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Deflation It Is--There Is No Longer Any Doubt

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http://uk.finance.yahoo.com/news/us-money-supply-plunges-at-1930s-pace-as-obama-eyes-fresh-stimulus-tele-96953538b23a.html?x=0

US money supply plunges at 1930s pace as Obama eyes fresh stimulus
Ambrose Evans-Pritchard, 22:19, Wednesday 26 May 2010
The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.
Paul Ashworth at Capital Economics said the decline in M3 is worrying and points to a
growing risk of deflation.
"Core (Berlin: LJ1.BE - news) inflation is already the lowest since 1966, so we dont have much margin for error here.
Deflation becomes a threat if it goes on long enough to become entrenched,"
he said.

Analogous to the situation where a bubble bursts sucking everything around it into a black hole. Deflation, once it has traction, is very hard to reverse as Japan has discovered. Fiscal stimulus can only do so much and in a contracting economy demand falls and credit disappears causing prices of assets to collapse. The last remaining bubbles are about to pop so be careful out there if you have too much in metals.

And another thing...house prices are well done Melba toast that needs the charred bits scraping into the sink.

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http://uk.finance.yahoo.com/news/us-money-supply-plunges-at-1930s-pace-as-obama-eyes-fresh-stimulus-tele-96953538b23a.html?x=0

US money supply plunges at 1930s pace as Obama eyes fresh stimulus
Ambrose Evans-Pritchard, 22:19, Wednesday 26 May 2010
The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.
Paul Ashworth at Capital Economics said the decline in M3 is worrying and points to a
growing risk of deflation.
"Core (Berlin: LJ1.BE - news) inflation is already the lowest since 1966, so we dont have much margin for error here.
Deflation becomes a threat if it goes on long enough to become entrenched,"
he said.

Analogous to the situation where a bubble bursts sucking everything around it into a black hole. Deflation, once it has traction, is very hard to reverse as Japan has discovered. Fiscal stimulus can only do so much and in a contracting economy demand falls and credit disappears causing prices of assets to collapse. The last remaining bubbles are about to pop so be careful out there if you have too much in metals.

And another thing...house prices are well done Melba toast that needs the charred bits scraping into the sink.

The problem is no one knows.

We want to live in an area where houses seem to sell for stupid sums, even now houses still selling at unbelievable prices. Money is in cash, hovering between - safest to buy a house (would still need signifcant mortgage of roughly 1/3 of value) as then we wouldn't be in cash, to why on earth would we pay these stupid amounts.

Impossible to predict but the mistake we appear to have made is not buying when we had the chance in October 2008 - we got freaked out by Lehman's - but so did the sellers and hence we would have had a chance to buy (at a price just under bubble price) - now all houses round here being sold for bubble prices +++ agents laugh at me when I say they are not worth what we think...

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The problem is no one knows.

We want to live in an area where houses seem to sell for stupid sums, even now houses still selling at unbelievable prices. Money is in cash, hovering between - safest to buy a house (would still need signifcant mortgage of roughly 1/3 of value) as then we wouldn't be in cash, to why on earth would we pay these stupid amounts.

Impossible to predict but the mistake we appear to have made is not buying when we had the chance in October 2008 - we got freaked out by Lehman's - but so did the sellers and hence we would have had a chance to buy (at a price just under bubble price) - now all houses round here being sold for bubble prices +++ agents laugh at me when I say they are not worth what we think...

Got any links? My belief now is that only a tiny amount of houses on market are selling, and that the bubble prices for this tiny amount is about to pop and collapse?

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Hmm hyperinflation vs deflation.

Since I have yet to see money burners in action yet the money printers have been in action recently and are primed to print away everything.

I err on the side of inflation.

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http://uk.finance.yahoo.com/news/us-money-supply-plunges-at-1930s-pace-as-obama-eyes-fresh-stimulus-tele-96953538b23a.html?x=0

US money supply plunges at 1930s pace as
Obama eyes fresh stimulus
Ambrose Evans-Pritchard, 22:19, Wednesday 26 May 2010
The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.
Paul Ashworth at Capital Economics said the decline in M3 is worrying and points to a
growing risk of deflation.
"Core (Berlin: LJ1.BE - news) inflation is already the lowest since 1966, so we dont have much margin for error here.
Deflation becomes a threat if it goes on long enough to become entrenched,"
he said.

that's inflationary then, you idiot.

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I love it how 99% of this board seems to believe inflation is upon us. We are at the end of a massive credit expansion, deflation is the only logical outcome. It has devastating effects.

