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| John, this is the best post I have read on here in some time. Maybe post of the year. You summed up my thoughts EXACTLY! Thank you to you and Von on a well directed conversation.
"I DO believe we will have massive deflation. We will have a deflated stock market and a deflated bond market. Does this mean the stuff we need to buy to live like food, fuel and toilet paper will be cheaper? I don't think so, at least not if we keep creating new monetary units called dollars."
Many people think that if/when inflation hits EVERYTHING goes up in value. This is not true, actually very false. It all depends on what people "perceive" to hold monetary value the best. This could be cigarettes, like in POW camps in WWII, etc. It could be gold. But I think you are dead on when you said deflation could hit the markets in comparison to the physical goods it takes to live.
"But it does not have to stop untill both of the following conditions are met: 1. People and other governments will no longer support US government deficit spending by refusing to buy our government debt, and 2. once we can no longer sell our debt if we turn to money printing to pay the government bills the currency value is destroyed to the point people and other governments will no longer accept our currency in payment of debts due or in transactions for trade."
WHY CAN'T SOMEONE WITH A PHD AFTER THEIR NAME GET THIS?!?! I can not tell you how many friends I have that follow the likes of Keynes and Krugman in believing more government spending is what the government needs. These same friends are almost PHD's in economics. If I can't get a bank to loan me money anymore and I lose my job there is a good chance I will be BANKRUPT! These same people tell me that the US can't go bankrupt because we control our own currency. While this is a true statement it is also a dangerous statement. I don't care if we go bankrupt, hyperinflation is the alternative and that in many ways is worse.
I will never forget a conversation a friend of mine and I had with Argentine farmers, last year. They said that inflation is so bad, the currency is not even used in their operations. It is all barter. Trade grain for fertilizer, etc. They said it is scary to even sell grain outright because the currency might devalue before they get it turned around and buy something else. If they can't barter for something, they have a safe in their office's that contains 100 US dollar bills. It is only a matter of time before those are not a safe bet either. I think we all know it is coming, but what is the timeline? Even scarier is what will the human person due to change the course of the collapse? It only takes a few men in suits to altar the financial future of any currency. I still have hope for our great country, but we need to get some gutsy, intelligent men together and chart a path.
Keep up the good conversations gents. | |
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Interesting presentation
