[mkwin]

$this->bbcode_second_pass_quote('Twilight', 'T')he give-away is US and UK banks saying "thanks for the bailout, we will not resume lending, piss off". The UK government actually asked for a return to 2007 lending levels and was told by the CML that it was being unrealistic. Meanwhile arrears and defaults are just starting to take off.

I don't know how many more deflation "tells" people need after banking bodies announce they intend to deflate. Do they expect a central bank official to cut into prime time on every channel and announce it live?

If hyperinflation was the plan, it would have been done already. Why isn't the dollar index cratering? Because they are not printing fast enough. Could they? Yes. So you have to consider the strategy is something different. Concealing the fraud and the losses using any means necessary short of full monetisation.

Perhaps hyperinflation is an option as a last resort. "Never say never" as they say. But there are a lot of rabbits to pull out of the hat before anyone contemplates it. Until then, accept you have deflation.

[Ayoob]

The market's been wrong a lot recently.

[Zardoz]

$this->bbcode_second_pass_quote('mkwin', '.')..I think people need to realise that there is no 'plan'.

[pogoliamo]

$this->bbcode_second_pass_quote('OilFinder2', ' ')The gap between yields on regular Treasurys and Treasury Inflation Protected Securities, which represents the rate of inflation in the $524 billion market, is now negative for debt maturing through 2012. This means that the market is priced for deflation, or negative growth in the U.S. consumer price index, as oil prices plunge and economic growth contracts.

[Twilight]

I do not view deflation as a plan as such. It is what they know happens in the absence of a plan. It is the default outcome in this situation when you have no plan or intention to print, and instead are focused on burying the bodies. That's how I see it, the bankers are stepping on each other to save their own skin, governments are laying smokescreens of alphabet soup, and deflation is there in the background like a natural force. They have announced they will not oppose it.

[sittinguy]

As long as there is no shortages of any kind we won't have hyperinflation. Hyperinflation is the wealthy peoples secret weapon, Do you think Paris Hilton is going to be worried if a gallon of milk is $50. NO, But when there is no milk, because people paniced and horded it all at a low price, now we have a problem.

At the first sign of any shortage WATCHOUT, happy days will be over.
Enjoy the deflation and stock up.

[Golgo13]

So are Peter Schiff and Jim Rogers off the mark here?:

[video width=425 height=344]http://www.youtube.com/v/cMCvTFwetWc[/video]

[video width=425 height=344]http://www.youtube.com/v/jJ4dNtbT_u8[/video]

They claim that low interest rates and massive money creation will make the dollar a horrible investment. When the international community comes around to this fact, they'll diversify their portfolios of their dollar holdings, unpeg from the dollar and the value of the dollar will drop off a cliff, causing massive dollar devaluation, and therefore rampant inflation.

Also, hilarious doomer comedy in the youtube comments:

$this->bbcode_second_pass_quote('chumbels', 'c')omex gold is not gold. and it will probally default in dec....around the same time the dollar collapses. then gold will be 2-3 thousand to buy physical. so you have roughly one month to get physical gold...the paper price will get whacked down really low tight before that happens.....i have gold shoved up my ass

[Micki]

$this->bbcode_second_pass_quote('', 'I') think people need to realise that there is no 'plan'. Banks are not intending to deflate, we will get deflation because that is what happens when the money/credit supply contracts so sharply.

[mkwin]

$this->bbcode_second_pass_quote('', 'T')hat will get the velocity of money going and it will further consolidate big banks power.

[CarlosFerreira]

Went to a seminar today, the speaker was David Blanchflower, from the Bank of England's Monetary Policy Committee- the guys that set interest rates in the UK. Blanchflower is a labour economist, and he's the only member of the MPC that's been crying for rate cuts - even as the CPI inflation hit 5.1%.

He puts a compelling case: there's no wage pressure on inflation, 80% of all inflation rise in 2008 is due to climbing fuel and food prices (that's oil, between you and me; the food commodities market is essentially a function of the oil markets). Add to that that the Baltic Dry Index (measures transportation prices of everything except oil) dropped 90% since last May (12% in the last 12 days), credit crunch stopping investment... and you have a strong case for deflation.

Blanchflower's speech and the respective slides.

[copious.abundance]

^
It made Bloomberg.

--> LINK <--
$this->bbcode_second_pass_quote('', 'B')ank of England policy maker David Blanchflower said U.K. interest rates need to fall soon and ``significantly'' to stave off the threat of deflation as the economy endures a recession throughout the next year.

``Interest rates do need to come down significantly -- and quickly,'' Blanchflower said in a speech at the University of Kent in Canterbury, England, yesterday. ``If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession.''

[Quinny]

Thanks for the david blanchflower stuff.

[patience]

Maybe, instead of the inflation/deflation debate that has been raging for so long, we ought to look at the relative values of currencies, since they all seem to be fiat anyway, and subject to the same ills to various degrees. In short, who goes down the tubes first, next, and last?

There seems to be some agreement that the $US is the current benefactor of settling out of malinvestments by Europeans, and others, but that this phenomena won't last. Result is the dollar will take a drubbing, some say fairly soon. GEAB/LEAP 20/20 says the US will default on its' debt by summer 2009. (Sorry, lost the link, but Google has it.)

