INFLATIONISTS vs. DEFLATIONISTS -- a compendium in progress

[ninakat]

Inflation Supply Shock Inferno
(Crisis & Globalization II)
by Daniel R. Amerman, CFA | October 29, 2009

Overview

The gasoline for rampant inflation already permeates the US economy – and all it will take is one bad day for a series of interrelated supply shocks to set off an inflationary inferno. As we will cover in this article, the accelerant in this case is the $700 billion annual United States trade deficit. We’ll explore how the real world economics of being the world’s largest debtor in a globalized economy trump insular deflationist monetary theory, as well as what happens when you pit exogenous supply shocks against Santa Claus.

(continues)

[picasso moon]

This was posted elsewhere on this sub-forum, but i can't find it, as that's where i got it, ie not from this thread.
I like the idea that price inflation and asset deflation are not mutually exclusive. That said, his argument that the deflationists are like Santa Claus with their insistence that the other nations will keep on propping up the dollar even as the US economy gets hollowed out has a big hole in it, he does not in any way advance a notion as to who will pick up the role of US consumers. Like that song aimed at those who wanna deport all illegal aliens, "Who's gonna wash your clothes, who's gonna mow your lawn, who's gonna wash your dishes..." , there's "Who's gonna buy your plastic pumpkins?"

Edit: never mind, i didn't get it from LATOC, but from Chris Martenson's site. Does it deserve its own thread?

[cabacaba]

Here is a very interesting read.

http://theautomaticearth.blogspot.com/2009/10/october-30-2009-interview-with.html?ref=patrick.net

Stoneleigh has the most logical argument for Deflation that I have read.... From the events happening around us, I would say this person is right on....

NO JOBS + NO CREDIT + NO WELFARE = NO MONEY = DEFLATION

[Xenopus]

Stoneleigh has the most logical argument for Deflation that I have read.... From the events happening around us, I would say this person is right on....

NO JOBS + NO CREDIT + NO WELFARE = NO MONEY = DEFLATION

I quite agree. There's a thread on this article:

http://www.doomers.us/forum2/index.php/topic,55836.0.html

[ninakat]

The Risks of a Catastrophic Deflationary Collapse
by Lawrence Tout | November 3, 2009

(...)

Many comparisons have been made to past crises and prognosticators argue whether we will see deflation or inflation, but its very possible that such arguments are invalid for three main reasons that predominate in markets today more than at any time in the past; these being mass, velocity and interconnectivity. Not only are the size of the debt/derivative/fraud problems so utterly underestimated and so much larger than at any other time in our history, but also modern day computer-driven trading means that should a crash sequence be initiated, subsequent price action declines will manifest very rapidly indeed. Combine this with the fact that global markets are now so interconnected and you have the recipe for the mother of all crashes.

(...)

[ninakat]

Four Reasons Hyperinflation Hasn’t Hit the US... Yet
Keith Fitz-Gerald  Nov 04, 2009 11:30 am

Everything we know about classic economic theory suggests the US economy should be experiencing Zimbabwe-like hyperinflation right now, thanks to the nearly $2.2 trillion the US Federal Reserve has pumped into the system.

But we’re not... yet.

(continues)

[graveday]

Well, one reason is the US is not Zimbabwe.

[DoomandGloom]

Four Reasons Hyperinflation Hasn’t Hit the US... Yet
Keith Fitz-Gerald  Nov 04, 2009 11:30 am

Everything we know about classic economic theory suggests the US economy should be experiencing Zimbabwe-like hyperinflation right now, thanks to the nearly $2.2 trillion the US Federal Reserve has pumped into the system.

But we’re not... yet.

(continues)

If we add hyperinflation to this equation I would be pretty certain the riots would start. I think the government would rather freeze prices than let that happen.

[BlackSheep_ProvenRight]

U.S. CONSUMER CREDIT FELL $14.8B in SEPTEMBER, MORE THAN $10B EXPECTED. PRIOR REVISED FROM -$12B to -$9.9B. US Consumer credit has fallen for eight consecutive months. This is the worst trend on records going back to 1943.   Credit contracting points to deflation...the fed can print money but can't force people to borrow or banks to lend.

[quick]

CNBC yesterday - Bob McTeer - former fed 'guvna' - said the fed was creating massive amounts of money and the reason inflation was not a problem yet was velocity of money. He went on to say inflation would be hard to avoid when the time came to back out of the present situation.

[graveday]

What does that mean, "back out"?  Seems there is only a power on mentality.  I don't think there will be any backing out of this quicksand bog.

[ninakat]

I don't think there will be any backing out of this quicksand bog.

But that's what they'll try -- so when it comes time to back out, or attempt to back out (change course, stop quantitative easing, end the bailouts, etc.), inflation will be unavoidable. That's how I interpret what McTeer said, at least. Time will tell.

At this point, I'm less concerned about which 'flation we end up with. My whole reason for initially doing this study was to decide where to invest my meager savings.... and I chose PMs because my assumption was INflation. But as it turns out, plenty of deflationists are also saying PMs are smart.... so it seems like a good decision regardless of who wins the 'flation debate. And, it should go without saying, but I'll say it again anyway -- prep first, then invest the remainder in PMs.

[graveday]

Ok, you put the eager in meager.  The beauty of gold, you can't go wrong, unless you count divorce. 

I think it is time to do another one of your tallies to account for the defectives, I mean, defectors.

[cabacaba]

I believe that the trigger for inflation and revolution will be the Peelosia Health Care bill...  If you don't buy into this monstrosity, you will fined and sent to prison.  A lot of folks are homeless, jobless, and struggling to feed their families and this Hell Demon Pelosia is going to put them in prison because they don't have the money to pay the Bitch's Health Care "TAX!!!!

If this passes the Senate, you can kiss the USA goodbye...

[vic_d]

According to Chris Martenson:

Again, I just want to caution you to be ready for any outcome.  I am open to the possibility of an immediate return of crushing deflation, and I am also open to the possibility that the gigantic wall of fiat money will override the deflationary impulses and whisk us into a fast date with high inflation. Right now the data says that the money masters are winning the battle against deflation.

http://www.chrismartenson.com/blog/market-recap-ridiculous-productivity/30966