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I know RH I did not mean to imply that - using your statements as Devil's Advocaat really :lol: - from my reading of even some msm articles, the uk came within hours of a banking implosion (so Cgnao was right) until the people's money was raided by the pirates, and ditto in the usa at a secret meeting wherein many senior senators were threatened with the prospect of the dollar collapsing followed by immediate martial law in the event that they didn't play ball with the fed and the usual suspects - Cgnao right again - Cgnao has been right all along - the only thing he was possibly off on was timing - in the broadest sense he was right in that the crisis was THERE, but only averted by THEFT and PIRACY on the largest scale imaginable - the fact is, these oligarchs keep having the ability to pull rabbits out of the hat when all looks lost - unfortunately by so doing they have ensured penury for us and our children for many generations to come, unless of course there is a system reset - and that, quite frankly IHO, has been the intention all along, when all their ducks are in a row and a GO is given...

I doubt very much whether we will see hyper-inflation, rather I magine we will see currency devaluations where they will still remain very much valuable for the mass of consumers where money, believe it or not, could be in short supply.

 

No 100% certainties... theory lives or dies if it is verified or not by future events. Give it six months or so and we should know which way things go. :)

 

If we see hyper-deflation instead, the market and all those inflation hedges, will tank.

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Hyperinflation sounds crazy, hey this is 2009, right, not the 20s and 30s? ... and yet, when clued up folks like Jim Sinclair, Mark Faber, Cgnao, HyperTiger, and plenty more say it is inevitable ... yes, we should know more in 6 months - Sinclair thinks the dollar will collapse within 53 days - if the dollar collapses, gold will surely hyperinflate overnight! :lol:

 

With all this funny money QE about, surely it is baked in the cake? It's just a matter of when it really becomes apparent to joe6pack...

My money is on the 30s. Depression mark 2. Joe6pack won't be buying so many six packs and holding on to the little money he has.

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As Stiglitz rightly says, nothing has been changed at a fundamental level and the system is actually in worse shape than at any time since this crisis began. I think we are now at the stage where the system is fragile enough that one more big wave will set off a chain of market selling that will dwarf anything we have seen before. In the last wave of selling that took the Dow to 6500 we all watched amazed as the dollar rallied due to deleveraging and dumping of dollar denominated assets. There are still so so many mispriced dollar assets out there that that round of deleveraging was

just a taste of things to come. I am of the opinion that we will witness a larger repeat of this, which will take the Dow to new lows in this current bear market

Interesting from Bill Murphy who has tended to come across as an anti-dollar moralist in the past. :lol:

 

Given Bill's prognosis here, it makes sense to hold your nose and buy the dollar. Hmmm... maybe this and next months income... would be nice to see it hit all time lows first.

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The overall effect will be a sudden, rapid deflation the overall duration of which i am unsure, but one that will leave a vacuum into which, based on past history, the FED will have no other option other than to deluge the system with fiat in an attempt to shock the patient back to life. By that time we won't just have zombie banks, we will have a zombie economy and Jim Sinclair's Weimar experience will be upon us. That is when the true value of gold will be realized and appreciated by those wise enough to have accumulated before this final wave hits.

That time is on us already I think, we are already seeing the FED trying to shock the economy back to life, but the general western economy is almost a zombie now, being kept alive by stimulus. We have had a rapid deflation followed by a equally rapid unprecedented reflation, how long till the next manic swing is the question.

 

 

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<53 days according so Sinclair, I am pretty certain he is a web bot man, as the web bot project sees major ructions from now on - gonna get nasty, and Sinclair is in the same time frame, too close IMHO to be a coincidence - that is why I would not trade in case of an overnight black swan...

53 days left for the dollar? :huh:

 

More likely that the dollar will spike massively upwards on a market crash. :rolleyes:

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...

This was posted at Bill Murphy's GATA newsletter yesterday - quite persuasive IMO...

...

Rgrds

LT'

...

