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Deflation Has Arrived
Safehaven ^
| 01.28.04
| Robert Prechter
Posted on 01/29/2004 8:25:43 PM PST by Beck_isright
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Against this backdrop of opinion, M3 since September has fallen over two percent, its largest decline in 60 years. This is different from a lack of inflation. It is real, actual, deflation. What's more, M3 has declined despite the strongest quarter of economic growth in decades, the lowest interest rates in half a century and a central bank committed verbally and by action to facilitating the expansion of credit! There is no interest rate spike or recession to explain away the decline in the money supply.
And so my 2005 prediction looks wiser by the day. Keep your powder dry folks. This will NOT be like any other event in recorded history.
To: arete; Tauzero; imawit; Dukie; Matchett-PI; Moonman62; Free Vulcan; Wyatt's Torch; Huck; ken5050; ..
A very important PING........
2
posted on
01/29/2004 8:26:56 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: Soren
Sorry...forgot to ping you also....
3
posted on
01/29/2004 8:28:48 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: Beck_isright
LMAO.
Inflation -- practical, real live, what one pays for goods inflation, higher and higher, is here right this second. And the general cause (there are exceptions) is the USD's gross near-collapse over the past two years.
Of the goods priced internationally in USD, every single one of them has risen in price, on a currency-adjusted basis. Even coffee, which is in general oversupply worldwide, and has been since 2000.
Roll up a fat one, Beck -- might as well, you haven't a clue otherwise (AND, I'm entirely willing to present very hard price data to demonstrate this point, at your convenience).
Never trade mkts if your trading ideas are based on your politico-economic views. Seek the (always available) statistical advantage, instead.
Feel completely free to disregard or denigrate this particular view here. I can use the money (g!).
4
posted on
01/29/2004 8:47:38 PM PST
by
SAJ
To: SAJ
" Feel completely free to disregard or denigrate this particular view here. I can use the money (g!)."
I shall. I stand by my prediction that the Dow will reach 11,000 by the election. I stand by my prediction that the Fed will CUT rates by August to 0.75% on the Fed Funds Rate. I also hope you do not wish to get into a statistical battle, because I will whallop you with charts and statistics which show that raw material inflation (commodity inflation) will continue, but against the backdrop of wage and ROI deflation, you will see the long term trends. I shall not try to convert you. If you're opinions are that hardened, then fine. If you think I'm approaching this from a political point of view, then you've missed the points of my hundreds of postings; I prefer to take a historical point of view. And your posting indicates a rather liberal approach to this article without looking at the historical ramifications of the economic data which has been released in the last 2,4,10,12, or 20 quarters.
5
posted on
01/29/2004 8:52:36 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: SAJ
Does anyone have any learning on what happens to gold in times of deflation?
To: SAJ
7
posted on
01/29/2004 8:54:49 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: Iconoclast2
"Does anyone have any learning on what happens to gold in times of deflation?"
It becomes the de facto currency of choice.
8
posted on
01/29/2004 8:55:26 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: Beck_isright
Deflation has arrived...Don't worry, it happens to most men one time or another, and it's not permanent. It is suggested that if deflation continues, go see a doctor.
9
posted on
01/29/2004 8:56:21 PM PST
by
CommandoFrank
(Peer into the depths of hell and there is the face of Islam!)
To: Beck_isright
Most observers think that the Fed still has that one percentage point of "ammo" left. The timing of Robert Prechter's article, theorizing that the Fed is trying to inflate but can't do it because there's no room left for it to cut interest rates, has to be rather embarrassing to him. On the same day, the Federal Reserve issued hints that it will soon raise interest rates.
If the government didn't inflate the money supply in the first place, deflation would be a normal and highly desirable economic condition. When productivity improves, and more and better products and services are made available, competition will naturally drive down prices. That's what we've seen for years with computers and DVD players and cell phones and all kinds of other high-tech products. Quality and capabilities go up while prices plummet, and everyone benefits.
I love deflation.
10
posted on
01/29/2004 9:00:04 PM PST
by
dpwiener
To: Beck_isright
And so my 2005 prediction looks wiser by the day. Keep your powder dry folks. This will NOT be like any other event in recorded history.Deflation is sitting just below the surface and has been. It has only been kept at bay by the FED's and government's ability to massively expand debt. There are limits and I think that we are getting close to them. Without debt expansion, the deflatinary monster is going to eat us and everything in sight. More helicopter money from the government coming soon. After that, turn off the lights cause the party is over.
