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Deflation?

SkyRider

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Some guy name Walter(?) Zimmerman is predicting 5 years of deflation. How can there be deflation when most countries are running their printing press in overdrive? :confused:
 

hinz

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Nov 27, 2006
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Some guy name Walter(?) Zimmerman is predicting 5 years of deflation. How can there be deflation when most countries are running their printing press in overdrive?
Cause the majority of the commercial banks in the developed economies are hoarding those extra cash printed from the "press" to pluck in the holes on their balance sheets, or using some of the those funds to buy a truck load of government bonds a couple of years ago, when many had really closed call of Financial Armageddon.

Plus, the corporates and the households in the same economies are de-leveraging fast and furious for the same reason. Thus, there are no demand for new loans, except those SME who are trying hard to get one by convincing the bankers their business ideas fly overdrive...to no avail.

That means whatever new printed currencies not absorbed by the developed economies are flooding the emerging economies and barring capital flow control, those countries are suffering inflation due to the fact Uncle Sam is the main reserve currency and like it or not the Fed is printing overdrive to save the US economy and DC and the Congress are literally "brain dead" and in denial. :rolleyes:
 

SkyRider

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Mar 31, 2009
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This guy Zimmerman made a bizarre analysis. He said that in a deflationary environment, all tangible assets decrease in value but paper money retain their value. How is this possible when they are printing paper money by the barrelfull?
 
B

burt-oh-my!

Basically, because everyone is dusting out their old unused barrels to hold all the cash rather than spend it.
 

oil&gas

Well-known member
Apr 16, 2002
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Ghawar
Basically, because everyone is dusting out their old unused barrels to hold all the cash rather than spend it.
Money never sleeps. The large excess of printed currencies won't
stay idle forever. If people are indeed saving more their cash deposits
will be channeled into others' pockets in the form of bank loans. The hot
money flooding China and other emerging economies will eventually be
exported back to North America. I have a hunch that
it won't be long before China will be forced to step up currency swapping
with countries like Brazil, Australia, Argentina and New Zealand
etc to reduce the cost of imports of food and raw materials. Oil exporters
like Iran and Venezuela will likewise increasingly engage in currencies
exchange with major oil importers like China. That will led to
substantial depreciation of the USD and inflation.
 

hinz

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Nov 27, 2006
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Money never sleeps. The large excess of printed currencies won't stay idle forever.
LOL. The responsible and prudent ones got punished/screwed by having their return on deposits essentially zero, negative when you have mild inflation.

Perhaps those group of people have vested interest to see deflation down the road.

If people are indeed saving more their cash deposits
will be channeled into others' pockets in the form of bank loans.
Maybe but other than the "damaged good" like the Citibank, the majority of the American commercial banks like Wells Fargo, BOA, JP Morgan, US Bancorp are for all intend purpose domestic institutions and the volume for new bank loans nowadays are again flat but it seems the trend is going up. Too early to say for sure.

The hot money flooding China and other emerging economies will eventually be exported back to North America.
Sure but that may happen only when those emerging economies start counter attack on America's "currency war" and take the risk to deflate the asset bubbles by implementing capital control. 2012 will be earliest IMHO, just in time to put a road block on Obama reelection.

I have a hunch that it won't be long before China will be forced to step up currency swapping with countries like Brazil, Australia, Argentina and New Zealand etc to reduce the cost of imports of food and raw materials. Oil exporters like Iran and Venezuela will likewise increasingly engage in currencies
exchange with major oil importers like China. That will led to
substantial depreciation of the USD and inflation.
Actually China has already imitated a series of first RMB swaps with those countries a year or so ago if my memory serves me right. These so-called "south-south" trades are practically giving the jokers (non big corporations) in Europe and North America a tonne of worry nowadays. :rolleyes:

Having said that, any substantial, even permanent depreciation of Uncle Sam and subsequent inflation will be IMHO a decade away under the "best" scenario. RMB is still not fully convertible, let alone easily circulated outside China.
 

hinz

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This would appear to be the likely scenario when the printing of paper money gets out of control. Isn't this what happened to Germany in the 1930's?
That was happened to Germany under Weimar Republic from 1918 to 1933. Remember Treaty of Versailles after WWI and those punishing reparations imposed on Germany mainly by the French?