I pretty much agree with this. But the important thing is that the deflation will be in overleveraged asset markets like general stocks and property (bought on debt), while there will be no deflation but rather the opposite in all things food and energy (bought with cash; see also Largely Ignorant's statement). After that second shock wave, we might go hyper. I don't think there will be much of a downward move in gold (not to $200 :) ) during the second shock wave.

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Another prescient post at GATA:

 

'Iran Rocket Threat Downgraded'...

 

If I had to guess, possibly the U.S. has been informed that our "credit line" has been cut off and as a condition of not "foreclosing" immediately the missile plan had to be scrapped? History has shown us that business, finance, wars, backroom deals etc. have all been intertwined, I don't think this is any different.

 

That seems far too simplistic for me. Why target this missile system? It's not like Russia who are the main opponents to this are anywhere close to being USA primary creditors... From what I read this is far more likely to do with a deal between america and russia related to the russian defensive position on Iranian sanctions. At this time Iran will not budge knowing that Russia is backing them all the way. Russia is using Iran as a pawn to ensure that as long as the US retains the policy of placing missiles in Europe then they will defend Iran's enrichment programme; if the USA is claiming that these missiles are required because of the Iranian threat (and not to be used against Russia) then Russia may as well let Iran get nukes. However, now that Obama has dropped the missile plan, russia is now able to switch sides to enable additional sanctions on Iran.

 

Obama is playing a dangerous game in which he is hoping that by dropping the missile programme, the russians will pressure Iran, Iran will drop their programme (and open their doors), this will pacify Israel who will comply with the settlement requirements; if you look at any Israel commentry they are getting backed into a corner by many nations at this time and will possibly take action against Iran by themselves as they are feeling that the world is against them and they will need to make a decisive move if they are going to protect their own interests. To all intents and purposes at this moment in time it looks like Obama has abandoned them to the rest of the world. So Obama has to act soon or this tinder box will ignite and no-one knows where it will end.

 

Will Iran respond to Russia? Surely the closer they get to owning a nuke the less they'll care about external pressure.

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<53 days according so Sinclair, I am pretty certain he is a web bot man, as the web bot project sees major ructions from now on - gonna get nasty, and Sinclair is in the same time frame, too close IMHO to be a coincidence - that is why I would not trade in case of an overnight black swan...

Just checked out the latest webbot predictions, they are amazingly similar. Jim Sinclair has also been going on about Israel making a large mistake soon.

 

- A big crisis is kicked off on October 25, 2009. It could be that Israel bombs Iran, or that Swine Flu goes into a level of extreme lethality. 10 days later, in relation to this crisis, the Obama administration will be thrown into chaos.

 

- When Israel bombs Iran (also around end Oct early Nov), they will use a nuclear-tipped bunker buster that will hit something unforeseen underground. As a result, a radioactive cloud will form that will pollute and sicken Southeast Asia. This will cause much of the world to turn against Israel.

 

- The “Death of the Dollar” will be a continuing trend, with a hyper inflationary period in 2010, and banking crises/confidence losses that will begin in August 2009 and escalate by November 2009.

 

- ”Global Coastal Phenomena” will be gradual, yet by March/April 2011 the situation could be disturbing for many people. Unusual movements of the Moon brought on by anomalies in the magnetosphere could cause coastal disruptions.

 

- The magnetosphere problems could lead to ultraviolet scorching of food crops. Grain crops will fail, mainly in the Northern Hemisphere, leading to food riots in the winter of 2010/spring of 2011. Specifically, they’ll be riots in Rome that will spill over into the Vatican.

 

- In South America, they’ll be large or mass sightings of UFO-related phenomena. In the summer of 2010, a video crew will interview an escapee from an internment facility. The young bald man will later be revealed to be a “non-Terran” human.

 

http://socioecohistory.wordpress.com/2009/...ollar-collapse/

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That's sooo cool! :)

Does anyone have any info on how accurate the webbot predictions have been in the past. I don't really know much about it, remembered watching a program on it once, a few years back.

