Monthly Archives: June 2009

China on track to deflationary bust as reports show that China’s loan spree goes to stocks, property.

About 20 percent of bank lending is going into stock speculation, and another 30 percent or so is going into the property market, state-run newspapers cited Wei Jianing, an economist with a Cabinet-level think tank, as saying.

Why We Need Deflation.

Deflation is a necessary season in the economic cycle. Deflation is the necessary contraction phase, and helps to balance the excesses fueled by the principles and energies of expansion. Deflation modifies prices that have escalated during the expansion phase of the cycle. These two forces – Inflation and Deflation – work together, as Day and Night work together, as Man and Woman work together.

The Possibility of Credit Collapse Deflation.

If the managers of the Fed actually started to punch the “zero key” one space to the left of the decimal in their own account balances and use that to purchase an endless number of electronic T-bonds from the U.S. Treasury, what would those holding T-bonds do? Better yet, to whom could those holding T-bonds sell their T-bonds in the open market?

Japanese Bonds Complete 2nd Weekly Gain as Deflation Deepens.

Any talk of “falling inflation” or “negative inflation” is plain silly. There is no such thing as negative growth or negative increase in anything. This shows quite a stubborn cowardice on the part of our the governments’ controlled news media to admit that we are solidly in deflation. Inflation, when it stops and the bubble begins to deflate, is no longer inflation, it is deflation. Try blow air into a toy baloon and then blow it negatively. So we go Japan has been mired in deflation for decades now since their real estate and stock market bubbles collapsed in the early 1990’s and they are still deflating, at an increasing rate, it should be said

ECB’s 442 Billion Euro injecton from June 24 is not working. Banks still refusing to lend funds, hoard cash.

Banks are not stupid, they know the economy is in decline, loan defaults are rising, assets that back them up are losing value, so the safest thing is NOT to lend and to keep the freshly printed Euros with the ECB. This is deflation and ECB cannot hide it anymore, despite what they are saying about it. Their actions tell us a story of panicky efforts in an attempt to prop up the imploding credit. 442 Billion Euros lent out in one single day is a staggering amount of money even in the context of what FED has done so far.

Deflation is hitting Europe hard. ECB in panick mode.

The ECB lent banks 442 billion euros for 12 months, the most it has ever allotted in an auction, as part of attempts to revive credit markets – the ECB is fighting deflation here, that is clear as a day.

Embrace Deflation – It’s The Cure, Not The Problem.

The Fed likes to portray itself as being an “inflation fighter” when the ONLY source of inflation is the Fed itself. Because of rising productivity over time, the natural state of affairs is actually deflation.

Deflation In A Fiat Regime?

In Austrian economics and the definition I use when I speak of inflation is a net increase in money supply and credit. Deflation is the opposite, a net decrease in money supply and credit.

A Plea for (Mild) Deflation.

Benign deflation is a result of improvements in productivity, that is, occasions when changes in technology or in management techniques allow greater real quantities of finished goods and services to be produced from a given quantity of land, labor, and capital. Because an increase in productivity is the same thing as a decline in unit costs of production, a productivity-driven decline in the prices of finished goods and services needn’t involve any decline in producers’ earnings, profits, or payrolls. Lower costs are matched by correspondingly lower consumer prices, not by lower wages or incomes. Such productivity-driven deflation is actually good news to the average breadwinner.

CPI deflation coming to USA.

CPI deflation coming to USA. Savings need to be replenished and savers need to be rewarded not punished. Responsible behavior builds nations, reckless one destroys them. Reckless spending and lending and bubble blowing what got us into this mess in the first place, so recklessness cannot possibly be the solution.