We have no MONETARY inflation through the real economy, only the inflationary ghosts of the great credit boom. The PRICE inflation we are witnessing in commodities (and thus manufactured goods) is completely speculative/momentum driven owing to the expectation of future monetary inflation (within the real economy) which will not happen. It is a self fulfilling positive feedback. Unless worker/consumer incomes are rising (is not and will not happen), speculative commodity bubbles are ultimately deflationary as the cost of non-discretionary spending lead to increased debt defaults, slowed discretionary product manufacture, higher unemployment, yada yada yada.
We are living in the final days of the biggest CREDIT driven bubble that the world has ever seen (and ever will see). Yet somehow intelligent people continue to believe that uncle Ben is going to airdrop cash to the masses to begin the bidding wars. The TBTF are hoarding cash thats purchasing power is going to increase, just like it did after the last great depression. Problem is that when the nominal prices of just about everything do fall, no one will have the cash to buy anything, the bankers checkmate. Anyone holding cash will buy up assets for cents on the dollar.
Again, unless worker/consumer incomes rise, commodity price inflation is ultimately deflationary. Until that happens, we will continue on our merry journey to the dark abyss of the greatest credit driven deflationary collapse the world will ever know and no one is going to trade you a moldy loaf of bread for an ounce of gold. There is simply not enough in existence/circulation to ever become a valued monetary medium. On the short to mid term of collapse, cash will still be king.
We know every empire devalue their currency in history
USA has no choice but to keep printing as they are no way they can clear their debts.
This is what i heard from a Taiwan TV show recently regarding China leaders:
They know USD is worthless but we need to continue to manufacture cheap goods to USA and europe like drugs to addicts. This will destroy their manufacture sector and technology advancement.
Now we know china has a large domestic market with about 800 million rural chinese. Just opening up this market will create enough domestic demand for commodities.
If every chinese want to live like american or european. I think we will see lot of resources war. This is why i think it is unsafe to have Fiat Currencies.
However, The USA gov will try to break the Bones of the Gold Bugs if they feel USD is fallen too fast. That will be a good time to buy more commodities or Silver.
Silver is a much better investment than Gold. It is so low in price because it is such a small market control by a few large banks.
Thanks for your excellent insight JohnLaw. It's really getting confusing out there. I find myself second guessing everything lately. Thanks to you I haven't gone crazy with all this information. You really know how to put things in persective. Keep up the GREAT! work.
3 comments:
I'm really am glad you're still posting. Thanks!
I read this comment on Zero Hedge.
http://www.zerohedge.com/article/commitment-traders-speculative-treasury-bubble-pops-dollar-longs-continue-rising
It's by wake the roach
We have no MONETARY inflation through the real economy, only the inflationary ghosts of the great credit boom. The PRICE inflation we are witnessing in commodities (and thus manufactured goods) is completely speculative/momentum driven owing to the expectation of future monetary inflation (within the real economy) which will not happen. It is a self fulfilling positive feedback. Unless worker/consumer incomes are rising (is not and will not happen), speculative commodity bubbles are ultimately deflationary as the cost of non-discretionary spending lead to increased debt defaults, slowed discretionary product manufacture, higher unemployment, yada yada yada.
We are living in the final days of the biggest CREDIT driven bubble that the world has ever seen (and ever will see). Yet somehow intelligent people continue to believe that uncle Ben is going to airdrop cash to the masses to begin the bidding wars. The TBTF are hoarding cash thats purchasing power is going to increase, just like it did after the last great depression. Problem is that when the nominal prices of just about everything do fall, no one will have the cash to buy anything, the bankers checkmate. Anyone holding cash will buy up assets for cents on the dollar.
Again, unless worker/consumer incomes rise, commodity price inflation is ultimately deflationary. Until that happens, we will continue on our merry journey to the dark abyss of the greatest credit driven deflationary collapse the world will ever know and no one is going to trade you a moldy loaf of bread for an ounce of gold. There is simply not enough in existence/circulation to ever become a valued monetary medium. On the short to mid term of collapse, cash will still be king.
What do you think?
Sorry for replying so late.
We know every empire devalue their currency in history
USA has no choice but to keep printing as they are no way they can clear their debts.
This is what i heard from a Taiwan TV show recently regarding China leaders:
They know USD is worthless but we need to continue to manufacture cheap goods to USA and europe like drugs to addicts. This will destroy their manufacture sector and technology advancement.
Now we know china has a large domestic market with about 800 million rural chinese. Just opening up this market will create enough domestic demand for commodities.
If every chinese want to live like american or european. I think we will see lot of resources war.
This is why i think it is unsafe to have Fiat Currencies.
However, The USA gov will try to break the Bones of the Gold Bugs if they feel USD is fallen too fast.
That will be a good time to buy more commodities or Silver.
Silver is a much better investment than Gold. It is so low in price because it is such a small market control by a few large banks.
Thanks for your excellent insight JohnLaw.
It's really getting confusing out there. I find myself second guessing everything lately. Thanks to you I haven't gone crazy with all this information. You really know how to put things in persective.
Keep up the GREAT! work.
Just so you know, I found your site at the GLP.
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