Sunday, Nov 23, 2008
Hyperinflation or deflation - the jury remains out
Merk: The Road to Financial Ruin: We Have to Spend Money Now
Fiscal spending is part of the problem, not the solution. At this stage, the dynamics over the coming years are shaping up. Investors may want to consider whether to take advantage of the panic buying of U.S. dollars to diversify their holdings. Typically, when a currency appreciates, the money is invested broadly in an economy; in recent months, most of the money flowing into the U.S. was invested in short-term Treasury Bills. We very much doubt that all this money will stay in the U.S. once the panic abates. Indeed, whereas just about everyone seems to be concerned about deflation, the risk of not only inflation, but hyperinflation increases with every step taken down this road.
Posted by gardeniadotnet @ 01:15 AM (1151 views) Add Comment
14 Comments
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1. gardeniadotnet said...
and by the way Greenbay operated from St. Helens and I should know I lived upstairs from him
2. planning4acrash said...
Wow! So, Garden, please get him on for an update! Deflation or inflation? Derivatives are a few QUADRILLION, if they implode and government can't cover them, deflation. If a small percentage of the derivatives moves into the real economy,its Weimar time.
3. alan said...
"There are two major reasons why we may be setting ourselves up for financial ruin: first, spending is unlikely to lead to a sustainable recovery; second, we cannot afford it".
China has a big surplus - we don't. Gordo spent it all.
So what exactly is Darling proposing tomorrow? I think this site will get busy !!!
4. techieman said...
In the states the jury is in! Deflation for some time. Then well the jury is out whether or not there is inflation / hyperinflation / stagflation or whatever after that.
Here? Answers on a postcard! The best place to look is gilts IMO. If massive PSBR increases doesnt cause Gilt yeilds to rise substantially then we are in deflation. If yeilds dont rise that doesnt mean we are in an inflationary climate, it just means we are walking the tightrope and are either gonna fall into the ravine (deflation) or snake pit (inflation) a bit later.
5. titaniccaptain said...
@gardeniadotnet
You lived above greenbay? tell more this sounds interesting
6. gardeniadotnet said...
@tc
beer-fueled silliness involving a Simon and Garfunkel lyric.
Sorry
7. titaniccaptain said...
@Gardenia
I see......good old beer.........I made mulled wine and drank the lot last night and bloged some really sureal stuff
8. stillthinking said...
It doesn't follow that what happens in the States will also happen in the UK, if the States overdoes their reflationary policies then the dollar will collapse against all other currencies.
9. Brightonrentfodder said...
I heard on 5 live the other day, a bloke commented that with the devaluation of sterling, why should our situation be any better than African countries with rampant inflation? you only have to look at Germany in the 1930's to see that. Speaking of which, that quote about slavery moving to democracy & then to apathy\dependency and finally back to slavery\dictatorship has a strong vein of truth in it when you look at Germany back then. So after Gordon has thrown all our money at the problem, & Labour finally throw in the towel, what's left? could it be a strong magnetic personality who can deliver us out of our poverty, but hides his more unsavoury politics until its too late, like Hitler? Yes I know that's a bit extreme, but who's to say which direction we could end up going right now.
10. stillthinking said...
The UK isn't printing money. Zimbabwe and the German episode both involved money printing. Sterling is losing value because the terms of trade are altering, foreign investors don't want to buy sterling assets etc., and also because the fact that they previously did so so gave us an originally over-valued exchange level.
My impression is that many people think the current value is a fair one.
11. nopensionnohouse said...
So, gardeniadotnet lived upstairs from Greenbay! Ha ha. So that explains why you are always so sarcastic towards me gardeniadotnet! I always gave Greenbay such a hard time. Are you guys pals or something?
I can not wait for an update from Greenbay!
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