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ken_ichikawa

World Wide Deflation

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Unless and until you produce a chart showing rising wages in the West, I'll stick to my deflation scenario. When the Chinese bubble bursts late this year, that'll unleash the biggest deflationary collapse in modern times - bad news for oligarchs and banksters but great news for us motorists and cash only brigade.

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http://graphicsweb.wsj.com/documents/INFLATION1101/INFLATION1101.html#view=ecSizeDESC

I see a completely blue chart meaning world wide hyperdeflation...

Strange. I see a completely red chart apart from a very thin strip of blue in the middle in 2009 for some countries.

Am I colour blind, or missing something?

Edited: My sarcasm detector went off minutes after writing the above reply. Please ignore.

Edited by AvidFan

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Originally I was sceptical of the deflation claims. How would it be possible to have policies like QE and deflation ?

To me over the past few weeks it seems like in the UK the government has lost the ability to control the economic policy. I suppose from the start it was kind of inevitable that although tinkering with the system would put off short term pain, ultimately a position would be reached where the government gets put between a rock and a hard place. Can't raise rates because that will choke off recovery. Can't lower rates because that will screw up the bond markets and the ability to borrow money. And so they have arrived at a point where they can no longer tinker to avoid the inevitable.

I think the government can now only change policy when other countries change. In other words it can only lower rates if the US/Eurozone lower rates. In short what we do is not dictated by what our economy needs, but by what the major economic blocks actually do in order to maintain our ability to service our debt.

Currently it feels to me like deflationary pressures are rising. Although in my industry things look good, I think I see things that are going to lead to severe deflationary pressures. I can't remember who said it, but there was a quote posted on here once about how you can't inflate your way out of a credit bubble. Sooner or later it's going to pop.

Inflation,deflation. Inflation, deflation. Inflation deflation. I'll make my call now. Deflation it is*.

* that is until I change my mind and call inflation again.

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I see deflation. We froze salaries in December and not even a scent of a leaver inside a month

Originally I was sceptical of the deflation claims. How would it be possible to have policies like QE and deflation ?

To me over the past few weeks it seems like in the UK the government has lost the ability to control the economic policy. I suppose from the start it was kind of inevitable that although tinkering with the system would put off short term pain, ultimately a position would be reached where the government gets put between a rock and a hard place. Can't raise rates because that will choke off recovery. Can't lower rates because that will screw up the bond markets and the ability to borrow money. And so they have arrived at a point where they can no longer tinker to avoid the inevitable.

I think the government can now only change policy when other countries change. In other words it can only lower rates if the US/Eurozone lower rates. In short what we do is not dictated by what our economy needs, but by what the major economic blocks actually do in order to maintain our ability to service our debt.

Currently it feels to me like deflationary pressures are rising. Although in my industry things look good, I think I see things that are going to lead to severe deflationary pressures. I can't remember who said it, but there was a quote posted on here once about how you can't inflate your way out of a credit bubble. Sooner or later it's going to pop.

Inflation,deflation. Inflation, deflation. Inflation deflation. I'll make my call now. Deflation it is*.

* that is until I change my mind and call inflation again.

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Originally I was sceptical of the deflation claims. How would it be possible to have policies like QE and deflation ?

To me over the past few weeks it seems like in the UK the government has lost the ability to control the economic policy. I suppose from the start it was kind of inevitable that although tinkering with the system would put off short term pain, ultimately a position would be reached where the government gets put between a rock and a hard place. Can't raise rates because that will choke off recovery. Can't lower rates because that will screw up the bond markets and the ability to borrow money. And so they have arrived at a point where they can no longer tinker to avoid the inevitable.

I think the government can now only change policy when other countries change. In other words it can only lower rates if the US/Eurozone lower rates. In short what we do is not dictated by what our economy needs, but by what the major economic blocks actually do in order to maintain our ability to service our debt.

Currently it feels to me like deflationary pressures are rising. Although in my industry things look good, I think I see things that are going to lead to severe deflationary pressures. I can't remember who said it, but there was a quote posted on here once about how you can't inflate your way out of a credit bubble. Sooner or later it's going to pop.

Inflation,deflation. Inflation, deflation. Inflation deflation. I'll make my call now. Deflation it is*.

* that is until I change my mind and call inflation again.

I see your point about interest rates, however, I don't see what there is to stop them printing more and more money. In fact, now it's all there is left to do it seems more and more inevitable. Am I missing something?

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I see the UK in pretty poor company amongst that chart.

