"When you hear of how central bankers are ‘battling deflation’ or ‘seeking price stability of at least 2% inflation’, just think to yourself - What they really want is endless growth.
The next thought you should have is Hey, is that even possible? Or even, advisable?" >>
<< <i>There are complicating factors to no growth is ok.
Population change - births & immigration Would there be room in the market to absorb new products? Growth for retirement savings?
Is there a goldilocks equilibrium ? If so, it'd be impossible to maintain. >>
Not sure if you're responding to me... I didn't mean no growth, I meant no inflation. An economy can grow without inflation through things like you mentioned (population growth, productivity improvements, technology). Retirement savings could grow without inflation.
the reason I mention it in connection to the linked article, is that of course China's economy growth rate can't keep going up 7+% forever, just think about it for a minute and it's obvious
Reminds me of something I said, yep, a couple years ago on here regarding China's growth in specific and hyperinflation in general (with respect to Weimar, Zimbabwe, etc) Notice those periods of hyper-inflation ended, and people still live where it happened and life goes on. these things have a way of self-correcting.
The story I told a few years ago was about a certain orange tree in my backyard in baleyville. We have Bears limes, Meyers and pink lemons, Texas ruby grapefruit, Haas avocaodos, as well as plums, cherries, and apricots, anyway this particular Washington navel tree and produces delicious oranges, the best oranges I've ever tasted, they were just perfect this year.. but there were only 6 of them!
Yes, the tree's production varies, depending on the pattern of the temperature that year; if a heat wave or a cold wave hits the buds or young fruit, they tend to fall off, and temperature and humidity swings can affect the flavor and texture of the fruit, too
Anyway, when I first planted the tree, it produced no oranges the first season, and one the second. then 4 the third, 18 the fourth, and 50 in the fifth year.. Wow, at this rate, in 10 years, this tree will produce over 50,000 oranges per year!
No it won't. nothing grows to the sky.. Even if the weather is perfect, there are limits to how big a tree gets. And of course there will be seasonal corrections, pruning, "regression toward the mean" This year, it was hot when the fruit was young. it was the year without a winter in baleyville. 6 oranges.. but damn were they good, the ones that made it and stayed on the tree were awesome. One left on the tree that I'm saving for a special occasion. Like tomorrow, maybe I'll post a picture. Worth it's weight in gold. . .
<< <i>I have to throw in the towel on my short SP500 move. It didn't exactly take off but it's not going down. The bankers have been able to keep it propped up.
Gold is doing well and I'm up on the added position from yesterday's dip. I think we'll see a few days of sideways-to-slightly-up consolidation. Gold is holding this move well, especially in lieu of a really strong dollar. It is certainly behaving differently.
Anyone here think this move is sustainable? This is the USD index, weekly chart.
One more question. Does anyone have any insight on mortgage rates? Would you lock in now or wait a few weeks and see if you can get something lower? >>
Certainly doesn't look like it wants to trend lower.
Regarding mortgages....what the difference in payments at 2.5% or 3%? Eventually the rate becomes meaningless.
Fed fund rate will go down before it goes up. Fedspeak on "raising rates" is just BS to get consumers to spend now.
Modern economic problems continue to be a result of excess debt in the system. Until addressed and removed the only change will be worsening symptoms.
"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>Does anyone have any insight on mortgage rates? Would you lock in now or wait a few weeks and see if you can get something lower? >>
Depending on your loan to value ratio, trying to catch a wee bit lower rate might come at the expense of affecting how much you can finance should the property value drop. Just went through the process at 3% and witnessed much tighter appraisal process.
"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
Fed fund rate will go down before it goes up. Fedspeak on "raising rates" is just BS to get consumers to spend now.
Modern economic problems continue to be a result of excess debt in the system. Until addressed and removed the only change will be worsening symptoms.
Yeah, I'm beginning to think that there will be a system "reset". There's no way to eliminate the debt burden without re-defining it or inflating away in an endless game of "catch-up".
Instead of "money creation" it has become "QE". Instead of "default" it will become "monetary reform".
Q: Are You Printing Money? Bernanke: Not Literally
I've read various explanations of the Weimar hyperinflation. It's true that their economy had been decimated in war and that the reparations and continued occupation of the Ruhr Valley which placed a burden on the Germans that they couldn't get out from under.
It's true that our current situation isn't the same as Weimar.
The cause may not be the same, but the magnitude of our debt load may in fact be larger on a comparative basis to our current GDP than Weimar ever was. What makes this situation dicey is that the US is still the strongest economy in the world and is the standard by which all others are judged.
And even though we are the world's "shining example" of success, we are in way, way, way too deep. The numbers don't lie.
Our finances are being run by people who couldn't manage their own checkbooks if they ran their own lives the way they run the government.
Q: Are You Printing Money? Bernanke: Not Literally
Wow, now there's some good logical reasoning right there >>
Yes, because there is no possible string of events, actions, or inactions that could happen that would ever lead to hyperinflation in the US. That only happens to other countries. Good logic.
That's right, henny penny, it's not impossible that you or I will be struck by lightning, hit by a meteor, or injured by a silver quarter thrown from a tall building.
There is a string of events that could lead to you or I paying $1000 US federal reserve notes for a gallon of gasoline or lowfat milk (or a silver quarter )
<< <i>That's right, henny penny, it's not impossible that you or I will be struck by lightning, hit by a meteor, or injured by a silver quarter thrown from a tall building.
There is a string of events that could lead to you or I paying $1000 US federal reserve notes for a gallon of gasoline or lowfat milk (or a silver quarter )
But it ain't very likely >>
Right, because the terrorists would never attack us on our soil.
<< <i>That's right, henny penny, it's not impossible that you or I will be struck by lightning, hit by a meteor, or injured by a silver quarter thrown from a tall building.
There is a string of events that could lead to you or I paying $1000 US federal reserve notes for a gallon of gasoline or lowfat milk (or a silver quarter )
But it ain't very likely >>
Right, because the terrorists would never attack us on our soil. >>
They already have...giving people like you fuel for your fire. "Let's hoard up guns and gold...the bad guys are coming"
Positive BST transactions with Timbuk3, coindeuce, charlottedude.
Then there was no reason for it anywhere it has appeared.
"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
Text The cause may not be the same, but the magnitude of our debt load may in fact be larger on a comparative basis to our current GDP than Weimar ever was.
I would be interested in these debt load figures. Can you provide? Are you talking about unfunded liabilities like medicare and social security? If so, the answer to those issues is a stroke of a pen. The problem is finding someone with nads big enough to lift the pen.
Aside from entitlement (what is giveth can be taken away), what debt is comparable to Weimar?
unchecked and continually rising spending of money that someone else owes the spender will lead to hyperinflation. We see this in government spending, corporate spending and consumer spending. "Credit" has become the American way. Credit is good until all of a sudden it is bad.
