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We need to look at inflation vs. deflation differently these days

November 4, 2014

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Discussion
11 Comments
    Nov 04, 2014 04:13 AM

    US hyperinflation, just another failed hype from the goldbugs as long as the US can sell their debt and borrow money hyperinflation is only possible in countries that can’t raise capital.

    http://armstrongeconomics.com/2014/01/14/hyperinflation-is-it-even-possible/

      Nov 04, 2014 04:43 PM

      Thanks for the comment jj. The US is still looked upon as being strong especially when compared to other countries around the world. This is hard to argue with. People will continue to put their money in US dollars and US markets for at least a little longer. The majority of countries around the world are giving it their all to inflate and it doesn’t look like that will stop anytime soon.

      Nov 04, 2014 04:19 PM

      This article has errors in it (like everything else that I read seems to have). At the end of the article it says that the DHS bought 2700 tanks. That is not true. They were not tanks but Mine-Resistant Armored Protection (MRAP) vehicles. A big difference. These were older vehicles which were used in Iraq. Not that big of a deal.

    Nov 04, 2014 04:22 AM

    Apart from possibly being a failed hype attempt, I think it’s more a misunderstanding of exactly the point you make, and I made in today’s segment. Especially in the case of the U.S., the 20-fold increase in our national debt– and WAY more than that in other public and private debt — has not been accompanied by the kind of “hyperinflation” that would see us using wheelbarrows as wallets; at least not yet. And it may be a long time coming still.

      Nov 04, 2014 04:31 AM

      Well Chris have the goldbugs actually got anything correct these past 3 years…manipulation is now again their biggest excuse, yet if gold could be manipulated it would still be $250 and if they can manipulate its value why not have gold trading at $2000 today as every central bank around the world is desperate for any signs of real inflation why not buy every indicators the markets watch for any kind of inflation, silver, copper OIL….if we woke up Fri and gold was $50gs who would benefit 1/2 of 1 % of the worlds population but if oil was $500 Fri everyone on the planet would be effected.

      BOJ is scared to death of the deflation its see’s in Japan and around the world…once the mind set takes hold, why buy today when prices will be cheaper tomorrow it take time to change that trend and with inane unemployment in Europe and higher taxation everywhere at all levels its no wonder deflation is here

    Nov 04, 2014 04:27 AM

    The question i keep asking myself is if we’ve reached the limits of debt driven growth where do we turn next? As Chris mentions there is a limit to how much debt you can consume and 90% of the population is full.

    We have a demand issue with credit not a supply issue.

    – QE has failed as a transmission mechanism
    – Fiscal policy is going nowhere

    The next options will surely be more radical and aim at putting money directly in peoples pockets? Or debt relief. I don’t see how else the economic engine is going to get cost push inflation kick started.

    Without the general public participating in the recovery the dead lock between deflation & Inflation will continue.

      Nov 04, 2014 04:00 AM

      Simon, I understand your reasoning, the financial system needs a reset, but people still think The Fed has silver bullets, no pun intended. The “D” word is not in most peoples vocabulary, collapse is something most people refuse to even discuss anymore, ignoring it does not make it vanish.

        Nov 04, 2014 04:46 PM

        I still think it will take a financial reset from another country or countries before anything happens in the US. Like it or not the Fed has a few more cards up its sleeve which I think is more than you can say about Europe.

          Nov 04, 2014 04:54 PM

          Hi Cory, The Fed may have a few more cards to play but they got us in this mess and a fine mess it is but now they have only managed to make it worse, whatever they might try in the future will not work they have already proven that.

    Nov 04, 2014 04:00 AM

    Of course hyperinflation is possible but you need a collapse of confidence. It would be total worldwide chaos. We would have a collapse and deflation long before we ever got there so I think it is highly unlikely in such a large economy as the US.

    But we don’t need hyperinflation for the wheels to fall off. All we need is the 10 year treasury to get to over 5% and the US is in real trouble. Some people say it is less than that. Mortgages would be untenable for many, many people and with the debt so high, interest rates would be far too high a percentage of taxes. This is the problem with too much debt and it is what is happening in Japan right now.

    All the people who said you can print print print with no consequences and held Japan up as an example of how you get away with it need their feet held close to the fire right now.

      Nov 04, 2014 04:48 PM

      Good comment Paul. It is all about rates!