The bit I can't get my head round is this: If the major economies have been running on invented hypothetical money not actually backed up by anything physical (at least that's how I understand it) how can we not get deflation when the scam is exposed and all the imaginary money disappears? Is that not what would have happened if they'd let the banks go bust? Surely when someone defaults on an unsecured debt then (assuming debt is money as many on here have pointed out) that money is no longer.

I'd love to see hyper deflation, but I just can't believe they'll let it happen.

Edited by tommyweaves

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I am still in the deflation camp. If you look in the USA they are still trending down in inflation. Something like 0.8% inflation last year, the lowest in 50 years. For the last 5 years it is in a downward trend channel.

The UK is still holding out running inflation at just over 3%. Which took taking interest rates to a 300 year low.. the old historic low for the BoE base rates was 1.75%. Now we are at 0.5%. They also grew the base money supply by 169%. And did a huge amount of extend and pretend with bank liabilities. With all that we got a measely 3% inflation, which is below the 30 year average.

Wait until housing breaks apart in the UK. Like is happening in Ireland and Spain.

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I am still in the deflation camp. If you look in the USA they are still trending down in inflation. Something like 0.8% inflation last year, the lowest in 50 years. For the last 5 years it is in a downward trend channel.

The UK is still holding out running inflation at just over 3%. Which took taking interest rates to a 300 year low.. the old historic low for the BoE base rates was 1.75%. Now we are at 0.5%. They also grew the base money supply by 169%. And did a huge amount of extend and pretend with bank liabilities. With all that we got a measely 3% inflation, which is below the 30 year average.

Wait until housing breaks apart in the UK. Like is happening in Ireland and Spain.

yep, they are certainly fighting the BUST with printed money and cheap credit.

shame that the cheap credit goes to the bond flippers...the banks, and instead of having bankers in the JSA, we have bankers with virtually risk free cash that costs them nothing buying stocks, and playing the commodities market.

oh, and thats another Austrian prediction come true....the first with the new money get the most benefit....everyone else gets higher prices.

another nice imbalance the Central Banks have got us into.

Edited by Bloo Loo

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Deflation! What the f**k is everyone smoking here?

What you saw in 08 - 09 is what you saw in the Weimar republic before hyperinflation: CBs print money and prices rise then because oil suddenly shoots to $147 people start running out of money due to the high prices. Central banks misinterpret this as an increase in the demand for money and so feel at ease with printing more to keep up with the demand.

Rinse and repeat.

BTW Daily Brent crude trading over $100 - deflation!!

Edited by gravity always wins

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Deflation! What the f**k is everyone smoking here?

What you saw in 08 - 09 is what you saw in the Weimar republic before hyperinflation: CBs print money and prices rise then because oil suddenly shoots to $147 people start running out of money due to the high prices. Central banks misinterpret this as an increase in the demand for money and so feel at ease with printing more to keep up with the demand.

Rinse and repeat.

BTW Daily Brent crude trading over $100 - deflation!!

But with the Weimar the money ended up in the pockets of workers, so far that hasn't happened. We've already been warned they will target wage inflation, they are trying to avoid the hyperinflation event by ensuring the proles get poorer. What they fail to realise is they are creating an even bigger collapse, as disposable income declines as necessities get more expense like food/fuel other spending will collapse.

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The most important things people need to survive are food and energy. Do you see inflation or deflation at the supermarket and petrol station?

Do you anticipate future inflation or deflation in food and energy?

.......they would like to have steady inflation but inflation will be tough when people refuse to pay the price, when there is more unemployment and low wage inflation, low tax collection.......where is the money going to come from to inflate the economy, if they print more the pound will fall further and imports will increase causing higher prices that most can't/won't pay....

rock-and-a-hard-place.jpg

Edited by winkie

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The most important things people need to survive are food and energy. Do you see inflation or deflation at the supermarket and petrol station?

Do you anticipate future inflation or deflation in food and energy?

Inflation in things you need every day (food, fuel, clothing etc) or import (new cars, exotic foods).

Deflation in things you buy on credit (houses, second hand cars), particularly if it was in an asset bubble (houses).

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Deflation! What the f**k is everyone smoking here?

What you saw in 08 - 09 is what you saw in the Weimar republic before hyperinflation: CBs print money and prices rise then because oil suddenly shoots to $147 people start running out of money due to the high prices. Central banks misinterpret this as an increase in the demand for money and so feel at ease with printing more to keep up with the demand.