"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>........... (what is giveth can be taken away), what debt is comparable to Weimar? >>
How about the $300 TRILL in otc derivatives held by the top 6 US banks....and the $1.1 QUAD worldwide held by the top 2 dozen world banks? Can these be removed by the stroke of a pen? Sure, but these are all listed as big assets of these same banks. You'll be wiping out a huge portion of their net capital....essentially all of it, as even the liquidated market value of these is 3-5% which is around $10-$15 TRILL being "stroked away by the pen." Netting them out, if even workable, has to be done before a calamity strikes, not during or after. That lesson was learned with Lehman which was a tiny outfit compared to the these bank behemoths. And there's no way these guys with the "winning" bets will allow you to net them out. They'd rather take down the entire financial system first....they all have their golden parachutes packed so what would they care. They either want it as it was or not at all. Once a bank goes down it's too late to net anything out. A failed bank means a failed otc derivatives system that is beyond netting out. These are all denominated in dollars or euros so they are in fact debt-money burdens. LTCM almost took down the entire system on $4 BILL in leverage. Lehman and AIG did the same trick on only a few TRILLION in derivatives. What's left out there today is still 50X to 200X those levels.
Since the big boyz all have >$40 TRILL in otc derivs how do you prop a bank back up once it fails? I think no matter what is attempted here, it collapses on its own weight whether it be an attempt to net it out "with a stroke of the pen" or a banking failure. How does netting out millions of individual otc derivative contracts even work? How many months or years will it take? Considering all the unknowns in that process won't that essentially freeze the banks or cause their share prices to plummet like stones? Talk about "uncertainty"? Who is going to be comfortable investing in the banking/money service sectors while this unwinding is taking place? Banks that once counted these derivatives as "assets" will now be looking at effectively "losses" as they come off the bottom line. Sounds easy to say "net them out." Doing it is a lot harder, probably impossible without crashing the system. Do you want to be holding JPM, GS, Citi, or BoA shares while this process occurs? Will you want your money in their brokerage, checking or savings accounts while this "netting/rehypothecating" is going on? Not me brother. And how do we control the other 2/3 of the otc derivatives ($800 TRILL) held by banks outside US regulatory control? This netting would be like doing a physical and book keeping audit of all the central bank gold for the first time in 60 years.....imagine the stinkus that would erupt from that as all the skeletons get dusted off?
How about the $300 TRILL in otc derivatives held by the top 6 US banks....and the $1.1 QUAD worldwide held by the top 2 dozen world banks? Can these be removed by the stroke of a pen? Sure, but these are all listed as big assets of these same banks. You'll be wiping out a huge portion of their net capital....essentially all of it, as even the liquidated market value of these is 3-5% which is around $10-$15 TRILL being "stroked away by the pen." Netting them out, if even workable, has to be done before a calamity strikes, not during or after. That lesson was learned with Lehman which was a tiny outfit compared to the these bank behemoths. And there's no way these guys with the "winning" bets will allow you to net them out. They'd rather take down the entire financial system first....they all have their golden parachutes packed so what would they care. They either want it as it was or not at all. Once a bank goes down it's too late to net anything out. A failed bank means a failed otc derivatives system that is beyond netting out. These are all denominated in dollars or euros so they are in fact debt-money burdens. LTCM almost took down the entire system on $4 BILL in leverage. Lehman and AIG did the same trick on only a few TRILLION in derivatives. What's left out there today is still 50X to 200X those levels.
Since the big boyz all have >$40 TRILL in otc derivs how do you prop a bank back up once it fails? I think no matter what is attempted here, it collapses on its own weight whether it be an attempt to net it out "with a stroke of the pen" or a banking failure. How does netting out millions of individual otc derivative contracts even work? How many months or years will it take? Considering all the unknowns in that process won't that essentially freeze the banks or cause their share prices to plummet like stones? Talk about "uncertainty"? Who is going to be comfortable investing in the banking/money service sectors while this unwinding is taking place? Banks that once counted these derivatives as "assets" will now be looking at effectively "losses" as they come off the bottom line. Sounds easy to say "net them out." Doing it is a lot harder, probably impossible without crashing the system. Do you want to be holding JPM, GS, Citi, or BoA shares while this process occurs? Will you want your money in their brokerage, checking or savings accounts while this "netting/rehypothecating" is going on? Not me brother. And how do we control the other 2/3 of the otc derivatives ($800 TRILL) held by banks outside US regulatory control? This netting would be like doing a physical and book keeping audit of all the central bank gold for the first time in 60 years.....imagine the stinkus that would erupt from that as all the skeletons get dusted off?
Nice treatise, roadrunner. That's pretty much it, in a nutshell. Any response from our banking-oriented friends yet? cohodk?
I wonder if Hank Paulson has his island paradise tucked away yet? And Geithner? Where are they now? Luxury high-security missile silo condos in Kansas? The principals in LTCM were prosecuted (by Bill Black). Nobody except Madoff (and the guy from Cedar Falls, Peregrine Financial) were prosecuted on this last go-round - and they were only peripheral to the fraud, not the decision-makers. Note that Jon Corzine was barely questioned, let alone ever being charged with a crime. Nothing has changed, except that the fundamentals are even worse now.
Two very good points by roadrunner: First Point - The winning bets want to be paid, and they WILL be paid. 2nd Point - Netting out the system is impossibly complicated. The ***only*** way to consolidate the payoff is right through the Treasury Dept. and the Fed. That's the ***only*** place that can aggregate that much capital in one place. And it can be done through force of Law. Guess who loses?
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>The cause may not be the same, but the magnitude of our debt load may in fact be larger on a comparative basis to our current GDP than Weimar ever was.
I would be interested in these debt load figures. Can you provide? Are you talking about unfunded liabilities like medicare and social security? If so, the answer to those issues is a stroke of a pen. The problem is finding someone with nads big enough to lift the pen.
Aside from entitlement (what is giveth can be taken away), what debt is comparable to Weimar? >>
If you include on- and off-balance-sheet items, our true debt-to-GDP is 542%. Greece created a massive problem for Europe at a debt-to-GDP level of 170% or so. Japan is the poster-child of overblown debt, yet it’s at 226% — about half of America’s true level.
As you admit and lets' be real, no one will EVER, EVER "lift the pen" on entitlements, not even a true "tea party" conservative. Just look at how Greece is handling austerity - why would the US be any different?
A black swan event could easily light the fuse to cause things to blow up. Our economy and most worldwide are in a fragile state. I envy those here who are able to overlook this.
A black swan event could easily light the fuse to cause things to blow up. Our economy and most worldwide are in a fragile state. I envy those here who are able to overlook this.
