. You need to have demand. Just like collecting pattern coins--many of which are unique or extremely rare--prices can stagnate or decline due to lack of interest or demand. My icon is one of only 7 known and its made of gold. You would think it would be worth a fortune, but it aint.
There's also "value" in consumption, or the potential for consumption. The bottle of water example in the desert, the current "value" is a function of supply and demand, and the inflation of the value will be due to decreased supply and/or increased demand. Once someone drinks the water, they've consumed the asset and gotten value in exchange for the price. If someone finds out that the prices for water are higher in the desert, and it will be profitable to ship water there after subtracting costs, then that's what they will do, and prices will come down as supply goes up.
The house or the car, same thing, there's utility in owning and using the asset, that must be accounted for in calculations of costs and returns.
Right now, things commonly used by people everyday are not hyperinflating in price. A gallon of gasoline or milk, or a loaf of bread, or a pound of butter or ground beef, or a fast food value meal, or a mug of basic beer at a bar, or pack of cigarettes is around $4, and it's about $12 for something like a basic haircut, or a generic shirt or a pair of pants, or a generic bottle of wine or booze.
Hyperinflation will start to be setting in, IMO, if prices for such things, in the aggregate, double in less than 5 years or so, and would be widely recognized if they doubled in a year or two.
also, what about "wages?" edited to add: or precious metals? and housing? We'll know there's REAL inflation when they make new all-time highs... when is that going to be??
because in true hyperinflation, shouldn't just about everything go up in price in terms of Dollars??
While I most certainly agree 100% that we are not experiencing hyperinflation, however I do believe we are seeing more inflation than what is being reported, or government /politicians would have us believe. This inflation appears not only as direct price increases but also in its more subtle form of less quantity - same price via the same packaging.
I think that the combination of near zero percent interest rates, somewhat stagnant wages over the past 7~8 years, businesses holding back on some new hiring's (particularly important to recent grads and younger workers), decreasing the hours of current workers to part time hours to avoid getting entangled into some of the recently implemented legislation and as mentioned the inflationary effects that we are seeing all combine to still have a chilling effect on the middle class. I don't think we need to see hyperinflation for the average Joe to suffer as a result of monetary policy. I think it's well underway now. You can be killed by blunt force trauma or by a thousand paper cuts, the end is still the same.
<< <i>A gallon of gasoline or milk, or a loaf of bread, or a pound of butter or ground beef, or a fast food value meal, or a mug of basic beer at a bar, or pack of cigarettes is around $4, and it's about $12 for something like a basic haircut, or a generic shirt or a pair of pants, or a generic bottle of wine or booze. >>
I'm not sure where you guys live but around here cigarettes are far from $4 (Personally I'm a non-smoker). Minimum Mandated Prices of Smokes
Where I get my hair cut its pretty much a no-frills joint, your classic basic barber shop. A normal cut there is $20.00. The prices on milk and butter are in line with what I'm seeing around here, but ground beef is about $5 /lb I of course realize locality has a lot to do with what each of us will see in terms of prices for various things, but even at that, I have noticed a strong increase in food prices over the last two years. Thankfully I can absorb the cost increases, or at least I can right now, but It makes me really wonder how long those on fixed incomes can keep it all together. The cost of food, medications, heat in the winter, fuel and other basic needs have, or will soon, out pace any savings and/or modest earnings these folks have IMO.
I enjoy reading these posts please keep sharing your thoughts.
Gas is $4.25, food is 20% more on average, McDonald's dollar menu is $1.49, electricity is on par with solar, basic haircut $19, pineapple at Wal Mart is $3.44...should be next to nothing, burger-fries-soda for two is $25 for an In-N-Out style joint, taxi to the airport is $82...
Most online retailers don't ship to Hawaii.
Hawaiian made surfboards are cheaper in California?
Things that are cheap: Alcohol, home insurance(?) and rice.
Priceless: Ocean, surf, sunsets, weather, aloha spirit, drinks with umbrellas.
<< <i>While I most certainly agree 100% that we are not experiencing hyperinflation, however I do believe we are seeing more inflation than what is being reported, or government /politicians would have us believe. This inflation appears not only as direct price increases but also in its more subtle form of less quantity - same price via the same packaging.
I think that the combination of near zero percent interest rates, somewhat stagnant wages over the past 7~8 years, businesses holding back on some new hiring's (particularly important to recent grads and younger workers), decreasing the hours of current workers to part time hours to avoid getting entangled into some of the recently implemented legislation and as mentioned the inflationary effects that we are seeing all combine to still have a chilling effect on the middle class. I don't think we need to see hyperinflation for the average Joe to suffer as a result of monetary policy. I think it's well underway now. You can be killed by blunt force trauma or by a thousand paper cuts, the end is still the same.
