[Queston]Why is deflation worse than (hyper)inflation to 'Status Quo'?

Discussion in 'Markets & Economies' started by spets1, May 20, 2011.

  1. spets1

    spets1 New Member

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    Almost everyone is predicting that there will be QE3 (in whatever form), QE4, 5, 6 etc.

    There are some deflationists out there but I have not found too many from my readings.

    In the last 25 years there has been 21 countries that have experienced hyperinflation.
    Meaning that the Central Banks have plenty of experience with hyperinflation. They know what causes it, they know how it develops, they know how it behaves, they know the effects on population (aka slaves) and they most importatntly know what happens to themselves.

    So quoting zerohedge :
    My question then is. Why would they ('status quo', power elites, whatever you call them) prefer inflation over deflation?
    Why do they never stop printing?
     
  2. fishball

    fishball New Member Silver Stacker

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    I know why they prefer inflation so I'll explain that part.

    Basically by inflation they can make sure their debts are minimized, by inflating money they make sure that fiat is worth less and less but their debts stay the same in nominal values so in effect they are paying less!

    Also, by inflation, the government can effectively steal from the public (citizens). Inflation figures are always made up using CPI or some other crappy indicator which is usually not reflective of the current situation and costs of the public. By claiming inflation to be 3% when in fact it is more like 6%, they have effectively stolen 3% of most people's wealth.

    In the US, Bernanke can print whatever money he wants and hand it out to whoever he wants without accounting to anybody while reporting inflation values of 3% when he prints trillions. How can the elite who get free money not like this?

    As for deflation, here are my guesses (I still haven't finished reading End the Fed by Ron Paul only briefly glanced but he talks in detail about this), deflation kills the economy. Everything is slowed down to a halt economywise. The money velocity drops, credit drops, everything is just slow and the economic sentiment is low. The people will not be happy, the elites don't want them to be unhappy, the elites want the plebs to be happy watching family guy, survivor, masterchef etc and not be thinking about what the elites are doing.
     
  3. mikedm

    mikedm New Member

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    I had this little a'ha! moment whilst reading The Evil Princes of Martin Place by Chris Leithner (solid case against Central Banking with examples).

    Helicopter Bernank and friends fear deflation because we are now a debt based society - much of our consumption is fuelled by debt. When there is deflation there is more incentive for the average person to default on their debt - why keep paying high interest on depreciating assets when the purchasing power of the money you would otherwise hold keeps increasing and increasing. More incentive to go bankrupt. Mass default causes a great black hole in the economy which can be endured/war outbreak/revolution as people wonder where their SOL went.

    Debt once upon a time used to be taken very seriously - there were debtors prisons and a man who was bankrupt would become the slave of the creditor until his debt was paid with labour. Perhaps they understood/experienced the grave implications of situation we have today.
     
  4. registered nutcase

    registered nutcase New Member

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    How is that different from today? Today we have to pay back massive ammounts of money to them rather than labour. I think we are in the same situation as you mentioned but we can not see that we are infact in it.
     
  5. mikedm

    mikedm New Member

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    Yes but when you have deflation you will find a lot more people say "stuff this for a joke" and walk away from their mortgages and start afresh etc as their equity shrivels up whilst they are paying comparably massive interest on the original purchase price. Today we also have limited liability corporations that can dissolve and leave creditors holding the bag with no human held ultimately accountable for the debt. But I get what you are saying - servitude to debt has become the norm.
     
  6. Mr Medved

    Mr Medved Member

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    Read this:

    http://fofoa.blogspot.com/2011/04/deflation-or-hyperinflation.html

    Always ask yourself, qui bono? (who benefits)

    TPTB will make decisions that are in their self interest. We'd be stuffed with full-scale debt deflation as it would be much, much worse than the 1930s and we're a massive debtor nation (165% private debt/GDP, public debt, CTH deficit $1B a week!). Perhaps one of the best passages from the link above for me was this:

    You either pay it off through (hyper)inflation or suffer debt deflation. Either way I believe the end game is complete economic collapse and complete collapse of the credit(money) system.
     
  7. THUCYDIDES79

    THUCYDIDES79 New Member Silver Stacker

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    The muslims have a prophecy from the Prophet pbuh

    " There will come a time when only the Dinar & the Dirham will be of value "

    Dinar .. gold coin
    Dirham .. silver coin

    and that Ribah ( Interest ) will be globally widespread.
     
  8. systematic

    systematic Well-Known Member

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    and Nostradamus weighs in with a prophecy:

    Quatrain 28 in book eight:

    "The imitations of gold and silver will become inflated which after the rape are thrown into the fire, after discovering all is exhausted and dissipated by the dept. All scripts and bonds are wiped out."

    paper fiat money imitates gold and silver...

    got real gold? real silver?
     
  9. systematic

    systematic Well-Known Member

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