What does someone who does not "overlook" the fragile economy (and the "fragile" society, and climate, and geopolitical world, and astronomical orbits)..
what do you do??
I've got gold already, what else do you recommend folks DO once they stop "overlooking" the risk of black swans here, there, and everywhere and recognize what a risky planet this is to live on?
I'm not one for nail biting, hand wringing, finger tapping, or nervous whistling, so really looking for some constructive advice on concrete steps here to combat this coming hyperinflation that you see as inevitable.
<< That's right, henny penny, it's not impossible that you or I will be struck by lightning, hit by a meteor, or injured by a silver quarter thrown from a tall building.
There is a string of events that could lead to you or I paying $1000 US federal reserve notes for a gallon of gasoline or lowfat milk (or a silver quarter )
But it ain't very likely >>
Right, because the terrorists would never attack us on our soil.
That's an irrelevant non-sequitur, unless the implication was that it's an example of a black swan. Ok, granted for sake of argument, events do occur and keep occurring, Katrina and Sandy are good examples, but there are many many more. They're local tragedies, there's a nationwide outpouring, and then things recover. And, so..
<< <i>I've got gold already, what else do you recommend folks DO once they stop "overlooking" the risk of black swans here, there, and everywhere and recognize what a risky planet this is to live on?
I'm not one for nail biting, hand wringing, finger tapping, or nervous whistling, so really looking for some constructive advice on concrete steps here to combat this coming hyperinflation that you see as inevitable. >>
My point was just that ignorance is bliss. But for those who aren't ignorant the common wisdom is to be in real assets and not in paper assets. Gold will always be gold. Farmland will always be farmland. Art, rare coins, collector cars, etc.
<< <i>Right, because the terrorists would never attack us on our soil.
That's an irrelevant non-sequitur, unless the implication was that it's an example of a black swan. Ok, granted for sake of argument, events do occur and keep occurring, Katrina and Sandy are good examples, but there are many many more. They're local tragedies, there's a nationwide outpouring, and then things recover. And, so..
what to do? >>
That was exactly my point. It was an example of a black swan that is very possible. I would give it 10% odds of happening in the next 10 years. Nothing I would bet on or expect but nothing I would dismiss either. IMO, to say that hyperinflation can't happen here is to say that there will never be a devastating black swan event, bigger in scope and effect than Katrina or Sandy. They keep saying LA/California is due for "the big one." How about a volcano eruption in Washington (state)? 20 years ago our nation could handle a significant event and not be completely devastated by it. I argue that the today we are much more fragile and vulnerable today which makes a statement like "never gonna happen" very foolish, IMO.
You're the one who keeps saying "never" and the one saying "ignorant"
No one is ignorant here, and no one is saying "never"
I for one am assessing probabilities and realistic scenarios. And I see the probability of "the whole thing crumbling down" as very low..
because people will fight it. Specific to hyperinflation (by any definition understood by educated people), it's extremely unlikely in the USA, IMO (IMO)
because the Fed will fight it. Hard, if necessary.
"""Specific to hyperinflation (by any definition understood by educated people), it's extremely unlikely in the USA, IMO (IMO)
because the Fed will fight it. Hard, if necessary."""
First the fed has to recognize it and stop under reporting the real number. We are not Brazil for god sakes.
If we reach 12%, the fed will declare 4% and say that we are just over the target.
But Baley, if and when the massive dollars that are pouring from the feds loose policy to the stock and bond markets switches to commodities and if and when wages begin to spike, how exactly does the Fed control the surging inflation?
Raising interest rates to 10% or 15% or 20%? Just how does the genie get stuffed back into the bottle?
<< <i>You're the one who keeps saying "never" and the one saying "ignorant"
No one is ignorant here, and no one is saying "never"
I for one am assessing probabilities and realistic scenarios. And I see the probability of "the whole thing crumbling down" as very low..
because people will fight it. Specific to hyperinflation (by any definition understood by educated people), it's extremely unlikely in the USA, IMO (IMO)
because the Fed will fight it. Hard, if necessary. >>
I was responding to the earlier comments: However, to think that the USA will have hyperinflation like some remote African country, or in this current economic environment, is beyond me. Because there is no reason it will. Clearly there are reasons it will, such as a black swan event like terrorism. Likely? No. Possible? Yes. The comment "no reason it will" is highly dismissive of events that are very much possible, and thus do qualify as "reasons."
<< <i>I for one am assessing probabilities and realistic scenarios. And I see the probability of "the whole thing crumbling down" as very low. >>
I agree.
<< <i>because the Fed will fight it. Hard, if necessary. >>
And how will they fight it? They cannot lower interest rates. They can go negative, but you know what I mean. They can always do more QE, but can they really shore up the $300T in OTC derivatives held by the top 6 banks if that mess blows up? So my other responses were addressing the faith people have in the fed. World history is full of tales of central banks that thought they had it all under control. The problem is, the fed is not all-powerfull. Do you really think the fed can raise rates? Not with this congress, or any forseeable future Congress. Do you know what even a 1 or 2% rise in rates would do to the country's budget? Raising rates simply isn't an option. So when you consider that no organization can out-manipulate true market forces and when you consider that the fed's hands are actually tied or restrained when it comes to several options, can you really still feel that the fed will ALWAYS be in control? Keep in mind that this is the same fed that didn't see the real estate bubble coming.
"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
Can't read the article sinceI don't subscribe. Do you mind explaining how they figure? Per the previous comment, the math works out to about 1.5% on $18T in debt for the budget for the current year. 2.5% makes the interest $450B. 4% $720B. 5.5% makes it $1T... PER YEAR! Not spread out over 10 years.
Can't read the article sinceI don't subscribe. Do you mind explaining how they figure? Per the previous comment, the math works out to about 1.5% on $18T in debt for the budget for the current year. 2.5% makes the interest $450B. 4% $720B. 5.5% makes it $1T... PER YEAR! Not spread out over 10 years. >>
I'm too lazy to figure it out. I'm retired.
"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
Those economists are ignoring the $240 TRILL in otc interest rate swaps/derivatives held by our biggest banks. That's the much bigger risk imo. One has to figure those swaps are written for interest rates down in the 0-2% range. The vast majority of otc derivs are for durations of <1-3 yrs. I would think that a 1-2% rise in any of the 6 month to 5 yr durations would blow the interest rate derivative's market sky high. The derivatives system already has experience with blowing up $30 TRILL worth of otc credit default swaps and approx $3-$5 TRILL in MBS's. Those failures cost various govts and corporations in the $5-15 TRILL range. We were all told well before 2008 that those couldn't fail. But, they did. Now we have interest rate swaps at 5X to 10X that size. Recall that Lehman's derivatives when all "netted out" were sold for 9% of their stated market value.
