Re: Inflation and Deflation of Price and Money Supply

Quote from: eboard10 on January 17, 2014, 10:08:55 AM

Quote from: Lloydie on January 16, 2014, 12:03:53 PM

Velocity crashing due to QE. http://www.zerohedge.com/news/2013-10-21/qes-gross-misallocation-capital

So the fed pumps money in, expecting velocity to stay constant, but it doesn't. Fisher was wrong. There at times when even near zero rates will not cause credit growth to increase.

So what do they do? Force feed credit gavage style to students, automobile loans, corporate debt to fund buy backs, REO to buy property, property refinancings, margin debt and of course government debt.

Sure they are going to succeed for awhile. Then it's going to blow up in their faces all over again.

Agree on this point. I'm expecting a deflationary collapse sometime within the next 2-3 years but I don't think that the crash will come from the US but rather from Japan and we'll see investors rush to the dollar and possibly gold and bitcoins too.

Japan or China or Europe. China is experiencing issues in their shadow financing sector. One of the investment trusts sold via ICBC (world's largest bank) has lost money to a coal company. Payment deadline to investors is end of jan. Many more trust products in the sidelines just waiting to blow up.

Europe hangs on by a thread. Greece government run by ex Goldman partner has a majority by a margin of three out of three hundred seats. We'll see how long things continue before Merkel is forced to reveal to Germany that their loans to Greece are not actually safe. Also, the whole area is falling into deflation, which is the correction they need. But of course crushing debt levels make this option unpalatable.