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Bernanke: I Am Afraid We Have Deflation

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http://finance.yahoo.com/tech-ticker/article/535517/A-%22Watershed-Event%22-for-Bernanke%3A-The-Fed-Is-%22Pushing-Water-with-a-Fork%2C%22-Harrison-Says?sec=topStories&pos=9&asset=&ccode=

A "Watershed Event" for Bernanke: The Fed Is "Pushing Water with a Fork," Harrison Says

Posted Oct 19, 2010 07:30am EDT by Aaron Task

When he declared "inflation is running at rates that are too low" last week, Federal Reserve chairman Ben Bernanke did a lot more than just pave the way for more quantitative easing, says Todd Harrison, CEO of Minyanville.com.

The Fed chairman's use of the "d-word" (deflation) is "an admission of defeat" by the central banker, Harrison says. "It's a watershed event."

Deflation is has been and deflation it is and will be--for many years. QE has failed.

Turmoil is breaking out in the markets, the inflation hedges are starting to teeter and some on here are smug sods.

Edited by Realistbear

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QE has failed SO FAR

They will be giving it another go surely, there's no choice now. Printy printy printy ^10

Many economists are saying QE is having the reverse effect--it will push up commodities and trigger a worse recession which will, in turn, exacerbate the deflationary cycle already underway. This is the gist of most of the articles in the last few days arguing against QE on the basis that it is useless and counterproductive.

The bond markets are pricing deflation in and it is hard to move the bond market--QE will just make IR lower and assett prices higher--the worst possible case scenario. If they leave QE and go with the trend (deflation) the assett bubbles will work through the system and provide a far better base in a few years from now--maybe 120.

There is no longer any option--deflation, once out of the tube, cannot be put back in. And in the end...the market always winsd and the cycle cannot be eliminated even though brown thought it couild. Its just that season for deflation--all very natural and part of the ongoing cyclical nature of these things. Fight it and you just make it worse.

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.../..

Deflation is has been and deflation it is and will be--for many years. QE has failed.

Turmoil is breaking out in the markets, the inflation hedges are starting to teeter and some on here are smug sods.

i guess there will be a few smug sods yes, but hopefully those that have been predicting the demise of particular inflation hedges for many years will realise that there is a lot of difference between $600, $800, $1000 and $1300

edit - and whilst we're on the subject

Edited by p.p.

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Many economists are saying QE is having the reverse effect--it will push up commodities and trigger a worse recession which will, in turn, exacerbate the deflationary cycle already underway. This is the gist of most of the articles in the last few days arguing against QE on the basis that it is useless and counterproductive.

The bond markets are pricing deflation in and it is hard to move the bond market--QE will just make IR lower and assett prices higher--the worst possible case scenario. If they leave QE and go with the trend (deflation) the assett bubbles will work through the system and provide a far better base in a few years from now--maybe 120.

There is no longer any option--deflation, once out of the tube, cannot be put back in. And in the end...the market always winsd and the cycle cannot be eliminated even though brown thought it couild. Its just that season for deflation--all very natural and part of the ongoing cyclical nature of these things. Fight it and you just make it worse.

Japan is the only country which is really in deflationary cycle.

The US has debt. But it is debt that cannot be repaid.

The first round of QE has failed spectacularly

[but hell, if you can get more, who wouldnt?! ]

The banksters are still acting in a Tony Soprano fashion, because they know that after the second round of printing, the only solution will be default of that debt.

Roll on the second round................................

The politicians are looking for short term fixes, because they don't have a spine.

They would rather watch the country burn, than be the first to stand up and implement unpopular policies.

What a joke.

Why print any more? The banks have kept the first $1 trillion, paid themselves huge bonuses, and not lent it out.

They will do exactly the same with the second trillion

We have no worthy leaders.

F@@@ it. Were all screwed folks.

If governments had really wanted inflationary QE to work, they would have given each person in the population $10,000.00 to spend. Rather than given it to banks, who they must have known would keep it?!!

[Why don't they do this? Its definitely a vote winner. Are the politicos, really that subserviant to the banksters? Or is it just too radical a concept? Or am I missing something?]

Please dont tell me that the elites f@@ked us? It cannot be so boring, and elemental? Surely not?