<< <i>A gallon of gasoline or milk, or a loaf of bread, or a pound of butter or ground beef, or a fast food value meal, or a mug of basic beer at a bar, or pack of cigarettes is around $4, and it's about $12 for something like a basic haircut, or a generic shirt or a pair of pants, or a generic bottle of wine or booze. >>
I'm not sure where you guys live but around here cigarettes are far from $4 (Personally I'm a non-smoker). Minimum Mandated Prices of Smokes
Where I get my hair cut its pretty much a no-frills joint, your classic basic barber shop. A normal cut there is $20.00. The prices on milk and butter are in line with what I'm seeing around here, but ground beef is about $5 /lb I of course realize locality has a lot to do with what each of us will see in terms of prices for various things, but even at that, I have noticed a strong increase in food prices over the last two years. Thankfully I can absorb the cost increases, or at least I can right now, but It makes me really wonder how long those on fixed incomes can keep it all together. The cost of food, medications, heat in the winter, fuel and other basic needs have, or will soon, out pace any savings and/or modest earnings these folks have IMO.
I enjoy reading these posts please keep sharing your thoughts. >>
Exactly! The one pound package that is now 13 ounces at the same price. The poor quality crap made in China at the same price as the good quality product they used to make in Allentown.
There is a lot of inflation, but the government won't report it!
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
<< <i>While I most certainly agree 100% that we are not experiencing hyperinflation, however I do believe we are seeing more inflation than what is being reported, or government /politicians would have us believe. This inflation appears not only as direct price increases but also in its more subtle form of less quantity - same price via the same packaging.
I think that the combination of near zero percent interest rates, somewhat stagnant wages over the past 7~8 years, businesses holding back on some new hiring's (particularly important to recent grads and younger workers), decreasing the hours of current workers to part time hours to avoid getting entangled into some of the recently implemented legislation and as mentioned the inflationary effects that we are seeing all combine to still have a chilling effect on the middle class. I don't think we need to see hyperinflation for the average Joe to suffer as a result of monetary policy. I think it's well underway now. You can be killed by blunt force trauma or by a thousand paper cuts, the end is still the same.
<< <i>A gallon of gasoline or milk, or a loaf of bread, or a pound of butter or ground beef, or a fast food value meal, or a mug of basic beer at a bar, or pack of cigarettes is around $4, and it's about $12 for something like a basic haircut, or a generic shirt or a pair of pants, or a generic bottle of wine or booze. >>
I'm not sure where you guys live but around here cigarettes are far from $4 (Personally I'm a non-smoker). Minimum Mandated Prices of Smokes
Where I get my hair cut its pretty much a no-frills joint, your classic basic barber shop. A normal cut there is $20.00. The prices on milk and butter are in line with what I'm seeing around here, but ground beef is about $5 /lb I of course realize locality has a lot to do with what each of us will see in terms of prices for various things, but even at that, I have noticed a strong increase in food prices over the last two years. Thankfully I can absorb the cost increases, or at least I can right now, but It makes me really wonder how long those on fixed incomes can keep it all together. The cost of food, medications, heat in the winter, fuel and other basic needs have, or will soon, out pace any savings and/or modest earnings these folks have IMO.
I enjoy reading these posts please keep sharing your thoughts. >>
Not surprising, considering the State.
Virginia charges about 1/2 the price for smokes. Even one of the most Liberal states, MD, charges about 1/4 less.
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
I smoke and a carton of the cig's I smoke is 56.00 plua 6% tax in PA. Well a short drive of about 35 miles to the VA line that same carton is 33.00. What would you do? As for milk in PA the state set the min. price which is around 4.10 now but 2 miles south of me in MD its 2.50 again what would you do?
I am sick and tired of being screwed every day all day......
I bought meat. It was so expensive I became a vegetarian. Now that vegetables are up, I just eat _ _ _ _. Someone said, "Eat _ _ _ _ & die". And that's just what I plan to do before hyper inflation sets in.
I do not believe inflation is much of a factor right now. Yes, gasoline has been over $3, but for 1,000 days. As to my own experience, meat is not all that expensive. I can buy steak for $4.99 a pound if I wait on a special. I am talking rib eye here.
With the economy only growing at 2% a year +/-, the fear is deflation, NOT hyper inflation.
I have a house in Maryland and one in Georgia where the cost of living is at least 20% less on daily purchases, gas excluded as it is the same.
The more urban you are, the more it costs to live. Housing costs are moving up, but mostly in areas where they were substantially depressed, i.e. Las Vegas, Florida, etc.
I just don't see major inflation in my daily activities, admittedly anecdotal information, but the major national trends seem to confirm it to me.
Retired United States Mint guy, now working on an Everyman Type Set.
" I can buy steak for $4.99 a pound if I wait on a special. I am talking rib eye here." Funny, I bought rib eye last week and it was $13.99 a pound. I guess inflation hit here harder?
It is all where you live. Filet mignon is on sale for $7.99 this week in southern Maryland. My brother paid far more in Texas, kind of funny unless you know that virtually all of their beef is shipped north for slaughter and then shipped back for sale. Markets are interesting things.
Retired United States Mint guy, now working on an Everyman Type Set.
I checked coinflation.com today and 40% half dollars were $3.30 and 90% havles were 8.07.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
You don't need hyper inflation when the value of the dollar is reduced to "raising the debt ceiling". WTF is that ? My friend said : "raising the debt ceiling is like digging in a pile of manure looking for _____.
