Loading ...THE GREAT FLATION DEBATE 2017
Back in the day circa 2005 to 2011 at the original Goldbug bastion Goldtent Poster’s Paradise. There was a raging , heated debate regarding Inflation vs Deflation. 90% were on the INflation side and 10% on the Deflation side.
We had a number of Aussie Posters back then and most of them were in the Deflation Camp. I was a staunch Hyperinflation guy. Looking back …the debate centered around will Greenspan and the Central Bankers be able to inflate away the Huge pending Credit Collapse…or will they fail in spite of helicopter money.
That was it in a nutshell. Well 2008 came and went and 2011 came and went and the debate still rages on.
Presently Our community of TA analysts …which is a much more civil and balanced community I would say…has proponents for both Flations
We have a Strong Contingent in Spock Graddhy Norvast and others who feel we have just begun a new INflation Cycle
We have a Strong Group lead by Plunger and Rambus …who see on Balance ….Deflation.
Plunger feels we are entering the Post Credit Bubble Contraction Phase originally postulated by Von Mises and the Austrian Economists.
The Inflationists are putting their faith in the power of the CBs and the Power of Trumponomics.
Personally I feel the most important thing here is to be open to either possibility….and not put all your eggs in one basket…..until the picture becomes more clear ( does it ever ?)
Anyhow lets keep this civil…back in the day it got ugly..with personal attacks and hard feelings.
There is even a chart which tracks Flation “Expectations
http://www.proshares.com/funds/rinf.html
Of course Germain to all this is the fate of the US Dollar.
This is THE chart I am watching ..Rambus members have a front row seat.
Let the debate resume :
INflation or DEflation or even STAGflation ? And will it be HYPER or just run of the mill.
Onward
Well said fully
Yes great post and info. Place your bets ladies and gentlemen!
Good post. Good summary. I must be an Aussie at heart.
Was a lone deflationista back at Richard Russell’s board in early 90s.
Still maintain that the inflation has been ongoing since the 70s, accelerating against all odds with neverending rounds of QE by Japan, then the Fed, then ECB, then more Japan. With China stepping up last year.
Can they trash all the currencies (even if the $ least in a relative sense ONLY) without pulling the supports out from under those not near the firehose? … most of humanity, that is.
All that buying bonds does is underpin bond holdings concentrated in the hands of the wealthy, while encouraging those with meager resources to borrow beyond their repayment capabilities over the cycle. They lose it all in the down cycle. When does this catch up with the CBs?
My EW on gold says we have 2yrs before it does. Then hyperinflation (in $) is chosen as the “way out” by 2025ish or perhaps sooner. Meaning, global revulsion at the dollar being the financial centerpiece of the monetary system.
Great post Fully!
I can honestly say that I think it is impossible to make a reliable call on deflation, inflation, hyperinflaiton or stagflation.
It just depends on how many “tools” the Fed has and how they use them.
Since the date of your US Dollar chart, the USDX appears to have had a breakdown from that small fallling wedge marked in red. I don;’t know how significant it is – whether it has taken the USD below the lower thick black line for instance. Anyway, the USD is atill at 96+ as of 1 June 2017, actually 97.23 right now up 0.26 today so says Kitco.
I think we have also to consider the different currency areas, USD, EUR, JPY and GBP for instance. Perhaps one of these could have an “accident” and go into hyperinflation before the others. Brexit is an accident waiting to happen to the GBP I fear, Eurozone has dodged the bullet in two recent elections, Japan seems to be getting a little Yen boost from North Korea or whatever reason. A new Euro panic would be a confidence event and that is needed for a hyperinflaiton isn’t it? Brexit is going to be very tricky and if the Europeans push it too far punishing the UK, maybe the GBP could collapse in a heap on the floor. Any of JPY, EUR or GBP collapsing could send the USDX through the roof because it is a geometric weighting calculation with the other currencies on the demominator. If one of the others goes to zero, USDX goes to infinity in theory.
Unlike John Williams of Shadowstats, I did not think a hyperinflation would come quickly (e.g. in 2014) but could take 10+ years to develop, perhaps in time for the 100th anniversary of Weimar in 2023. So far we have had big monetary base inflation (QE) but little money supply inflation, long term under trend money multiplier, plenty of asset inflation but no commodity inflation. It’s all over the place and no real sign of a hyperinflation yet (except in Venezuela).