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Realistbear

Bill Gross: Its Going To Be Deflation

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http://www.bloomberg.com/apps/news?pid=206...id=a5qkMIPH67tQ

Pimco’s Gross Buys Treasuries Amid Deflation Concern (Update1)

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By Thomas "Tom" R. Keene and Susanne "Suzi" Walker

Sept. 29 (Bloomberg) -- Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said he’s been buying longer maturity Treasuries in recent weeks as protection against deflation.

“There has been significant flattening on the long end of the curve,†Gross said in an interview from Newport Beach, California, with Bloomberg Radio. “This reflects the re- emergence of deflationary fears. The U.S. is at the center of de-levering as opposed to accelerating growth.â€

Japan called deflation in an earlier post today. The Bundebank called recession lasting at least another 3 years. Sounds like deflation to me.

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Thanks RB, but I'll stick with my choices for now.

NSAI will still be paying me 1% - not bad in a deflation, and if we get a deflationary collapse, who knows, perhaps someone will want my handful of useless metal for something I can eat or grow stuff on.

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The economy needs to rebalance it can only do that via deflation. You cannot expand forever.

An economy is like a pair of lungs they can inflate but will ultimately deflate. We have avoided the deflation part for too long because we have idiots running the economy who have ensured that we need perpetual inflation.

The invisible hand is coming and it's not happy. Bitch slaps will be issued to those who thought they could beat the system.

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ah - by inflation hedges i suppose you mean gold? i guess you can't mention that because you seem to get your azz kicked everytime you post about it. :lol:

anyway have a listen to harry s. dent who is also a deflationista & makes a very powerful case for deflation. strangely he thinks gold will be going up...

http://financialsense.com/fsn/main.html

christ my head hurts with all this stuff! :(

never mind - daddy bear (you know, the man who thinks we will be having wage inflation despite there having been bugger all wage inflation during this last 10 year boom - ho ho ho) will be along in a minute with his bloomin' sig.

closely followed by bruce banner...

Bill Gross saying buy treasuries is like Goldfinger saying buy gold.

"eat more lard" says chairman of the british lard council.

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IIRC Gross's opinions carry a lot of weight. He can severely affect the market just from his own predictions.

Yes, theres a concerted effort to talk gold down and the dollar up atm.

Even got some random fed guy claiming they can raise interest rates to 15-20% if need be.

All jawboning and central banker shills coming out of thw woodwork to make people uncertain. Evil, really.

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Yes, theres a concerted effort to talk gold down and the dollar up atm.

Even got some random fed guy claiming they can raise interest rates to 15-20% if need be.

All jawboning and central banker shills coming out of thw woodwork to make people uncertain. Evil, really.

yep

may work short term though

merv managing inflation expectations :lol:

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how can the US have deflation when their currency is collapsing with still further to go? ditto UK

desperate efforts to prop up the $ and bring down gold, but they can no longer compete with the unstoppable forces of China, India and Russia

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He holds a LOT of treasuries, no vested interest...?

Bonds get vapourised in Hyperinflation, just ask any Argentine.

Western Goverments have lots of debt and no savings, what would they prefer?

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He holds a LOT of treasuries, no vested interest...?

Bonds get vapourised in Hyperinflation, just ask any Argentine.

Western Goverments have lots of debt and no savings, what would they prefer?

...they also have the ability to tax their citizens till the pips squeak...

cheery thought ;)

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Laffer curve says no.
The Laffer Curve assumes that the Government will collect no tax at a 100% tax rate because there would be no incentive to earn income. However some economists question whether this assumption is correct. They argue, for example, that in the Soviet Union there was an effective 100% tax rate and yet, while the Soviets were not known for their efficiency, the government still managed to fund a very large and highly dispersed military while at the same time creating a highly advanced space program.

Laffer curve questionable <_<

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Guest P-Diddly
Laffer curve questionable <_<

The Laffer Curve assumes that the Government will collect no tax at a 100% tax rate because there would be no incentive to earn income. However some economists question whether this assumption is correct. They argue, for example, that in the Soviet Union there was an effective 100% tax rate and yet, while the Soviets were not known for their efficiency, the government still managed to fund a very large and highly dispersed military while at the same time creating a highly advanced space program at the point of a gun.

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"It seems to me to be logical that when an inflationary bubble bursts the normal course that follows is deflation. Much as a baloon deflates when you let the air out of it. History demonstrates that long periods of deflation follow significant periods of inflation as you cannot have a reversal of assett prices and not have deflation. I think this applies to the current global situation of falling house prices in the aftermath of the bubble that has forced central bankers to reign in risk-taking despite rhetoric that suggests otherwise. In order for there to be inflation following a significant reversal in market prices there would have to be a significant increase in demand coupled with a comensurate ability to fuel a continuation of the situation which has only just corrected itself. I cannot see such a state of affairs happening in the current circumstances where you have risk aversion coupled with the ordinary consequences of a recession all of which are deflationary."

I agree.

It makes no sense to bet on the inflation horse if the bubble is deflating.

Deflation is good news for those wanting to see house prices fall. It is probably disastrous for gold bugs though. :(

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...they also have the ability to tax their citizens till the pips squeak...

cheery thought ;)

Conventional economic paradigms acknowledge the basic notion of the Laffer curve, but they argue that government was operating on the left-hand side of the curve, so a tax cut would thus lower revenue. The central question is the elasticity of work with respect to tax rates. For example, Pecorino (1995) argued that the peak occurred at tax rates around 65%, and summarized the controversy as:

Just about everyone can agree that if an increase in tax rates leads to a decrease in tax revenues, then taxes are too high. It is also generally agreed that at some level of taxation, revenues will turn down. Determining the level of taxation where revenues are maximized is more controversial.

At 65% marginal tax, I for one would be squealing like a stuck pig ;)

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"It seems to me to be logical that when an inflationary bubble bursts the normal course that follows is deflation. Much as a baloon deflates when you let the air out of it. History demonstrates that long periods of deflation follow significant periods of inflation as you cannot have a reversal of assett prices and not have deflation. I think this applies to the current global situation of falling house prices in the aftermath of the bubble that has forced central bankers to reign in risk-taking despite rhetoric that suggests otherwise. In order for there to be inflation following a significant reversal in market prices there would have to be a significant increase in demand coupled with a comensurate ability to fuel a continuation of the situation which has only just corrected itself. I cannot see such a state of affairs happening in the current circumstances where you have risk aversion coupled with the ordinary consequences of a recession all of which are deflationary."

I agree.

It makes no sense to bet on the inflation horse if the bubble is deflating.

Deflation is good news for those wanting to see house prices fall. It is probably disastrous for gold bugs though. :(

Yes - betting on gold means betting against the cantral bankers, the state and their shills, their ability to cajole and force, the wit of evil men.

Theres still no chance whatesoever of deflation.

Gold is a generall useless yellow metal, theres going to be mega inflation leading to hyperinflation.

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Contrary to popular belief you can (and should) eat gold. Known as the Philosopher's stone, that's what allowed Egyptian Pharoahs to live several hundred years. You can make white powder gold very cheaply but you need real gold to make the good stuff.

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At 65% marginal tax, I for one would be squealing like a stuck pig ;)

you're already paying more than that, schmucko.

40% income tax, 10% NI, 13% employers NI??? 17.5% VAT on almost everything you but, car tax, council tax, tv tax fuel duty, booze tax.. you probably get to 'keep' about 12% of 'your' income.

Keep payig, sucker. The rest of us are enjoying the free ride.

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How's the price of uranium doing? All this noise about gold and fiat makes a man scared. Not scared enough to sell his gold though. I'll never sell, never.

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