Hyperinflation Discussion
Mish:
Russ can you explain your seemingly hyper-inflationary stance in context of this chart?
martincapital.com
year-on-year broad money supply growth about to go negative.
I am waiting to see final yoy data but as amazing as it might seem with this housing boom and all, money supply, not just growth in money supply appears to be going negative (and it will once that zero line is crossed)
Russ:
I already have explained this one, but it's a global USD monetary
expansion exercise, and banks serve as intermediaries (to securizations) more than depositories. Most of the Old Maid Cards and Clownbucks are going overseas to boot. Secondly "money" isn't being left in banks, and the demand and other short duration deposits that M3 measures, have been mobilized into the inflationary boom, leveraged again, and put into financial assets, leveraged again, put increasingly into things as well, and then leveraged again. Your M3 charts seem to suggest that money is scarce, and we can all see plain as day, that just hasn't been the case. Therefore, I consider M charts nearly worthless in this environment.
The commercial chart is interesting in that it shows credit demand for real productive activity is virtually nonexistent, and instead goes to fund monsterous speculation and financial chicanery. Money supply is now controlled by Bully wild men, and criminals willing to put OPMs (other people's money) on the casino table to bet on 7s and 11s. If they hit in their mutually reinforced frenzy, then they collect a bunch of fees, and buy yachts. If it turns out something else, then it gets "socialized" (a polite term for fucking society at large, including the young and future generations, all enabled by the Wizards and their bogus economic theories), by the printing presses. It's the S&L crisis of the 80's multiplied 1000 fold.
Heinz:
well, he does have a point here. the current account deficit and the mercantilist reaction to a falling dollar by the Asian CBs boost money supply growth rates ELSEWHERE in the world. it's also true that the system is highly leveraged, but that is much more likely to lead to deflation than to inflation (since the more leverage, the more likely it becomes that defaults will at some point simply wipe out money - which will return to whence it came from, namely thin air). all bond bears make a mistake in underestimating domestic demand for bonds, which is set to grow quite a bit in the future, on demographic grounds alone. 'safe' income will become very important. note btw. that Japan stopped its currency interventions early last year - and it's the biggest interventionist buyer of dollars out there. well, the dollar duly declined against the yen, but why did bond prices not come down? obviously bonds are far less dependent on overseas buying than is generally assumed. |
