February 22, 2012 at 2:46 pm #901wp_adminKeymaster
[article]169[/article]February 22, 2012 at 4:20 pm #903
So governments are dammed if they do and dammed if they don’t.
Run a deficit——dammed
Reduce a deficit—-dammed
Raise taxes to reduce deficit—–dammed
Lower taxes and deficit—— good trick if you can do itFebruary 22, 2012 at 4:43 pm #904
The Christian Science Monitor says it, right out loud:
Reasonably good analysis there. To me- Greece is a country ripe to bursting for a charismatic leader to arise, and take control. Then? Pure crapshoot. Time frame for a new charismatic to reach control, in my mind- a year, or thereabouts.February 22, 2012 at 4:45 pm #905February 22, 2012 at 4:51 pm #906
MR166 – yep, dams all over. The problem, if I can revert to veterinary metaphor; is that all the “economists” of the world are struggling to help the Cow Of International Commerce give birth. It’s a hard birth; breech, in fact, and a small birth canal. So, gosh, it’s difficult. And they’re positive it’s twins in there, too.
Thing is- they don’t have a cow- what they actually have is a bull- which isn’t going to give birth, no matter what- and the bull has two broken legs. But the “expert financial technicians” only see a cow in labor; so- no; nothing they’re recommending is going to get the animal back on its feet.
That is, in fact, a basic precept in the pursuit of Understanding. If the answers you keep getting don’t work- there’s a huge chance you have not asked the correct question. That’s pretty much where western civilization is right now. Eager to solve all our problems- but in fact we don’t see what the true problems are.February 22, 2012 at 4:52 pm #907
woohoo! We can paste graphics? Ok, that’s fun…February 22, 2012 at 6:59 pm #909AnonymousGuest
Ash, would you please give me some clarity. I’m long familiar, and to a very large part, long agreeing with TAE. Recently i’ve been reading ZeroHedge a lot. Tyler states over and over his findings that central banks globally have been printing, printing, printing, flooding the world with money in a race, and that there is $2 trillion more now in circulation than in the summer. Is this true?February 22, 2012 at 7:37 pm #910
And we might as well add to that, if they plan to pay off all of this debt with phoney money when will inflation rear it’s ugly head. If the answer is never since destruction of debt is depressive then why is this not a good long term plan for all governments.February 22, 2012 at 8:54 pm #911PhilParticipant
Am I alone in wishing that the byline be at the top of the post rather than at the bottom of it? These things matter! Doom, gloom, etc 🙂February 22, 2012 at 9:10 pm #912
What loose monetary policy such as ZIRP and QE (monetization of debt) do above all else is transfer wealth from savers/workers/taxpayers to corporate elites (and shareholders in the short to medium-term), while also building up the level of imbalances in the markets and general economy. It generally does that by sucking more people (or amounts of productive wealth) into paper asset, consumption/investment bubbles while also undermining general confidence (the trust horizon), creating unintended consequences and sticking taxpayers with the losses on many of the bad assets.
Thus, Ilargi’s theme of Wile E Coyote in suspended animation. Sites like ZeroHedge believe that private and public debt deflation will always be met with massive amounts of “money printing”, which replaces private credit money that is disappearing with fresh base money from the central banks. They also believe that this will lead to HI of the major currencies, much sooner rather than later. The $2T it refers to is basically the amount that the ECB’s balance sheet has expanded since the summer from secondary market purchases of peripheral debt and the LTRO operation (1% 3-year loans backed by very distressed collateral).
OTOH, many of us here believe the situation is more complex than that. First of all, there are many economic, social and political factors that will both limit the amount of money printing and reduce its effectiveness. ZH itself ran an article yesterday about how QE is becoming less and less effective at even propping up the casino paper markets (stocks). In Who Killed the Money Printer and Political Theater Will Kill the Status Quo, I pointed out how near-term political factors can disrupt the drive to monetize debts as well.
ZH also had an article yesterday about how the some ECB officials (and the Bundesbank) is worried about the imbalances/unintended consequences of LTRO and may end the operation after the second one next week. Which also brings us to the next point that monetization of debts does not necessarily translate into inflation/HI because very little of the money makes it outside of the banking system, and LTRO may even slow down the velocity of money in the Euro periphery (Unintended Consequences of LTRO].
We must also distinguish between the likelihood of inflation/HI in peripheral parts of the global economy from central parts. The former include the Euro periphery (and most imminently Greece), parts of Asia, the ME and perhaps South America. As Stoneleigh has pointed out, collapse (including monetary collapse] typically starts in the periphery and then progresses to the center. We are still in the early stages of that collapse, since no significant economy has experienced very high inflation or HI yet.
HI will eventually show up in the developed world down the road, and at a time when people are least expecting it and can least afford it (even less than now). However, it’s not as simple as every major currency blowing up at the same time in the next few years. The process will be drawn out and debt deflation will make that time seem like an eternity for many people with low incomes, debts, low savings, lack of preparation, etc. That has been a pillar of I&S’ message here from the beginning – getting through the short and medium-term so you have a long-term to worry about.February 22, 2012 at 10:22 pm #914AnonymousGuest
Thanks Ash, for your generous willingness to address questions. Tyler repeatedly says (this is a quote from a post today) that “due to $2 trillion in liquidity *** dumped into markets *** by central banks”. That seems to imply the liquidity ends up in the market – you say it stays at the banks – would you be willing to clarify?
Also, i’ve been thinking of a post i would someday post on ZeroHedge to balance out the HI leanings: That, even though many creditors will go belly up when things collapse, there will be some creditors standing. They are, essentially, loan sharks. They will want to be paid on the debts owed them. There is not enough gold on Earth to act as currency, so they must choose one currency to act as the standard and will want that currency to maintain value.
