[pedalling_faster]

raises good questions, which sometimes is MUCH better than clever answers.

i think the "deflation vs. hyperinflation" debate is a bit of a red herring as AN END IN ITSELF, althought the debate itself can be educational - which is the good part.

most of us have the challenge of moving our financial resources around from less safe places to more safe places, in a situation where "what is safe" is changing. e.g., GE stock.

Jim Puplava had some good conversation on the subject in Saturday's broadcast, including an interview with Shadowstats' John Williams
http://www.netcastdaily.com/broadcast/f ... 0314-2.mp3

[copious.abundance]

Wholesale prices went up for a 2nd month in a row in February - but just barely.

>>> U.S. Feb. Producer Prices Rise 0.1%; Core Up 0.2% <<<

[shady28]

$this->bbcode_second_pass_quote('OilFinder2', 'W')holesale prices went up for a 2nd month in a row in February - but just barely.

>>> U.S. Feb. Producer Prices Rise 0.1%; Core Up 0.2% <<<

[copious.abundance]

We now have 2 months of consumer-level inflation in a row. These are still pretty low numbers so it's not time to call off the deflation warning just yet, but for the time being the trend isn't looking good for that bond market prediction.

>>> Bloomberg <<<
$this->bbcode_second_pass_quote('', 'T')he cost of living in the U.S. increased more than forecast in February, reducing concern of a deflationary spiral that might push the nation toward a depression.

The consumer price index climbed 0.4 percent after a 0.3 percent rise in January, the Labor Department said today in Washington. Excluding food and fuel, the so-called core rate advanced 0.2 percent. The gains pushed the annual core inflation rate up to 1.8 percent, within the range that most Federal Reserve officials say is their objective.

[...]

[Micki]

And yesterday's statement by Fed that they are bying $300B worth of treasuries is of course something that will be further inflationary.
As I've said before deflation or inflation(stagflation) is in a fiat world a matter of choice.
TPTB have shown their inflationary bias. If 300B doesn't do what they want, they'll make it another 300B or 300T or 300Q. I still can't say how long it will take but the outcome seems pretty darn clear.


EDIT: oh, nearly forgot the 750B mortgage backed securities.
http://www.federalreserve.gov/newsevent ... 90318a.htm
As I said, there is no limit. If prices don't start moving up and USD down Fed will end up owning the world and then they will decide what price tag will apply.

[deMolay]

The Gubmint keeps saying Recession when really it is a Depression. http://www.itulip.com/forums/showthread.php?p=86995#post86995

[deMolay]

The first western country to move into deflation. http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5110578/Swiss-slide-into-deflation-signals-the-next-chapter-of-this-global-crisis.html

[patience]

That is one scary situation outlined by Ambrose, of competitive devaluations. I had hoped we were at least a couple years from that, but it looks now like THIS year is going to see it start in earnest. Time to check my stocks of imported stuff. We could get whipsawed several times by this.

Economies swirling the bowl, racing for the bottom, it looks like.

[Novus]

This is a major story that many have missed. Japan may be the next shoe to drop.

$this->bbcode_second_pass_quote('', '&')quot;The West has dumped a large part of its economic downturn onto Japan by devaluing against the yen."

This is about to go into reverse as Tokyo hits the ping-pong ball back across the net. "As the unfolding collapse in the yen gathers pace, the West will see its green shoots incinerated to dust," he said.

Japan's industrial output fell 38pc in February (year-on-year), mostly concentrated into the last four months. No major economy imploded at this speed in the 1930s.

[ReverseEngineer]

The Nipponese and the Chinese HAVE to devalue, because Politically neither one can stand the massive unemployment they are experiencing here. I'm shocked its taken them this long to realize they have to do this, along with the Swiss of course.

This is why the hyperinflation scenario most likely won't come to pass, regardless of how many dollars Helicopter Ben prints. Besides the disappearance of the new money into the bottomless pit of bank debt here on toxic waste, you also have the effect of all the money becoming worthless as the carry trade races to the bottom. No currency is a "safe haven", and of course there is no REAL Gold or Silver to buy here, anybody who owns some is Hoarding it and won't sell at ANY price denominated in ANY paper currency. That market is frozen as a result.

Anyhow, you would have to be a dumb shit to buy Yen, Yuan or Swiss Francs regardless of whether they officially devalue the currency or not. The Swiss Banks are in a WORLD of shit, over leveraged against loans made to Eastern Europe. How many people live in Switzerland ANYHOW? You think they could tax a few million people to Bailout THEIR banks? I don't think so. The Japs are stuck on a tiny island TOTALLY dependent on an export market that no longer EXISTS for their electronic toys. The Chinese are stuck in a Sewer of Industrial Pollution in a country overburdened by 1.3B people without water enough to farm their rice, whether they get fertilizer from the west or not. Anybody betting on the Chinese here by buying Yuan has his or her head stuck up the nether regions of the anatomy.

