Posted on 11/19/2023 3:56:25 PM PST by bitt
Several news stories caught attention in the last few days. One was that Moody, the bond rating agency, joined Standard and Poor’s and Fitch, in downgrading the bond rating of US government debt. It would seem the issuer of the reserve currency of the world, and the world’s largest economy no longer has a AAA credit rating with any of the major bond rating agencies.
Then two stories appeared in the Wall Street Journal. One was “China’s Economy Descends Back Into Deflation”, and how various government attempts to “stimulate” have failed.
The next day we are treated to “Japan: The Land Where Inflation Is Good News.”
It seems deflationary pressure is now evident in our neighbor Canada.
Bloomberg reports that British inflation has taken its sharpest tumble in 30 years.
So, arguably the second-largest economy in the world, China, is sliding into deflation. The third largest economy in the world, Japan, is trying to get out of deflation. A few other notable countries are starting to deflate.
With the price of everything in the grocery store soaring here in the US, could we too be headed for deflation? After recently buying some cuts of beef and filling up the gas tank, such a thought seems ridiculous.
What is deflation?
Deflation is defined as a decline in prices, often accompanied by a contraction in the supply of money. It is usually associated with a sharp economic contraction, rising unemployment, a credit crisis, and widespread default on debt.
Typically, deflations have been associated with sharp declines in asset prices such as stocks, commodities, and real estate.
There may be even a decline for a while in consumer prices, but they do not tend to be that severe.
Sometimes the episodes are so intense, they can upset the existing monetary order and political order. Some episodes have been related to war or the economic financial strains stemming from financing a war.
Periods of deflation have tended to be episodic both before and since the founding of the Federal Reserve in 1913. The nation suffered short but sharp contractions such as in the Panics of 1819, 1837, 1857, 1873, and 1893, and a big one in 1907, that led to the founding of the FED.
...more
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All I will say is, how in the world can the US continue with finance its debt. The federal debt service, alone, is now greater than one trillion dollars, and they keep spending! How is this sustainable under any scenario whatsoever?
Deflation isn’t good for those with debt...
It’s all good. Just print more money.
duhh.. what was the head fake?
Money is a substance created from nothing by central banks like the Fed.
It has value only in the imagination of counterparties.
How could something created from nothingness have value based on anything other than imagination?
This is why the enormous debt gets endured. Because it is a meaningless substance that we base our lives on. The usual response to this reality is “If you think it is meaningless, then send me yours” and then walk away with some sort of chuckle.
The chuckle changes nothing. A central bank brought it into existence on a whim. It’s a whimsical substance that we lend to people and then destroy their lives if they can’t repay it.
Friend took his 5 y/o daughter to Disney On Ice in Reno Thursday night.
She wanted Cotton Candy....
A single serving for a kid was -——$18.
NO Inflation?????? Not around Disney-—rampant theft.
Where did you find this? 🤑 😏
We’re going to have the largest tax increase in history when trump taxes on the middle class expire. Perhaps put that money towards the debt. Signed trump.
The latest estimates of caring for O'Bitem's millions of illegal invaders is $40 billion a year. The mayor of NYC is now cutting police and social services in order to pay for the care of non-citizens... this is where we are headed, this is 'The Plan.'
We have lost our way - and been betrayed by rotten opportunists. Read Cloward and Piven, although the latest Wiki article seems to gloss over the two author's motive of breaking down the system - AND establish a permanent Democrat national welfare government.
We are on the precipice of losing the dollar and our national sovereignty! Who is really fighting against it❓❓❓
Not the current GOP, whose major contributor is the National Chamber of Commerce - who would like a collapse of the labor market (deflation and depression.)
Perhaps in NYC alone, but for the nation the cost is closer to half a trillion dollars annually.
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Looks like I made a typo. Of course, that is the overall expense of dealing with the problem. Much of the cost for care and other problems falls on the local govts. All part of making our country a banana republic.
That's true until the federal government sends them money to assist them, but it is still negatively impacting the taxpayers of this nation.
Where exactly did they move those homeless people to when they cleaned up San Francisco for Xi's visit? I guarantee it wasn't hotels where they get three meals a day, a free phone and 2,100 dollars a month to buy whatever their heart desires.
Deflation is defied as too few dollars chasing to many goods.
About Neland Nobel This author has not written his bio yet. But we are proud to say that Neland Nobel contributed 224 entries already.
The so called experts I deal with have been mouthing on about deflation for the last 20 years I have known them. So far, I have not seen them or any others actually right about anything. The economy is much like the weather, it changes. Perhaps not randomly but mostly unpredictably in anything but the very short term which seems to be confused with some prediction of long term trend, it is not. Instead it is more like looking at an elephant through a knothole.
The only thing I see for certain is that our debt is eating us alive. It is unsustainable and growing.
This guy has 240 articles. In September he was predicting a sustained down market. Now he is retracting that prediction. I will not take the time to go back and check what else he has said. I suspect his track record is not good and no worse than other economists.
That is flawed thinking, unhappily. The fed govt does not have any money. We are already $trillions over budget for last year; this admin is piling on additional unaccountable spending. The latest CR will only continue those deficits - the usual rigged card game the carpetbaggers keep foisting on us.