Here we go, from page 102 of the budget (and we know how accurate these are): 2016 Budget
Note that interest on national debt (assuming no rate increases) doubles by 2019 and triples by 2022. In 2021, interest will approximately equal total defense and non-defense spending (individually, not combined).
<< <i>Note that interest on national debt (assuming no rate increases) doubles by 2019 and triples by 2022. In 2021, interest will approximately equal total defense and non-defense spending (individually, not combined). >>
Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it?
And those debt/bond holders would probably think twice about lending to you/me/USA ever again.
Inflation will happen when the private sector can't use OT anymore. Whew! Thank the lord that we are importing the new underclass to keep wages down.
Deflation/asset confiscation is the private sectors worst nightmare in a myriad of ways. It is happening now and you ain't seen anything yet.
BTW, steel quotes for #2 scrap for foundries dropped $60/ton today for Feb contracts. THATS BECAUSE THEY HAVE NO CUSTOMERS. Copper down, all non ferrous down, steel in all forms through the floor. Hello recession.
<< <i>Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it? >>
I have a feeling our govt would not let J6P have a field day repaying with largely inflated dollars on their cars, homes, credit cards, etc. Rather, some new law will be applied allowing banks and others who have given loans to inflate the loan prices according to the inflation rate. This will be considered a national economic emergency and could be covered under the 1917 war powers act. There will be no "bonanza" for J6P. The system is being reset within the next 10 years and in no way will J6P be allowed to benefit in any way shape or form. Oops....there goes my conspiracy slant again.
Numerous loop holes have been closed in the past 5-10 years. The remaining ones will be closed as well.....unless you're a 1%er.
<< <i>Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it? >>
I have a feeling our govt would not let J6P have a field day repaying with largely inflated dollars on their cars, homes, credit cards, etc. Rather, some new law will be applied allowing banks and others who have given loans to inflate the loan prices according to the inflation rate. This will be considered a national economic emergency and could be covered under the 1917 war powers act. There will be no "bonanza" for J6P. The system is being reset within the next 10 years and in no way will J6P be allowed to benefit in any way shape or form. Oops....there goes my conspiracy slant again. . >>
Wai.. wha? THEY are gonna 10x my mortgage balance on me? well, I can't pay That! THEY gonna have to 10 x my salary, too. Then where will I be? Oh, same situation, different numbers.. kind of like my grandpappy made 1/10 what I make in dollars, and spent 1/10 for his house?
<< <i>Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it? >>
I have a feeling our govt would not let J6P have a field day repaying with largely inflated dollars on their cars, homes, credit cards, etc. Rather, some new law will be applied allowing banks and others who have given loans to inflate the loan prices according to the inflation rate. This will be considered a national economic emergency and could be covered under the 1917 war powers act. There will be no "bonanza" for J6P. The system is being reset within the next 10 years and in no way will J6P be allowed to benefit in any way shape or form. Oops....there goes my conspiracy slant again.
Numerous loop holes have been closed in the past 5-10 years. The remaining ones will be closed as well.....unless you're a 1%er. >>
I don't share your cynicism on this point. After all, loans are private contracts and it would be a big deal for the gov't to interfere here on such a mass scale, although they've already done it in some cases. More of a problem is whether the borrower would be able to re-pay the loan under the modified numbers - it would be a mess. Just because the dollar has devalued 10x, doesn't mean wages have gone up 10x. As was stated before, loaning out money is going long the dollar, and with any investment sometimes you win and sometimes you lose. I agree that the banks "own" Congress and political leaders and our Congress serves the elite and Wall St., but there is a limit to what they can and will do. After all, even in the great gold confiscation a citizen was allowed to keep a few ounces of gold and I believe all "collectible" gold coins (and jewelry) was exempt. Hyperinflation has been seen on other countries in recent decades. Does anyone have any idea if loans were "re-priced" in those countries?
<< <i>Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it? >>
What you bought earlier on credit would seem cheaper. Everything else would not.
"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
If wages increased 10X wouldn't social security payments also have to increase 10X. I doubt Congress could mandate either one, the U.S. would be in a debt trap and the economy would probably be in a depression not being able to support a 10X increase in wages.
In a hyperinflation scenario perhaps red dollars would be issued at 1/10 the value of current currency value but the U.S. would still be in a debt trap.
Could a $20 trillion U.S. debt be reduced to $2 trillion with the issuance of the red dollars This is just another way of the U.S defaulting on its debt. More conspiracy theories.
Given the extremely rapid debasement of the larger denomination notes, with limited physical cash in the system, existing currency would disappear quickly as a hyperinflation broke.In terms of cash, new bills of much higher denominations would be needed, but production lead time is a problem. Conspiracy theories of recent years have suggested the U.S. Government already has printed a new currency of red-colored bills, intended for some dual internal and external U.S. dollar system. If such indeed were the case, then there might be a store of "new dollars" that could be released at a 1-to-1,000,000 ratio, or whatever ratio was needed to make the new currency meaningful,
Given the extremely rapid debasement of the larger denomination notes, with limited physical cash in the system, existing currency would disappear quickly as a hyperinflation broke.In terms of cash, new bills of much higher denominations would be needed, but production lead time is a problem. Conspiracy theories of recent years have suggested the U.S. Government already has printed a new currency of red-colored bills, intended for some dual internal and external U.S. dollar system. If such indeed were the case, then there might be a store of "new dollars" that could be released at a 1-to-1,000,000 ratio, or whatever ratio was needed to make the new currency meaningful, >>
didn't fix Zimbabwe.
"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
Venezuela undergoing some hyperinflation (63% annualized as of November). Food inflation is at 93% annualized. At the supermarkets, you have to wait in separate lines for each items (bread, meat, etc.). Then a separate line to pay. The shelves are nearly wiped clean. The govt has taken control of several dozen stores to limit hoarding. Hyperinflation is a loss of confidence in the currency/govt such that people buy whatever they can while they can. Venezuela is in a recession as well. They said it couldn't happen. The drop in oil prices was certainly not good for these people. The cure for high prices is low prices. But what's the cure for no prices (ie no goods)?
Speaking of Russia, the construction of the $51 BILL Sochi Olympics is coming back to haunt them. The Oligarchs that helped fund a number of the venues want out and are trying to dump it on the state. Some of the cost over-runs were nearly 10X the orig projected costs. Anyone want to buy a Ski Jump facility cheap? Food inflation and sporting deflation. Makes you wonder if Brazil is gonna regret taking on the 2016 summer olympics?
Stated this before but "hyperinflation" already happened here, on a slow frog boil basis.. What's next?... 2 possible scenarios, one just straight Mexico/Argentina devalue, knock a zero off the amount... Or revalue $48 gold...
