The Death of Inflation

[errolanderson]

The volacity-of-money stateside is now apparently at lows not seen since 1946 despite nearly 40 percent more U.S. dollars in-circulation over just the past year. This failure of keynesian policy has been further complicated by Covid, but these results should make any central banker gringe.

Money printing has had little impact except kick-the-can while generating artificial and unsustainable asset bubbles.

Cryptocurrencies are the largest benefactor and the riskiest (IMO). Even gold can’t gain traction without inflationary fuel. And the stock market bubble is just that, a bubble. When equities break despite all the free money, it’s game over (IMO). The impact of ‘over-leverage’ and ‘unsustainable debt’ will be the two new sheriffs-in-town impacting market direction.

My opinion which many in the financial industry don’t share . . . .

[Austrian Economics]

The volacity-of-money stateside is now apparently at lows not seen since 1946 despite nearly 40 percent more U.S. dollars in-circulation over just the past year. This failure of keynesian policy has been further complicated by Covid, but these results should make any central banker gringe.

Money printing has had little impact except kick-the-can while generating artificial and unsustainable asset bubbles.

Cryptocurrencies are the largest benefactor and the riskiest (IMO). Even gold can’t gain traction without inflationary fuel. And the stock market bubble is just that, a bubble. When equities break despite all the free money, it’s game over (IMO). The impact of ‘over-leverage’ and ‘unsustainable debt’ will be the two new sheriffs-in-town impacting market direction.

My opinion which many in the financial industry don’t share . . . .

My sense is that the markets are going to break downwards before too long. The costs of the lockdowns are simply too much to bear. Central banks will be forced into accommodating negative interest across the yield curve to reflate those markets.

Forty years ago the monetary expansion we see today would have fueled a stunning rise in GDP. Today, a dollar of debt only gets you about 30 cents worth of GDP growth. This is due to the declining marginal productivity of debt. It's been in decline since the 1950s (back then a dollar of debt generated a dollar of GDP) but the trend has really accelerated since 2008. This is a clear signal that the capital structure underpinning our economy is in serious decline.

[jazz]

By all accounts the US is going to launch several major debt laden programs. Probably $2T to some green deal and something similar for infrastructure aligned with it.

Investing debt into an energy source less that is less than 10% the efficiency of fossil fuel and using fossil fuels to build an asset that has a minimum of 10 yr payback, but probably twice that.

I think they believe this will be the catalyst to respark GDP.

Can the US economy handle another $4T in debt? The feds balance sheet is already $10T which is twice what it was in the great recession. They will never be able to unwind that. The fed govts debt is approaching $30T.

[TOM4CWB]

The volacity-of-money stateside is now apparently at lows not seen since 1946 despite nearly 40 percent more U.S. dollars in-circulation over just the past year. This failure of keynesian policy has been further complicated by Covid, but these results should make any central banker gringe.

Money printing has had little impact except kick-the-can while generating artificial and unsustainable asset bubbles.

Cryptocurrencies are the largest benefactor and the riskiest (IMO). Even gold can’t gain traction without inflationary fuel. And the stock market bubble is just that, a bubble. When equities break despite all the free money, it’s game over (IMO). The impact of ‘over-leverage’ and ‘unsustainable debt’ will be the two new sheriffs-in-town impacting market direction.

My opinion which many in the financial industry don’t share . . . .

errolanderson;

Something is missing from your 'bubble' 'lack of inflation' theory:

Housing, Real estate, farm land, farm inputs, grain prices, livestock, food prices, minimum wages, equipment cost, virtually all 'real assets' have increased significantly over the past 5 and 10 years.

There has and continues to be: 'significant inflation'. Governments simply choose to ignore increasing prices; dishonestly reporting a narrative to increase prices while simply changing how they 'report' increasing prices. Low real interest usury fees has fuelled increasing prices... bank margins have been very profitable... re-inflateing capital balance accounts... of virtually all segments of civilization.
Bitcoin, gold, silver, precious metals... steel, copper; all have large appreciations. But for Covid-19 we would be in a period of 'unprecedented prosperity' many would suggest recent GameStop, Blackberry, savings rates, massive infrastructure spending and increased taxes on energy/'carbon' costs... all tell a different story.

