[evilgenius]

It isn't just private debt per se that looms over the future. The huge derivative universe has begun to demand a real return in terms of money available in the circulating money supply. This is evident in the placing of bailout and QE funds, where they go to finance the sucking hole of nonproductive assets! Now is not a time to have a lot of personal debt, nor is it a time to expect high returns on investment.

As always the major challenge is toward the faith of the people. Will they continue to believe in investment or will they clam up and retreat into the morass of regionalism, nationalism and financial revenge?

[Newfie]

Degrowth, an idea whose time has come...........in about 1950.

Too little, too late.

We are no longer in position to steer the car, it is in the process of crashing. It's just happening really slow so we don't recognize it, yet. It will speed up, then we will notice.

Cheers.

[AgentR11]

$this->bbcode_second_pass_quote('evilgenius', 'T')he huge derivative universe...

[evilgenius]

I don't think so. The corporate debt that forms the derivative universe is, as I've stated somewhere else on this site, tantamount to the PTB creating the hydra. Multiple calls exist against every instrument. Try to kill it and another set of heads pop up in place of the one removed. So much illicit and clandestine wealth relies upon it for existence that it cannot be satisfied in any kind of legitimate way, not without endangering the status of the government and the economy. If you feed it it will start to create new heads (instruments) designed to make use of the inputs. It won't go away because of a deep pockets attempt to pay it off. What began as a means to stave off inflation is now a monster in the absence of the kind of growth that it was designed to be fed by. What really needs to happen is that it has to be disconnected from the real economy in such a way that legitimately recognized debt remains integrated within the economy and illegitimate debt is left to fend for itself in the phantasmic world in which it belongs.

[AgentR11]

Why would anyone WANT to kill the derivates. You only need to cover bets that want to unwind, as they unwind, in the event no private counterparty wants the bet.

Secondly, the government and economy are already endangered, and have been since the first QE. That's why the printing is such a brutal weapon, used too savagely, and it will splatter the economy and the government like bugs on a windshield, used too gently, and the economy, industry, and government are instantly annihilated by deflation.

Thirdly, in case I haven't made myself clear, the FED DOES NOT WANT TO STAVE OFF INFLATION, they are desperately fighting deflation in the face of a contracting real economy, and they have the "mother of all weapons" with which to fight it.

Fortunately, everyone holding large sums knows this, and is very careful to unwind gently; because when it comes right down to it, everyone would like to get value for their funds when they sell. Getting toilet paper for years of work, sucks eggs.

[evilgenius]

$this->bbcode_second_pass_quote('AgentR11', '
')
Thirdly, in case I haven't made myself clear, the FED DOES NOT WANT TO STAVE OFF INFLATION, they are desperately fighting deflation in the face of a contracting real economy, and they have the "mother of all weapons" with which to fight it.

[Lore]

QE on to infinity is proving to be at this point a pop-gun. The Fed's bullets are 40 grams low on powder. Could be the reason why Ben is looking to go stage left.

[AgentR11]

$this->bbcode_second_pass_quote('evilgenius', '[')Don't mistake me, I agree with you on this. What I don't think is that QE will ultimately prove successful. Meanwhile structural changes to the way things are done go begging.

[Loki]

$this->bbcode_second_pass_quote('Agent', 'T')he Fed can and will BUY IT ALL.

[Newfie]

If banks create money, who creates value?

If I build something say a shed, it has value. The median we use to express that value is money.

But if the money goes away, the shed still keeps my stuff dry, and has value.

I think that concept has been lost.

[sparky]

.
Fair value was lost when the local landlord and his goons starting coming around
taking a third of the harvest and called it a " taxe "

[ralfy]

To add to what Loki wrote,

"The myth of the money multiplier"

the-myth-of-the-money-multiplier-t67257.html

[ritter]

$this->bbcode_second_pass_quote('Newfie', 'I')f banks create money, who creates value?

If I build something say a shed, it has value. The median we use to express that value is money.

But if the money goes away, the shed still keeps my stuff dry, and has value.

I think that concept has been lost.

[kublikhan]

$this->bbcode_second_pass_quote('Loki', 'O')nce it's time for the public sector to deleverage, we get European-style deflationary depression, only worse.

[Newfie]

So how to insulate yourself from the problem?

Ritter rightly suggests making physical improvements.

For a while I was trying to figure out something tangible that could act as a substitute for cash. Salt, bleach, ammo. All have their problems. The best suggestions I got were booze and smokes, but they are highly regulated and difficlut to carry across state or country lines in quantity.

[Loki]

$this->bbcode_second_pass_quote('Newfie', 'B')ut if that money goes away, the shed still keeps my stuff dry, and has value.

[evilgenius]

$this->bbcode_second_pass_quote('Loki', '')$this->bbcode_second_pass_quote('Newfie', 'B')ut if that money goes away, the shed still keeps my stuff dry, and has value.

[AgentR11]

I think it would be fair for me to acknowledge that while I do not believe a nominal deflation event will occur, the catastrophic nature of the possibility has me slightly favoring that side as far as what I am doing personally. Inflation/hyper inflation is so cheesy easy to balance against, some gold, some silver, some land, poof, you're set, carry on! Deflation otoh, is brutal; your taxes will NOT go down, governments will fight for every last penny of property and gains taxes they can get; meanwhile your income sources get hosed, badly. So you favor cash, and you favor it in non-productive instruments. Deflation would crush stock prices, just as it will crush other prices; so you have to sit on that cash, in its useless, meaningless, virtually nil return form.

That its consequences are so much worse than the consequences of inflation/hyper-inflation, is why I hold the opinion concerning the Fed that I do. Deflation will not be permitted. If they have to stick $100k on every SNAP card in the US to prevent it, that is exactly what they'll do. (that's extreme, and I doubt it would be necessary, but the fact that I can't find anything that would stop them, and that it would work, ought to make folks a tad less glib about underrating the power of the Fed.)

[sparky]

.
" I agree that deflation is almost unimaginable"
Not so , if there is a decrease in customers , prices are under downward pressure
I've always suspected one of the cause of inflation is a rise in population
hence a rise in demand

a deflation can occur if there is a severe drought in spending ,in particular discretionnary spending
or because many customers are dead
that could happen if ( when) we get to peak food