No wonder the French were deserved to be punished for what they did during WWII. :rolleyes:
 

nottyboi

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May 14, 2008
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You have to consider that the mortgage fraud destroyed a HUGE amount of paper wealth. The banks have trillions of $$ of toxic assets they have not yet written off. Those are being held on the books at "mark to fantasy" values due to the suspension of "mark to market" rules. If they were forced to mark to market, all the banks would be insolvent. So the Fed is printing money, to allow the banks to make easy money to fill a massive gaping hole in their balance sheets as they gradually write down these securities. So ALL that cash is really being soaked up gradually by the wealth that was destroyed but not yet reported as missing.
 

big dogie

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Jun 15, 2003
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in a van down by the river
I don't think you could be more wrong, what do you have to back up that statement that they still have trillions that they have yet to write off?

b d

You have to consider that the mortgage fraud destroyed a HUGE amount of paper wealth. The banks have trillions of $$ of toxic assets they have not yet written off. Those are being held on the books at "mark to fantasy" values due to the suspension of "mark to market" rules. If they were forced to mark to market, all the banks would be insolvent. So the Fed is printing money, to allow the banks to make easy money to fill a massive gaping hole in their balance sheets as they gradually write down these securities. So ALL that cash is really being soaked up gradually by the wealth that was destroyed but not yet reported as missing.
 

nottyboi

Well-known member
May 14, 2008
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I don't think you could be more wrong, what do you have to back up that statement that they still have trillions that they have yet to write off?

b d
Here is just one example:

http://www.alternet.org/economy/148...ere_may_be_financial_disaster_on_the_horizon/


and another:

http://pragcap.com/market-still-facing-major-risks


"Banks went into the 2008 credit crisis loaded with toxic assets, and, to a large extent, they still have them. While TARP was originally proposed by Treasury Secretary Paulson as a buyout of toxic assets, the program was almost immediately changed to generalized bailout. The accounting rule-makers were then pressured to do away with mark-to-market accounting, thereby papering over the problem and leaving most of the toxic assets the banks’ books, where they remain today. This is one of the reasons banks are hoarding cash and are so reluctant to lend. They know what they have"
 

big dogie

Active member
Jun 15, 2003
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in a van down by the river
Those links are just propaganda with a few facts thrown in to give them some credibility. The US banks are selling debt and it is finding buyers, the debt market is a lot smarter then the stock market that is an important indicator that worst is behind the US banks, not saying it is full speed ahead thou.

Certainly the biggest problem that is soon to crush the world markets is state and municipal debt for paying for pensions of government employee's, the big shoe is a coming down soon.

b d



Here is just one example:

http://www.alternet.org/economy/148...ere_may_be_financial_disaster_on_the_horizon/


and another:

http://pragcap.com/market-still-facing-major-risks


"Banks went into the 2008 credit crisis loaded with toxic assets, and, to a large extent, they still have them. While TARP was originally proposed by Treasury Secretary Paulson as a buyout of toxic assets, the program was almost immediately changed to generalized bailout. The accounting rule-makers were then pressured to do away with mark-to-market accounting, thereby papering over the problem and leaving most of the toxic assets the banks’ books, where they remain today. This is one of the reasons banks are hoarding cash and are so reluctant to lend. They know what they have"
 

nottyboi

Well-known member
May 14, 2008
22,447
1,325
113
Those links are just propaganda with a few facts thrown in to give them some credibility. The US banks are selling debt and it is finding buyers, the debt market is a lot smarter then the stock market that is an important indicator that worst is behind the US banks, not saying it is full speed ahead thou.

Certainly the biggest problem that is soon to crush the world markets is state and municipal debt for paying for pensions of government employee's, the big shoe is a coming down soon.

b d
You need to ask yourself....who is buying the debt? (other banks and Fed?). Why are banks taking so long to foreclose? (because they need to write of the loans when they do) What happened to all the toxic assets...and why are bank balance sheets so opaque?
 

big dogie

Active member
Jun 15, 2003
1,227
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36
in a van down by the river
Wow, I'm afraid of you!!!

You are so smart I bet you are a billionaire!!!

b d

you must be working for a fucking bank ........and it better not be the fucking goldman scum or JP Morge AKA THE FINANCIAL TERRORISTS cause im gonna be coming after you - shortly !!!!!!

even AN IDIOT can realize that pretty much ALL THE BANKS have trillions and trillions of bad bets/debt YET to be revealed !!!!
 
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