I realise that democracy has been fought against by 'the state' whether they be royal, or parliament, for centuries, but surely the handful of elites have not managed to keep the tens of millions in the population in a feudal society for that long?

Are we, the masses, really that f@@ing dumb and impotent? Im sure if I can understand it, so can the rest of us. Maybe this is all for the best?Maybe out of this, a new golabl era of equality will arise? For the first time in a millenium? [After the trade wars, followed by the real wars of course]

Whats the f@@@in point of human beings?

Edited by Dan1

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Many economists are saying QE is having the reverse effect--it will push up commodities and trigger a worse recession which will, in turn, exacerbate the deflationary cycle already underway. This is the gist of most of the articles in the last few days arguing against QE on the basis that it is useless and counterproductive.

The bond markets are pricing deflation in and it is hard to move the bond market--QE will just make IR lower and assett prices higher--the worst possible case scenario. If they leave QE and go with the trend (deflation) the assett bubbles will work through the system and provide a far better base in a few years from now--maybe 120.

There is no longer any option--deflation, once out of the tube, cannot be put back in. And in the end...the market always winsd and the cycle cannot be eliminated even though brown thought it couild. Its just that season for deflation--all very natural and part of the ongoing cyclical nature of these things. Fight it and you just make it worse.

I get the feeling you dont work for the MPC.

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I get the feeling you dont work for the MPC.

The Muppetry that goes on at the BoE is a joke. They are the creatures of any political wind that blows in. Independent? What a joke.

Their crime is in not understanding that when you let crooks (banksters) loose in the system and allow them to create trillions out of thin air you are going to have a problem. Fractional reserve banking is one thing but the last decade was somethng far more. IMO we are seeing a structural collapse and the end of a 300 year cycle that began with the South Sea bubble. The forces of nature are too great to resist.

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When the independent Fed was first established they must have said to themselves why can't we just print money and give it to ourselves.

Someone likely said well we have to have an excuse first such as the biggest bubble catastrophe in all history with all that panic and then we'd need political cooperation and what would be the point if it's all just inflated away. Well if we keep all the money when the economy is in deflation. :o

and then we have the perfect excuse to just keep printing and printing and just giving all that extra money to ourselves to keep - that is until the deflation bottom :o

and then we can start to buy things that start to inflate in price when we come to sell :o

Edited by billybong

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The Muppetry that goes on at the BoE is a joke. They are the creatures of any political wind that blows in. Independent? What a joke.

Their crime is in not understanding that when you let crooks (banksters) loose in the system and allow them to create trillions out of thin air you are going to have a problem. Fractional reserve banking is one thing but the last decade was somethng far more. IMO we are seeing a structural collapse and the end of a 300 year cycle that began with the South Sea bubble. The forces of nature are too great to resist.

This may be so RB but they are still in charge of our monetary policy - as Bernanke is in the USA - and you know what they will do... saying there is deflation is just an excuse to print on a massive scale: we know this is what they will do - they cannot do anything else and it will end in ruin.

I'm not disagreeing with some of your overall sentiments but because we have mentalists in charge we will have mass printing and with mass printing we will have currency debasement, collapse of FIAT and potentially a flight to commodities (and dare I say it gold).

You still in USD?

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This may be so RB but they are still in charge of our monetary policy - as Bernanke is in the USA - and you know what they will do... saying there is deflation is just an excuse to print on a massive scale: we know this is what they will do - they cannot do anything else and it will end in ruin.

I'm not disagreeing with some of your overall sentiments but because we have mentalists in charge we will have mass printing and with mass printing we will have currency debasement, collapse of FIAT and potentially a flight to commodities (and dare I say it gold).

You still in USD?

80% $ and 20% £

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80% $ and 20% £

Including round-trip costs, you're going to have to execute some well-timed trades to come out ahead of an RPI+1 sterling bond over the next 5 years.

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Including round-trip costs, you're going to have to execute some well-timed trades to come out ahead of an RPI+1 sterling bond over the next 5 years.

I get a small fraction over the FOREX rate on currency trades. My objective is one big trade from $ to £ for one purpose--buying a house.

If deflation is on I will continue renting for a loooooooooooooooooooobng time.

