Hyperinflation Coming? Very Very Concerning...

[MJ DeMarco]

Might be time to reactivate this thread ...

Gold ... short term high.
Silver ... short term high.
USD vs AUD ... at short-term low
USD vs EURO ... at short term low
Oil ... at short term high

Folks, your dollar is weakening before your eyes.

Wouldn't it be nicer to say "The dollar is at an all time high in strength?"

We can't because all economics point to a continuing decline -- a retrace back to the all-time lows seen during the "BOOM" -- except this time, we will have record unemployment and a negative GDP.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MJ DeMarco]

Some concerning "breaks" today that continue to signal inflation and eroding dollar values. ...

Oil broke through $80
The EURO broke $1.50 ... you now need $1.50 USD for $1 EURO.
The AUD broke .93
The CAN broke .96

 

[Lusches]

How would you react if your thesis was true and a hyperinflation was the result ?
What would you do to hold the value of your assets ?

 

[hakrjak]

This thread was started awhile ago and there still seems to be no hyperinflation happening or looming... Looks like they are squeezing the money supply too much for this, or even a recovery to really take hold. You can't have goods & services increasing in value dramatically when nobody has a job to pay for the goods & services... That too is another reason things are still being held in check, I'm thinking....

- Hakrjak

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MJ DeMarco]

Do we need to reactivate this thread?

The dollar is at record lows against some other currencies.
Gold has hit an all-time high ...

Things are getting dicey!

 

[Gaulkin]

Dollar 15 year low against the Yen today. Not looking good for us.

 

[Deege]

The Ratio of the dollar to other currency's is astounding, from what I've seen, hold on to your gold, soon it will be the only thing worth holding on to.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Anon3587x]

For all you economic experts out there I have a question.

Is the stock market necessary for a economy?

I'm starting to get a little frustrated. In my short amount of years here on earth, I never benefited/lost/cried/laughed/angered or anything because of the stock market.
If the thing did not exist it would not of made much difference in my life to a sense. I grew up with practically nothing, how is a 40% loss on the dollar going change what I ate? I barely ate anyways in those days, living on scraps.

 

[Gaulkin]

For all you economic experts out there I have a question.

Is the stock market necessary for a economy?

I'm starting to get a little frustrated. In my short amount of years here on earth, I never benefited/lost/cried/laughed/angered or anything because of the stock market.
If the thing did not exist it would not of made much difference in my life to a sense. I grew up with practically nothing, how is a 40% lost on the dollar going change what I ate? I barely ate anyways in those days, living on scraps.

I'm getting the impression all these guys sitting on the top are really F*cking up things for the rest of us who don't really care about that shit anyways.

Stock market is just a place for people to trade, people have been trading things they consider valuable for forever. Whether its a market place that everyone goes to or just a place on the corner is irrelevant.

 

[hakrjak]

The Dollar was blowing away Europe just a few months ago.... This just shows that currency markets are fluid and change day to day.

When the brown stuff hits the fan around the world, people are still running to the US dollar for shelter, or US Treasuries...

I'll say it again.... Hyperinflation without a major fix to this unemployment problem (And great recession now) we've got? Ain't happening... Almost all of the last 10 recoveries were lead out by Real Estate, and I don't see Real Estate leading us out anytime soon either! Also no increase in money supply for "Joes" on the street due to tight lending.

My supermarket bag boy told me to invest in Gold the other day... I'm calling the top of that market based on that alone! ROFL

Cheers,

- Hakrjak

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GlobalWealth]

For all you economic experts out there I have a question.

Is the stock market necessary for a economy?

I'm starting to get a little frustrated. In my short amount of years here on earth, I never benefited/lost/cried/laughed/angered or anything because of the stock market.
If the thing did not exist it would not of made much difference in my life to a sense. I grew up with practically nothing, how is a 40% lost on the dollar going change what I ate? I barely ate anyways in those days, living on scraps.

I'm getting the impression all these guys sitting on the top are really F*cking up things for the rest of us who don't really care about that shit anyways.

The stock market, both primary and secondary, have provided investment dollars for the companies involved. Have you ever bought laundry detergent, a Big Mac, a Toyota, Snickers bar, a toothbrush, or a computer? If so, you can thank the stock market.

Without a market for investing in companies, they would not have had the funds to grow and provide us with things we use every day.