Comments
As foreign countries resist the idea of financing more and more US Government borrowing, the US Treasury Department had to do something.
In effect, the Federal Reserve was forced to go along and expand their balance sheet or see itself implode.
What has happened is that the Federal Reserve has essentially ceased to exist and now acts as off balance sheet financing for the US Treasury Department. The independence of the Federal Reserve has been mostly destroyed.
Those who crusade against the existence of the Federal Reserve do not realize that the Federal Reserve has really ceased to exist except as a pawn of the US Treasury Department. Almost no one realizes what has happened in the last 8 months! It has been a totally unexpected and incredible development!
Private sector credit has almost entirely collapsed and in its place is public sector credit.
Hyperinflation to me is inflation of over 18% per year. That means prices double every 4 years. if you know the rule of 72, inflation of 18% before daily compounding means prices double every four years!!
If inflation hits 36% before compounding, prices double every TWO YEARS. Do the math!
Will we have hyperinflation? Possible. There is still time for the Federal Reserve to slam the brakes on credit if they see the banks lending more money and the velocity of money rapidly accelerating (that would be the sign of inflation) but will Bernanke have the guts to do it as previous Federal Reserve Chairman Volcker did back in 1979 and 1980? Not too likely.
I do see eventual 12% inflation which means prices will double at least every 6 years. That is frightening in itself.
By the way, I took 10 economics courses in College over 30 years ago and I am still sorting it all out!
The laws of nature cannot be repealed. It applies to economics as well.
The Feds are trying to keep the "old forest" alive by massive borrowings to keep things in place. While that will keep the politicians in office, it will not clean out the overgrowth and allow a rebirth to occur.
The US government has to let the US economy "fail" at this time. Massive cutbacks in borrowing and fed government employment has to begin immediately.
I am sorry to say but I do see that the Feds will have to partially renege on their promise to pay social security and medicare as such promises to pay is not sustainable.
I see FUTURE recipients of social security will have to wait until 70 before they are entitled to full social security. At age 66 a reduction of 40% of full benefits. Those who are collecting social security now may see a freeze on future increases.
I also see an incredible explosion of people applying for social security disability which is a serious problem.
the British economy’s short-term prospects are “bleak.”
Knowledge is the enemy of fear
"<< What if the house is only worth 150k now and the buyer has a 150k loss? >>
In your example, the house was purchased for $300k. The seller has the money from the original transaction"
But you said you got 100K on the sale and now the buyer has a 150K loss. The seller (you) dont have the additional 50k. Are you going all they back to the first owner of the house? Lets say the first own had the house built for 100k and sold it to you for 200K. Where did the price increase (money creation) come from?
What if the house burns to the ground and the owner has no insurance so the value is 0. The owner is left with a 300k mortgage so there is a minus 300k. You got 100K and the first owner got 100k. There is still a minus 100k.
How about this...
In 2007 the entire worth of the USA was 65 trillion. Today it is 54 trillion. Where did the 11 trillion go? It wasnt transferred to anyone. No one has it.
I have this same conversation with my Dad every 6 months. He doesnt see it either. He always says, "someone must have the money."
I think you are being confused by the creation of money--(wealth, value) through inflation. If inflation creates value, then deflation surely takes it away.
Knowledge is the enemy of fear
<< <i>Proof, your examples are contradictory.
"<< What if the house is only worth 150k now and the buyer has a 150k loss? >>
In your example, the house was purchased for $300k. The seller has the money from the original transaction"
But you said you got 100K on the sale and now the buyer has a 150K loss. The seller (you) dont have the additional 50k. Are you going all they back to the first owner of the house? Lets say the first own had the house built for 100k and sold it to you for 200K. Where did the price increase (money creation) come from? >>
You have examples crossed here, so it is confusing. In my example I referred to a $200k home, he mentioned a $300k deal. Regardless, there was no money created. A buyer with $200k in his pocket (regardless of the source) purchased the home.
<< <i>What if the house burns to the ground and the owner has no insurance so the value is 0. The owner is left with a 300k mortgage so there is a minus 300k. You got 100K and the first owner got 100k. There is still a minus 100k. >>
Still, no dollars are created or destroyed. A house was destroyed, but no USD.
<< <i>In 2007 the entire worth of the USA was 65 trillion. Today it is 54 trillion. Where did the 11 trillion go? It wasnt transferred to anyone. No one has it. >>
The "worth of the USA" is not related to the country's money supply or the number of US Dollars in existence. It's a valuation based on an estimate of the sum of an estimate of the FMV of assets. Those estimates can easily exceed the total number of dollars in existence.
<< <i>I have this same conversation with my Dad every 6 months. He doesnt see it either. He always says, "someone must have the money."
I think you are being confused by the creation of money--(wealth, value) through inflation. If inflation creates value, then deflation surely takes it away. >>
I think you are confused about the value of an asset having anything to do with the country's money supply.
