During the first phase of the crisis, we have been seeing a deflationary rather than an inflationary bias: This is because, hard as it may seem to believe, more wealth has been destroyed than created (at least so far). The plunging of the value of real estate, stocks, bonds, and any and all "paper assets" plus unemployment, price-slasing in the face of extreme competition, retail zones filled with "Going Out of Business" signs, etc etc -- that represents deflation, not inflation. Most univesities have lost around 1/3 of endowments if they are lucky. Individuals seem to have lost 1/3 or 1/2 of their stock/bond "retirement investments" (toxic paper crap), companies suddenly see credit lines vanish, states are going bankrupt (cali and 7 other states start issuing IOUs instead of cash on Monday!) The situation with pension funds and big insurance industries is even grimmer (many are functionally bankrupt even now although everyone is trying not to admit this). ALl this is deflationary.

AND YET the fed and treasury have been running the presses 24/7. cranking out trillion after trillion in real money and credit...we don't really know how much because they don't print basic econ credit creation stats like the M3 anymore! But at some point all this is going to hit the financial and economic bloodstream like a mainline shot of smack and the credit-strung-out nation will breathe a shakey sigh of relief as this $$ floods the ecomony again. You can bet at that point the MSM will start crowing about how "everythings fine now" and business is back to ususal, and all the ATS types will be laughed at and called tinfoil hatters...for awhile that is. It will be like this brief golden spot. Then INFLATION will set in because the Fed and Treasury will OVER-COMPENSATE instead of stopping where they should...then we really will swing back to desperate times as we experence severe (or even possibly hyper-) inflation. The press will try to keep the illusion going as long as possible but eventually people are going to see prices for the basics SKYROCKET once all this printing-press money hits the general market.




[edit on 7/3/09 by silent thunder]

Well, I can think of a few good things as a result of hyper-inflation. One, we wont need to purchase toilet paper anymore and that will make the environmentalists happy because we wont be cutting down as many trees. Second, we wont need to purchase kleenex to blow our noses and again the environmentalists will be happy less trees cut down. Third, we have a fuel source to heat our barrels in tent city. Sorry for the sarcasm, but I thought a little levity should be added to such a somber subject.

However, I am in agreement with all of you that we are in for one heck of a ride; so fasten the seat belts and hold on. This deficit spending during a bitter recession is just plain lunacy. It's as though our legislatures are patients at the puzzle factory. Have they lost all sense! You would figure in tough times their budgets would be slashed and be a little more conservative in their expenditures. However, there is no sign of frugality but yet they expect the average American to live on nickles and dimes. As the average American is struggling to keep a roof over their heads, feed their families, keep a job; the politicians smoke cigars, drink fine wines, sip expresso, remodel their homes, purchase luxury cars, wear thousand dollar suits, ect. ect. ect. . .

When is jig going to be up and when are the people going to see that these money grubbing monsters in Washington care not of the struggles of their constituents but padding their own nests? The Washington of today might as well be the London of the American Revolution era some 3,000 miles away and separated by an ocean. In other words, the events in Washington might as well be happening on the Moon because they have no relation to main street and the perils of the common man.

I've been waiting on hyperinflation but right now I wonder if the MONEY is ever going to get into circulation.

I mean, they printed it, but where did it GO? I sure ain't getting any - we and everyone I know have had to endure pretty bad salary CUTS.

Originally posted by hadriana
I've been waiting on hyperinflation but right now I wonder if the MONEY is ever going to get into circulation.

I mean, they printed it, but where did it GO? I sure ain't getting any - we and everyone I know have had to endure pretty bad salary CUTS.

First they take the money out of the economy then they put it back in to the economy and tax it on the way back. It's BS. It's acomplished nothing but a bigger deficit.

It wont create hyperinflation. Nobody is failing to take into account the trillions of dollars wiped out in the recession.

Their is NO TRILLIONS off the darn printing presses people......they did not physically print tangible money at any high rate...... .....they created trillions in promises to insure bad debt's that should otherwise be allowed to default.....they created a trillion in "Insurance" to back up money market funds....they created credit out of thin air ....this is not being lent out by banks.......people's wages are not going up ....there will be no high inflation or hyperinflation because that would = such tremendous decline in standard of living that falls squarely on the gov't that people would stop talking thru letters and start talking thru shotguns

OBE1 the gov't realizes that real depreciation of the currency will not benefit the economy at all.....i don't believe they have chosen any such political decision to trash the currency.

unlike other country's when the dollar depreciates.....the price of energy and food Soar....due to the ability of investors/"speculators" being able to buy futures on margin

understand when the dollar is trashed (implying a trashed country will lose the world reserve currency)... the financial sector and military strength are as well .....

depreciating the currency would do no good......we have high and rising U6 unemployment.......wage's are stagnant and or falling for the majority.......the financial sector is not loaning into this enviornement.....asset prices are not turning up with the biggest credit collapse recent history....we are not "inflating out of debt"..the credit markets are dependent on trillions of gaurantee's and promises just to stay on life support....Ben B's printing press or "electronic equivilant" speech was to try and INSTILL CONfidence in the fed's abilities......believe him at your own perill....just like the "subprime crisis was containted".....he is trying to maintain CONfidence....Gov't shills sell this crap nite and day and gold bugs simply CHOOSE to believe it.................we will have debt serf's and fascism......not hyperinflation.....Jim sinclair and J willie are inflexible due to the need to maintain their positions to maintain credibility and a job

this does not mean we have crippling deflation IMO......just no hyperinflation and a hell of a time to try and get some ordinary inflation

p.s now should the gov't take over banks and start printing 10,000 dollar bills i will revisit other possiblities or should the gov't take to handing out 10,000$ thank you for not protesting or rioting gifts i will re-consider as well...........

the discussion itself def vs. hyperinflation is really more of a red herring
the reality is the very real threat of a rapidly decreasing standard of living for most....and fascism........the elite grew great amounts of wealth and the disparity was somewhat shadowed by the amount of debt the consumer took on to appear like they were "keeping up" to some degree......now the debt clock struck midnite and the consumer is F(*K(D

[edit on 5-7-2009 by cpdaman]