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hardnox604008
Advisor

inflation vs. deflation

http://www.rickackerman.com/2013/02/why-isn%e2%80%99t-gold-higher/

 

I've been getting headaches for the better part of 15 years puzzling over the question of whether the world ends by fire or ice.

 

Some of the best discussion I've found over the years takes place periodically at Rick Ackerman's site.  I happened upon him a decade or so ago when he was one of the few semi-reputable people who would discuss the existence and possible footprint of the Plunge Protection Team (PPT). Even though the PPT was clearly authorized by executive order folowing the '87 crash it was considered tinfoil hat stuff to suggest that they really existed (Uncle Miltie explained how markets work on PBS and that wasn't in it) or that they might intervene in US markets from time to time. It wasn't until the '08 meltdown when Paulson was out of cards that he began bragging about how his PPT was standing vigilant guard against all bad things. 

 

I suppose I've also been drawn to Ackerman's maunderings because we share the same basic inclination- I'm open to considering both but in my gut continue to lean to the deflationist side. Certainly, as he says, the fact the the world has thrown an unimaginable amount of ammo at the deflation monster over the last 5 years and hardly moved the needle is some strong evidence.

 

That said, the Full Immersion Baptists of the inflationist camp won't recant their religion and may actually turn out to be right although, as I said I'm not leaning in that direction.

6 Replies
BA Deere
Honored Advisor

Re: inflation vs. deflation

In the case of gold prices not being over $2,000 given the mess we`re in, gold is traded in US dollars and so far the US dollar has been the prettest girl in the leper colony.  Gold price we all watch is the paper price, like the price of corn ask a hog feeder or E-plant about the sometime huge premium of physical to paper.

 

The Hunt Bros tried to make a buck or 2 on silver with the knowledge that more paper silver is traded compared to physical.  It was a great plan and showed the emperor is naked, but when you go against the "white shoe boys" they just change the rules of the game and clean you out. Lesson learned. 

 

I think we will have hyperinflation because politicans will not want to see the electorate starving.  Right now the fed is goosing the system with $100 billion/mo to keep this ol` Cummins banging on 5 1/2 cylinders...but they quit squirting ether in the intake the motor quits.  Even with all this starter fluid ..still the GDP is going backward.  I guess if we had a real law and order austerity administration, then I`d been betting on deflation.  But I don`t know everything, only think I do Smiley Happy

r3020
Senior Advisor

Re: inflation vs. deflation

We will have inflation until it become hyper, then a massive deflation spiral.

bruce MN
Advisor

Surely you must be mistaken

The PPT, if indeed created by executive order, couldn't have been created prior to the inaugaratoin in 2009. 

 

To read here, such a thing never existed before then.

bruce MN
Advisor

Re: inflation vs. deflation

Only and purely out of sheer orneriness, what one "economist" has to say about that shrinkage:

 

 

http://krugman.blogs.nytimes.com/2013/02/01/our-incredible-shrinking-government/

 

 

BA Deere
Honored Advisor

Re: inflation vs. deflation

Basically what "Keyesians" are saying is `government spending is contained within the GDP, if the gov`t doesn`t spend more each yr, the GDP takes a hit`?    That probably is true, however in other words we are a heroin addict, this junk(gov`t expenditures) is killing us, first slowly, then suddenly.

 

 

Krugman offers no way out of this heroin cycle, only gives us more jucie to prevent the convulsions. But Bruce at some point then will not be enough heroin in the universe to fed our habit.  There`s no growing our way out.  There will come a day when a "Dave Ramsey" will have to put us on a budget and the president will have to go to our creditors and say"Ramsey says we can handle a debt that is 10¢ on dollar of what it is...So how `bout it, will you write-off 90% of our debt, if we agree to balance the budget, live within our means?   And to prove it we will end the fed, go on a gold standard...no more borrowing and printing!" that would be the softest of landings that I can envision http://www.forbes.com/sites/nathanlewis/2013/01/31/the-10-minute-gold-standard-its-much-easier-than-...     The current electorate would blawk at this, so we got many miles to travel ...lotta pain first.

Samnospam
Advisor

Re: inflation vs. deflation

I've always felt that deflation was the monster that would prevail, short of the helicopter I cannot see how inflation can get a serious hold. I think the monster can be held off for a long time tthough, its amazing how long they've kept the balls in the air.