If I have a bottle of water, I can probably sell it to you anytime/anywhere for $1. However, if you and I were stranded in the desert, I could probably sell that water bottle to you for $100. That doesn't mean that inflation has ocurred, and that doesn't mean that the US money supply suddenly increased by $99 because you were willing to pay $100 for water. And when you drink that water, it doesn't mean that $100 has vanished from the money supply.
The simple printing of money does not create inflation. If you disagree then we will just have to leave it at that.
Knowledge is the enemy of fear
I agree, and think that the benefits of globalism are always touted (e.g. lower prices) but not the negative effects (job dislocation and lower wages). The shift of jobs to lower cost countries will at best stagnate US wages. It's hard to see too many dollars chasing too few goods any time soon. I think that's what's holding down the price of pm's. Also, every time I turn on Fox Business or CNBC, someone is wringing their hands about the coming hyperinflation once the economy recovers. That seems like a contrary indicator to me.
<< <i>Ok. You are talking about paper money. I am talking about anything that can be turned in to paper money. Wealth is destroyed whether you call it paper or not. >>
Of course we're talking about paper money, this thread is about inflation. If you're talking about wealth as defined as "anything that can be turned into paper money" then what are you claiming has been destroyed? All of the foreclosed homes and non-foreclosed homes are still standing. All of the shares of stock still exist. So please clarify, what wealth has been destroyed?
<< <i>The simple printing of money does not create inflation. If you disagree then we will just have to leave it at that.
Whether you believe in the monetarist explanation of inflation or the Austrian School's explanation of inflation, the increase in the supply of money is directly related to inflation. One way to increase the money supply is to print it. Now if you want to argue that in today's world there are factors offsetting the effect of printing money, then that could be a valid argument. I think many here would say that once those mitigating factors change we will start to see hyper-inflation. An example would probably be the velocity of money which has decreased and is deflationary - although some day it will turn around. Other factors like a drop in imports is inflationary because less money is leaving the country. Foreign countries who decide not to re-invest their funds from maturing treasury notes into more notes is also inflationary.
<< <i>< In 2007 the entire worth of the USA was 65 trillion. Today it is 54 trillion. Where did the 11 trillion go? It wasnt transferred to anyone. No one has it. >> >>
Just look at the countries in the middle east and in Asia. You will be amazed.
The USA is an aging giant similar to that of England in the first half of the 20th century For example, New York City is no longer the center of the world.
India and China alone probably increased their net worth by almost half of what the USA lost in the last three years.
The United States better be careful. In less than 10 years it will fall way behind China in being able to keep modernizing and maintaining their military.
<< <i>
<< <i>< In 2007 the entire worth of the USA was 65 trillion. Today it is 54 trillion. Where did the 11 trillion go? It wasnt transferred to anyone. No one has it. >> >>
Just look at the countries in the middle east and in Asia. You will be amazed.
The USA is an aging giant similar to that of England in the first half of the 20th century For example, New York City is no longer the center of the world.
India and China alone probably increased their net worth by almost half of what the USA lost in the last three years.
The United States better be careful. In less than 10 years it will fall way behind China in being able to keep modernizing and maintaining their military. >>
The last part about the military is the most frightening. When I was in the Marines we read "secret" briefings about the future of china in the 21st century, guerilla warfare and terrorism. That was back in mid 1980's. No so secret because it all has happened.
I want to add....about a year ago I read that chinese boys starting in grade school go to military summer camps...almost every year. They grow up to be soldiers. It's part of their culture. And we need to take note. At some point when China sees us as weak...e.g. a wishy-washy president and S. of State, they will just take Taiwan and wait to see what happens. Look, what are we doing about North Korea's intent of launching an ICBM except for lip service. That needs to be shot down as soon as it gets off the rails, imo.
Brazil's president Lula da Silva says the fault of the current financial storm is "white people with blue eyes." What a Richard Cranium. I was flying down in Brazil a lot in 2003 after he was elected in 2002. The Brazilians really loved him at first. I remember driving around Sao Paulo and points further west and looking at the intense poverty living in cardboard shacks along the hillsides for miles. In contrast I would run across small enclaves with beautiful modern homes surrounded by 12 foot fences and an armed guard in a tower. Our layover hotel in Campinas was like a resort until you walked out the front gate...cameras everywhere. I remember telling my wife back then that this will come to America some day.
Ren
<< <i>Ok Proof
why does a stock go down i won't write a book here but short answer more short sellers then buyers so the money
flows to the sellers of the stock not the buyers
that's the way the market works for ever dollar lost the short seller gains a dollar
so how much is lost
thats how it works the cash is their
but were >>
You are under the false assumption that buying and selling stocks is a zero sum gain. yes short sales generally are but the vast majority of stock sells are NOT short sales.
there has been actual capital destruction that is simply gone with the wind
<< <i>
<< <i>Ok Proof
why does a stock go down i won't write a book here but short answer more short sellers then buyers so the money
flows to the sellers of the stock not the buyers
that's the way the market works for ever dollar lost the short seller gains a dollar
so how much is lost
thats how it works the cash is their
but were >>
You are under the false assumption that buying and selling stocks is a zero sum gain. yes short sales generally are but the vast majority of stock sells are NOT short sales.
there has been actual capital destruction that is simply gone with the wind >>
Exactly.