Comments
<< <i>The central bank folly of "endless growth"
"When you hear of how central bankers are ‘battling deflation’ or ‘seeking price stability of at least 2% inflation’, just think to yourself - What they really want is endless growth.
The next thought you should have is Hey, is that even possible? Or even, advisable?" >>
Another name for "endless growth" is "Cancer"
Liberty: Parent of Science & Industry
<< <i>There are complicating factors to no growth is ok.
Population change - births & immigration
Would there be room in the market to absorb new products?
Growth for retirement savings?
Is there a goldilocks equilibrium ? If so, it'd be impossible to maintain. >>
Not sure if you're responding to me... I didn't mean no growth, I meant no inflation. An economy can grow without inflation through things like you mentioned (population growth, productivity improvements, technology). Retirement savings could grow without inflation.
Reminds me of something I said, yep, a couple years ago on here regarding China's growth in specific and hyperinflation in general (with respect to Weimar, Zimbabwe, etc) Notice those periods of hyper-inflation ended, and people still live where it happened and life goes on. these things have a way of self-correcting.
The story I told a few years ago was about a certain orange tree in my backyard in baleyville. We have Bears limes, Meyers and pink lemons, Texas ruby grapefruit, Haas avocaodos, as well as plums, cherries, and apricots, anyway this particular Washington navel tree and produces delicious oranges, the best oranges I've ever tasted, they were just perfect this year.. but there were only 6 of them!
Yes, the tree's production varies, depending on the pattern of the temperature that year; if a heat wave or a cold wave hits the buds or young fruit, they tend to fall off, and temperature and humidity swings can affect the flavor and texture of the fruit, too
Anyway, when I first planted the tree, it produced no oranges the first season, and one the second. then 4 the third, 18 the fourth, and 50 in the fifth year.. Wow, at this rate, in 10 years, this tree will produce over 50,000 oranges per year!
No it won't. nothing grows to the sky.. Even if the weather is perfect, there are limits to how big a tree gets. And of course there will be seasonal corrections, pruning, "regression toward the mean" This year, it was hot when the fruit was young. it was the year without a winter in baleyville. 6 oranges.. but damn were they good, the ones that made it and stayed on the tree were awesome. One left on the tree that I'm saving for a special occasion. Like tomorrow, maybe I'll post a picture. Worth it's weight in gold. . .
if there's ever hyper-inflation, that is
edited to correct numerous drunken typos
Liberty: Parent of Science & Industry
<< <i>I have to throw in the towel on my short SP500 move. It didn't exactly take off but it's not going down. The bankers have been able to keep it propped up.
Gold is doing well and I'm up on the added position from yesterday's dip. I think we'll see a few days of sideways-to-slightly-up consolidation. Gold is holding this move well, especially in lieu of a really strong dollar. It is certainly behaving differently.
Anyone here think this move is sustainable? This is the USD index, weekly chart.
One more question. Does anyone have any insight on mortgage rates? Would you lock in now or wait a few weeks and see if you can get something lower? >>
Certainly doesn't look like it wants to trend lower.
Regarding mortgages....what the difference in payments at 2.5% or 3%? Eventually the rate becomes meaningless.
Knowledge is the enemy of fear
Modern economic problems continue to be a result of excess debt in the system. Until addressed and removed the only change will be worsening symptoms.
"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>Does anyone have any insight on mortgage rates? Would you lock in now or wait a few weeks and see if you can get something lower? >>
Depending on your loan to value ratio, trying to catch a wee bit lower rate might come at the expense of affecting how much you can finance should the property value drop. Just went through the process at 3% and witnessed much tighter appraisal process.
"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
Modern economic problems continue to be a result of excess debt in the system. Until addressed and removed the only change will be worsening symptoms.
Yeah, I'm beginning to think that there will be a system "reset". There's no way to eliminate the debt burden without re-defining it or inflating away in an endless game of "catch-up".
Instead of "money creation" it has become "QE". Instead of "default" it will become "monetary reform".
I knew it would happen.
<< <i>Look. I hope an ounce of gold goes to 5k an ounce, so everyone here, and Peter Schiff can be happy.
However, to think that the USA will have hyperinflation like some remote African country, or in this current economic environment, is beyond me. >>
Ah yes, the classic "it can't happen here" philosophy.
Menomonee Falls Wisconsin USA
http://www.pcgs.com/SetRegistr...dset.aspx?s=68269&ac=1">Musky 1861 Mint Set
<< <i>Because there is no reason it will. >>
Famous last words.
Wow, now there's some good logical reasoning right there
Liberty: Parent of Science & Industry
It's true that our current situation isn't the same as Weimar.
The cause may not be the same, but the magnitude of our debt load may in fact be larger on a comparative basis to our current GDP than Weimar ever was. What makes this situation dicey is that the US is still the strongest economy in the world and is the standard by which all others are judged.
And even though we are the world's "shining example" of success, we are in way, way, way too deep. The numbers don't lie.
Our finances are being run by people who couldn't manage their own checkbooks if they ran their own lives the way they run the government.
I knew it would happen.
<< <i>Famous last words
Wow, now there's some good logical reasoning right there
Yes, because there is no possible string of events, actions, or inactions that could happen that would ever lead to hyperinflation in the US. That only happens to other countries. Good logic.
There is a string of events that could lead to you or I paying $1000 US federal reserve notes for a gallon of gasoline or lowfat milk (or a silver quarter
But it ain't very likely
Liberty: Parent of Science & Industry
<< <i>That's right, henny penny, it's not impossible that you or I will be struck by lightning, hit by a meteor, or injured by a silver quarter thrown from a tall building.
There is a string of events that could lead to you or I paying $1000 US federal reserve notes for a gallon of gasoline or lowfat milk (or a silver quarter
But it ain't very likely >>
Right, because the terrorists would never attack us on our soil.
<< <i>
<< <i>That's right, henny penny, it's not impossible that you or I will be struck by lightning, hit by a meteor, or injured by a silver quarter thrown from a tall building.
There is a string of events that could lead to you or I paying $1000 US federal reserve notes for a gallon of gasoline or lowfat milk (or a silver quarter
But it ain't very likely >>
Right, because the terrorists would never attack us on our soil. >>
They already have...giving people like you fuel for your fire. "Let's hoard up guns and gold...the bad guys are coming"
<< <i>Because there is no reason it will. >>
Then there was no reason for it anywhere it has appeared.
"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 would be interested in these debt load figures. Can you provide? Are you talking about unfunded liabilities like medicare and social security? If so, the answer to those issues is a stroke of a pen. The problem is finding someone with nads big enough to lift the pen.
Aside from entitlement (what is giveth can be taken away), what debt is comparable to Weimar?