The new Speaker of the House has just done exactly what Kevin McCarthy was going to do - kick the ball down the road. I doubt the commies that run the Senate will allow anything different. That is why I posted that article (on another thread; bitt picked it up there.)
I am amazed that the dollar has survived this year. The present administration and the Fed keep things going by extreme measures and lies. The stock market shot up last week on admin news that inflation was coming under control. Any person shopping at their local super market - or buying gas - knows that that is not true. 🤯
It may be since Mike Johnson has taken over as Speaker of the House, but it was the case before him with Kevin McCarthy.
The new Speaker of the House has just done exactly what Kevin McCarthy was going to do - kick the ball down the road.
While that is true, it's because Kevin McCarthy didn't do his job. When Mike Johnson took over he was out of time, either leaving him with the choice of shutting down the government, or supplying a CR. But if he doesn't demand the House to start doing their job, the next CR will be squarely upon his shoulders.
BTW, we are in complete agreeance about the state of our economy, but try convincing the stupid cheerleaders who support the conflict in Ukraine of that & you will receive blank stares.
When I said: That's true until the federal government sends them money to assist them, but it is still negatively impacting the taxpayers of this nation, I was speaking in historical terms.
The truth is that if it were just the 33 trillion in debt that hangs over this nation, we might have found a way to overcome that & paid it off. But the reality is that the unfunded liabilities of over 200 trillion dollars is a ticking timebomb that cannot be stopped.
Had we not replaced Kevin McCarthy when we did, Kevin was prepared to provide the 100 billion to Biden, and possibly more.
Part of that 100 billion would have gone to bailing out the blue states with sanctuary statuses, guaranteed. But does that mean the states may still not receive the aid it seeks? The Pentagon has miraculously found money if didn't know it had, will they find more? They can't pass an audit, but they seem to have a mysterious ability to find money, which is another reason I worded my statement to include the word until. 😋
The cost of providing these illegal invaders with the substance needed to survive is costing this nation an additional half a trillion dollars a year. In addition, the servicing of the interest on the debt is costing us another trillion dollars per year.
Believe me, I understand fully what is happening to this nation financially Sadly, there are many here who think we can just keeping the printing presses humming, and all is good. If that were the reality every country would do it. But the reality is fiat money printed with little regard ends up becoming the equivalent of toilet paper eventually.
In addition to those woes, the BRICS are threatening with dethroning the dollar as the world's currency. When, not if, that happens the people of this nation will suffer like no one in the country has ever suffered before. <.P This problem was created by the criminal factions that have been in positions of power for many decades now and include people from both sides of the political aisle who have been fleecing the American public of their hard-earned money.
Anyway, I am getting too verbose as usual. 😋
No, no! In my view you are well in possession of reality. {Reality has become a rare commodity lately. I almost threw up when Chuck Schumer accused Tucker Carlson of propagating lies with his airing of Jan 06 tapes... IOW, don't believe your lying eyes, believe that I have the truth. Disgusting!}
***The truth is that if it were just the 33 trillion in debt that hangs over this nation, we might have found a way to overcome that & paid it off. But the reality is that the unfunded liabilities of over 200 trillion dollars is a ticking time bomb that cannot be stopped***
PLUS this from the referred to article:
“The U.S. Now Has:I like the quote from the article: Janet Yellen, former head of the FED and now Secretary of the Treasury, will go down as one of the greatest boneheads in financial history ... she failed to refinance hardly any of the US accumulated deficits when rates hovered above zero. I assured my son that Yellin is an intellectual cretin, not a financial wizard.1. Record $17.29 trillion in household debt
2. Record $12.14 trillion in mortgages
3. Record $1.60 trillion in auto loans
4. Record $1.08 trillion in credit card debt
***the servicing of the interest on the debt is costing us another trillion dollars per year***
And Janet Yellin has set the trap now that we either raise interest rates to control inflation and default on the debt, or we borrow to pay the debt and default on entitlement payments... a crisis failure either way we look at it.
I was posting on FR for years that the collateral on the debt is your salary, your car, your house, your children, your retirement... etc. Already we have heard how the govt can seize IRAs and 401Ks to help keep Social Security afloat.
***the reality is fiat money printed with little regard ends up becoming the equivalent of toilet paper eventually***
We could have learned that lesson from Argentina some time ago and Venezuela recently. That is why educators no longer teach history and civics. When I used to post about the collateral on the debt, one of these ultra smart elitist would contradict me and say that the debt is no problem, we just owe the money to ourselves. I would respond, OK then who are we paying the interest to? ...no answer, ever.
***BRICS***
Notice how BRICS is never mentioned in the media or by the carpetbaggers. BRICS is likely the trigger to topple U.S. dominance. Once we lose the reserve currency status, what is left to support the dollar, which is only paper? What will people do when a loaf of bread is $30, gas $32 a gallon, milk $40 a gallon?
The only problem with that scenario is that the world economy is fueled by the status of the dollar. China, already facing economic storms, would be left destitute. The whole Chinese economy relies on raiding the American economy ruthlessly. {Right, Joe Bitem?}
They know that.
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