Rinse and repeat.

BTW Daily Brent crude trading over $100 - deflation!!

Oil prices can be extremely volatile whereas wage demands and money velocity take a long time to get up a head of steam. I think you are confusing the QE programme with real money, 80% of it simply sits in deposit and cannot circulate outside the financial system because it is effectively a pile of IOUs. Its purpose is to keep the banks solvent when the real economic default crash happens, which could be any time now, and the governments/CBs know this.

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.......they would like to have steady inflation but inflation will be tough when people refuse to pay the price, when there is more unemployment and low wage inflation, low tax collection.......where is the money going to come from to inflate the economy, if they print more the pound will fall further and imports will increase causing higher prices that most can't/won't pay....

rock-and-a-hard-place.jpg

I love the expression on that sheeps face. It's f****d but it's still got an inane vacant expression as if it doesn't give a damn.

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http://graphicsweb.wsj.com/documents/INFLATION1101/INFLATION1101.html#view=ecSizeDESC

I see a completely blue chart meaning world wide hyperdeflation...

With china stripping countrys of manufacturing wealth i cannot see anything else but deflation for these countries as average wages will fall, and china will still be able to supply goods at a lower price for a long while.

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But with the Weimar the money ended up in the pockets of workers, so far that hasn't happened. We've already been warned they will target wage inflation, they are trying to avoid the hyperinflation event by ensuring the proles get poorer. What they fail to realise is they are creating an even bigger collapse, as disposable income declines as necessities get more expense like food/fuel other spending will collapse.

The (Unionised) workers did better than the middle classes (who were completely wiped out) but they still suffered a huge loss in relative income. Their pay definitely failed to keep pace with inflation.

The printed money comes first, then the prices rise following the increased money supply and finally the salaries rise.

This gives people with first access to the new money an enormous advantage - that would be the bankers and their cronies then (Weimar and today).

Exporters do well.

Farmers maintain their standard of living.

Workers see a very significant fall in their standard of living.

Most middle classes (excluding doctors) and savers are wiped out.

When Money Dies

Workers with trade unions to support them were, as usual, not so badly off, their pay being revised from time to time. Nevertheless they were not exactly fortunate. Whereas in 1914 it required 80 hours of work to buy a suit of clothes and in 1919 141 hours, by July 1922 381 hours were needed. Similarly, the hours required to buy a dozen eggs had moved from one to three, and for a kilo of bread from half to two.

In the countryside the landowners and farmers were less affected than anyone, producing most of their own essentials and putting up commodity prices as regularly as the shopkeepers. Landless peasants were not doing so well, and the large number of casual labourers whose wanderings had been limited by the new confines of Hungary formed a particularly destitute class. Hohler’s account concluded with the comment that many were thriving in the economic crisis and were responsible for the superficial atmosphere of prosperity which Budapest presented — notably, he thought, the Jews who made up much of the capital’s population.

It was clear as Christmas 1922 approached and as prices rose beyond the power of most of the urban classes to cope that the crisis could not be long delayed, nor support for the korona usefully continued. With the secret organisations growing in power, extreme nationalism burgeoning, and anti-Semitism in evidence even in official circles, Hungary was near the brink.

8: Autumn Paper-chase

ONLY the country people were surviving in Germany in any comfort: anyone who lived off the land had the readiest access to real values. It was not surprising that even when they ensured that the money receipts for their goods were no more than equivalent in purchasing power to what they were used to, they were accused of extortion — the more so if they delayed the sales of produce in the full knowledge that prices would be higher the longer they waited. Erna von Pustau went to stay in the country and asked her hosts bluntly what they were doing with all the money they were squeezing out of the townspeople. They replied candidly that they were paying off their mortgages. The principle of Mark gleich Mark had helped agriculture enormously: for the country people, landowners, farmers or peasants, life had started again. At the end of August 1922 when the mark passed 2,000 to the dollar — 9,000 to the pound — a mortgage of seven or eight years’ standing had been 399/4OOths paid off. When Frau von Pustau returned home the talk in the family was about prices going up, about the credits which had to be reduced, about the middle-class party, about big business and the workers who always asked for more … The contrast between country and city was so enormous that it cannot be understood by people who have not lived through it.