Knowledge is the enemy of fear
"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>........... (what is giveth can be taken away), what debt is comparable to Weimar? >>
How about the $300 TRILL in otc derivatives held by the top 6 US banks....and the $1.1 QUAD worldwide held by the top 2 dozen world banks? Can these be removed by the stroke of a pen? Sure, but these are all listed as big assets of these same banks. You'll be wiping out a huge portion of their net capital....essentially all of it, as even the liquidated market value of these is 3-5% which is around $10-$15 TRILL being "stroked away by the pen." Netting them out, if even workable, has to be done before a calamity strikes, not during or after. That lesson was learned with Lehman which was a tiny outfit compared to the these bank behemoths. And there's no way these guys with the "winning" bets will allow you to net them out. They'd rather take down the entire financial system first....they all have their golden parachutes packed so what would they care. They either want it as it was or not at all. Once a bank goes down it's too late to net anything out. A failed bank means a failed otc derivatives system that is beyond netting out. These are all denominated in dollars or euros so they are in fact debt-money burdens. LTCM almost took down the entire system on $4 BILL in leverage. Lehman and AIG did the same trick on only a few TRILLION in derivatives. What's left out there today is still 50X to 200X those levels.
Since the big boyz all have >$40 TRILL in otc derivs how do you prop a bank back up once it fails? I think no matter what is attempted here, it collapses on its own weight whether it be an attempt to net it out "with a stroke of the pen" or a banking failure. How does netting out millions of individual otc derivative contracts even work? How many months or years will it take? Considering all the unknowns in that process won't that essentially freeze the banks or cause their share prices to plummet like stones? Talk about "uncertainty"? Who is going to be comfortable investing in the banking/money service sectors while this unwinding is taking place? Banks that once counted these derivatives as "assets" will now be looking at effectively "losses" as they come off the bottom line. Sounds easy to say "net them out." Doing it is a lot harder, probably impossible without crashing the system. Do you want to be holding JPM, GS, Citi, or BoA shares while this process occurs? Will you want your money in their brokerage, checking or savings accounts while this "netting/rehypothecating" is going on? Not me brother. And how do we control the other 2/3 of the otc derivatives ($800 TRILL) held by banks outside US regulatory control? This netting would be like doing a physical and book keeping audit of all the central bank gold for the first time in 60 years.....imagine the stinkus that would erupt from that as all the skeletons get dusted off?
Since the big boyz all have >$40 TRILL in otc derivs how do you prop a bank back up once it fails? I think no matter what is attempted here, it collapses on its own weight whether it be an attempt to net it out "with a stroke of the pen" or a banking failure. How does netting out millions of individual otc derivative contracts even work? How many months or years will it take? Considering all the unknowns in that process won't that essentially freeze the banks or cause their share prices to plummet like stones? Talk about "uncertainty"? Who is going to be comfortable investing in the banking/money service sectors while this unwinding is taking place? Banks that once counted these derivatives as "assets" will now be looking at effectively "losses" as they come off the bottom line. Sounds easy to say "net them out." Doing it is a lot harder, probably impossible without crashing the system. Do you want to be holding JPM, GS, Citi, or BoA shares while this process occurs? Will you want your money in their brokerage, checking or savings accounts while this "netting/rehypothecating" is going on? Not me brother. And how do we control the other 2/3 of the otc derivatives ($800 TRILL) held by banks outside US regulatory control? This netting would be like doing a physical and book keeping audit of all the central bank gold for the first time in 60 years.....imagine the stinkus that would erupt from that as all the skeletons get dusted off?
Nice treatise, roadrunner. That's pretty much it, in a nutshell. Any response from our banking-oriented friends yet? cohodk?
I wonder if Hank Paulson has his island paradise tucked away yet? And Geithner? Where are they now? Luxury high-security missile silo condos in Kansas? The principals in LTCM were prosecuted (by Bill Black). Nobody except Madoff (and the guy from Cedar Falls, Peregrine Financial) were prosecuted on this last go-round - and they were only peripheral to the fraud, not the decision-makers. Note that Jon Corzine was barely questioned, let alone ever being charged with a crime. Nothing has changed, except that the fundamentals are even worse now.
Two very good points by roadrunner: First Point - The winning bets want to be paid, and they WILL be paid. 2nd Point - Netting out the system is impossibly complicated. The ***only*** way to consolidate the payoff is right through the Treasury Dept. and the Fed. That's the ***only*** place that can aggregate that much capital in one place. And it can be done through force of Law. Guess who loses?
I knew it would happen.
<< <i>The cause may not be the same, but the magnitude of our debt load may in fact be larger on a comparative basis to our current GDP than Weimar ever was.
I would be interested in these debt load figures. Can you provide? Are you talking about unfunded liabilities like medicare and social security? If so, the answer to those issues is a stroke of a pen. The problem is finding someone with nads big enough to lift the pen.
Aside from entitlement (what is giveth can be taken away), what debt is comparable to Weimar? >>
If you include on- and off-balance-sheet items, our true debt-to-GDP is 542%. Greece created a massive problem for Europe at a debt-to-GDP level of 170% or so. Japan is the poster-child of overblown debt, yet it’s at 226% — about half of America’s true level.
As you admit and lets' be real, no one will EVER, EVER "lift the pen" on entitlements, not even a true "tea party" conservative. Just look at how Greece is handling austerity - why would the US be any different?
A black swan event could easily light the fuse to cause things to blow up. Our economy and most worldwide are in a fragile state. I envy those here who are able to overlook this.
What does someone who does not "overlook" the fragile economy (and the "fragile" society, and climate, and geopolitical world, and astronomical orbits)..
what do you do??
I've got gold already, what else do you recommend folks DO once they stop "overlooking" the risk of black swans here, there, and everywhere and recognize what a risky planet this is to live on?
I'm not one for nail biting, hand wringing, finger tapping, or nervous whistling, so really looking for some constructive advice on concrete steps here to combat this coming hyperinflation that you see as inevitable.
<< That's right, henny penny, it's not impossible that you or I will be struck by lightning, hit by a meteor, or injured by a silver quarter thrown from a tall building.
There is a string of events that could lead to you or I paying $1000 US federal reserve notes for a gallon of gasoline or lowfat milk (or a silver quarter )
But it ain't very likely >>
Right, because the terrorists would never attack us on our soil.
That's an irrelevant non-sequitur, unless the implication was that it's an example of a black swan. Ok, granted for sake of argument, events do occur and keep occurring, Katrina and Sandy are good examples, but there are many many more. They're local tragedies, there's a nationwide outpouring, and then things recover. And, so..
what to do?
Liberty: Parent of Science & Industry
<< <i>I've got gold already, what else do you recommend folks DO once they stop "overlooking" the risk of black swans here, there, and everywhere and recognize what a risky planet this is to live on?
