The Death of Inflation

[biglentil]

Massive selloff in cryptos today said to be taking the whole market down. This just shows what a deck of cards have been holding markets up (IMO). The impact of overleverage.

Gold ralling on crypto capulation today but its main fuel, inflation now taking a heavy hit. Big gold swings possible in next few days . . . .

Crypto carnage forsure, total capitulation. I got blasted by crypto heads for posting this a few weeks back suggesting we were in the return to normal phase when Bitcoin rallied back to $62kusd. They called me names like 'no coiner' and 'boomers. When it comes to market bubbles its never different this time. Problem is the dollar is the biggest bubble of all.

Warren Buffett said it best when he stated: “What the wise do in the beginning, fools do in the end.”

[biglentil]

Barn find

[Sodbuster]

Barn find [ATTACH]8001[/ATTACH]

Not sure if the song would be as good as the original.

[biglentil]

A handy diagram that explains MMT.

[errolanderson]

Warning shot is recent collapse of crypto’s (IMO). Crypto washout shook equities and commodities due to excessive leverage in markets, all markets. And crypto’s have turned from trendy to thrashy rather quickly. Nothing like having to pay-the-piper to suddenly change the momentum of a market’s perceived value.

If the piper demands more payment soon (market correction), inflation will be checked rather quickly. Deflation could and will quickly erupt (which is not a trendy opinion these days). Cracks are now also appearing in commodities. The elephant chart above doesn’t explain this well (IMO).

My apologies for my edgy comments, but I’m amused how the market has become smug with inflation these days and it’s just clear sailing ahead. Nothing could be further from the real economic truth.

[jazz]

errol you need to be more clear about your inflation call. If you are talking a debt default jubilee type cycle somewhere in the future of course that is a deflationary event. But that could be 100 yrs away for all we know.

But also we have had one of those before in 1971 when the gold standard was abolished and the resulting new system was hugely inflationary for quite a while.

The fed is already moving to a digital currency that will allow real rates to go negative and to inject carrot and stick money right where they want it. Only consumers can affect money velocity. That gives them precision control over the economy. In additional they are printing up 10s of trillions to do a ESG push which will ultimately fail.

Its hard to see any near term deflation.

[biglentil]

Warning shot is recent collapse of crypto’s (IMO). Crypto washout shook equities and commodities due to excessive leverage in markets, all markets. And crypto’s have turned from trendy to thrashy rather quickly. Nothing like having to pay-the-piper to suddenly change the momentum of a market’s perceived value.

If the piper demands more payment soon (market correction), inflation will be checked rather quickly. Deflation could and will quickly erupt (which is not a trendy opinion these days). Cracks are now also appearing in commodities. The elephant chart above doesn’t explain this well (IMO).

My apologies for my edgy comments, but I’m amused how the market has become smug with inflation these days and it’s just clear sailing ahead. Nothing could be further from the real economic truth.

Lets look at Dr.Copper arguably the best bellwether of inflation expectations. Here is the 3 yr copper chart. Deflation no where in site. Biden just announced 6 to 7 trillion more stimulus, remember the inflation that resulted from the $800billion printed to bail out banks and business from the 2008 great financial crisis. Well this round of stimulus makes that look like childs play and unlike the MMT elephant in the room to get more commodities in the economy it ain't going to suck itself. You cant just hit CTRL-P to make commodities. Why not mention gold Errol or do you only mention it when there has been a slight pullback? While crypto and the dollar tanked gold's stealth rally has been stunning. When the everything bubble pops, only imaginary value will be destroyed that includes the $. Intrinsic value can not be created nor destroyed it is inherent.

[biglentil]

“When It Becomes Serious, You Have To Lie” is the most famous quotation from Jean-Claude Juncker, the former Prime Minister of Luxembourg

Hence the Fed calling inflation transitory.

[errolanderson]

2021 is a far cry from 1980 . . . . If rates are hiked just 1%, there would be mass personal and business defaults. In the Volker era, there was no debt. Big, big difference. Today, a rate hike would threaten the whole financial dynamic. Our banks could be threatened with mass defaults.

Hot U.S. inflation now reported today 5% in May . . . Big question; can it hold? In my view, unlikely. Are you buying any lumber these days? Are you wanting to go into deeper unwanted debt these days?

The consumer is king. If the consumer cuts back, some industries will turn deflationary in a bat-of-a-eye. This is already noticeable in some areas of tech, transportation. Heavy debt loads means the cashflow treadmill has to keep spinning. Any threat to the treadmill wind speed is a risk to servicing debt loads.

And price gouging (as in lumber) and wide-eyed speculation (as in real estate) are quite temporary (IMO). It this true long-term inflation? Or another flash in-the-pan? Bitcoin's crash may be a pre-cursor of other asset class reality check that in-reality don't have the valuation to justify the current spec demand. Simply, parking money is not a healthy sign of inflation (IMO).

Gold has also lost its git-up-and-go . . . why? The Fed is now doing what's called a reverse repo. In other words, they are starting to take the life jackets off-the-market and want their money back ie: stimulus. The Fed debt load is an albatross . . . . With the hot inflation data today, gold prices should be ripping, they aren't.

Is current inflation healthy and sustainable, (IMO) not in-the-least. And markets are just a hair trigger from sudden deflationary pressures should economic reality strike. My opinion . . . .

[wheatking16]

if the trendline in the Weekly Copper Futures breaks then the stock market could follow with the inflation narrative changing.

https://klarenbach.substack.com/ https://klarenbach.substack.com/