Herr Hans-Georg von der Osten, who had formerly flown with Baron von Richthofen’s Flying Circus and was later for a short time Goering’s ADC until he shot the Reichsmarschall’s favourite stag, recollects that in February 1922, with a loan from a friendly banker, he bought an estate neighbouring his own property in Pomerania for 4 million marks (then equivalent to about £4,500). He paid the debt in the autumn with the sale of less than half the crop of one of his potato fields. In June of the same year, when prices were shooting up ahead of the mark, he bought 100 tons of maize from a dealer for 8 million marks (then about £5,000). A week later, before it was even delivered, he sold the whole load back to the same dealer for double the amount, making 8 million marks without raising a finger. ‘With this sum’, he said, ‘I furnished the mansion house of my new estate with antique furniture, bought three guns, six suits, and three of the most expensive pairs of shoes in Berlin -and then spent eight days there on the town.’

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Oil prices can be extremely volatile whereas wage demands and money velocity take a long time to get up a head of steam. I think you are confusing the QE programme with real money, 80% of it simply sits in deposit and cannot circulate outside the financial system because it is effectively a pile of IOUs. Its purpose is to keep the banks solvent when the real economic default crash happens, which could be any time now, and the governments/CBs know this.

So just a coincidence then that commodities, oil, gold, the stock markets all rocketed in the wake of QE - in the face of what should have been major deflation ... And of course we see the results in CPI today.

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With china stripping countrys of manufacturing wealth i cannot see anything else but deflation for these countries as average wages will fall, and china will still be able to supply goods at a lower price for a long while.

China will still HAVE to supply goods at a lower price. Otherwise it faces mass unemployment and political instability. It will be preferable for its leaders to see a 10% drop in wages rather than the mass unrest that leads to political turmoil.

Meanwhile people in the wests incomes are lowering, pay freezes, increased taxes, unemployment. Non discretionary spending is increasing due to energy price inflation (food/fuel), which is directly equivalent to a pay cut. People will cut back on the discretionary spend as they have no money. Discretionary spend Chinese goods prices will decrease.

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I love the expression on that sheeps face. It's f****d but it's still got an inane vacant expression as if it doesn't give a damn.

Probably thinking about who's going to win the next X Factor/ Strictly Come Dancing/I'm a Celebrtity. Or maybe musing on the premiership transfer market.

It's a great icon to sum up the masses.

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Oil prices can be extremely volatile whereas wage demands and money velocity take a long time to get up a head of steam. I think you are confusing the QE programme with real money, 80% of it simply sits in deposit and cannot circulate outside the financial system because it is effectively a pile of IOUs. Its purpose is to keep the banks solvent when the real economic default crash happens, which could be any time now, and the governments/CBs know this.

QE money might not get into the pockets of people, but's liquifying the balance sheets of commercial banks and fuelling rampant speculation in commodities. There are solid macro reasons why the price of oil and food should go up, but it's this liquidity gusher that's intensifying and accelerating the trend so rapidly it's resulting in food riots and revolution.

The problem compounds too. Bonuses (enabled by QE) find their way into hedge funds, which... speculate in commodities.

'Cranks' on HPC and people like Celente were calling for this from the very start of QE. 'Biflation' is here and it's ugly. The only consolation is that house prices are still going to crash.

Edited by 50sQuiff

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But with the Weimar the money ended up in the pockets of workers, so far that hasn't happened. We've already been warned they will target wage inflation, they are trying to avoid the hyperinflation event by ensuring the proles get poorer. What they fail to realise is they are creating an even bigger collapse, as disposable income declines as necessities get more expense like food/fuel other spending will collapse.

I have to agree with this. You can increase base money all you want but if at the same time the general populous is seeing non of this as it isn’t being used for credit expansion by the banks. Until the funny money sees it’s way into the paupers pockets via wage increases then I cannot see it in the immediate future. That’s not to say it won’t happen. In Weimar, money was paid directly into the pockets of NON PRODUCTIVE workers.

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I have to agree with this. You can increase base money all you want but if at the same time the general populous is seeing non of this as it isn’t being used for credit expansion by the banks. Until the funny money sees it’s way into the paupers pockets via wage increases then I cannot see it in the immediate future. That’s not to say it won’t happen. In Weimar, money was paid directly into the pockets of NON PRODUCTIVE workers.

It will be those with capital that have the value of it eroded; if you don't have much to start with, you have little to lose. That's not to say food and other essentials won't get harder to afford - I'm certain they will - but I can't see the army handing out bags of rice any time soon in this country.

IMO, the people who will lose most will be the middle classes (who have some savings) and the non-financial corporate sector (which are very cash rich).

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  • 312 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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