 

I guess we will know quiet soon if it is at all accurate, with the October/ November predictions, and maybe "non-terran" human in the summer of 2010.

 

Does it do gold predictions? :lol:

 

 

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I pretty much agree with this. But the important thing is that the deflation will be in overleveraged asset markets like general stocks and property (bought on debt), while there will be no deflation but rather the opposite in all things food and energy (bought with cash; see also Largely Ignorant's statement). After that second shock wave, we might go hyper. I don't think there will be much of a downward move in gold (not to $200 :) ) during the second shock wave.

Ok, so many are now agreeing that financial assets are set to keep deflating. But bracket your aversion to fiat for a moment and think of the logic of this.

 

What do you think will be the effect of people seeing their wealth destroyed will be? They will most get very defensive and stop spending. We have seen this behaviour already. Less spending leads to demand destruction which is a downwards pressure on prices in consumables. Why would prices rise if the velocity of money doesn't?

 

Currencies are relative. You might as well say they are all rising together as sinking together as consumers come to value money more [save it and not spend it], and unless we see large rises in prices that is what they will be doing. Some currencies I imagine will rise more than others; gold could quadruple in value against assets while the dollar could conceivably double in value against those assets. The same may also be true of goods.

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Ok, so many are now agreeing that financial assets are set to keep deflating. But bracket your aversion to fiat for a moment and think of the logic of this.

 

What do you think will be the effect of people seeing their wealth destroyed will be? They will most get very defensive and stop spending. We have seen this behaviour already. Less spending leads to demand destruction which is a downwards pressure on prices in consumables. Why would prices rise if the velocity of money doesn't?

 

Currencies are relative. You might as well say they are all rising together as sinking together as consumers come to value money more [save it and not spend it], and unless we see large rises in prices that is what they will be doing. Some currencies I imagine will rise more than others; gold could quadruple in value against assets while the dollar could conceivably double in value against those assets. The same may also be true of goods.

 

Why is it that everyone seems to talk about demand destruction and not supply destruction ?!

 

I make this point every time I see "demand destruction".

 

 

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Why is it that everyone seems to talk about demand destruction and not supply destruction ?!

 

I make this point every time I see "demand destruction".

Isn't there a vicious circle here? Demand destruction leads to supply destruction [over-supply/ over-capacity]. The economy is then locked in an ongoing contraction as there will be less of both demand and supply. GDP would shrink and people would live much simpler and frugal lives.

 

Keynesian policies can at best only slow the contraction and stave off a complete collapse. I do not think the government has the power to reverse this process... you might as well tell the tide not to go out. Sure, there is the idea of omnipotence, yet those that think governments are all powerful and can create inflation on a whim are indulging in the mis-allocation of intellectual resources, that is, of mal-reasoning. :lol:

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Isn't there a vicious circle here? Demand destruction leads to supply destruction [over-supply/ over-capacity]. The economy is then locked in an ongoing contraction as there will be less of both demand and supply.

 

Yes, exactly. Every lost job reduces demand, but also reduces supply.

My point is that demand destruction may not necessarily be greater than supply destruction.

In one case you'd expect prices to fall, but in the other they would rise.

Certainly demand destruction is not the whole picture :D

 

A very good debate between Mish and Daniel, which I've only heard 3 times so far. I think it requires quite careful analysis.

 

The bit I found funny was when Jim said "inflation leads to inflation". A classic example of how that word gets people confused ;)

And I think they'd have been able to debate better if they'd had that word banned in the whole debate.

 

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Jim Willie's latest:

 

'My theory is simple. As long as Goldman Sachs and JPMorgan maintain firm control of the USDept Treasury and USFed respectively, the USDollar will sink in value and gold will rise in value. When this Wall Street Iconic Tagteam is exposed for the incredibly broad and deep chronic machinations, the climax comes in a US$ crash and a parabolic upward move in Gold.

 

 

An excerpt from some notes for an interview.

