Posted on 10/31/2009 5:32:23 AM PDT by blam
United States Catching The Argentinian Economic Disease Of Hyperinflation?
Economics / US Debt
Oct 31, 2009 - 12:54 AM
By: John_Mauldin
I have been in South America this week, speaking nine times in five days, interspersed with lots of meetings. The conversation kept coming back to the prospects for the dollar, but I was just as interested in talking with money managers and business people who had experienced the hyperinflation of Argentina and Brazil. How could such a thing happen? As it turned out, I was reading a rather remarkable book that addressed that question. There are those who believe that the United States is headed for hyperinflation because of our large and growing government fiscal deficit and massive future liabilities (as much as $56 trillion) for Medicare and Social Security.
This week, we will look at the Argentinian experience and ask ourselves whether "it" - hyperinflation - can happen here.
[snip]
Coming soon:
THE WEIMAR REPUBLIC PART II
In this episode, socialists once again destroy a major Western country by means of HYPERINFLATION thus launching famine, poverty and revolution.
Lights! Cameras! Action!
At this time, there is little sign of inflation. Folks can’t believe we won’t eventually have it, given the exorbitant rate that the Fed is printing money, but it’s not here yet. And it may never be here.
What we do have is government consuming ever more of our hard earned income. Taxes are taking a bigger bite. Private spending is going down. But government spending on endangered species and welfare handouts is increasing.
Much more likely folks such as Erik Rohm and Adolph Hitler took advantage of Weimar's long term and exceedingly difficult unemployment problem among young men and WWI veterans.
You'll notice we have a similar unemployment problem ~ with the vast majority of the unemployed being young men. We face the same risk.
We’ll be “Argentina with nukes.”
Doesn’t sound like a recipe for stability or prosperity. Not with our ingrained social problems festering like smoking volcanos.
Don't get out much? Try shopping for groceries and then tell me prices are stagnant or falling. In y world, I have seen many of those things costing more (sometimes MUCH more) than I paid last time. I am beginning to hoard.
I have seed and fuel storage, and food enough for a year. I even made sure that Spot has plenty of vittles.
You can't continuously print money without it becoming worth less.
Rising food and energy and tax burdens will seriously reduce the US standard of living.
Yes inflation will come soon.
It will take 10+ years to rebuild the economy with the idiotic irresponsible fiscal policies of our goobermint.
Still no changes in the regulation of mortgages with the continuation of liar loans w/ banks just now allowed to indicate on their books upside down mortgages as performing.
Add that the fact there are no regulations being put in place to control banks exposure to the derivatives scheme as to reduce the amount of leveraging, etc., etc., etc nor the fact that CDO's and CDS's are still being allowed to be repackaged with untraceable assets and liabilities.
What do you really think is happening?
Those in the goobermint want everyone to drink from their poisoned well.
“United States Catching The Argentinian Economic Disease Of Hyperinflation?”
It will if the Communist White House has anything to say about it. They need a “good” crisis to bring off their shady coup.
In my view, none of those things will impact inflation until we have excessive GDP growth at home, or possibly if we have shrinkage of productive capacity. Printing money causes inflation because of the classic line, “too much money chasing too few goods.” We don’t have that now. We have a lot of money, but it’s not circulating very fast. Once the velocity of money picks up, then you may have a problem, but that is no where in sight. Additionally, the Fed could put a damper on that by tightening the money supply as velocity increases. Of course, all this assumes that the Fed will do the right thing at the right time, but if you say inflation is inevitable, then you are in essence assuming that it won’t. I really don’t think there is any more validity in assuming that. It’s all in the future, and none of us can know the future.
I would focus on what we’ve got now. We’ve got more serious problems right now. Personal income is static. Personal spending is going down. The libs say that we’re coming out of the recession because of the stimulus. But the reality is that the recession would come to an end by itself. The primary effect of the stimulus has been to divert vast wealth from the private sector to the government. Even if we are coming out of the recession, the diversion of income to the public sector is not a good thing, and in fact pretty much nullifies the gains that are being had from the improvement in the overall economy.
Check the prices for red meat.