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I don't know. The 'money supply contracting' bit sounds awful deflationary to me. And what good is printed money if velocity collapses?

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I love it how 99% of this board seems to believe inflation is upon us. We are at the end of a massive credit expansion, deflation is the only logical outcome. It has devastating effects.

The other 1% is now worried about melba toast!

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I don't know. The 'money supply contracting' bit sounds awful deflationary to me.

but the money supply isn't contracting; it's expanding at unprecedented pace, and Mr Pres wants a new stimulus package as well!

M3 is not the money supply. it is a measure of how much money banks (and a few other financial institutions) have promised to supply.

And what good is printed money if velocity collapses?

:rolleyes: well if printed money is 'no good' (as you seem to imply), then why would they be printing at all?

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I love it how 99% of this board seems to believe inflation is upon us. We are at the end of a massive credit expansion, deflation is the only logical outcome. It has devastating effects.

What devastating effects does deflation have?

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It isn't about psychology.

It's about the amount of money, and thats only going one way.

Up.

This money is not in the hands of the sheeple though? Pubs for example are empty, where they would have been busy three years ago? how will the extra money enter society?

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This money is not in the hands of the sheeple though? Pubs for example are empty, where they would have been busy three years ago? how will the extra money enter society?

Via terrified politicians chucking it in handfuls at the mob.

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This money is not in the hands of the sheeple though? Pubs for example are empty, where they would have been busy three years ago? how will the extra money enter society?

Society, what's that?

Try Anomie.

I haven't seen 1p of it.

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Guest The Relaxation Suite

that's inflationary then, you idiot.

Simple logic would dictate that as the world's largest ever stimulus ended in the present deflationary situation, the next one will as well. Deflationistas might have to raise a glass soon and toast their prescience.

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Guest The Relaxation Suite

I love it how 99% of this board seems to believe inflation is upon us. We are at the end of a massive credit expansion, deflation is the only logical outcome. It has devastating effects.

I have tried to make this point before: we had the runaway inflation. From 1762 to 1921 prices went up 33%, from 1971 to 2010 prices went up 1138%. The only option now is deflation, hard and fast. Like never seen before in living memory.

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if it looks like deflation the feds will send out more money cheques in the mail

it's inflation all the way , fiat is dead

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As the government is reducing spending, cutting jobs and increasing taxes then that is likely to be deflationary for the general public.

The banksters on the other hand will carry on minting it when QE has to be restarted so that is likely to be inflationary for hard assets like high-end property.

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I have tried to make this point before: we had the runaway inflation. From 1762 to 1921 prices went up 33%, from 1971 to 2010 prices went up 1138%. The only option now is deflation, hard and fast. Like never seen before in living memory.

If true (and I'm sure it is), that is a very revealing statistic.

Its always a good idea to take a step back and look at things in a long-term historical perspective. I've only known the last 40 years or so, so to me inflation seems a normal state of affairs.

Thank you Tecumseh, you've made me think again...

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I have tried to make this point before: we had the runaway inflation. From 1762 to 1921 prices went up 33%, from 1971 to 2010 prices went up 1138%. The only option now is deflation, hard and fast. Like never seen before in living memory.

I agree with your view - the long historical analysis is needed to explain the mess we are in now. Too few economists read any history though.

Deflation it is.

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I have tried to make this point before: we had the runaway inflation. From 1762 to 1921 prices went up 33%, from 1971 to 2010 prices went up 1138%. The only option now is deflation, hard and fast.

how the hell have you concluded that inflation must be followed by deflation?

Weimar had 1000% inflation, then another 1000% inflation, then another 1000% inflation, then another 1000% inflation, then another 1000% inflation, then another 1000% inflation, then another 1000% inflation, then another 1000% inflation, then another 1000% inflation, then another 1000% inflation, then another 1000% inflation..

...then currency repudiation.

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Inflate away people’s wealth.

Plebs maybe. Elistists no.

They’ll try as hard as possible to keep prices static but the hoards will hold and deflation it will be.

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I don't know. The 'money supply contracting' bit sounds awful deflationary to me. And what good is printed money if velocity collapses?

Milton? Is that you? I thought you were dead man.

AKA this is the essence of it. Market momentum is collapsing and stimulus will not be sufficient to arrest it. The bond markets will not tolerate it. The world has overcapacity, over supply and it needs a couple of decades of contraction. When bubbles deflate deflation is the result (Tautologous Tim).

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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