Also, I posted this in another thread: Dollar Illusion and coming collapse

I guess to me it looks like each country is riding its' own rollercoaster, some coincide with ups and downs, and some don't, so bet on the outcome at your own peril. Scares meto death and I thought I was fearless....

[copious.abundance]

--> NY Times <--
$this->bbcode_second_pass_quote('', 'N')ovember 1, 2008
Specter of Deflation Lurks as Global Demand Drops
By PETER S. GOODMAN

As dozens of countries slip deeper into financial distress, a new threat may be gathering force within the American economy — the prospect that goods will pile up waiting for buyers and prices will fall, suffocating fresh investment and worsening joblessness for months or even years.

The word for this is deflation, or declining prices, a term that gives economists chills.

Deflation accompanied the Depression of the 1930s. Persistently falling prices also were at the heart of Japan’s so-called lost decade after the catastrophic collapse of its real estate bubble at the end of the 1980s — a period in which some experts now find parallels to the American predicament.

“That certainly is the snapshot of the risk I see,” said Robert J. Barbera, chief economist at the research and trading firm ITG. “It is the crisis we face.”

With economies around the globe weakening, demand for oil, copper, grains and other commodities has diminished, bringing down prices of these raw materials. But prices have yet to decline noticeably for most goods and services, with one conspicuous exception — houses. Still, reduced demand is beginning to soften prices for a few products, like furniture and bedding, which are down slightly since the beginning of 2007, according to government data. Prices are also falling for some appliances, tools and hardware.

[...]

[threadbear]

Banks are still hoarding. Bush hasn't got the ba**s to demand they start loosening their grip on the bailout cash. This is why the US has across the board deflation, at the moment. I give it two more months, maximum, before everyone gets the message that the money spigots are open, even if what comes pouring out of them will be very devalued.

[ColossalContrarian]

$this->bbcode_second_pass_quote('threadbear', 'B')anks are still hoarding. Bush hasn't got the ba**s to demand they start loosening their grip on the bailout cash. This is why the US has across the board deflation, at the moment. I give it two more months, maximum, before everyone gets the message that the money spigots are open, even if what comes pouring out of them will be very devalued.

[threadbear]

$this->bbcode_second_pass_quote('ColossalContrarian', '
')
From what I've heard through word of mouth is that banks ARE being forced to hand out money.

The flood gates are open but the amount of money coming in to the system is still too small compared to the amount of money flowing out (to where? I don't know, it never existed to begin with)

[copious.abundance]

Interesting analysis.

--> LINK <--
Highlight (with a strange and indecipherable typo stuck in there):
$this->bbcode_second_pass_quote('', '[')...]

I'll try and explain why I believe a deflationary debt unwind is now underway, and why I believe it will be many years before we should start worrying about inflation again. In fact, by the time inflation becomes a legitimate concern, I expect the vast majority of people will find it as outrageous to worry about inflation then as found it outrageous last year when I made deflation one of my Five Themes for 2008.

The disconnect at work today that makes it difficult to envision a life without inflation is almost entirely grounded in a failure to see that credit expansion, by necessity, must have two sides; a credit production mechanism, and a debt acceptance recipient. We have as much of the former as the world has ever seen, but none of the latter.

Going back to 1934, whenever the Federal Reserve has made credit available the world has accepted it. While it is true, as those anticipating hyperinflation argue, the Fed and global central banks are making record amounts of credit available, that is only one side of the credit equation. The assumption is that this record-breaking credit expansion means risk assets (stocks, commodities, etc.) will all skyrocket and the U.S. dollar will get destroyed. But what hyperinflationists fail to realize is that for an inflation (of either the tame or hyper variety) to take place, one must have both the means (credit from the fed and banks) and the motive (the desire to take on more debt) for credit expansion. For over a year now we have had record amounts of the former, but none of the latter.

Additionally, in order for hyperinflation to even be a remote possibility here there would have to be at least one economy that is both, stronger than the weakest.S. economic downturn, and larger in size that the state of Ohio's or even California's economy.

Ironically, while smaller emerging markets could potentially find themselves facing a Zimbabwe-esque hyperinflation, that would only make the U.S. dollar and U.S. debt more attractive and secure. Emerging markets are at this point the only place where it seems a possibility that credit could find a willing home and debt an eager taker, but even that is not a certainty. It is more likely that the creeping protectionism that is developing, as countries begin to wake up to the fact that the global system is too big to save, results in a more severe credit contraction globally.

[...]

[CrudeAwakening]

$this->bbcode_second_pass_quote('OilFinder2', 'B')ut what hyperinflationists fail to realize is that for an inflation (of either the tame or hyper variety) to take place, one must have both the means (credit from the fed and banks) and the motive (the desire to take on more debt) for credit expansion. For over a year now we have had record amounts of the former, but none of the latter.

[Micki]

$this->bbcode_second_pass_quote('CrudeAwakening', '')$this->bbcode_second_pass_quote('OilFinder2', 'B')ut what hyperinflationists fail to realize is that for an inflation (of either the tame or hyper variety) to take place, one must have both the means (credit from the fed and banks) and the motive (the desire to take on more debt) for credit expansion. For over a year now we have had record amounts of the former, but none of the latter.