 

I am looking back at my days in the Commodity Derivatives business:

 

"The bank did not want to leave things as they were. They decided that the business needed to be globalised. So I was made to report to someone in New York, who was head of global commodities.

 

The same guy ran our gold business, so I had a few chances to talk with the bank's gold traders. I can recall at how they laughed at notions of a "gold conspiracy" which controlled the gold price. Instead, they explained how mining companies would aim to sell gold at high prices. So whenever the gold price rose to the high end of a trading range, they would enter gold loans, buy puts, and sell calls - all actions that would tend to reduce the gold price. The banks that had mining companies as clients would turn to the futures market to hedge their risks, so they would show up their as sellers, and so commercial shorts would rise. It wasnt the manipulation by the government that was putting a cap on the gold price, it was the natural working of the hedging market. Of course, the banks that were dealing with the miners would see the orders piling up on their books, so they would be shorting gold too, for their own proprietary trading accounts. But there were strict limits on the maximum size of bank speculative shorts. The major factor was the behavior of the mining companies."

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Yes, exactly. Every lost job reduces demand, but also reduces supply.

My point is that demand destruction may not necessarily be greater than supply destruction.

In one case you'd expect prices to fall, but in the other they would rise.

Certainly demand destruction is not the whole picture :D

 

A very good debate between Mish and Daniel, which I've only heard 3 times so far. I think it requires quite careful analysis.

 

The bit I found funny was when Jim said "inflation leads to inflation". A classic example of how that word gets people confused ;)

And I think they'd have been able to debate better if they'd had that word banned in the whole debate.

I have come to similiar conclusions. Prices might just stagnate as upward pressure on prices, which you would expect from a devaluing currency, might well be counteracted by downward pressures such as a contracting economy and unemployment when money becomes valued more[demand destruction]. The worst affected would be government with less revenue and those in debt.

 

Stagflation stagnation.

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I have come to similiar conclusions. Prices might just stagnate as upward pressure on prices, which you would expect from a devaluing currency, might well be counteracted by downward pressures such as a contracting economy and unemployment when money becomes valued more[demand destruction]. The worst affected would be government with less revenue and those in debt.

 

Stagflation stagnation.

 

 

I would argue that stagnation is by definition impossible as it implies all parties are complicit in any agreement.

Whether you define stagnation by VI stats I don't know ?

 

Inflation is always stealth robbing is it not, so the stats never tell the real story ? this is happening right now.

 

Stagnation can't happen due to power & greed.

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They predicted 911. And plenty more besides.

Have you got a link to when they predicted 911? It will be interesting to see how much detail they went into and when.

 

Have you read "The shape of things to come 2010"?

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Ok, ...

So, you think places like e.g. Argentina didn't first have asset deflation and some even CPI-deflation(!) , and only then went hyper?

 

Think twice!

 

Similar thing in Weimar Germany, by the way.

 

Don't get confused by flawed Keynesian demand thinking. Supply matters just as much, as Steve Netwriter pointed out. On top of that, the plunging demand for the currency might matter more than the demand for goods at the time.

 

Argentinian CPI:

argentina_cpi1995-2008(copyright).gif

 

Argentinian stocks:

argentina_stock_market2001-2.png

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So, you think places like e.g. Argentina didn't first have asset deflation and some even CPI-deflation(!) , and only then went hyper?

 

Think twice!

 

Similar thing in Weimar Germany, by the way.

 

Don't get confused by flawed Keynesian demand thinking. Supply matters just as much, as Steve Netwriter pointed out. On top of that, the plunging demand for the currency might matter more than the demand for goods at the time.

Well, I only have one foot in the deflation camp. Eventually we might see some capital flight out of the dollar and into stronger currencies [what I've termed hyper-deflation, where the currency also devalues] but before then chances are that the dollar will strengthen due to deflationary dynamics.

 

I like to take a more "syncretic" approach, which recognizes the valid points of each.

 

http://dictionary.reference.com/browse/syncretic

the attempted reconciliation or union of different or opposing principles, practices, or parties, as in philosophy or religion.

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