CDZ Engines of Deflation

[william the wie]

Negative interest rates in most of the rest of the developed world is pretty much deflationary by definition'

Likewise the Japanese style slow motion collapse of China is deflationary.

The continuing decline in the marginal cost of fracking oil/bbl is deflationary in regards to both conventional drilling and alternative energy usage.

Tax-exempt muni bond yields being 2-3 times higher than taxable treasury yields mostly in blue (D) jurisdictions is also highly deflationary.

So we are obviously headed towards a deflationary train wreck by the end of the next presidential term and possibly before the election. My question is with all of the above being reported on a more or less daily basis why are so many people trying to get their candidate to become scapegoat in chief?

 

[jwoodie]

So they can blame Bush?

 

[william the wie]

So they can blame Bush?

The statute of limitations has expired on that BS.

 

[jwoodie]

Negative interest rates in most of the rest of the developed world is pretty much deflationary by definition'

Likewise the Japanese style slow motion collapse of China is deflationary.

The continuing decline in the marginal cost of fracking oil/bbl is deflationary in regards to both conventional drilling and alternative energy usage.

Tax-exempt muni bond yields being 2-3 times higher than taxable treasury yields mostly in blue (D) jurisdictions is also highly deflationary.

So we are obviously headed towards a deflationary train wreck by the end of the next presidential term and possibly before the election. My question is with all of the above being reported on a more or less daily basis why are so many people trying to get their candidate to become scapegoat in chief?

How do you see this scenario playing out and what actions should individuals take to ameliorate the effects?

 

[william the wie]

Actually I don't see how this will work out and when.

Lehman Brothers and Bear Stearns made it clear at the 1998 LTCM they were overleveraged. This became common knowledge 2 years later "When Genius Failed" but nothing was done and the meltdown resulted.

In the first half of 2005 AIG exited the CDS market amd even though the portfolio made net gains the company was swamped by the meltdown.

With that kind of track record I can't think of any way to stay in the muni market safely.

However with the technical defaults already here for decades in the case of IL sometime in the next four years I would expect the wave to hit.

 

[william the wie]

One of the bigger dangers is that the Fed has not raised interest rates high enough to allow a sane method of stimulation when deflation is imported from Europe and the Far East in sufficient power to have any effect.

 

[FA_Q2]

Negative interest rates in most of the rest of the developed world is pretty much deflationary by definition'

Likewise the Japanese style slow motion collapse of China is deflationary.

The continuing decline in the marginal cost of fracking oil/bbl is deflationary in regards to both conventional drilling and alternative energy usage.

Tax-exempt muni bond yields being 2-3 times higher than taxable treasury yields mostly in blue (D) jurisdictions is also highly deflationary.

So we are obviously headed towards a deflationary train wreck by the end of the next presidential term and possibly before the election. My question is with all of the above being reported on a more or less daily basis why are so many people trying to get their candidate to become scapegoat in chief?

Because most people are either blind to any possibility of this happening or think that their guy can change it.

 

[william the wie]

True. But I am uncertain that Trump with his economic degree has thought this through and I am fairly certain that Hillary hasn't. When the Blue Wall starts to work through its insolvency a lot of Detroits will be created by the tax flight that follows.