Friday, Apr 03, 2009
Inflation/Deflation take your pick!!
The Economic Voice: And what exactly is wrong with deflation?
"We have now talked ourselves into the position of fighting deflation at all costs. To get an idea of why you need to look at who wins and who loses with regard to the inflation / deflation argument."
Posted by titaniccaptain @ 10:43 AM (431 views) Add Comment
8 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. mountain goat said...
Hi TC nice to hear from you. Answer to your question: Inflation is to save the insolvent and the stupid.
Here's another way the insolvent and stupid are being saved, Did the ECB Save COMEX from Gold Default?. The claim is Deutsche Bank got caught short on COMEX and couldn't deliver the gold so the ECB conveniently sold a similar amount at exactly the same time. It's all over the web even
Reuters has a link to it. I hope this goes to some tribunal, corrupt swine dogs.
2. titaniccaptain said...
Thanks MG great link
Been watching gold of late.......and I think it looks like its on a downward trend for a bit.....but alot of talk in mainstream press about it moving from its role of the past few years and becoming a serious currency in its own right and public perception is changing towards that...and after all thats all that gold needs is for the public to change the way they view it for it be set aside from its raw material and "Practical" value and back towards it being a storage of wealth.
Also been bus looking into why hyperinflation could be a nonstarter.......I know plenty on here will be wuick to rip me to shreds on that one but I will have my say on it.
3. mountain goat said...
Yes I have changed on hyper-inflation after thinking it was inevitable. I now think it is deflation we will get no matter how much money they throw away. In fact the more they throw away and prop up insolvent banks riddled with bad debt the more deflation we will get. It destroys the economy meaning consumption drops more and more and so demand and prices will keep falling. Posted a few things on hpc here this week on this in fact.
4. titaniccaptain said...
Exactly.
And where exactly do you think the banks will be lending money to? businesses here in the uk? nope.
They will be looking at banks in emerging markets abroad........If they were to release their credit into the UK market alone they would flood it also having the knock on effect of devaluing their assets and undermining their newly found stable(Ish) capital position.....And as for the argument on imported inflation...that argument hinges purely on the strength of the pound as for the dollar and euro both of which are also on rocky ground im sure any money trader can tell you that the there are no given facts at a time like this on where the pound will be or wont. Infact the pound has been showing promise in the past few days. So if our inflation/deflation takes out of the equation the pounds position it starts to look like a different story but if you also take out the banks releasing the credit enmass even with our money supply doubled (Maybe there really is a massive deflationary pressure sucking these funds via toxic debt and devaluing property market) then maybe we are looking at a deflationary scenario....................maybe not...but its an argument that has had too many factors written into both sides of the argument that are not "given facts"
5. Bear said...
From Mises Institute (they correctly predicted all bubbles and crashes this century, deserve a look: There Will Be (Hyper)Inflation:
That said, the German hyperinflation was the result of a policy that considered the financing of government debt by an accelerating increase in the money stock as the politically least unfavorable method. It seems that the state of opinion hasn't actually changed much. Today, there is great public support when it comes to expanding the base-money stock for financing ailing banks, insurance companies and, most important, rising government debt.
6. titaniccaptain said...
Impressive and comprehensive link Bear.....the difference this tim eis the personal debt that each person in the U.K. holds is greater than anythink we have seen in teh past making the lending of the increased money supply alot more risky.
Great public support for increaing the money supply for the banks?????? hmmmmm dont think so....increasing the money supply for the banks to pass on to lenders is another story....but they aren't going to pass the money on in any effective way to borrowers to support either mortgages or businesses......"only lend money to people who can prove they don't really need it" is an old banking adage......
7. shipbuilder said...
I tend to agree with this article. Refreshing to hear something beyond the usual blind 'we must feed the god of economic expansion forever' nonsense.
8. titaniccaptain said...
Blody hell my spelling is bad