I think Ben is about to give up--if he prints it will sink like a stone in a very deep well. He is checkmated as every bit of QE will force commodities up against a back drop of falling demand due to lack of funds in the hands of those who actually buy stuff.

He needs to allow overpriced sh*t to come down in price to restore demand that is based on ability to pay as opposed to ability to borrow. Prices have simply gotten (?) ahead of production (ability to pay). Deflate the bubble and everything will work out nicely. Inflate it a bit more and the bang will be louder and cause more mess.

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Afraid I have to agree with the folks here who see this as cover for just more printing.

"But soon there came another result: times grew less easy; by the end of September, within

five months after the issue of the four hundred millions in assignats, the government had spent

them and was again in distress. The old remedy immediately and naturally recurred to the

minds of men. Throughout the country began a cry for another issue of paper;"

- Fiat Money In France, A Dickinson White

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Just think, RB, if you'd gone 80% AU and 20% £ when you STR'd (2004 was it) and bought in early 2009, you'd be in your own home by now.

;)

Too risky. Prefer the safety of bonds 13% or so YTD. :)

And another thing--if you held that much AU and got caught in an early Spring 1980 type sell off (36.78% down in one day) you stand no chance. It could happen again and at a time when most will not expect it. But today does not seem to be one of those days unless, of c ourse, the Asian markets pick up where we leave off.........................

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but it can be defaulted on or renegotiated.

Hi Pedro.

What is there after currency?Is this the real question our politicians, are facing but dare not face?

Is it that unbearable? The END OF CURRENCY

Edited by Dan1

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Printy printy.

What was it Bernanke said to Friedman? along the lines of the great depression was a mistake we could have printed to avoid it.

Chopper ahoy this is Bernanke's great moment he has been waiting decades for this.

His faith is in the printing press, the man is a loon he will destroy your savings until such time as you spend them.

Of course he is right, printing will raise prices in commodities and eventually even real estate but he is wrong about the outome it will be a disaster.

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i guess there will be a few smug sods yes, but hopefully those that have been predicting the demise of particular inflation hedges for many years will realise that there is a lot of difference between $600, $800, $1000 and $1300

edit - and whilst we're on the subject

Deflation = tightening of money supply = spiralling debts for insolvent govts, companies, individuals = higher interest rates = collapsing economy = collapsing currency = value of gold up in that currency.

See Iceland for further details.

Edited by General Congreve

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Deflation = tightening of money supply = spiralling debts for insolvent govts, companies, individuals = higher interest rates = collapsing economy = collapsing currency = value of gold up in that currency.

See Iceland for further details.

why is there an offer on at the mo?

seriously, yes i know gold can fair well in either 'flations, i was just making sure the re-writing of history that goes on here sometimes was abated

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http://finance.yahoo.com/tech-ticker/article/535517/A-%22Watershed-Event%22-for-Bernanke%3A-The-Fed-Is-%22Pushing-Water-with-a-Fork%2C%22-Harrison-Says?sec=topStories&pos=9&asset=&ccode=

A "Watershed Event" for Bernanke: The Fed Is "Pushing Water with a Fork," Harrison Says

Posted Oct 19, 2010 07:30am EDT by Aaron Task

When he declared "inflation is running at rates that are too low" last week, Federal Reserve chairman Ben Bernanke did a lot more than just pave the way for more quantitative easing, says Todd Harrison, CEO of Minyanville.com.

The Fed chairman's use of the "d-word" (deflation) is "an admission of defeat" by the central banker, Harrison says. "It's a watershed event."

Deflation is has been and deflation it is and will be--for many years. QE has failed.

Turmoil is breaking out in the markets, the inflation hedges are starting to teeter and some on here are smug sods.

QE doesn't "fail" unless Mr Bernanke and his masters decide it doesn't. They own the printing presses. Inflation is not some kind of economic phenomenon that just happens. It has to be manufactured. QE has been the main vehicle of that manufacture. It if isn't "working" they always have the option of pushing some more into the system.

They may decide, however, that the "cure" is worse than the disease and so stop QE-ing. But, only if they choose to do so. But, why would they? If the USA stops printing, it will collapse into a deflationary spiral in short order.

Of course they will continue to print.

Until repudiation.

Or war.

Edited by tallguy

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  • 259 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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