Posted on 10/28/2015 10:27:26 AM PDT by blam
October 27, 2015
Harry_Dent
During World War II, the Fed bought its own bonds to keep interest rates low and demand high enough to finance the war effort.
Back then, the Fed’s efforts did what you’d expect: they caused a modest level of inflation.
So you’d expect the unprecedented stimulus of today to create substantially higher inflation. In fact, with the greatest money printing in history, it wouldn’t be unreasonable to fear hyperinflation.
That’s what most gold bugs fear.
It’s what most everyone seems to fear.
They’re completely wrong.
Inflation is low… will stay low… and there will be no hyperinflation to speak of.
The money the Fed printed has largely gone into financial speculation. It hasn’t performed any real stimulus efforts by expanding the money supply through lending and spending.
So instead of inflation, we’ve seen bubbles pop up all over the financial markets. And they’re just like the ones we’ve seen before when tech stocks blew up. It was the same with real estate to follow… then emerging markets… then commodities… then gold… then junk bonds… then Treasury bonds.
Those bubbles did nothing to create a stronger future.
Instead, they tempted investors to misallocate resources. So when the bubbles inevitably burst, the system they’d stretched and warped with debt fell apart.
So why are gold bugs’ fears of hyperinflation so misplaced?
Because they’re only looking at the amount of new money being created.
I’ll grant them – current printing is unprecedented. There’s a lot of new money.
But what they’re not considering is the velocity of money.
Dr. Lacy Hunt – the only classical economist I like – explains when we invite him to speak at our Irrational Economic Summits.
(snip)
(Excerpt) Read more at marketoracle.co.uk ...
“Chicago Mafia crap. “
I’d love to agree, but this actually started under Nixon. Nixon took us off the gold standard because LBJ had simply printed money to fight the Vietnam war and also have his Great Society at the same time without raising taxes. Charles De Gaulle realized this and started buying dollars and turning them in for gold. If Nixon hadn’t taken us off the gold standard France would have owned all of our gold. If you’ll recall inflation was at an all time high of 4%. Something had to be done! We got wage and price controls and a tweaking of how they counted inflation. The tweak has gotten worse and worse as time went on. Now, a correction would be politically unthinkable. So, the lie continues.
We are preparing for a deflationary depression. Its going to be very unpleasant. Hard to belive but you will long for the prosperity of today.
Ah, that's why the price of oil appears to be less than a third what it was back in '08. The true price now is $300/bbl but the reason we can buy it today for $50 is because the true price is hidden.
Ah, that's why the price of oil appears to be less than a third what it was back in '08. The true price now is $300/bbl but the reason we can buy it today for $50 is because the true price is hidden.
What is this "steak" thing you speak of?
If there is no inflation, why do prices keep going up?
Inflation has taken a temporary breather.
The Federal Reserve decision to lower interest rates about seven years ago sent Wall Street types into the commodity markets, which sent commodity prices soaring and many manufactured things higher.
When the stock market soared, commodity positions were liquidated to free up funds for stock investing, which sent commodity prices lower, which temporary halted most price inflation.
I’ve seen some price increases recently, but not at the level and frequency typical of most of Obama’s term (an average of about five percent per year).
Trust me, my grocery store will in the near future raise prices just like yours. They have done so for decades.
The low oil prices (and lack of ~5% inflation) won’t last - most US producers simply can’t survive on the existing oil prices.
Don’t just look at numbers (especially government numbers), but at the underlying realities of the real world.
My estimate of inflation since the Lazy, Stupid, Ignorant, Rabble rouser ascended, is ~100%, meaning the price of most things have nearly doubled since 2008.
True. Many things I buy have doubled in price. We won’t see the full impact until the economy starts recovering. Then, pent up demand will drive all prices sky-high.
The tax market value assessment of my house went up by over 20%.
Thank the voters of Florida that there is homestead tax protection.
Obama prevaricates. His government lies.
Housing prices haven’t risen too much, but that is because they were already very inflated during the days of the real estate bubble.
I’m guessing if you looked at categories were prices seem stable, it wouldn’t be hard to find a reason. Either those prices were already inflated from some other cause or they are being kept artificially low through some sort of subsidy.
I went into McD’s today - hey, Bfast all day, I will take two sausage/egg/cheese.
$9, two sandwiches, no sides.
“Are you kidding?”
“No.”
“Cancel the order.”
And I left.
No inflation, my a**.
Exactly. Inflation is crazy. I've never seen it so bad in my entire life.
“Zero prcent inflation? Clearly some people don’t buy their own groceries!”
That bears repeating, and repeating, Kartographer. Paid over a $1 for a small bottle of off brand bleach at the cut rate grocery store the other day. Used to pay that for the brand name, large container of Clorox not that long ago.. Multiply that by everything you buy and we are in a world of hurt.
That's pretty much my reading on the situation these days.
5.56mm
LOL! I know. Lots of profit taking today from CHICKENS.
If people would just listen to me and let this thing ride, all would be well. ;)
“Does anybody have a current rate for REAL inflation in the US?”
Depressing, but true, Shadow Government Statistics:
http://www.shadowstats.com/alternate_data/inflation-charts
The official inflation calculation does nothing for retired folks on fixed incomes and whose expenses for food and energy are not included in what constitutes inflation; while zero interest rates are a tax on the elderly. Meanwhile, most actively employed workers can expect some sort of raise in wages each year.
On the other hand, Social Security recipients are being funded by the payroll taxes of currently employed folks, and they’ll likely get higher payroll taxes placed on them if we are to keep paying the “baby boomers” benefits.
Everywhere you look the government is robbing Peter to pay Paul. Imagine if we just did none of it.
There was a time, I read, where 43% of everything the government spent was borried. I don't know what that number is today but it must still be high.
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