Hyperinflation?

[Kathianne]

I think this piece sums up my fears of what may happen with all the tinkering the 'leaders' are doing regarding the economy.

Who are they trying to protect? Those who have money in IRA's, 401k's? Those who manage those accounts? Who saved the money that's being destroyed? Who took their fiduciary responsibility too lightly?

It's certainly true that too many of us let others, 'more financially wise', to handle our money without giving the matter our due concern. I think most are willing to 'take the lumps' that come with that.

In the past few weeks it's become clear that the government's policies seem aimed at those that caused the problems, at the top of the financial chain and at the bottom of it. For those who didn't save, borrowed recklessly, and it's really hard to see how they are going to pay much of a price.

No it will be the 'middle class' that first will take the financial hits, then the burden of all this 'fiddling' then the aftermath of what follows, which may be the worst hit of all:

http://media.nationalreview.com/post/?q=YTI5ZDhhMDQ1YjI2NzhiOTRjYWI1NmM3M2Y5ZTFiYjY=


Jim Rodgers on Today's G7 Meeting [Greg Pollowitz]

Sobering interview with Jim Rodgers over at CNBC.com. An excerpt:

The way to solve this problem is to let people go bankrupt," Rogers said.

"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."

The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems, Rogers warned.

"We're setting the stage for when we come out of this of a massive inflation holocaust," he said.

And the plans are unlikely to fend off a severe economic downturn, as the crisis starts affecting all walks of life.

"We had the worst excesses we had in credit markets in world history. We're going to have to take some pain," Rogers said.

"Many people bought 4-5 houses with no money down and no job… you think we'll just say well, that's too bad, we'll start over and nobody loses their job? Be realistic."

People should not look to the upcoming G7 meeting with the hope that the leaders of the strongest economies will find a solution.

"What they (G7 leaders) need to do is go down the bar and leave the rest of us alone," Rogers said.

10/10 10:05 AM

[Joe Steel]

No it will be the 'middle class' that first will take the financial hits, then the burden of all this 'fiddling' then the aftermath of what follows, which may be the worst hit of all:

http://media.nationalreview.com/post/?q=YTI5ZDhhMDQ1YjI2NzhiOTRjYWI1NmM3M2Y5ZTFiYjY=

To a large extent, the middle class are to blame. They didn't pay enough attention to the fundamentals of modern society and allowed themselves to be duped by Republicans. They bought the Reagan snake oil and then took a second dose by electing Bush. Tax cuts, degulation and prosperity in a bottle. Just drink it down and everything will be fine. Well now the bottle's empty and so are their wallets. All they have is the hangover.

[Kathianne]

JS, how is that kool aid? :coffee: What flavor is it that allows anything informative to be lost to you, so that you only hear the echos of your mind?

[Joe Steel]

JS, how is that kool aid? :coffee: What flavor is it that allows anything informative to be lost to you, so that you only hear the echos of your mind?

Denial doesn't change the facts. America let itself be duped. They wanted to believe free markets always worked and they always produced fair outcomes. Well, now the middle class, regardless of their innocence or guilt, are going to go down with the ship because they didn't take care to notice the builders were using bad steel, the captain was incompetent and there aren't enough lifeboats.

[Kathianne]

I was wrong, you don't ignore the information, you just try to twist all to come up with justification to start your Marxist dream of utopia. Good luck with that.

[Joe Steel]

I was wrong, you don't ignore the information, you just try to twist all to come up with justification to start your Marxist dream of utopia. Good luck with that.

You're welcome to your opinion but fair analysis isn't "twisting."

The middle class had their chance and they voted to cut their own throats. They may not have known they were doing it but they could have. They could have taken the time to educate themselves and study the issues. No one who does that votes Republican and not voting Republican usually is enough to keep America healthy and strong.

[Kathianne]

You're welcome to your opinion but fair analysis isn't "twisting."

The middle class had their chance and they voted to cut their own throats. They may not have known they were doing it but they could have. They could have taken the time to educate themselves and study the issues. No one who does that votes Republican and not voting Republican usually is enough to keep America healthy and strong.

So who are you voting for JS? Why?

[Joe Steel]

So who are you voting for JS? Why?

Obama.

He's not a great choice but he's the best we have.

Generally speaking, he's more in touch with average Americans than McCain. In his work as a community organizer and because of his background, he has a fair understanding of the damage free market economics can cause. Because of that perspective, I think he'll work to reestablish the controls we had in place in the '40s - '70s. That will help us back to prosperity or, at least, stability.

[Kathianne]

Obama.

He's not a great choice but he's the best we have.

Generally speaking, he's more in touch with average Americans than McCain. In his work as a community organizer and because of his background, he has a fair understanding of the damage free market economics can cause. Because of that perspective, I think he'll work to reestablish the controls we had in place in the '40s - '70s. That will help us back to prosperity or, at least, stability.

How is it you picture the 70's as a time of 'controls' on the markets? What do you think was good about those years, for the average person?

[Joe Steel]

How is it you picture the 70's as a time of 'controls' on the markets? What do you think was good about those years, for the average person?

Our current economic disaster is the the product of unregulated markets and the '70s saw the beginning of the deregulation craze. Jimmy Carter began it with the deregulation of the transportation industry.

[Kathianne]

Our current economic disaster is the the product of unregulated markets and the '70s saw the beginning of the deregulation craze. Jimmy Carter began it with the deregulation of the transportation industry.

Sorry, I missed the 'from'; as in from the 40's-70's.

