http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=117.BSI.M.U2.N.R.LRE.X.1.A1.3000.Z01.E s -> R s e e s c e x r E v e s OMG Supah Bailout! OMG Hypah Inflation! Then it dropped again. But we didn't hear them then.
There was no QE from the ECB in 2012. Straight out money printing is still to come. Destroyed or not they will print more and more cash. If you destroy 1T$ and it takes a single key stroke to make 2T$ how can deflation win?
Even Armstrong predicts this http://armstrongeconomics.com/2014/08/21/ecb-to-flood-southern-europe-with-trillion-euros/
The cause of deflation is government. Raising taxes is lowering real wages and the hunt for cash is crippling the economy. This is shown by record cash held by corporations. Nobody will invest in a downwards moving economy. You can print money until the cows come home but it will not solve the problem nor will it lead to hyperinflation. The money will simply move somewhere safe.
There are a thousand Armstrongs out there including the ghost of the one that visited the moon. I look at data because I learnt that figures reflect reality better than Armstrongs. Looking at what is done, versus looking at what is said. Would this be dumb?
Deflation is a term that seems to have a very wide interpretation. I see deflation as a normal trend in an economy. Because people get better in doing a job, so new products see their prices gradually drop, with that rate thus being limited by the rate that people can improve, and ends when optimal production is reached. In your interpretation, deflation is a result of a period money creation and thus unbacked spending. This deflation typically ends in corrected prices. That's all. Now, governments, and all unbacked spenders, do of course not like to have to pay back 300,000 on an asset whose price corrected to 100,000. What can they do: 1) create more money (read: bail out banks) 2) make current money owners waste their money on bloated prices of various speculated upon products. 3) destroy the wasted money (read: banks pay back the loans to the central bank, if needed as penalties for their bad bad bad behaviour lol) And bingo, their new money doesn't face competion of existing. And bingo, they can spend it without causing corresponding price increasings. When do they fail: if current money owners skip the bloated prices. Then they may decide to show us their ugly fascist faces more openly. But they don't like that, for the obvious reason.
The three faces of deflation. Monetary restraint, rise in currency and what we have now......Collapse in Demand. The HIGHER the taxes. the lower the living standards and greater the deflation. This causes more capital to move off the grid resulting in the collapse of liquidity and rising tangible assets like high-end real estate, collectibles, and art. However, this reduces general consumer demand and this sets the stage for the economic implosion.
The economic deflation is when the economy as a whole is declining and in that context she is correct. The value of money rises in purchasing power as assets decline. In the very early stage you get the traditional flight to quality. However, prolonged deflation is indeed a serious problem for people will not borrow if they do not see an opportunity to make a profit. That is the key. This is what Japan created with its low-interest rates. Merely increasing the money supply will not cause inflation. It requires people to stop hoarding cash and have confidence that there is a profit to be made. This is where most people go seriously wrong in ASSUMING that a mere increase in the supply of money must be inflationary. That statement is fundamentally wrong because it PRESUMES people will stop hoarding if you simply increase the supply of money. All the evidence demonstrates this imaginary relationship. Inflation will erupt even when the supply of money does NOT increase it depends upon DEMAND. If the people decide to hoard toilet paper because of a coming storm, the price will rise with demand. It has nothing to do with the supply of money. Hence, central banks, including the ECB, have been increasing the supply of money steadily to no avail, Only when people have confidence in the future economy or a collapse of confidence in government will they no longer hoard cash. It can never be reduced to a single cause-effect relationship. with thanks to Martin Armstrong.
Deflation is just a mechanism. Just like inflation is. The first prices that go up due to spending of bank savings and/or new money are the ones of the products that are bought with it. Real estate, is a major example. In the correction of this, the first prices that go down, are the same. The most expensive first. Yet you state here that 'high-end real estate' would rise in price? The first prices that rise, are typically those of products that people have no choice but to buy. Basic stuff. And those that were artificially held down, by that same sponsoring during the money creation period, rise too. Capital that "moves off grid", and "collapse of liquidity", actually is hyperinflation, not deflation. In case you didn't notice, your grid spans the world. There is no 'move off'. All you can legally do is sweeping it to a least frontrunned market. And every sweep stops "deflation" in that market. Deflation is thus limited to the downside. Inflation isn't. Hence we never see houses with a net price of $1. What is your 'economical implosion'? Well, simple, just people stopping to produce. GDP zero. Does that mean that they all play with their toes all day? Of course not. Life will go on. Despite the velocity of money being measured as a zero, trading won't stop. And other products will be used as mediums of exchange. What will RELATIVE prices do? Well, except for above corrections, not much.
Increasing the money supply by itself never causes general price increasings. Spending the new money may cause general price increasings, IF the producing population part is unable to produce more for the same wage. (all in terms of purchasing power of course). First word of last sentence. "Spending". Now let's stop creating new money. Implicitly (haha), the spending of new money thus also stops. Then what? Why would prices keep dropping? Who will cease to buy? Who will continue to sell? For which reason? The reason just vanished. End to end (start money creation -> stop money creation), they will just have been readjusted to new levels, corresponding to the new, and now stable, amount circulating money. with thanks to Pirocco Legstrong.
Sorry Pirocco, I have followed Armstrong for a long time and I have followed Pirocco for a long time and one has continually been accurate while the other is still learning.
Hey, I didn't ask for fanmail. I explain what I think, based on data I know. Follow Armstrong as long as you want. If it's Neil then good luck there on the moon. Past performance is no guaran.... hum, I forgot the rest.
Well, past performance is no guarantee for future performance, and Lance is a school example of that. There may be other examples, that you don't know, just like we didn't know about Lance back then too.
Controversy is good. It makes people think. Me included. It made me change mind enough times. Happens when it becomes clear that the other side has to be right. But what one learnt that way, becomes harder and harder to underpin. Simply because it closed in further and further on reality. But some got freezed in a mindset. It's like it is.