In the past, when beef prices plummeted, as they currently have in my area, it has indicated that many ranchers are rushing steers to market, as they can't afford the upkeep of their herds. At such times slaughterhouses are very busy, and retail groceries try to push the sale of the excessive supply of beef they CURRENTLY have with low prices, special deals, and frequent clearance sales. So, low prices for red meat are not necessarily a positive indication.
Meat will always drop in price before it goes UP out of sight. If you have no feed, you can’t “top” them. Farmer’s are just now bringing in crops which are decidedly lower. Add to that the “ethanol miracle” and we are in deep doodoo...
Bump.
Huh?
Expected bumper crop is good for some, but not for everyoneWATERLOO - The U.S. Department of Agriculture expects a bountiful harvest nationwide, especially in Iowa.
Whether it is good for agriculture and the local economy depends on a person's perspective.
Based on Sept. 1 crop conditions, the government believes corn and soybean fields are bursting at the fences. If predictions are realized, Iowa's corn crop will be at record highs. At the national level, soybean productivity is expected to be the best ever.
Harvest is just getting under way in the state. A few combines are rolling locally. Numbers popping up on yield monitors and recent in-field ear and pod counts - except in hail-damaged areas - back up government estimates.
It appears the state's farmers are destined to pick their sixth monstrous crop in a row. Ample corn and soybean supplies are good news for livestock producers, grain processors and some farm-related business, but not so good for others, especially those producing the products. [emphasis added]
"This year's (records) will keep pushing down prices," said Chad Hart, Iowa State University Extension grain economist. "It'll definitely help (grain) users like livestock and ethanol since it'll bring input costs down. If there is a loser, it's the producer themselves - they have great production, but take a hit on price."
[excerpt]
WCF Courier, September 27, 2009.
My wife, who shops for food, has been down with the flu so I have been doing that task. I was aghast, people. AGHAST. The price of a loaf of good bread astounded me. Bread, butter, the staples left me bug-eyed.
You did nail it exactly with your analysis with regards to the GDP.
Problem is with the current yahoos now in the WH and the Congress, the GDP is inaccurate as it takes into account goobermint spending.
Anyway you cut it, the private citizen and private industry pays for the ingredients, the labor and the resources that make up the economic pie that all of us eat from.
The reduction in the standard of living here is happening with the net buying power of the average private citizen eroding at an alarming rate.
The bozo's on Humpback Hill think they can print money and then dole it out to its kool-aid drinkers as a means to increase the velocity of money.
With current conditions, that's a wet dream shooting blanks. (sorry about that statement, but it does apply on the mark).
The only way for the economy to rebound and the dollar to strengthen is to cut the size of goobermint, reduce taxes, tighten credit, raise the interest rates, pay down the national debt, remove the strangleholds of over regulation to industry, reduce corporate income taxes as it is the only means stimulate manufacturing. We also need to institute fair trade, not free trade.
As a country we need to invest tax dollars now into infrastructure vs art work and ACORN, as examples.
A nation's true wealth is derived from manufacture of domestic goods from domestic resources with balanced domestic consumption. Also, private investment (savings) is a must to allow for technology improvements within domestic industry. If I had a billion laying around, no way would I invest it in a bunch of strip malls or condos now (as examples).
Finally, we need to stop playing political footsies with special interest groups w/ regards to energy policy. We have the resources now to develop an independent energy grid and we need to do it. Nuclear is way lagging in that regard.
INHO, people do not want to accept reality and fact. In reality the NWO wants to bankrupt us and is well on the way. Greed and deceit are well and alive and growing.
I've seen this game before.
Higher prices means we're doomed. Lower prices means we're gonna be doomed.
I wanna play.
Milk last year, $4 a gallon, solid proof inflation is out of control.
Milk this year, $1.88 a gallon, shows the Fed prints too much.
How'd I do?
Milk is mostly a subsidized product...
Was it subsidized at $4 a gallon?
So we might fall from a record harvest to an average harvest? C’mon.
GDP has always included government spending, but I agree with you... It’s inaccurate. There is no market mechanism to test the value of government services. The only thing that ensures that government spending is not pure waste is that it’s got to get through the political system. But the political system is broken. At the same time, I don’t think that really has much to do with inflation. It has more to do with redistribution.