[Rareearth]

I get the opposing views on the market, they both make some sense.
I haven’t seen or experienced any consumer good that has gone down in price, every thing seems be cost more.
I’m ok with inflation.
It just doesn’t seem right our Canadian dollar going up in value against the USA, obviously not good for Canada as a exporter. International investors buying Canadian dollars, seem oblivious to Canadian politics or are we just that much better off comparatively compared to other countries?

Higher inflation in the past has always resulted in higher interest rates. Austrians comments, and other analysts suggest lower rates because the economy, and Govt can’t afford higher rates.

If there was higher rates, business would then stop - possible deflation then? Only if everything crashes, then deflation ( every thing will stop - Covid legislated lock downs won’t be necessary, - every one would self impose stay at home, no Starbucks, no buying of anything, or going any where.

Just trying to simplify the scenarios.

[shtferbrains]

Hasn't govenment induced inflation been the cure for government induced debt?

Pay it back with an inflated economy?

[furrowtickler]

I'm seeing price inflation everywhere. Lumber, steel, food, grains, fertilizers.... Stop drinking the cooked cpi data koolaid. The WSB crowd is now targeting silver. I assure you there is an unbelievable level of velocity occurring as I type. So much so that the very pillars of the financial system are being shook. I'm not entirely sure what to expect in the markets this coming week(depends on the rule changes), but I anticipate it will be somewhere between truly epic or outright biblical. Buckle up and brace for impact.... I assure you the net result will not be an increase in the purchasing power of dollars.

Agree , inflation is almost rampant right now. Lumber in some cases 3x , steel up a lot
Meanwhile people are spending like drukin sailors and have been for over 6 months.
Not sure where this will end up but agree purchasing power is about to hit a wall for the majority

[canolacrazy]

errolanderson;

Something is missing from your 'bubble' 'lack of inflation' theory:

Housing, Real estate, farm land, farm inputs, grain prices, livestock, food prices, minimum wages, equipment cost, virtually all 'real assets' have increased significantly over the past 5 and 10 years.

There has and continues to be: 'significant inflation'. Governments simply choose to ignore increasing prices; dishonestly reporting a narrative to increase prices while simply changing how they 'report' increasing prices. Low real interest usury fees has fuelled increasing prices... bank margins have been very profitable... re-inflateing capital balance accounts... of virtually all segments of civilization.
Bitcoin, gold, silver, precious metals... steel, copper; all have large appreciations. But for Covid-19 we would be in a period of 'unprecedented prosperity' many would suggest recent GameStop, Blackberry, savings rates, massive infrastructure spending and increased taxes on energy/'carbon' costs... all tell a different story.

Correct. We are already seeming significant inflation, it just isn't reported in the manipulated CPI. Modern Monetary Theory, of which our PM and Finance minister are proponents, is starting to gain traction in the G7. Especially now that Janet Yellen is heading up the US treasury. The Fed and Treasury are one. She will have William Powell print all the money she needs to "adjust" US society for social and environmental justice. MMT does not have a problem with printing money, they advocate using the tax system as a way to pay for it.
Watch for significant increases in taxes here and in the US, and also follow the US 10 treasury as it is starting to climb.

[jazz]

errol may have been talking stagflation, where prices rise even in the face of flat demand.

Some people are spending money but I bet a lot are hoarding it too. Many people had the fear of god put in them with this pandemic and they wont be so quick to be so exposed next time.

But on the other hand, my bank manager at RBC says they have seen a refi renovation and real estate boom which really isnt spending real money per say.