Here is another example.
On Monday a stock is valued at $20 per share. Overnight it is discovered that the company is a massive fraud. On Tuesday morning the stock opens at $1. There were no sales or exchanges overnight. Where did the $19 go?
Japan has been flooding its economy with currency for the last 20 years. And it has had deflationary pressure since.
And CHINA, INDIA, RUSSIA, SAUDI ARABIA, have also lost massive amounts of wealth in the last 12 months.
I may have unconventional views of how things work and have written examples in various threads over the years, but those views have had an uncanny way of proving. We can only hope for inflation.
Knowledge is the enemy of fear
<< <i>Here is another example.
On Monday a stock is valued at $20 per share. Overnight it is discovered that the company is a massive fraud. On Tuesday morning the stock opens at $1. There were no sales or exchanges overnight. Where did the $19 go? >>
Whoever sold the stock for $20 on Monday still has their $20. No US Dollars are destroyed when the price of a share of stock declines.
It's no different than the water bottle analogy I gave.
<< <i>
<< <i>Here is another example.
On Monday a stock is valued at $20 per share. Overnight it is discovered that the company is a massive fraud. On Tuesday morning the stock opens at $1. There were no sales or exchanges overnight. Where did the $19 go? >>
Whoever sold the stock for $20 on Monday still has their $20. No US Dollars are destroyed when the price of a share of stock declines.
It's no different than the water bottle analogy I gave. >>
I have to agree here. It took me a while to wrap my head around it.
I think proof is right.
In order to own that 20 dollar per share stock you had to pay someone 20
dollars.
Overnight the price has gone down by 19.
Someone has 20 dollars and you have a stock that at one time was
valued at 20 dollars. Just because the price changed does not mean
money was destroyed. The seller has your 19 bucks that you just lost.
------------
Why use something complicated like a stock? How about a coin!
You pay 1000 dollars for a new mint product that everyone is speculating on.
Someone has your 1000 dollars and you have a coin at that moment
in time is worth 1000 dollars.
Just because tastes change and you can no longer sell that coin for 1000 does not mean money was destroyed.
Since the coin is only worth 100 dollars now... someone has your money
that you lost.
It all washes out. I hope i made sense.
what does the new money were printing do to your old dollars ???
same items more cash
so sorry for my bad english i'm chinese and i have your cash LOL!!
i disagree most if not all traders [bank brokers traders] have stop losses trailing only the long time little guy get dinking
and short sellers make the cash on them cash
just my thoughts
<< <i>so if the money is still their in stocks coins or what ever
what does the new money were printing do to your old dollars ???
same items more cash
so sorry for my bad english i'm chinese and i have your cash LOL!! >>
printing physical money is creating money by the fed. i agree this will
cause inflation if it keeps up past the point of just replacing old worn
bills and enough to keep the growing population needs.
but keep in mind that when the feds gives money to the banks and
the banks do not create new loans... it is not going to lead to inflation. fractional lending is not taking place. Old loans are being
paid off as we speak.
deflation is taking place.
proof has won me over. printing actual physical money or creating
new loans is the only way to create money.
the only way to destroy it is to pay those loans off or actually burn
some 100 dollar bills to keep warm.
<< <i>printing physical money is creating money by the fed. i agree this will
cause inflation if it keeps up past the point of just replacing old worn
bills and enough to keep the growing population needs.
but keep in mind that when the feds gives money to the banks and
the banks do not create new loans... it is not going to lead to inflation. fractional lending is not taking place. Old loans are being
paid off as we speak.
deflation is taking place.
proof has won me over. printing actual physical money or creating
new loans is the only way to create money.
the only way to destroy it is to pay those loans off or actually burn
some 100 dollar bills to keep warm. >>
Do not forget the supply side of the equation. If supply simply grows only to the extent of population growth then the above makes sense. if supply of goods and services grows more or less than population changes, then you will have supply caused inflation or deflation on one of the elements of inflation/deflation.
It is not as simplistic as we would like it to be:
The five major predictive components of inflation/deflation are:
supply increase/decrease
demand increase/decrease
credit increase/decrease
money increase/decrease
velocity of money increase/decrease
(there is also the minor 6th element of barter)
many could argue that velocity of credit could also affect inflation/deflation. That is true. But in a sense, the velocity of ANY of the five of the major predictive components of inflation/deflation could affect inflation/deflation. Furthermore, the velocity of any of the other four predictors is intertwined definitionally with the increase/decrease terminology used above.
Only money really could have the same amount in existence and by being used 10 times a day instead of once per day could have a separate multiplier effect apart from the increase/decrease in quantity of money.
The reality is that as usage of credit cards possibly decline, the usage of old fashioned money will have to increase or you have a deflationary bias to the predictive model.
Last point; I have not been able to predict with any accuracy the degree of importance each of the five predictor expressed as a percentage.