The only way that it impacts inflation, I think, is that the taxpayer has got to pay for that waste, and the higher taxes are, the less reason people have to be productive. Less production means even fewer goods, so that it takes less money to have the situation that you have “too much money chasing too few goods.” That’s why I hedged my statement by saying that the only way it can happen is if GDP is growing too fast, “or productive capacity is declining.” There are a lot of ways productive capacity can fall. I think that what happens in the oil industry will be the key to whether this ends good or bad, however. If the price of oil goes up, which might happen if world oil demand outpaces supply, or if the dollar continues to fall, then you’ll see inflation caused by reduced capacity, as well as a further decline in GDP. If the price of oil comes down, then you’ll see the reverse.
The Obama voter is taking us on a ride I never wanted to be on.
There are several freepers, myself included, who have been astounded this past week or so, to see how prices on many food items have suddenly risen, anywhere from a quarter to around forty cents each.
Say, you might consider being very careful about where & how you store your dogfood -- I've not yet had a chance to fully research this, but somewhere recently I read that BY LAW, it is legal for dogfood to contain salmonella -- so you won't want to let commercial dogfood possibly contaminate your emergency storage food for humans. (I know nothing else yet about this, but have removed the bag of dogfood from the kitchen, permanently, and anything canine we've purchased in advance, is now stored in a separate room, not in the pantry.
Buy Food – Price Rises Are Almost Guaranteed
http://www.freerepublic.com/focus/f-news/2373180/posts
Food will never be so cheap again
I’ve had enough with what is being done to our currency.
Little by little, I am withdrawing my savings from the bank (so as not to screw them up) and buying gold and silver.
I’ll take my chances. Now that China is selling gold and silver in it’s bank branches, I’m no longer worried that gold will drop to $ 800 or so. They have established a “floor” via their marketing.
I think that it should be mandatory that everyone posting on an econ/inflation thread spend time drinking with some CBOT traders at least once a week.
I have kept close watch on things since, and now use my microwave oven to treat those and other products. I also have a UV light in my storage room.
You are right that milk and other dairy has dropped. But one example does not prove deflation.
I have noticed over the last year the following:
Product sizes of all kinds, cereal, tuna, pasta, canned goods, have been getting smaller- 16 oz boxes shrinking to 13 or 14 oz, tuna cans shrinking from 6.5 oz to 5.5 oz, cereal boxes shrinking from 16 or 24 oz to 13-15 oz. They have not gone down in price as you say, they are the same as last year. But contents shrinkage means they have gone up in price. It is the first step that manufacturers take to hide inflation. This has affected almost all canned and boxed products. As to other prices, a loaf of “cheap” bread has gone from 1.08 to 1.58 in the last 6 months. A couple of cents at a time to be sure, but the fact remains that it is going up. Same with pasta, which is now over a buck a box, and the sizes have gone down to 13-15 oz.
Gas is another one people want to say has gone down. They are wrong. Yes gas was over 4 bucks a gallon last summer, then it did a nose dive and this spring it was around 1.40 per gallon. It is now at 2.70 and showing no signs of coming down. Hubby pointed out that when oil was 80 a barrel before the spike last year, we were paying 2.15-2.30 per gallon, now oil has been hovering at 80 a barrel and we are paying 2.70+ for the same gas.
Inflation always hits the necessities market first because we HAVE to buy them, therefore supply and demand are less a factor because demand remains. You will see deflation in non essential buying because it is dependent on a demand, and in recessionary times, demand drops. Houses, cars, jewelry, appliances, and the like do move downward, but that in no way proves deflation, any more than charging 17 bucks for a gallon of water or 100 bucks for a sheet of plywood during a hurricane proves inflation.
Listen to the moms who are trying to feed their kids and do comparative unit pricing on necessities. They are the canary in the coal mine on this issue.
Sorry if we don't speak your language, but we do like to report our personal experiences. Next thing we'll all hear that prices will continue to fall...
You know I can’t do that anymore. LOL!