Markets are how the world economy exists. Markets can be a simple flea market, street vendor market, stock market, money market, or commodity market where buyers and sellers converge and price comes into equilibrium with demand (in theory, minus all the inefficiencies).

Markets are a natural function of human interaction. The stock market is no different. It is only the buying and selling of investment securities.

And to answer your last question, if the dollar falls by 40% in relation to the yuan (for example), this means you will only be able to afford 40% of what you could previously buy which has a serious effect on your quality of life. Imagine if you earn $100/wk and your normal basket of groceries cost you $100/wk. But now the dollar falls by 40%, you still earn $100/wk but it buys you 40% less stuff. Meaning you now have to survive on 60% of the food you bought last week. (of course this is simplified, but you get the idea).

As far as your last statement, the idea is to learn how to take advantage of these inefficiencies and profit from them. If you continue to feel that;

I'm getting the impression all these guys sitting on the top are really F*cking up things for the rest of us who don't really care about that shit anyways.

you should probably go ahead and line up for your food stamps now. This kind of attitude won't take you far in the great game of business. Some play to win, and some just want to complain about the winners. Which one do you want to be?

 

[Guest3722A]

For all you economic experts out there I have a question.

Is the stock market necessary for a economy?

I'm starting to get a little frustrated. In my short amount of years here on earth, I never benefited/lost/cried/laughed/angered or anything because of the stock market.
If the thing did not exist it would not of made much difference in my life to a sense. I grew up with practically nothing, how is a 40% lost on the dollar going change what I ate? I barely ate anyways in those days, living on scraps.

I'm getting the impression all these guys sitting on the top are really F*cking up things for the rest of us who don't really care about that shit anyways.

The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. An economy where the stock market is on the rise is considered to be an up coming economy. In fact, the stock market is often considered the primary indicator of a country's economic strength and development. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison of central banks.

http://www.articlesbase.com/investing-articles/function-and-purpose-of-stock-market-582881.html

-------------------------------------------------

When companies traded on the stock market get a lot of money from selling their stock, they use it to grow their business. In order for the business to grow they hire people.

As an example of the amounts of money that gets traded daily in the thousands of companies that are public, today alone C (Citigroup) traded almost 383 million shares at just under $4 per share. IBM did almost 5 million shares today at around $129 per share. F (Ford) did almost 40 million shares today at around $12 per share.

With all of this 'volume' trading daily, across thousands of companies, a substantial amount of the money is used to grow these companies, BUT it is done in a way that will keep each company's shareholders happy.

In this current economic environment, happiness many times is achieved through just saving the money until the point to where it will become a better choice to start hiring again and growing.

I understand your comfort levels and the feeling that things still feel the same to you today as to maybe 5 or 10 years ago but I may be wrong but believe that's due to your current living situation from which you've learned to adapt to and survive within.

One day when you're ready you're going to step out and it will be at this point when you may begin to really understand why and how this economic circle can influence your quality of life.

At this point and as an example, even if you invented a multi billion dollar idea, if the overall economy was in conserve mode, the greatness and usefulness of the idea may not float due to the timing. However when the economy is doing well and is strong and has lots of extra money to spend, chances are more in your favor that your product would sell.

 

[Anon3587x]

My frustration comes from the fact the top .5% of the the country
runs the economy. It is them who tanked the economy and made all the stupid
decisions. I don't want to wake up one day and see the stock exchange crashed
because the top echelon individuals pulled the lever and tanked
the whole system.

I see a dollar and it is worth a dollar to me. The fact somebody in New York or Washington D.C can make a few changes
and this dollar I'm holding in California is now worth less is just
absurd and it irritates me.

Are these highly educated and prestigious individuals so uncreative
they can not come up with a better system null to this sort of behavior?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Anon3587x]

Oh and for the record, I grew up in the country. I can hunt/kill/gut/skin a rabbit and grow my own food if I was that hungry.

 

[GlobalWealth]

bateati,

Who knows what tomorrow brings? Deflation, inflation, hyperinflation, stagflation, jerryspringernation....

The point is, educate yourself about the way the world works and learn to profit from the inefficiencies that will always exist. Wherever turmoil exists, opportunity persists. Just get out there and find it. There are opportunities everywhere now. If I could duplicate myself right now there are at least 5 new business opportunities I could take advantage of today.

Keep your mind sharp and learn how the world works. Keep a positive attitude and your eyes open. Markets don't have a lever. There is always a reason for booms and busts. Learn how to spot them. Economics is a good place to start.