For arguments sake, each predictor could easily be a flat 20% but we all know that it is not. For example, we know that table salt is price inelastic so that in the case of table salt, a halving the money and credit supply is not going to affect the price of table salt all that much. It is one of the best examples used in academia. When table salt goes on sale at even 90% off, consumers do not rush to he store to buy more. Too often, they don't even buy one. It is a ho-hum product. Yet compare it to rock salt used in the wintry months in the north. Very different.
Physical owners of assets, like most of the precious metals enthusiasts on this board are all subjected to the risk of capital destruction AND creation....whether they believe it or not
For instance, if an annoucement comes out with a definitive plan to replace the USD as the world's reserve currency, it would create a sudden oversupply of USD as everyone rushes to abandon the USD. And as we saw last year when the price of gold first dropped below $1000 on the strengthening dollar, investors were unwinding some investments and that created a strong demand for the dollar.
<< <i>the price of gold is determined by a market that I believe to be international and too big for any companies or banks or even governments to control.
the unemployment numbers and the CPI numbers are determined by a survey method and a reporting method which is contrived by government.
show me that the gold market is not a "fair market" -- in other words, prove to me that it's manipulated -- and I will be very attentive. >>
I agree.
Do not forget the supply side of the equation. If supply simply grows only to the extent of population growth then the above makes sense. if supply of goods and services grows more or less than population changes, then you will have supply caused inflation or deflation on one of the elements of inflation/deflation.
--------
When I read this part of oreville's post I thought of the millions of dollars sent to Mexico from illegal aliens every year for decades. I was aware of this back in the 1970's-2005 when I lived in SoCal and Central Coast. How many dollars were sent to Mexico? I don't know but I remember Pres. Vicente Fox saying that these "immigrants" are Mexico's greatest asset because of this act of dollars sent back. That makes me think that the millions were significant. The money orders sent back to Mexico were to support families, pay off "coyotes", pay off drug cartel, guns,...
Hundreds of millions maybe?
If joe blow still has the $20 from the stock sale and doesnt do anything with them then there will be no inflation.
Thinking that inflation is only caused by the number of US dollars in circulation will lead to erroneous assumptions. Believing that increases in the money supply causes inflation will also lead to erroneous assumptiions.
Knowledge is the enemy of fear
<< <i> I thought the point of this thread was hyper inflation. I dont care how many "dollars" are in circulation, if asset values decline we will not have inflation. >>
cohodk: Your thinking is faulty in that you are not allowing for the possibility that even if asset values decline, if owners of such assets withhold them from the market as they do not like the new lower prices there will be acute shortages then defeat the disinflation scenario you stated.
It is impossible to generalize in the way you have done.
<< <i>If joe blow still has the $20 from the stock sale and doesnt do anything with them then there will be no inflation. >>
What you are discussing is a slowdown in the velocity of money circulation. As discussed earlier, this is just one of several factors.
<< <i>Thinking that inflation is only caused by the number of US dollars in circulation will lead to erroneous assumptions. >>
If you read the thread, you will see that several factors have been identified, and this is just one of them.
<< <i>Believing that increases in the money supply causes inflation will also lead to erroneous assumptiions. >>
If all other factors stayed the same, increasing the money supply WILL cause inflation.
We have over 500,000 troops stationed throughout the world. 50,000 alone in Germany. Not to mention Japan. We are over extended and its time to stop playing the policeman of the world. This can no longer be sustained when we are borrowing trillions of dollars to prop up are failing economy.
Box of 20
<< <i>The United States better be careful. In less than 10 years it will fall way behind China in being able to keep modernizing and maintaining their military.
We have over 500,000 troops stationed throughout the world. 50,000 alone in Germany. Not to mention Japan. We are over extended and its time to stop playing the policeman of the world. This can no longer be sustained when we are borrowing trillions of dollars to prop up are failing economy. >>
--------
That's an important side point to this thread. Once BHO or whoever pulls troops from all of our bases the writing is on the wall. We will have passed on the baton on to the Chinese. And America will be in survival mode dictating nothing but just reacting. I think this is in the offing, when? Our debt will neuter this country. And the social re-engineers are hard at work. Be it hyper- or de-flation I don't think it is a healthy outcome for the America we once knew.
England ruled not too long ago. They had huge war debt among other social issues and had to pass the baton on to us. At least at the time of passing we were a country of principles and ideas and individualism. America is what inspired the world. Can you imagine was this world will be like if Russia had won the Cold War...or if Germany won WWII. Or what it will be like when China dictates global policy. I know that it hasn't been a bouquet of flowers while America has been the police force...mistake are abound. I would like to blame Corporatism, Big Government, arrogance... The downfall has been coming for some time. We are now seeing the final stages.
I don't like being D&G. I try to see optimistic solutions but I don't have much faith in the 535+ "leaders".
I have a lot more to say but will refrain from putting my comments into a permanent digital place like any board, here or elsewhere.
Liberty: Parent of Science & Industry
<< <i>Another fascinating conversation... if someone doesn't like old threads, then they shouldn't click on 'em
If your name is on it then should we assume it's an old thread be dug up?