Richard W.
11
posted on
01/29/2004 9:04:19 PM PST
by
arete
(Rebellion to tyrants is obedience to God.)
To: dpwiener
"The timing of Robert Prechter's article, theorizing that the Fed is trying to inflate but can't do it because there's no room left for it to cut interest rates, has to be rather embarrassing to him."
Agreed. I think they can and will cut, this time for socio-political rather than practical economic reasons. Not until this summer, but they will cut again to 0.75% on the Fed Funds rate.
"If the government didn't inflate the money supply in the first place, deflation would be a normal and highly desirable economic condition."
The problem is, as M3 is illustrating, is that the money is going into a proverbial black hole, to pay off interest on top of interest of consumer, corporate and government debt. Normally I would agree with your comment, but in this case the consumer and corporate debt is at a level which surpasses those of 1931 on a per capita/percentage basis (360% plus of GDP for 2003 per CNBC).
"When productivity improves, and more and better products and services are made available, competition will naturally drive down prices."
Again valid, except the value of the improvements are not being added to the American economy but the "global" economy. Thus why Prechter might indirectly be on to something.
"That's what we've seen for years with computers and DVD players and cell phones and all kinds of other high-tech products. Quality and capabilities go up while prices plummet, and everyone benefits."
Uh, no. We've found substandard non-American labor sources instead of innovating. Instead of improving our own economy, we've financed the use of third world labor to build the widgets. When we should have been building robotic widgets to make better widgets here at home.
12
posted on
01/29/2004 9:06:42 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: Beck_isright
You fool! You blew my cover!
13
posted on
01/29/2004 9:07:42 PM PST
by
Tauzero
(A slight squeeze on the hooter is an excellent safety precaution)
To: arete
I find the statistics of M3 horrifying. I also found a CNBC chart from last year illustrating that consumer and corporate debt is now 360% plus of GDP; surpassing levels from 1928-1932. This has validated a lot of the points that you have been making. I'm glad gold is pulling back and I hope silver retreats back to $5.50-$5.75 also. I shall load up as 2005 is still the year of the baddest bear we've ever seen, IMHO.
14
posted on
01/29/2004 9:08:40 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: dpwiener
The FED can issue any kind of hints that it wants. No one is even taking there constant bullhorning seriously anymore. The first rate increase will blow the whole financial ponzi scheme IOU backed by IOU system right out of the water.
Richard W.
15
posted on
01/29/2004 9:08:57 PM PST
by
arete
(Rebellion to tyrants is obedience to God.)
To: Tauzero
LOL, damn. Sorry Ahnold.
16
posted on
01/29/2004 9:09:10 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: Beck_isright; Grampa Dave; SierraWasp; NormsRevenge
So should we move money from Stocks to real estate?
17
posted on
01/29/2004 9:11:04 PM PST
by
Ernest_at_the_Beach
(The terrorists and their supporters declared war on the United States - and war is what they got!!!!)
To: arete
FYI:
18
posted on
01/29/2004 9:11:14 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: Ernest_at_the_Beach
"So should we move money from Stocks to real estate?"
I'm not. That bubble will be the first to explode, IMHO.
19
posted on
01/29/2004 9:12:08 PM PST
by
Beck_isright
(" I cannot vote for a liberal whatever his party label happens to be."-Lazamataz, FR 2004)
To: Beck_isright
>And so my 2005 prediction looks wiser by the day. Keep your powder dry folks. This will NOT be like any other event in recorded history.
Not this again. This is like the Art Bell show. After the world didn't end in 1999, he moved up the date to 2012.
All those people predicting a crash in 2005-06 were also predicting that big crash in 2003 (Bill Gross, Fleckenstein, Sornette etc...). It didn't happen, so they keep predicting, but they extend the date little by little.
Prechter's recent accuracy has been what? Not too good.
M3 is lower because people are moving money into stocks out of money markets. How can you tell? Stocks are going up. This article fails as any reasonable sort of analysis that a busniessman, economist or trader would come up with. It is pure guru style hype.
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