Anyhow, I think the beggar the neighbor spiral downward is the more likely scenario than the hyperinfaltionary one here. IMHO, the system collapses completely before the megaTrillions Helicopter Ben is printing ever make it out into the real economy.

Reverse Engineer

[deMolay]

I think that we will see both hyperinflation and deflation cycles at the same time, going on within the global economy. Depending on the size of the economy as to when you get hit by one or the other.

[Mesuge]

That linked article speaks about the dangers of the current deflationary spiral that japanese society might perhaps desintegrate?! I'm not sure where they got this alarmism? Yes, japanese had suffered from the sluggish 1990s, the new generation is more selfish, they are in demographic black hole, their MPs are ready to fight mano a mano before TV cameras..

But in direct comparison to other industrialized nations, I think they can pull as a compact nation in one direction, even if that means abandoning their high-tech product toys in favor of manufacturing something less capital intensive but not necessarily that much less profitable (in future exchange for energy credits), obviously resulting in overall lower living standard. Similar process is likely to end up much more nasty faster in other parts of the world..

[copious.abundance]

Looks like we can't count out deflation just yet.

>>> Bloomberg <<<
$this->bbcode_second_pass_quote('', '[')b]U.S. Producer Prices Fall in March; Core Unchanged
By Shobhana Chandra

April 14 (Bloomberg) -- Prices paid to U.S. producers unexpectedly fell in March after two months of gains, indicating the recession is keeping inflation under control.

The 1.2 percent decrease followed a 0.1 percent gain in February, figures from the Labor Department showed today in Washington. Excluding fuel and food, so-called core prices were unchanged. Over the last 12 months, wholesale expenses fell by the most in almost six decades.

[...]

[copious.abundance]

And it looks like we also can't count out deflation at the consumer level just yet either.

>>> Marketwatch <<<
$this->bbcode_second_pass_quote('', '[')b]U.S. March consumer prices fall 0.1% on lower energy prices
By Ruth Mantell
Last update: 8:30 a.m. EDT April 15, 2009

WASHINGTON (MarketWatch) -- Led down by lower energy prices, overall U.S. consumer prices fell a seasonally adjusted 0.1% in March, matching analysts' expectations, the Labor Department reported Wednesday. Energy prices decreased 3% in March, with declines in fuel oil, gasoline and natural gas. Meanwhile, food prices fell 0.1%. The core CPI, which excludes food and energy prices, rose 0.2% for the third consecutive month, boosted by higher prices for tobacco and smoking products, and new vehicles. Economists polled by MarketWatch had expected the core to gain 0.1%.

[deMolay]

But all the experts said the Crisis has passed? http://globaleconomicanalysis.blogspot.com/2009/04/deflation-has-gone-global.html

[shady28]

Mish is dead on, and deflation is still the name of the game.

Don't expect to get too many replies though. Note that the gold and oil bugs have come out in force on these boards again. They came out about the same time that the market started to rally (stocks, oil, commodities all rallied in tandem - which is normal).

Somehow the consensus here is that the stock market will collapse a little farther on, but the markets they invest in (gold, oil) will not. They'll be wrong - all the markets will go down again, all of them.

[deMolay]

I think Obama's Viagranomics will stir the markets for awhile, but overall we are in a Global Deflationary Depression.

[shortonoil]

deMolay said:

$this->bbcode_second_pass_quote('', 'I') think Obama's Viagranomics will stir the markets for awhile, but overall we are in a Global Deflationary Depression.

[deMolay]

I agree, fish is one of the single largest sources of protein all over the world. And the fish have been strip mined out of the oceans. The Japanese fleet still use plastic drift nets because they are cheap. Quite oftend more fish are killed and left to die in these nets than they harvest and take home. And they care not. The bottom line of the operation is more important.

[kerry]

The housing data out recently has been very negative, showing no sign of a bottom. Rent, don't own if you are in a position to do so. And until the housing market picks up the banks and the economy can't easily. We're into prime now and commercial big time. Regional variations are big. There's about one deflation article out there for every ten warning of inflation. Those in charge talk about green shoots because deflation is caused, in large, by the psychology of people, and it's an effective tool in fighting it.
Three quotes from articles today:

1, by David Sokol, possible future replacement of Warren Buffett:
$this->bbcode_second_pass_quote('', 'T')here is an enormous shadow backlog of about-to-be foreclosed homes and of individuals who need to sell but have time, and there are already six (for sale) signs on their block.