Economics is the study of why we make the choices we make. Nothing else. Economics will teach you why individuals, companies and governments make the decisions they make. It is really just the science of decision making. It really only relates to money in the sense that money drives many of our choices.

I will leave the .5% contol issue alone. This is way too politically charged for me to keep my mouth shut.

Your comment about hunting, etc. is very telling about you. Self reliance is a good thing. As I sit at my desk my rifle is behind my chair and my revolver is on the shelf above me. I'm no farmer, but I can kill a rabbit for dinner if I need to...of course I will probably make my son prep it ...

 

[MJ DeMarco]

Well as the dollar slips to new lows, gold hits new highs, silver, agriculture, oil -- all new highs. Inflation is HERE and you think there is any mention of this in the media? Nope. I see no news about inflation but it is right in front of our face.

The most telling stories often are what the media isn't telling you.


Be cautious.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[max momo]

PHXMJ,

Ok - I'll bit. So, where do you see the stealth inflation?

I'll take the other side of the argument and posit that the US has seen
- Asset deflation since 2008
- wage deflation for many years
- Durable good deflation for a few years 2005.

Consumer staples are stable.

Only inflation present has been commodity inflation, now in year 9; started in the hards and now hitting the softs.

Granted what most folks HAVE has been going down in value whilst what most folks NEED has been rising in price (education, health care).

How about the FedReserve press balloons last week that the fed will possibly inject a second round of Quantitative Easing to STIMULATE INFLATION to their target level of 2%.

Fed was created to spur inflation; they are deathly afraid of continued deflation.

 

[Russ H]

max,

As much as you and I butt heads on occasion,

I would *love* to see a good-natured debate between you and MJ on this.

And I say that with all sincerity.

I think it's a great topic for discussion, but I have no expertise in this area.

So I'd love to learn.

-Russ H.

 

[Anon3587x]

It's been over a month and I'm just now reading your reply Global.

I've learned a great deal of economics since my last post on this thread. It all started after I watched "A Beautiful Mind". I was reminded of Ricson9 making a comment stating that "my thoughts could be the making of great economist."
At the time I did not really understand what he meant.

A combination of the two experiences sparked my interest to study the field in depth a tad more.

I think hyper inflation is inevitable when you look at the big picture. In the future our planet Earth will have double the human population and half of the natural resources we once had.

Unless we can find ways to recycle every bit of material we use Humans are in trouble. History constantly reminds us humans will continue to live ignorantly until something really big and horrible happens. They will then and only then consider change.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GlobalWealth]

PHXMJ,

Ok - I'll bit. So, where do you see the stealth inflation?

I'll take the other side of the argument and posit that the US has seen
- Asset deflation since 2008
- wage deflation for many years
- Durable good deflation for a few years 2005.

Consumer staples are stable.

Only inflation present has been commodity inflation, now in year 9; started in the hards and now hitting the softs.

Granted what most folks HAVE has been going down in value whilst what most folks NEED has been rising in price (education, health care).

How about the FedReserve press balloons last week that the fed will possibly inject a second round of Quantitative Easing to STIMULATE INFLATION to their target level of 2%.

Fed was created to spur inflation; they are deathly afraid of continued deflation.

Don't confuse 'inflation' with 'price inflation'. Most people do. The simplest definition of inflation is when money is created at a faster rate than productivity increases. For example, if there were an island economy with $100 of goods and $100 of money the economy is in balance. if the 'govt' of the island prints another $100 without the increase of $100 of goods, this is inflation.

Eventually the prices of goods will double to reflect the amount of available goods in the economy. The 'inflation' happened. The 'price inflation' takes a bit of time.

In the US' case, the Fed printed a gazillion dollars to buy Treasuries, effectively doubling the US money supply. However, due to the fear in the markets and high unemployment, the banks are not deploying capital (loans) as quickly as the policymakers expected. This is the primary cause for the lag in 'price inflation'. But rest assured, it's coming.

You cannot double the money supply without 'price inflation' being the end result. History has shown many times this to be the case.

We are still in a deflationary period now due to the devalution of asset prices, primarily real estate. With the govt intervention in the RE market, this caused many people to have most, if not all, of their savings tied up in RE. Once we can flush out the excess housing inventory and employment starts to recover, the banks will begin to unleash their cash horde in the way of loans.

When that happens, hang on.

