Monthly Archives: August 2009

The Power Of The FED And Deflation.

This article from GoldSeek makes good points and explains quite clearly why US is going to stay in deflation much longer than most people and so called “economists” think, and why the privately owned FED is unable to reinflate the debt bubble.

Deflationary consumer attitudes: Beds made of hay are latest hotel craze in Europe.

Ultimately deflation is rooted in consumer attitudes toward taking on more debt for speculative and consumption purposes. When the proverbial consumer finally reaches the point when he is no longer capable of taking on more debt, an anti-deflationary mind set becomes entrenched and no Central Bank in the world with all its stimulative programs can kick start spending and encourage businesses and individuals to take on more debt. It is not the levels of debt that are catastrophic and lead to its deflation, but it is the inability or unwillingness of debtors to take on more debt is what spells doom for the finance “industry” and the rest of so called economy, which in reality is just a consumption mirage based on fiat money that supports inordinate levels of debt. The point of catastrophe has been reached and we are now gleefully deflating. Deflation can take many forms, such as walking away from your negative equity house, cutting your credit card debt, not being able to get a loan from a bank, or from booking a room in a Hay Hotel. This is a sign of times and only confirms the deflationary trend that, hopefully, will take a very firm hold and straighten this world economy for good.

Credit crisis: What comes next?

As the ongoing debt crisis continues, we have transitioned from Stage One, the initial Wall Street impact of debt-deleveraging, to Stage Two, the Main Street impact, and are now well into Stage Three, the coordinated Fiscal and Monetary response to the debt crisis. The question, then, is what comes next?

Japanese bonds and Swiss National Bank err on the side of deflation.

Unlike Government orchestrated propaganda campaign to proclaim imminent recovery, the Government bonds investors and Central Bankers know that deflation is no where near the end. Both Japanese Government bond prices and Swiss National Bank officials tells us – deflation is here and not going away.

Who’s afraid of deflation?

A swelling dollar can clearly be good news for shoppers as well as for those who are sitting on cash. Deflation is often a result of economic progress — productivity improvements that increase spending power.

Cash is king … in deflation.

Any one with cash on hand has an upper hand when buying assets in this deflationary economic environment. Banks accept lower bids from cash buyers/investors on the repossessed properties that they are trying to liquidate and forego higher bids from buyers that need to get a mortgage approval before a real estate transaction can close. It is quite clear that banks are trying to dump the rapidly depreciating real estate assets as quickly as they can while fueling deflationary spiral in the process. Appraisers too don’t give out general estimates anymore and soberly undervalue properties. Banks and appraisers know that house prices are on an unstoppable slide downhill and are hedging their bets by correctly discounting present house values to their future prices. Deflation is here no matter what privately owned U.S. Federal Reserve and U.S. Government want us to believe.

FED foresees deflation even after “the recovery”.

Fed officials go on to make public statements that the privately owned mega central bank will keep interest rates at bay even after economy begins to recover. There can only be one explanation of this: they are worried about deflation. When economy grows interest rates normally go up, but if the FED’s decision makers plan on keeping the interest rates at their current near zero level, we can safely say that they are bluffing about the “recovery”. The Government manipulated statistics will tell us that the economy is growing, but a growing economy can not be a deflating one at the same time.

Canada experiences 2nd month of deflation.

Canadian people have been fortunate to have experienced the wornderful feeling of seeing lower prices for a second month now. Deflation is there and looks like it likes it in Canada. Oh Canada. United Press International. August 19, 2009. Canada experiences 2nd month of deflation. OTTAWA, Aug. 19 (UPI) — Consumer prices in Canada fell […]

Sane discussion of deflation from MSM … for a change.

There are winners and losers, just as there are from most economic developments. The important point is that the people who lose are more powerful than the people who gain. That might explain why we hear about the dangers of deflation, and not about its advantages. It still doesn’t make them right.

There is no threat from deflation. It may even be desirable if it encourages a balance between saving and consumption, and discourages governments and banks from taking on debt.

Deflation is here and now and everywhere.

If one were to listen to the policy makers and news media, one might think that deflation may still be averted and has not yet arrived. But if one reads the official economic statistics from around the world one will see that deflationary spiral has already arrived and is beginning its whirlwind motions in earnest.