<< <i>
<< <i> I thought the point of this thread was hyper inflation. I dont care how many "dollars" are in circulation, if asset values decline we will not have inflation. >>
cohodk: Your thinking is faulty in that you are not allowing for the possibility that even if asset values decline, if owners of such assets withhold them from the market as they do not like the new lower prices there will be acute shortages then defeat the disinflation scenario you stated.
It is impossible to generalize in the way you have done. >>
Actually your thinking is faulty. If goods are services are withheld yet demand stays constant, prices WILL rise thus bringing those "strong hands" to market and establishing price discovery.
But lets say you are a farmer and have 1000 tons of corn. You dont like the price so you keep it off market. It gets moldy is now worthless. Maybe you shoulda sold at those depressed prices and at least have gotten something. Now you it will cost you to dispose of the moldy corn. Or if you are a cattle farmer, how long will you hold out for higher prices? How long does a cow live?
If you own gold then surely you can hold onto it. If the price is down it probably means no one wants it or that demand is insufficient to support prices. Eventually you might need to buy some corn or meat so you will have to bring some to market. Just hope the farmer wants it.
Point is, just because something is withheld from the market does not mean prices will go higher. You need to have demand. Just like collecting pattern coins--many of which are unique or extremely rare--prices can stagnate or decline due to lack of interest or demand. My icon is one of only 7 known and its made of gold. You would think it would be worth a fortune, but it aint.
Knowledge is the enemy of fear
The house or the car, same thing, there's utility in owning and using the asset, that must be accounted for in calculations of costs and returns.
Right now, things commonly used by people everyday are not hyperinflating in price. A gallon of gasoline or milk, or a loaf of bread, or a pound of butter or ground beef, or a fast food value meal, or a mug of basic beer at a bar, or pack of cigarettes is around $4, and it's about $12 for something like a basic haircut, or a generic shirt or a pair of pants, or a generic bottle of wine or booze.
Hyperinflation will start to be setting in, IMO, if prices for such things, in the aggregate, double in less than 5 years or so, and would be widely recognized if they doubled in a year or two.
also, what about "wages?"
because in true hyperinflation, shouldn't just about everything go up in price in terms of Dollars??
Liberty: Parent of Science & Industry
While I most certainly agree 100% that we are not experiencing hyperinflation, however I do believe we are seeing more inflation than what is being reported, or government /politicians would have us believe. This inflation appears not only as direct price increases but also in its more subtle form of less quantity - same price via the same packaging.
I think that the combination of near zero percent interest rates, somewhat stagnant wages over the past 7~8 years, businesses holding back on some new hiring's (particularly important to recent grads and younger workers), decreasing the hours of current workers to part time hours to avoid getting entangled into some of the recently implemented legislation and as mentioned the inflationary effects that we are seeing all combine to still have a chilling effect on the middle class. I don't think we need to see hyperinflation for the average Joe to suffer as a result of monetary policy. I think it's well underway now. You can be killed by blunt force trauma or by a thousand paper cuts, the end is still the same.
<< <i>A gallon of gasoline or milk, or a loaf of bread, or a pound of butter or ground beef, or a fast food value meal, or a mug of basic beer at a bar, or pack of cigarettes is around $4, and it's about $12 for something like a basic haircut, or a generic shirt or a pair of pants, or a generic bottle of wine or booze. >>
I'm not sure where you guys live but around here cigarettes are far from $4 (Personally I'm a non-smoker).
Minimum Mandated Prices of Smokes
Where I get my hair cut its pretty much a no-frills joint, your classic basic barber shop. A normal cut there is $20.00.
The prices on milk and butter are in line with what I'm seeing around here, but ground beef is about $5 /lb
I of course realize locality has a lot to do with what each of us will see in terms of prices for various things, but even at that, I have noticed a strong increase in food prices over the last two years.
Thankfully I can absorb the cost increases, or at least I can right now, but It makes me really wonder how long those on fixed incomes can keep it all together. The cost of food, medications, heat in the winter, fuel and other basic needs have, or will soon, out pace any savings and/or modest earnings these folks have IMO.
I enjoy reading these posts please keep sharing your thoughts.
Charles III Album
Charles III Portrait Set
Charles IV Album
Charles IV Portrait Set
Spanish Colonial Pillar Set
Gas is $4.25, food is 20% more on average, McDonald's dollar menu is $1.49, electricity is on par with solar, basic haircut $19, pineapple at Wal Mart is $3.44...should be next to nothing, burger-fries-soda for two is $25 for an In-N-Out style joint, taxi to the airport is $82...
Most online retailers don't ship to Hawaii.
Hawaiian made surfboards are cheaper in California?
Things that are cheap: Alcohol, home insurance(?) and rice.
Priceless: Ocean, surf, sunsets, weather, aloha spirit, drinks with umbrellas.
<< <i>While I most certainly agree 100% that we are not experiencing hyperinflation, however I do believe we are seeing more inflation than what is being reported, or government /politicians would have us believe. This inflation appears not only as direct price increases but also in its more subtle form of less quantity - same price via the same packaging.
