AdvancingTime
Senior Member
- Feb 8, 2015
- 150
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The central banks often claim deflation drives or allows their QE policy to remain and is central to their ability to stimulate. The moment inflation begins to take root or becomes apparent much of their flexibility in policy is lost. Today those who see inflation in our future are back on their heels and off balance. Many people see falling commodity and stock market problems as proof deflation is at our doorstep and this supposedly removes the possibility that prices might soon soar as a result of the creation of massive amounts of newly printed money. A word of caution, we should not be deceived or led to believe that lower oil and commodity prides will in themselves bring about deflation. Often falling prices in both commodities and goods reflect a lack of demand or temporary supply imbalance that will correct itself. When that happens prices tend to rapidly adjust to what I will call the "new reality of the day".
The 2% inflation target central banks have deemed optimum or to be the point at which inflation will produce the most favorable and best possible economic result is not grounded in reality or related to the prosperity of main street.This is all a convenient cover allowing for the transfer massive power to the world’s central bankers during the last two decades. And it survives only because it serves the interest of the Wall Street elite, the world’s politicians, and fiscal authorities alike. This has allowed those in power to run up endless public debt because the central bankers buy it under QE and drive the cost of carrying debt to virtually nothing. As a bonus the top 1% of financial elite cannot get enough of the 2% inflation hoax because it means free carry trade money will remain available.
A great definition or rule about inflation, its effect on the economy, and how it effects savings came to me long ago, it goes like this, "Inflation is a thief that robs those who are improperly invested, and gives the money to those improperly invested." This would of course be referring to those who had the foresight to position their investments for its emergence. The same can be said about deflation, it mimics in reverse the process, also acting as a way to transfer wealth between parties. The problem is to time and recognize the approach of these two strong economic forces. I have found the mindset of investors and of the "money people" often shifts into overdrive when opportunities for speculation arise. The distortion caused by easy money from Federal Reserve policy coupled with political and social compassion for affordable housing, medical care, has obvious implications as debt and promises continue to rise.
In the past I have put forth the idea that inflation could rule the day even if central banks are unable to keep the wheels on the bus and the economy collapses. This powerful force known as stagflation can devastate those improperly invested. One thing is clear and that is this debate will not be resolved today. For those interested the article below explores deeper the basis of this theory.
http://brucewilds.blogspot.com/2016/03/inflation-or-deflation-debate-continues.html
The 2% inflation target central banks have deemed optimum or to be the point at which inflation will produce the most favorable and best possible economic result is not grounded in reality or related to the prosperity of main street.This is all a convenient cover allowing for the transfer massive power to the world’s central bankers during the last two decades. And it survives only because it serves the interest of the Wall Street elite, the world’s politicians, and fiscal authorities alike. This has allowed those in power to run up endless public debt because the central bankers buy it under QE and drive the cost of carrying debt to virtually nothing. As a bonus the top 1% of financial elite cannot get enough of the 2% inflation hoax because it means free carry trade money will remain available.
A great definition or rule about inflation, its effect on the economy, and how it effects savings came to me long ago, it goes like this, "Inflation is a thief that robs those who are improperly invested, and gives the money to those improperly invested." This would of course be referring to those who had the foresight to position their investments for its emergence. The same can be said about deflation, it mimics in reverse the process, also acting as a way to transfer wealth between parties. The problem is to time and recognize the approach of these two strong economic forces. I have found the mindset of investors and of the "money people" often shifts into overdrive when opportunities for speculation arise. The distortion caused by easy money from Federal Reserve policy coupled with political and social compassion for affordable housing, medical care, has obvious implications as debt and promises continue to rise.
In the past I have put forth the idea that inflation could rule the day even if central banks are unable to keep the wheels on the bus and the economy collapses. This powerful force known as stagflation can devastate those improperly invested. One thing is clear and that is this debate will not be resolved today. For those interested the article below explores deeper the basis of this theory.
http://brucewilds.blogspot.com/2016/03/inflation-or-deflation-debate-continues.html
