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overtheedge
Member since May 2012
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Preparing For Deflation

- John Rubino - Dollar Collapse

The PPI is the rate of change in selling price.

So you and others contend that lower prices are indicative of deflation?
Under this definition, we the public feed this deflation when we take advantages of sales. So we the public cause deflation?

Inflation and deflation are monetary events. There is more money in the system now than at any time in history. Ergo, NO DEFLATION.

The problem is the velocity of money has stalled out. Consumers have little to no disposable income. In many cases, they can't pay all the current monthly bills.

This is a depression. Odd how the economists and politicians are free to change definitions (depression) to suit their agenda. And yes, it begets a vicious circle where slower velocity of money trends towards slower still until dead stop. At that time, barter is all that is left. No tax revenue stream.

When deficit spending exists, it signals insufficient tax revenue stream. Two options: raise taxes and/or cut spending. In a depression, neither option is palatable for politicians.

You MUST permanently remove money from the system to effect a deflationary trend. That is NOT happening. It will happen when confidence ends at which time the money is discarded by the public as worthless.
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Oh and please tell me about these falling deficits you spoke of in the first paragraph.
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Doesn't anyone remember why the CBs started paying interest on commercial bank deposits held at the CB?
Does anyone remember why the emergency loans to commercial banks?
How about the reason for stress testing?

The commercials lacked the reserves and one way to insure any reserves obtained by the bail-out weren't pissed away was by stashing them at the CBs. And to encourage that the bail-out funds would be deposited at the CB was by paying interest on them.

So now the CBs are considering forcing the commercials to pay for the privilege of maintaining deposits at the CB. Next, the commercials will start charging depositors to maintain a savings account.

This is all about velocity of money. Make loans, spend money take in one another's laundry. PUMP up the tax revenue stream.
Remember all the stuff about getting folks to spend more to fire up the economy?

Doesn't anyone think for themselves anymore? The CBs, economists and politicians haven't solved anything. They are not waiting to use the best solution last. They used it first and are using options 9 - 12 now and it will be options 16 - 39 tomorrow. They are psychologically incapable of realizing that they have failed. Denial is a symptom of mental illness, not proof, just a symptom. It is NEVER a good idea to attach any credibility to anyone suspected of mental illness.

First, last and always. If it ain't better, it is always worse. Be it an individual or a multinational corporation, every day it doesn't significantly improve is just another drain on limited reserves. Everyone's financial well is going dry! Or you can listen to CBs, economists and politicians when they tell you to borrow and buy, bye, bye to save their economy.

Commented 4165 days ago

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Beginning of the headline :Signs of a slowdown are spreading. Here in the US, despite all the happy talk about rising stock prices and falling deficits and the imminent unwinding of the Fed's debt-monetization program, today's numbers were ominous: Producer prices post big drop, factory activity weak (Reuters) - U.S. producer prices recorded their largest drop in three years in April as gasoline and food costs tumbled, pointing to weak inflation pressures that should give the Federal Reserve latit... Read More

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