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Must watch, he one of us:-

Mike

All is going to plan and there are going to have to make a decision soon as to which way we go. It was always going to be one of the two outcomes.

High inflation, high interest rates followed by a later collapse.

Or collapse now with managed deflation until all the rot is worked out of the systems.

My view is now the treasury market is getting too hot they will have to appease the bond vigilantes with another bout of deflationary fear, I just can not see them opting to inflate our way out of this mess. They are fighting deflation and will use inflationary indicators such as comodities and equity markets to limit the deflation preventing an instantaneous collapse that has always be possible if managed incorrectly.

We are at a very critical point in this crisis and one which will prove the personal view I have formed above right or wrong, I really think we have arrived at the all important cross road!

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All is going to plan and there are going to have to make a decision soon as to which way we go. It was always going to be one of the two outcomes.

High inflation, high interest rates followed by a later collapse.

Or collapse now with managed deflation until all the rot is worked out of the systems.

My view is now the treasury market is getting too hot they will have to appease the bond vigilantes with another bout of deflationary fear, I just can not see them opting to inflate our way out of this mess. They are fighting deflation and will use inflationary indicators such as comodities and equity markets to limit the deflation preventing an instantaneous collapse that has always be possible if managed incorrectly.

We are at a very critical point in this crisis and one which will prove the personal view I have formed above right or wrong, I really think we have arrived at the all important cross road!

Hi confounded,

well you know my stance on this one by now. ;)

They should have let the financial institutions fail & let deflation run its course BUT they have implemented rescue plans via QE & are printing.

They constantly push out deflation scares via the media, so you can almost guarantee it will be inflation.

fwiw, I really do hope they change their current stance & opt for deflation, as my personal circumstances have changed & I will be in the situation that the cash holding deflationistas face shortly. :o:(

what I would like & what will happen are two entirely different things unfortunately.

as ever the watchwords are:

watch what they do, not what they say. :ph34r:

Edited by grumpy-old-man-returns

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All is going to plan and there are going to have to make a decision soon as to which way we go. It was always going to be one of the two outcomes.

High inflation, high interest rates followed by a later collapse.

Or collapse now with managed deflation until all the rot is worked out of the systems.

My view is now the treasury market is getting too hot they will have to appease the bond vigilantes with another bout of deflationary fear, I just can not see them opting to inflate our way out of this mess. They are fighting deflation and will use inflationary indicators such as comodities and equity markets to limit the deflation preventing an instantaneous collapse that has always be possible if managed incorrectly.

We are at a very critical point in this crisis and one which will prove the personal view I have formed above right or wrong, I really think we have arrived at the all important cross road!

indeed, EDM proposed this counter of deflation with limited inflationery tools as the likely outcome of the crisis.

My own view was that from day one, the ONLY way out was to prolong the system with crutches and trade through. It was never going to be pretty, but bulls think the end is now...Its not, the trade through must now take place. that means rebuilding, consolidating and cost cutting, especially in the public sectors.

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Hi confounded,

well you know my stance on this one by now. ;)

They should have let the financial institutions fail & let deflation run its course BUT they have implemented rescue plans via QE & are printing.

They constantly push out deflation scares via the media, so you can almost guarantee it will be inflation.

fwiw, I really do hope they change their current stance & opt for deflation, as my personal circumstances have changed & I will be in the situation that the cash holding deflationistas face shortly. :o:(

what I would like & what will happen are two entirely different things unfortunately.

as ever the watchwords are:

watch what they do, not what they say. :ph34r:

Yes I know and I am very sympathetic to it.

I try and think more along the lines of what I would try and do if I was fighting their battle. Inflation will be disastrous, deflation at the rate we had at the beginning of the year is disastrous. The QE and bailouts were to halt the terrifying collapse that was possible by supposedly showing their hand to the smart money (the media since G20 has been used to guide the sheeple in the right direction) which has always believed inflation would be how they fix it. Lehman's was a big tell for me if they were going for out an out inflation they would have bailed it out, simple as that. They had to set a deflationary tone which they knew they could then manage from then on. In the World of Fiat deflation is easier to control than rapid inflation so if I was them I would rather be managing this from a deflationary base than an inflationary one. As seen in 3 months we have gone from the depth of deflation to it is all fixed and inflation is now the new threat. This was achieved simply by manipulating both the SM and comodities back up.

I may be giving them more credit than they deserve but now they have halted the massive deflation their next concern is inflation which the bond market is now reacting to. So my belief is they will now instruct GS and JPM to let the markets fall again and let the fear return to get the rates back down again (6% mortgages is not going to allow the US consumer to repair their balance sheet!)

It may be they are inept and they inflate away destroying both debt and saving but we will be facing a bigger crisis further in the future which I am sure they can see. Also it is important to add they may not be able to achieve this managed deflation/stagnation as the cycle of fear followed by euphoria may not be able to be repeated many times but my views is this is where we are now.

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