[Old Cowzilla]

TV s are 1/2 the price they where 20 years ago ,we get twice the mileage out of cars and trucks and tractors then we did in the 70's. Young people don't pay for TV or MUSIC . One coffee at Starbucks will buy you a whole can of coffee ( 1000 cups ). Don't buy books for $30 download for $2 .Food still cheap at stores and i don't mean all that other crap that is thrown in shopping cart. Most families don't have more than 2 kids to feed and North America pop. would drop without imports. Thats what really is happening.

[jamesb]

Lots of very interesting thinking on this thread. Many of you are far more versed and polished than I in looking into the crystal ball and many of your theories have merit. My observations are that many have been foreseeing the collapse of things as we know them for many years but until this point at least things seem to bump along and carry on. Around the world people live better than their parents in most cases. Maybe that will change. I do believe we will see the total collapse of third world countries before things ever get out of hand here. How the west react to this collapse will be telling, build a wall or open borders? How many can we take in?
As a farmer and land owner I guess I feel more secure in the fact that whatever happens the demand for what we grow is still going to be there. We may do it differently, we may grow different crops. Owning the land for me is important . I guess we can fear the govt taking the land from us but I believe I think history has shown us that a private farmer left to their own can be the most productive growing food or fuel.
I do think covid is speeding up the slide of many countries that are in tough shape but I am more concerned with the US. The rural / urban split that has happened in the US is stunning in its intensity. Where is this going to go?
So I guess I am saying that we could have reset/ crash in the stock market/ economy from poor monetary policy but for me there are a lot of other issues at play here.

[errolanderson]

Government debt contributed and funded inflation, not actual growth. COVID disruptions are the key reason why groceries cost more these days. But take-away the free money and see what consumers have left?

And with the power of money printing now showing little ‘bang-for-buck’, this is a financial train wreck that has already occurred. Remember, central bankers produce no economy. All they can do is kick-a-can and pray for massive inflation to get them and economy out of this mess. Have you ever heard a central banker say the word “deflation”, that’s like kryptonite to Superman.

In my view, investors are sipping the cool-aid taking massive on risk. But the financial industry says you can’t place your money into cash. Inflation will eat you alive. Dividends, dividends. Stay invested, is the chant. But who cares about the speculator right?

Where’s the inflation going to occur, when governments say you aren’t getting anymore free money. And sorry about your job loss.

Print all the money you want, that ain’t going to fix anything. But tell the general public, the Fed has your back with unending stimulus. That’ll fix everything. And if China stops buying, tractor tire prices are apt to get a whole lot cheaper.

Maybe it’s time for me to go the fridge and have some cool-aid . . . .

[canolacrazy]

Inflation or Deflation, that is the question. whichever way it goes, i think farmers are in the best position right now to deal with it. we've got a fixed asset, produce our own food and peace and quiet. i'll take that anyday.

[macdon02]

The MO of the Wall Street Bets crew is phuck the shorts, and they take a glance at USD, and decide to shit on the rug, light the house on fire and basically have a rave/mosh pit, this is gonna get real interesting. They are pushing silver to the tune of 6.5% on open tonight. These guys are not fly by night morons that are clueless, their hit list is solid, they only pick what has trend behind it, the formation is there, and they are extremely vengeful with someone else's money. They got nothing to lose. Im sure govt is looking at banning retail if net worth isn't a million plus. Paid a bill yesterday, usually it dates Monday if done after 4pm Friday, but it dated Sat. Are we going full digital currency?

[shtferbrains]

I started checking in on WSB last Feb or March mostly for the entertaining memes but also to learn about shorting with options.
At that time they were complaining about all the newbie retards joining every day and diluting the discussion much like you sometimes hear on agriville.
I think they had just gone over 1 million users.
They had some MSM attention on influencing the market then.
I found it hard to follow the convo with a lot of jargon.
All talk of puts and calls.
Ridicule any stock purchasers.


Now I think 5.4 million users.
Most all newbies buying less than 10 stocks. Not options.
Lost any general day to day market analyst.

Truly a bunch of retards have no idea but push gamestock.
Can't duplicate that everyday as most will be broke next week.

Still entertaining but DYOD.