Tag Archives: inflation

On foreclosures fraud, QE and coming new spiral of deflationary forces.


There isn’t anyone at the (nominal) helm who didn’t understood from the very git-go that the only possible way out was a resumption of organic credit growth. All the fraud, lies, deceit, corruption and violation of centuries old jurisprudence were justified (at least in their minds) by national security concerns.

The power-elite have always know that there was a black whole comprised of many different elements, one of which being title insurance, related to challenges in re-securitizing the ponzi. More importantly, they knew that they had at most two years in which to blow another bubble, anywhere/any kind, to get the herd moving once again in a speculative fashion.

The Marginal Productivity of Debt.


The key to understanding the problem is the marginal productivity of debt, a concept curiously missing from the vocabulary of mainstream economics. Keynesians take comfort in the fact that total debt as a percentage of total GDP is safely below 100 in the United States while it is 100 and perhaps even more in some other countries. However, the significant ratio to watch is additional debt to additional GDP, or the amount of GDP contributed by the creation of $1 in new debt. It is this ratio that determines the quality of debt. Indeed, the higher the ratio, the more successful entrepreneurs are in increasing productivity, which is the only valid justification for going into debt in the first place.

G7’s Sheeple Distraction in IQALUIT, Canada, while Central Bankers Meet Secretly in Australia.


We don’t know what the Central Bankers will be discussing during their secret two day meeting in Australia, but what we know is that you don’t hold a well publicized G7 economic ministers meeting at the same time for no reason. If the CBs need a distraction that means that something is very grave and serious is going on. Whether we are on the verge of a new panic and financial crisis or something else, but it cant be good. Perhaps the sovereign debt issues in Europe are on the verge of causing a big monetary implosion and stock markets collapse.

Google wants to get into energy trading business. Is this a sign of coming deflation in that sector?


When you see automotive companies and consumer electronics companies getting into the business of Finance, you know that the boat is lurching to far to one side in will most surely topple over. So it happened in the US Financial Services industry that has expanded far beyond the original investment banks and brokerage houses.

“US Government” fearing Treasury bond collapse, wants 401(k) funds to prop up their prices.


In yet another clear set up by the so called “US Government”, the US Treasury and Labor departments, as if it is their own idea, are looking to give Americans more “options” of how to invest their pension money. These “options” have a funny way of becoming the only choices when it comes to government […]

Conquer the crash: Bernanke defeats deflation.


At last, the news reports are now fully brimming with optimism and proclaiming victory after victory on the economic front. Despite the fact that the private (and total) credit in the US economy has been and is still contracting at unprecedented multitrillion dollar annual rate, which is deflation by definition in credit based monetary system, the Bloomberg news declares nevertheless that the honorable manager of the privately owned Federal Reserve, Ben Bernanke, has already defeated deflation. Oh say, can you see …

Retail Sales Data from NPD Shows Consumer Technology Revenue Declined the Week of Black Friday.


When you don’t have government meddling into the free-market price setting mechanisms the prices decline and help consumers save money. Such is the case of consumer electronics that has been experiencing deflation for many years now and the skies did not fall. To the contrary all consumers benefited from natural price declines while the quality and capability of consumer electronic goods have been continuously improving. Now, when most of us badly need lower prices the only bright spots of the economy are where the government is absent and not trying to prop up prices, with our stolen money by the way.

Sovereign Defaults Coming in Second Stage of the Financial Crisis.


The first stage of the deflationary debt unwind resulted in massive consumer and corporate defaults, particularly in the financial sector. This sector being one and the same as the governments that it controls, the state has thrown all the resources that it had and did not have (pulled them out of thin air) in order to save its Banking sponsors. While it has given the Banks the respite and saved many of them for now from going belly up, it did not solve a thing. The bad debts have simply been transfered to the Central Banks’ balance sheets that are expected to be later transferred to the taxpayers of each and every country. Whatever was not transfered was hidden by suspension of the mark-to-market accounting rules. Thus, the deflation that is not seen has not gone a way, but has been simply hidden.

Mother of all carry trades will lead to inevitable deflationary bust.


For now the privately owned US Federal Reserve’s efforts to reflate the financial markets are sending a flood of liquidity into speculative asset bubble blowing by the speculators. Nearly every asset class is seeing its price being bid up with cheaply borrowed US dollars. At some point an asset bubble always bursts when an event or a perception driven change of heart causes investors to unwind their speculative positions. As the article below explains, when this happens we’ll witness a huge deflationary bust which may wipe out many speculators. Will it wipe out the Central Banks is another good question that only time will be able to answer.

Deflation is firmly taking root in USA. FED is still in denial.


Even though the signs of deflation are everywhere as expressed in contracting credit, money supply, and prices, the privately owned Federal Reserve’s executives continue to beat about the deflationary bush by referring to it as “disinflation” and talking about it in future tense. It has been happenning already for the past year and a half and it will continue as evidenced by record low long term Treasury yields this week. The below article provides a detailed discussion and solid evidence of deflation and how it works.