The Death of Inflation

[biglentil]

The incoming deflationary shock and credit market defaults will catch the investor herd totally unsuspecting (IMO).

Even plywood prices are susceptible to-a-markdown.

You've been saying deflation is coming since plywood was $26 a sheet and calling for golds sell off since $900. I've been hearing about deflation risks for 20years and I've been calling bullshit for that long. It's just jawboning by the fed all the while they continue to print and steal the purchasing power of the savers. Increasing money supply is INFLATION, price inflation is the result. That is the definition as per the Merriam Webster Dictionary from early 1900's to the 1970's until the Keynesians forced them to change it to align with a cooked CPI model to significantly understate real world price inflation. Do you honestly believe the economy is struggling to maintain a 2% price inflation rate currently?

[biglentil]

You can’t make this shit up. Comic book produced by the NY Fed outlines exactly what’s going on today.

https://twitter.com/HayekAndKeynes/status/1388308624431255555?s=19 https://twitter.com/HayekAndKeynes/status/1388308624431255555?s=19

[biglentil]

You can’t make this shit up. Comic book produced by the NY Fed outlines exactly what’s going on today.

[sumdumguy]

Cycles repeat. The thing is, there were probably the same predictors over and over again all through the years. Who hasn’t heard the old folks warning the next generation about prices rising, too much borrowing? All I am saying is I’ve heard this song and dance repeatedly. When we were buying land in 1972 at $100/acre, our father was saying, “You’ll never pay for that, the price is way too high”. The borrowers were the winners (except when interest rates went to 22%). Could that happen again? That would put the brakes on, wouldn’t it?

[Ache4Acres]

I’ve basically been calling for a collapse of the dollar for nearly 20 years and yes it may seem to some like I’m the boy that cried wolf but I would say thing look more than ever like I will be right in the near future.

Interest Rates can never increase significantly again without bringing a complete collapse of the system. The amount of debt in the world compared to 1980 is literally astronomical.

This is not a matter of if but when. In the interim they feel like the way out is taxation (carbon tax), currency devaluation and quasi inflation. That’s the same old game plan. The inflation (read devaluation) of your currency is estimated to be around 15% per year right now. If you are not making 15% on your money you are losing your wealth.

The only asset in the world that has outperformed the money printing in last 12 years is bitcoin. Other commodities and assets like real estate have faired well too but really treaded water compared to the Feds balance sheet expansion.

[biglentil]

Pictures going up!

[errolanderson]

Who's going to pay for this recent bout of inflation?

Never-ending credit market expansion? Print more money till the cows come home? That appears to be the central bank game plan. But if it's real inflation, don't interest rates have to rise to cool? But, a rise in rates could trigger an overly leveraged, margined market to rethink high prices. Even the Fed itself is now warning of heightened risk of asset devaluation . . . I call that incoming deflation.

The current price rise (ie: gouging) may be seen as an inflationary huge head-fake, if credit markets fail. And how much leverage is there in credit markets? INSANE LEVERAGE. Inflation can quickly become a distant memory if leverage is remotely impacted.

Is this real or a bubble? Today's U.S. jobs numbers were a major miss . . . treasury yields quickly dropped. Gold is breaking out of its downtrend this week, believing inflation is real. Inflation is talk of the town. To me, price gouging is real, until it can't be done anymore. Right now, commodity strength is now largely driven by computer algorithms (fund buying).

And when was the last time a commodity bull market held?

When economic fundamentals have no meaning and being disregarded by investors taking on massive risk fueled by insane greed, economic reality will be the check and eventually have the final say.
And it may be a shock to investors fueled by added risk and greed (IMO).

[errolanderson]

Can real demand hold-up prices for the long-haul?

The red-hot lumber chart is showing significant cracks, (off 25% from recent highs) and now in its-own-form of 'price timber', precious metal strength appears weak at-best, the Cdn dollar is now technically overbought, while grain futures have clearly stumbled of-late.

Massive debt levels will have a definite say in the value of commodities heading into the 2nd half of 2021. Realize inflation is the buzz word these days, but could rapid fund liquidation, debt defaults and deflation be right-around-the-corner?

These are interesting, but strange economic times . . . .

[canolacrazy]

Can real demand hold-up prices for the long-haul?

The red-hot lumber chart is showing significant cracks, (off 25% from recent highs) and now in its-own-form of 'price timber', precious metal strength appears weak at-best, the Cdn dollar is now technically overbought, while grain futures have clearly stumbled of-late.

Massive debt levels will have a definite say in the value of commodities heading into the 2nd half of 2021. Realize inflation is the buzz word these days, but could rapid fund liquidation, debt defaults and deflation be right-around-the-corner?

These are interesting, but strange economic times . . . .

Thanks Errol, i believe that we are in for a repeat of 2008-09 crash. that was precipitated by the housing crisis which led to a world wide financial crisis. i think this time will be much worse because central banks have no ammo to fight the coming deflationary collapse because of excess money printing and quantative easing. there's nowhere left to go. if the central banks would have followed normal course, they would have raised rates two years ago and let the market correct. they didn't and that's led us to where we are now.
the good news for farmers is that if we use 2008 as an example, grain prices held up or rose through that period with a commodity boom unseen in history. let's hope and expect for more of the same.

[biglentil]

Thanks Errol, i believe that we are in for a repeat of 2008-09 crash. that was precipitated by the housing crisis which led to a world wide financial crisis. i think this time will be much worse because central banks have no ammo to fight the coming deflationary collapse because of excess money printing and quantative easing. there's nowhere left to go. if the central banks would have followed normal course, they would have raised rates two years ago and let the market correct. they didn't and that's led us to where we are now.
the good news for farmers is that if we use 2008 as an example, grain prices held up or rose through that period with a commodity boom unseen in history. let's hope and expect for more of the same.

The Great reset coming between beginning of June and end of August. But I do not think it will be a buying opportunity for those with cash.

[Taiga]

Reset is coming for sure, insolvencies spiking.

https://financialpost.com/executive/executive-summary/posthaste-the-backlog-of-debt-put-off-by-pandemic-aid-is-catching-up-with-canadians

[errolanderson]

Agrivillers . . . my apologies for being such a pain-in-the-ass on this subject.

But I genuinely believe the current inflation hype we are all seeing is not sustainable. Markets are setting up for a big surprise from real estate to commodities to equities . . . . it's going to come in strong . . . economic reality that is. Central bankers can be blamed for creating free money and fueling the bubbles.

This reality check is soooo far past due. And its going to hurt a lot of investors.

It's going to impact our financial institutions. It going to impact the value of global commodities. It's going to trigger a rash-of-defaults. Credit markets will be impacted. But for true recovery to occur, a housecleaning is-in-order and unavoidable.