The surviving debtors (especially sovereigns) on the other hand will want to dilute all currencies in order to not pay/pay less to the loan sharks.
So the question is who has more influence/control in a such a situation. TAE feels that the loan sharks will have more power (at least initially) and HI’ists feel the sovereigns will have more power/choice to outprint the loan sharks.
What do you think of this explanation/simplification?February 23, 2012 at 2:26 am #919StevoMember
I wonder if an effect of the seemingly large QE and LTRO of the US and Europe is to dilute and thereby proportionately reduce in value the current store of money/assets held by banks? If these additioons to the shrinking money supply do not go outside the banks then they have no inflationary effect.on the cost of general goods and services. But the impact is still inflationary on money wealth. The owners of the existing stock of money are thereby effectively paying the costs of propping up the private banking system, so it can still fund the roll-over of sovereign debt??February 23, 2012 at 3:18 am #920NZSanctuaryMember
The rhetoric against Iran is flowing thick and fast now. Either support is won for a “pre-emptive” strike, or something BIG is on the horizon that will be blamed on Iran to cement the deal.February 23, 2012 at 7:34 am #926entropyMember
There will be no nukes in Germany (except when it gets very cold) https://www.telegraph.co.uk/science/science-news/9094430/The-world-has-forgotten-the-real-victims-of-Fukushima.htmlFebruary 23, 2012 at 7:42 am #927el gallinazoMember
The question about a war with Iran centers around the question of whether the US military could reopen the Straits of Hormuz in a short period of time. If they believe they can, then they will go to war. Believing they can and doing it are two different sacks of fish. I suspect that the Iranian military are far more capable than many predict. And then there is Russia and China. Can they afford an Western takeover of Iran, and if not, what are they going to do about it? And then there is also the factor of the Zionist tail wagging the US dog. If the Straits are closed for six months or more, which I see to be quite likely, then the global Ponzi will certainly collapse. One school of conspiracy factists believe that the NWO strategists wishes to collapse the Ponzi in order to rebuild with a world currency and government.
Recommend Dmitri Orlov’s interview with Max Keiser at:
Also, Club Orlov has some outstanding recent articles and letters as well as a link to an excellent animation.
Orlov had to amend is five stages of collapse recently from watching the financial quackery taking place. He original saw them in succession, financial, economic, then political, but now he sees them as a simultaneous pile-up. This is what the NWO attempt to save the banking Ponzi since the first collapse has brought. He also puts forth the idea, which I&S also support, that the American Empire will collapse when the rest of the world will no longer trade its real goods for paper with pictures of dead white men and electrons. He claims that in the end, this is what collapsed the Soviet Union. Orlov states that in its last days, Gorbachev approached Washington through Helmut Kohl to bail them out, and Orlov never seems to get his facts wrong.
When asked about the coming FaceBook and Zuckerberg IPO, Orlov’s comment is that you know that the economy is near collapse when its touted pinnacle is a time wasting diversion. By the way, unlike the Hotel California, it is possible to quit FaceBook, though the path out is laborious. My advice is just mail your upcoming itinerary direct to Vaterland Insecurity. You¡ll be saving them and yourself a lot of time.
CHS today also put forth a rigorous piece of analogous reasoning which would indicate that the Ponzi will collapse suddenly in the end. This supports I&S idea of a period of monetary deflation, because the central banks will be unable to “print” on a scale to counteract this sort of collapse. The HI financial counterculture (ZH for example) is using the idea of “printing” very loosely. In Weimar and Zimbabwe, the paper money was printed and distributed, after a large government cut, to the pissants. This resulted in a straight forward dilution of the value of the currency. What TPTB are now doing is just trading credit of the central banks to the TBTF banks, who then put the money into sovereign debt or market speculation in a giant, transgovernmental circle jerk. That is why we have not seen HI inflation yet. Most of the credit never reaches the common man. It does raise the world market price of stuff by commodity speculation, but since the vast majority of people around the globe are seeing their income decrease, this just means that they can buy less essential stuff, and limits a “price inflationary” spiral. And by the Austrian school definition, the globe is seeing net deflation, manifested at this stage by the collapse of the shadow banking system and many hedge funds.February 23, 2012 at 1:33 pm #929TrichterMember
Can definitely confirm the point Ash makes in the article. Despite Germany’s much-touted status as “Exportweltmeister” (export world champion). Life on the ground is getting harder and harder for the people. It was perfectly summed up by laconis t-shirt a family father I saw walking down the street in Berlin with his daughter. It read:
“Arm trotz Arbeit” (Poor Despite Having Job)
They are squeezing people hard. A serious backlash will come from right and left factions.February 23, 2012 at 4:07 pm #930jalParticipant
The circle jerk, as you have stated, does affect the outcome definition of deflation/inflation.
It may end up in a sudden collapse but so far everything is on slow boil.February 23, 2012 at 5:02 pm #932el gallinazoMember
“The slow boil” reminds me of the Yellowstone NP fire disaster. The “moral hazard” of the TBTF and their political puppets is leading to a total conflagration in all the markets.February 23, 2012 at 9:43 pm #933
Hummmn, petroleum usage in the US is plummeting but oil prices are up big time despite a steady to increasing dollar. HI might be closer than we think. Yes, Iran is a big unknown but is it production worries or devaluation that is causing this spike.February 25, 2012 at 10:59 pm #984PatrickMember
I think the good ole US of A is the most likely candidate for a charismatic leader to take over. Won’t say it *can’t* happen in Greece but their experience with dictatorship is fresh and painful. Amurica otoh, has this, as James Kunstler would call it, tendency to “corn-pone fascism.” Can picture some general like Petreaus standing up and claiming the US was “stabbed in the back” by traitorous leaders.
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