I think that the combination of near zero percent interest rates, somewhat stagnant wages over the past 7~8 years, businesses holding back on some new hiring's (particularly important to recent grads and younger workers), decreasing the hours of current workers to part time hours to avoid getting entangled into some of the recently implemented legislation and as mentioned the inflationary effects that we are seeing all combine to still have a chilling effect on the middle class. I don't think we need to see hyperinflation for the average Joe to suffer as a result of monetary policy. I think it's well underway now. You can be killed by blunt force trauma or by a thousand paper cuts, the end is still the same.
<< <i>A gallon of gasoline or milk, or a loaf of bread, or a pound of butter or ground beef, or a fast food value meal, or a mug of basic beer at a bar, or pack of cigarettes is around $4, and it's about $12 for something like a basic haircut, or a generic shirt or a pair of pants, or a generic bottle of wine or booze. >>
I'm not sure where you guys live but around here cigarettes are far from $4 (Personally I'm a non-smoker).
Minimum Mandated Prices of Smokes
Where I get my hair cut its pretty much a no-frills joint, your classic basic barber shop. A normal cut there is $20.00.
The prices on milk and butter are in line with what I'm seeing around here, but ground beef is about $5 /lb
I of course realize locality has a lot to do with what each of us will see in terms of prices for various things, but even at that, I have noticed a strong increase in food prices over the last two years.
Thankfully I can absorb the cost increases, or at least I can right now, but It makes me really wonder how long those on fixed incomes can keep it all together. The cost of food, medications, heat in the winter, fuel and other basic needs have, or will soon, out pace any savings and/or modest earnings these folks have IMO.
I enjoy reading these posts please keep sharing your thoughts. >>
Exactly! The one pound package that is now 13 ounces at the same price. The poor quality crap made in China at the same price as the good quality product they used to make in Allentown.
There is a lot of inflation, but the government won't report it!
<< <i>While I most certainly agree 100% that we are not experiencing hyperinflation, however I do believe we are seeing more inflation than what is being reported, or government /politicians would have us believe. This inflation appears not only as direct price increases but also in its more subtle form of less quantity - same price via the same packaging.
I think that the combination of near zero percent interest rates, somewhat stagnant wages over the past 7~8 years, businesses holding back on some new hiring's (particularly important to recent grads and younger workers), decreasing the hours of current workers to part time hours to avoid getting entangled into some of the recently implemented legislation and as mentioned the inflationary effects that we are seeing all combine to still have a chilling effect on the middle class. I don't think we need to see hyperinflation for the average Joe to suffer as a result of monetary policy. I think it's well underway now. You can be killed by blunt force trauma or by a thousand paper cuts, the end is still the same.
<< <i>A gallon of gasoline or milk, or a loaf of bread, or a pound of butter or ground beef, or a fast food value meal, or a mug of basic beer at a bar, or pack of cigarettes is around $4, and it's about $12 for something like a basic haircut, or a generic shirt or a pair of pants, or a generic bottle of wine or booze. >>
I'm not sure where you guys live but around here cigarettes are far from $4 (Personally I'm a non-smoker).
Minimum Mandated Prices of Smokes
Where I get my hair cut its pretty much a no-frills joint, your classic basic barber shop. A normal cut there is $20.00.
The prices on milk and butter are in line with what I'm seeing around here, but ground beef is about $5 /lb
I of course realize locality has a lot to do with what each of us will see in terms of prices for various things, but even at that, I have noticed a strong increase in food prices over the last two years.
Thankfully I can absorb the cost increases, or at least I can right now, but It makes me really wonder how long those on fixed incomes can keep it all together. The cost of food, medications, heat in the winter, fuel and other basic needs have, or will soon, out pace any savings and/or modest earnings these folks have IMO.
I enjoy reading these posts please keep sharing your thoughts. >>
Not surprising, considering the State.
Virginia charges about 1/2 the price for smokes. Even one of the most Liberal states, MD, charges about 1/4 less.
As for milk in PA the state set the min. price which is around 4.10 now but 2 miles south of me in MD its 2.50 again what would you do?
I am sick and tired of being screwed every day all day......
As opposed to "eat , drink & be married".
With the economy only growing at 2% a year +/-, the fear is deflation, NOT hyper inflation.
I have a house in Maryland and one in Georgia where the cost of living is at least 20% less on daily purchases, gas excluded as it is the same.
The more urban you are, the more it costs to live. Housing costs are moving up, but mostly in areas where they were substantially depressed, i.e. Las Vegas, Florida, etc.
I just don't see major inflation in my daily activities, admittedly anecdotal information, but the major national trends seem to confirm it to me.
Funny, I bought rib eye last week and it was $13.99 a pound.
I guess inflation hit here harder?
Knowledge is the enemy of fear
The exact date is October 18, 2013
GrandAm
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>I checked coinflation.com today and 40% half dollars were $3.30 and 90% havles were 8.07. >>
So, in other words, prices for those are down 50% in the past 2 years, and are exactly the same as they were 34 years ago?
Liberty: Parent of Science & Industry