I'm not one for nail biting, hand wringing, finger tapping, or nervous whistling, so really looking for some constructive advice on concrete steps here to combat this coming hyperinflation that you see as inevitable. >>
My point was just that ignorance is bliss.
But for those who aren't ignorant the common wisdom is to be in real assets and not in paper assets. Gold will always be gold. Farmland will always be farmland. Art, rare coins, collector cars, etc.
<< <i>Right, because the terrorists would never attack us on our soil.
That's an irrelevant non-sequitur, unless the implication was that it's an example of a black swan. Ok, granted for sake of argument, events do occur and keep occurring, Katrina and Sandy are good examples, but there are many many more. They're local tragedies, there's a nationwide outpouring, and then things recover. And, so..
what to do? >>
That was exactly my point. It was an example of a black swan that is very possible. I would give it 10% odds of happening in the next 10 years. Nothing I would bet on or expect but nothing I would dismiss either. IMO, to say that hyperinflation can't happen here is to say that there will never be a devastating black swan event, bigger in scope and effect than Katrina or Sandy. They keep saying LA/California is due for "the big one." How about a volcano eruption in Washington (state)? 20 years ago our nation could handle a significant event and not be completely devastated by it. I argue that the today we are much more fragile and vulnerable today which makes a statement like "never gonna happen" very foolish, IMO.
No one is ignorant here, and no one is saying "never"
I for one am assessing probabilities and realistic scenarios. And I see the probability of "the whole thing crumbling down" as very low..
because people will fight it. Specific to hyperinflation (by any definition understood by educated people), it's extremely unlikely in the USA, IMO (IMO)
because the Fed will fight it. Hard, if necessary.
Liberty: Parent of Science & Industry
because the Fed will fight it. Hard, if necessary."""
First the fed has to recognize it and stop under reporting the real number. We are not Brazil for god sakes.
If we reach 12%, the fed will declare 4% and say that we are just over the target.
But Baley, if and when the massive dollars that are pouring from the feds loose policy to the stock and bond markets switches to commodities and if and when wages begin to spike, how exactly does the Fed control the surging inflation?
Raising interest rates to 10% or 15% or 20%? Just how does the genie get stuffed back into the bottle?
<< <i>You're the one who keeps saying "never" and the one saying "ignorant"
No one is ignorant here, and no one is saying "never"
I for one am assessing probabilities and realistic scenarios. And I see the probability of "the whole thing crumbling down" as very low..
because people will fight it. Specific to hyperinflation (by any definition understood by educated people), it's extremely unlikely in the USA, IMO (IMO)
because the Fed will fight it. Hard, if necessary. >>
I was responding to the earlier comments:
However, to think that the USA will have hyperinflation like some remote African country, or in this current economic environment, is beyond me.
Because there is no reason it will.
Clearly there are reasons it will, such as a black swan event like terrorism. Likely? No. Possible? Yes. The comment "no reason it will" is highly dismissive of events that are very much possible, and thus do qualify as "reasons."
<< <i>I for one am assessing probabilities and realistic scenarios. And I see the probability of "the whole thing crumbling down" as very low. >>
I agree.
<< <i>because the Fed will fight it. Hard, if necessary. >>
And how will they fight it? They cannot lower interest rates. They can go negative, but you know what I mean. They can always do more QE, but can they really shore up the $300T in OTC derivatives held by the top 6 banks if that mess blows up?
So my other responses were addressing the faith people have in the fed. World history is full of tales of central banks that thought they had it all under control. The problem is, the fed is not all-powerfull. Do you really think the fed can raise rates? Not with this congress, or any forseeable future Congress. Do you know what even a 1 or 2% rise in rates would do to the country's budget? Raising rates simply isn't an option. So when you consider that no organization can out-manipulate true market forces and when you consider that the fed's hands are actually tied or restrained when it comes to several options, can you really still feel that the fed will ALWAYS be in control? Keep in mind that this is the same fed that didn't see the real estate bubble coming.
<< <i>. Do you know what even a 1 or 2% rise in rates would do to the country's budget? >>
The 2016 budget rolled out by the executive branch budgets interest on the debt at $283 Billion. That is what, 1.5% on the $18T debt?
<< <i>. Do you know what even a 1 or 2% rise in rates would do to the country's budget? >>
Not as much damage as one would think:
if interest rates rise as the highest 10 predictions of the private-sector economists surveyed by the Blue Chip Economic Indicators — that is, 4.5% on the 3-month Treasury and 5.8% on the 10-year in 2023 — then the federal deficit will be $157 billion bigger in that year then it would otherwise be, and $1.14 trillion bigger over ten years.
"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>. Do you know what even a 1 or 2% rise in rates would do to the country's budget? >>
Not as much damage as one would think:
if interest rates rise as the highest 10 predictions of the private-sector economists surveyed by the Blue Chip Economic Indicators — that is, 4.5% on the 3-month Treasury and 5.8% on the 10-year in 2023 — then the federal deficit will be $157 billion bigger in that year then it would otherwise be, and $1.14 trillion bigger over ten years. >>
Can't read the article sinceI don't subscribe. Do you mind explaining how they figure? Per the previous comment, the math works out to about 1.5% on $18T in debt for the budget for the current year. 2.5% makes the interest $450B. 4% $720B. 5.5% makes it $1T... PER YEAR! Not spread out over 10 years.
<< <i>
<< <i>
<< <i>. Do you know what even a 1 or 2% rise in rates would do to the country's budget? >>
Not as much damage as one would think:
if interest rates rise as the highest 10 predictions of the private-sector economists surveyed by the Blue Chip Economic Indicators — that is, 4.5% on the 3-month Treasury and 5.8% on the 10-year in 2023 — then the federal deficit will be $157 billion bigger in that year then it would otherwise be, and $1.14 trillion bigger over ten years. >>
Can't read the article sinceI don't subscribe. Do you mind explaining how they figure? Per the previous comment, the math works out to about 1.5% on $18T in debt for the budget for the current year. 2.5% makes the interest $450B. 4% $720B. 5.5% makes it $1T... PER YEAR! Not spread out over 10 years. >>
I'm too lazy to figure it out. I'm retired.
"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>Treasuries are not adjustable rate securities, just because rates go up, debt service across the yield curve is not a 1-1. >>
Yes, that's what I was missing. But what it the average maturity of all of the US Debt?
About one fourth of the face value of the debt will mature within the next 12 months, and about half within the next 36 months. About 70 per cent of the debt is due within five years.
http://ftalphaville.ft.com/2014/10/16/2004102/the-real-reasons-why-the-us-treasurys-debt-maturity-has-been-rising/
So they can raise rates and we'll be OK for a couple of years but the 4-5 year Outlook is still bleak. Reality will catch up eventually.
I still contend that raising rates isn't a realistic option.