 

[FDJustin]

We are still in a deflationary period now due to the devalution of asset prices, primarily real estate. With the govt intervention in the RE market, this caused many people to have most, if not all, of their savings tied up in RE. Once we can flush out the excess housing inventory and employment starts to recover, the banks will begin to unleash their cash horde in the way of loans.

When that happens, hang on.

Does that mean it would be a great time to snap up loans and get assets? I'm certainly not an economist. It just looks to me like "Loans open up. Get them right away, get assets before inflation kicks in, then when income begins to inflate to match the new standards, you'll be effectively paying half price." This assumes income won't lag too far behind the inflation.

 

[CommonCents]

Many dynamic factors at work.

Risk/reward decisions. Big banks get the low interest money and turn around and buy treasuries "risk free" (a tough phrase to swallow these days) which enables more government spending that crowds out private enterprise.

Demand for loans is low as businesses aren't confident to take on borrowing risk to expand if they aren't confident.

Money supply skyrocketing while usable street level credit is shrinking. (loan standards much higher, credit lines cut etc..)

Yes, when things stabilize and demand for loans picks up there is a lot of money out there to lend that could
lead to inflationary environment especially through lending because of the fractional reserve banking system.

The hyperinflation risk is default/currency risk. If SHTF, there will be a mad scramble into hard assets.

The deflation/inflation/hyperinflation discussion is always an interesting one as they are very interconnected and things can change very rapidly.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Russ H]

If SHTF, there will be a mad scramble into hard assets.

Agreed. And RE is considered a great place to go if/when this happens.

But I can't help but wonder: If you have a variable interest rate loan on something, won't that adjust to the sky as inflation hits?

Getting fixed rate loans for your own home is pretty easy. But for your commercial property? Anyone have any ideas on how to get fixed rate loans for commercial or investment RE?

-Russ H.

 

[CommonCents]

Agreed. And RE is considered a great place to go if/when this happens.

But I can't help but wonder: If you have a variable interest rate loan on something, won't that adjust to the sky as inflation hits?

Getting fixed rate loans for your own home is pretty easy. But for your commercial property? Anyone have any ideas on how to get fixed rate loans for commercial or investment RE?

-Russ H.

I guess it depends on T&C of variable rate agreement in terms of annual/lifetime caps on rate adjustments.

 

[FDJustin]

Getting fixed rate loans for your own home is pretty easy. But for your commercial property? Anyone have any ideas on how to get fixed rate loans for commercial or investment RE?
-Russ H.

Sexual favors? Bribery? Find someone who thinks a 5% interest rate is good, has money, and is happy with the deal who isn't a bank? Set up a legal entity who will own the mortgage, and "reside" in the building, thus making it a "home"?

Actually, I wonder if there are lenders in other countries who might be willing to work with foreigners who would give fixed rates?

Excuse me, I'm tired and silly. But two of those are honest suggestions. When I lived in Calgary, I actually saw billboard ads for quite amazing interest amounts from someone who says they use the loans for commercial development. I have no idea if it was legit or not, but the thing is... I recognized there was a chance it was, and the strong advertisement makes it feel like there's a very good chance it is. If you can fulfill the promise, I see great potential in offering to give people a better rate on their savings than their bank does.
I also see a pretty big headache.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[CommonCents]

It is reported that computerized high frequency trading is anywhere between 40-70% of volume. Huge numbers and is a monster that needs to be dealt with soon. Maybe the market will just keep on keeping on no matter what economic conditions and corporate earnings as computers trade w/ themselves based on nano short term technicals It could theoretically decouple and have a life of its own. Maybe a simulation on 2nd Life would shed some light on the possible outcome! Speaking of, has anyone heard anything about 2nd Life lately?

 

[GlobalWealth]

Does that mean it would be a great time to snap up loans and get assets? I'm certainly not an economist. It just looks to me like "Loans open up. Get them right away, get assets before inflation kicks in, then when income begins to inflate to match the new standards, you'll be effectively paying half price." This assumes income won't lag too far behind the inflation.

Excellent point. This is a great time to leverage up a bit (within reason of course) because the dollars you receive today will be worth less as you pay them back.

 

[GlobalWealth]

Sexual favors? Bribery? Find someone who thinks a 5% interest rate is good, has money, and is happy with the deal who isn't a bank? Set up a legal entity who will own the mortgage, and "reside" in the building, thus making it a "home"?


Excuse me, I'm tired and silly. But two of those are honest suggestions. .

which 2?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.