You don't see the relationship between the reemergence of countries economic development following WWII as a causal factor in the changes post 1975? It was just about then that OPEC, Germany, Japan 'took off.'

What about this 'bubble bursting' leads you to the conclusion that it's lack of government, rather than collusion between government and industry ties? This housing led burst, has government fingerprints all over it, as does the current fiddling with trying to stem the fallout to now other sectors.

I'd say your argument fits better with the tech bubble burst over a decade ago, real lack of oversite there, probably due to failure of government to understand the technologies and the trading.

[Kathianne]

Back to the original 'fear' post:

http://article.nationalreview.com/?q=NTFhYjlkYTc4YmY5NzM5ZmJkMzBkNjc5NWVkOTY3NzA=


The Best Laid Plans . . .
It’s all absurd intellectual vanity.

By Jonah Goldberg

Plans, shmans.

Under Barack Obama’s plan, 95 percent of Americans will get a tax cut. John McCain’s plan will deliver portable, affordable health care to all Americans. Obama has a plan to win in Afghanistan. So does McCain. There are plans for how to implement plans and plans for how some plans will be replaced by other plans. Go through their respective Web sites and you’ll fine more plans than at the hall of records. ...


The simple fact is that planning is very hard. Even plans to build houses often require countless revisions. But planning for people is so much harder. Every weekend I have a plan for how my one 5-year-old child will spend her day. Keep in mind: I am literally the boss of her. She has no money, little education and no reliable means of escape. And yet, she foils my plans time and again. But somehow we’re supposed to believe that a plan involving billions or trillions of dollars, millions of people (each with their own agenda) and thousands of communities influenced by countless interested parties and bureaucracies is not only possible, but the highest responsibility of our elected leaders.

Mao and Stalin had their five-year plans and benefited from the added flexibility that comes with the ability to kill millions of their own people, and yet that worker’s paradise always seemed just one more five-year plan away...

[mundame]

It's definitely not about hyperinflation now.

Oil has collapsed and that underpinned earlier inflation.

Credit has collapsed and the stock market has crashed this week: those factors lead to deflation, not inflation ----------

That's why the Fed lowered the discount rate this week. They could, finally.

[Kathianne]

It's definitely not about hyperinflation now.

Oil has collapsed and that underpinned earlier inflation.

Credit has collapsed and the stock market has crashed this week: those factors lead to deflation, not inflation ----------

That's why the Fed lowered the discount rate this week. They could, finally.

Not talking about NOW, talking about unintended consequences:


"We're setting the stage for when we come out of this of a massive inflation holocaust," he said.

[Mr. P]

It's definitely not about hyperinflation now.

Oil has collapsed and that underpinned earlier inflation.

Credit has collapsed and the stock market has crashed this week: those factors lead to deflation, not inflation ----------

That's why the Fed lowered the discount rate this week. They could, finally.

I agree. With the current worldwide economic situation it will be awhile before we see any inflation much less hyperinflation. Survival mode does not mix with inflation.

Now if we can keep the Government fingers out of the fix we'll be okay..Too late? maybe.

[5stringJeff]

The Fed artificially fixing the price of short-term intra-bank loans (which is what they do when they change the discount rate and/or the federal funds target rate) is being ignored by banks, because the market-clearing interest rate is much higher than 1.5%. The spread between the federal funds rate target and the actual rate is about 300 basis points, or 3%. The Fed can lower interest rates to zero, and it won't matter, because banks aren't going to lend at low rates. They will, however, lend at higher rates.

[5stringJeff]

In the short term, I don't see much inflation. In the long term, though, with something like $2,000,000,000,000 (that's $2 trillion) pumped into the economy, the dollar will absolutely decrease in value, leading to inflation. I'd give it about 6-12 months.

[Kathianne]

In the short term, I don't see much inflation. In the long term, though, with something like $2,000,000,000,000 (that's $2 trillion) pumped into the economy, the dollar will absolutely decrease in value, leading to inflation. I'd give it about 6-12 months.

Exactly. The best thing that can be said for 'unintended' is if true. In this case, it doesn't take a genius. As the others said, right now most of us have a job and prices are falling, quickly. Gasoline of course is the tie in. On the other hand, there's just too much money being floated, now it's going to be from the G20? I think we are getting way beyond $2 trillion.

[mundame]

Who are they trying to protect?


Whoever it is or was, they failed.

So there is no use worrying about how we should "let businesses fail" --- they are failing all around us, including very old, large banks that predate the Civil War.

If you want businesses to fail, boy, you got it and a defined stock market crash into the bargain. Lots more failures coming. Be satisfied, I suggest.



What is actually centrally going on, as I understand it, is that governments are trying to protect the worldwide banking system. Nevermind the stock markets, there is nothing much can be done with them except stop trading. (I would argue to stop shorting, too.)

The banks won't lend to each other (or anyone) for the excellent reasons that 1) everything keeps going bankrupt or getting nationalized practically overnight, so they'd lose their money, and 2) they need to collect reserve cash now to be in compliance with banking regulations, because their collateral and holdings are dropping like stones in value. So all the cash goes into the bank vault (well, the digital vault) and none comes out.

If banks don't let any money out, well, we don't have banks anymore.

Clue: we don't have banks anymore. That's viewed as a problem that is likely to get bigger as it starts to have consequences in the general society. Of course the stock market crashed with all this credit removed from everywhere, but that's a different problem.

The 'thirties actually WAS about the stock market, at first; in our situation the stock market is a side show, and that makes me worried. Banking not circulating money is central to the current problem.