<< <i>
<< <i>. Do you know what even a 1 or 2% rise in rates would do to the country's budget? >>
Not as much damage as one would think:
if interest rates rise as the highest 10 predictions of the private-sector economists surveyed by the Blue Chip Economic Indicators — that is, 4.5% on the 3-month Treasury and 5.8% on the 10-year in 2023 — then the federal deficit will be $157 billion bigger in that year then it would otherwise be, and $1.14 trillion bigger over ten years. >>
Those economists are ignoring the $240 TRILL in otc interest rate swaps/derivatives held by our biggest banks. That's the much bigger risk imo. One has to figure those swaps are written for interest rates down in the 0-2% range. The vast majority of otc derivs are for durations of <1-3 yrs. I would think that a 1-2% rise in any of the 6 month to 5 yr durations would blow the interest rate derivative's market sky high. The derivatives system already has experience with blowing up $30 TRILL worth of otc credit default swaps and approx $3-$5 TRILL in MBS's. Those failures cost various govts and corporations in the $5-15 TRILL range. We were all told well before 2008 that those couldn't fail. But, they did. Now we have interest rate swaps at 5X to 10X that size. Recall that Lehman's derivatives when all "netted out" were sold for 9% of their stated market value.
Note that interest on national debt (assuming no rate increases) doubles by 2019 and triples by 2022. In 2021, interest will approximately equal total defense and non-defense spending (individually, not combined).
<< <i>Note that interest on national debt (assuming no rate increases) doubles by 2019 and triples by 2022. In 2021, interest will approximately equal total defense and non-defense spending (individually, not combined). >>
Depressing.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
And those debt/bond holders would probably think twice about lending to you/me/USA ever again.
Inflation will happen when the private sector can't use OT anymore. Whew! Thank the lord that we are importing the new underclass to keep wages down.
Deflation/asset confiscation is the private sectors worst nightmare in a myriad of ways. It is happening now and you ain't seen anything yet.
BTW, steel quotes for #2 scrap for foundries dropped $60/ton today for Feb contracts. THATS BECAUSE THEY HAVE NO CUSTOMERS.
Copper down, all non ferrous down, steel in all forms through the floor. Hello recession.
<< <i>Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it? >>
I have a feeling our govt would not let J6P have a field day repaying with largely inflated dollars on their cars, homes, credit cards, etc. Rather, some new law will be applied allowing banks and others who have given loans to inflate the loan prices according to the inflation rate. This will be considered a national economic emergency and could be covered under the 1917 war powers act. There will be no "bonanza" for J6P. The system is being reset within the next 10 years and in no way will J6P be allowed to benefit in any way shape or form. Oops....there goes my conspiracy slant again.
Numerous loop holes have been closed in the past 5-10 years. The remaining ones will be closed as well.....unless you're a 1%er.
<< <i>
<< <i>Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it? >>
I have a feeling our govt would not let J6P have a field day repaying with largely inflated dollars on their cars, homes, credit cards, etc. Rather, some new law will be applied allowing banks and others who have given loans to inflate the loan prices according to the inflation rate. This will be considered a national economic emergency and could be covered under the 1917 war powers act. There will be no "bonanza" for J6P. The system is being reset within the next 10 years and in no way will J6P be allowed to benefit in any way shape or form. Oops....there goes my conspiracy slant again.
Wai.. wha? THEY are gonna 10x my mortgage balance on me? well, I can't pay That! THEY gonna have to 10 x my salary, too. Then where will I be? Oh, same situation, different numbers.. kind of like my grandpappy made 1/10 what I make in dollars, and spent 1/10 for his house?
Liberty: Parent of Science & Industry
<< <i>
<< <i>Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it? >>
I have a feeling our govt would not let J6P have a field day repaying with largely inflated dollars on their cars, homes, credit cards, etc. Rather, some new law will be applied allowing banks and others who have given loans to inflate the loan prices according to the inflation rate. This will be considered a national economic emergency and could be covered under the 1917 war powers act. There will be no "bonanza" for J6P. The system is being reset within the next 10 years and in no way will J6P be allowed to benefit in any way shape or form. Oops....there goes my conspiracy slant again.
Numerous loop holes have been closed in the past 5-10 years. The remaining ones will be closed as well.....unless you're a 1%er. >>
I don't share your cynicism on this point. After all, loans are private contracts and it would be a big deal for the gov't to interfere here on such a mass scale, although they've already done it in some cases. More of a problem is whether the borrower would be able to re-pay the loan under the modified numbers - it would be a mess. Just because the dollar has devalued 10x, doesn't mean wages have gone up 10x. As was stated before, loaning out money is going long the dollar, and with any investment sometimes you win and sometimes you lose. I agree that the banks "own" Congress and political leaders and our Congress serves the elite and Wall St., but there is a limit to what they can and will do. After all, even in the great gold confiscation a citizen was allowed to keep a few ounces of gold and I believe all "collectible" gold coins (and jewelry) was exempt.
Hyperinflation has been seen on other countries in recent decades. Does anyone have any idea if loans were "re-priced" in those countries?
<< <i>Hyperinflation would certainly make fixed interest rate debt easy to repay, wouldn't it? >>
What you bought earlier on credit would seem cheaper. Everything else would not.
"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
In a hyperinflation scenario perhaps red dollars would be issued at 1/10 the value of current currency value but the U.S. would still be in a debt trap.
Could a $20 trillion U.S. debt be reduced to $2 trillion with the issuance of the red dollars This is just another way of the U.S defaulting on its debt. More conspiracy theories.
From
shadowstats
Given the extremely rapid debasement of the larger denomination notes, with limited physical cash in the system, existing currency would disappear quickly as a hyperinflation broke.In terms of cash, new bills of much higher denominations would be needed, but production lead time is a problem. Conspiracy theories of recent years have suggested the U.S. Government already has printed a new currency of red-colored bills, intended for some dual internal and external U.S. dollar system. If such indeed were the case, then there might be a store of "new dollars" that could be released at a 1-to-1,000,000 ratio, or whatever ratio was needed to make the new currency meaningful,
Box of 20
didn't fix Zimbabwe.
"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
Linky
Food inflation around the world...Russia is right up there.
Speaking of Russia, the construction of the $51 BILL Sochi Olympics is coming back to haunt them. The Oligarchs that helped fund a number of the venues want out and are trying to dump it on the state. Some of the cost over-runs were nearly 10X the orig projected costs. Anyone want to buy a Ski Jump facility cheap? Food inflation and sporting deflation. Makes you wonder if Brazil is gonna regret taking on the 2016 summer olympics?
$20 BILL in bond claims against Venezuela is not helping
Science fiction, conspiracy hallucinations.....
2 possible scenarios, one just straight Mexico/Argentina devalue, knock a zero off the amount... Or revalue $48 gold...