Excellent! You aren't going to claim a few falling prices proves inflation, are you?
That's sooo 'last month,' LOL
Fall Harvest's Way Behind Schedule; Could Have Impact on Prices
Doppler Dale's Weather Posts
^ | 10/27/09 | Dale Bader
Posted on 10/27/2009 1:54:05 PM PDT by dopplerdale
http://www.freerepublic.com/focus/bloggers/2372301/posts?page=6
Crops such as Corn, Cotton and Soybeans Affected
If it has seemed like it has been raining unusually often and by quite a bit, you are right. The months during harvest time (August/September/October) are traditionally the driest .....
Crop prices rise 7.7 percent amid soggy harvest
AP/YahooNews ^ | 10/30/09
Posted on Friday, October 30, 2009
2:19:49 PM by Kartographer
http://www.freerepublic.com/focus/f-news/2374879/posts
Crop prices jumped nearly 8 percent in October as rainy weather delayed harvests across the Midwest.
Farmers are still getting paid much less for their crops compared with a year ago . . . .[groan] Now I need a drink.
GOOD BY.
And if he's a fellow freeper, then he's not an idiot (probably), but still a random blogger.
again, its more a question of why those certain prices are falling, more than the question of are they falling.
There are alot of people who have cut dairy out of their diets either while prices were exhorbitant or due to dietary issues. Alot of folks view dairy as either unhealthy, a cause of obesity, lactose intolerance, or a plain out extra (luxury). If people are not buying cheese and yogurt, there will be a glut of milk, therefore driving prices down. The very same media that gave us the current administration has been also pounding on the health risks of dairy for years. When the prices spiked, I can imagine alot of folks found an alternative, such as soy milk or rice milk due to these facts. They also started regulating the consumption of dairy to make it last longer (I know this is the path we took when milk was 5 per gallon). My kids were allowed to have a bowl of cereal per day and NO other milk consumption during that period. Prior to that, we used to go through a gallon a day (3 teenage boys who played sports alot and are all 6 ft plus), we reduced our consumption to 2-3 gallons a week. We are still at 2-3 gallons a week even though milk is cheaper now, because the habit stuck. Same went with cheeses for us. We pretty much eliminated them except for use in meals, no snacking, which my kids used to do all the time with fresh fruit and veggies. We now buy some on occasion, but they have found alternatives during the hike in prices.
My whole point is that the why might be just as important as the what. I do not think my family is any different than most others, and milk doubling or tripling changed habits, same as gas usage did.
Noob should learn to read and grow a thicker skin.
I have already asked you to please not post to me again. Thank you for your kind consideration in this matter.
Incidentally, thank you for your gracious comments. You must be proud of your manners!
Here’s the way things work: when you post a comment on the public side of the forum, you invite comments in return. And if you post inaccurate information, I will continue to point it out.
You’ve lasted here a whole ten days with your delicate constitution? Good job!
I have yet to find a retailer of any kind, anywhere, that sells soy or rice milk at a price cheaper than regular milk. That's not to say you didn't alter your behavior when the price of regular milk went up, but claiming that prices fell due to "substitution effect" when the price of the substitution is higher doesn't make sense.
That might not be the explanation.
However, I do not focus on one set of numbers...I look at the average blue collar workers around me, the flight of US manufacturing overseas and the collective picture of all of the efforts of our own goobermint marching to seize more power.
That in of itself (the continued willful and goal-minded) growth goobermint duration a serious and global recession is idiotic at first glance, however, that is not case.
Previously, easy money and irresponsible lending couple with an corrupt banking and political system lays forth nothing but disaster for you and me and this country.
We have the worse crack addict ever now running this country and they (the legislative and executive branches) are hooked on the money-power drug soon to OD.
We have a much much larger problem than the polished / slanted / deceitful numbers the goobermint hands out and the state run media shills for continuously.
Zero will go down in history as the worse POTUS to ever hold the office.
Currently, U6 numbers are pushing 25%.... and until that number is cut in half and people back to work, all the goobermint BS numbers mean doodley squat. (a doodle is a bunch of baby chicks, with one sometimes referred to as a diddle.)
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