tag:blogger.com,1999:blog-912107698547747613.post5260167815407876807..comments2023-10-23T22:07:07.535+01:00Comments on London Banker: Fisher's Debt-Deflation Theory of Great Depressions and a possible revisionLondon Bankerhttp://www.blogger.com/profile/13358082683340132378noreply@blogger.comBlogger44125tag:blogger.com,1999:blog-912107698547747613.post-60051232373094241642011-09-29T01:10:19.650+01:002011-09-29T01:10:19.650+01:00You didn't follow Fisher all the way through t...You didn't follow Fisher all the way through to the Soddy-inspired Chicago Plan to writedown all that zombie debt and replace the liquidity with publicly owned debt-free, interest-free United States Notes.<br /><br />"To cut the tie between debt and the circulating medium."StaplesEconomyhttps://www.blogger.com/profile/14785751906404275729noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-17332500922269966182011-09-26T14:03:39.590+01:002011-09-26T14:03:39.590+01:00Nice to have a quote from Ayn Rand at the end of t...Nice to have a quote from Ayn Rand at the end of the article - for ironic effect.<br /><br />Ayn Rand's disciples are the ones that got us into this mess. Three decades of the Randisation of the US economy have left us with the kind of inequality not seen since the 1920s. Is our problem really that the wealthiest are being held back by the poorest?<br /><br />As for a yearning for a return to the gold standard - its adherents need to read some economic history.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-58683494151576375962011-07-23T18:45:46.807+01:002011-07-23T18:45:46.807+01:00Dangerous deep deflation dead ahead! Austrian eco...Dangerous deep deflation dead ahead! Austrian economics says all credit inflations end in crushing credit deflations. Especially, in a Keynesian, socialism, welfarism one world government world turning ever more fascist. The parasite (big government) always sickens the host (the economy) - deja vu all over again and again. Nature! <br /><br />It just took a 80 year Kondratiev wave this time instead of a 40 - 50year one like in the 1900's. <br /><br />PS. Homestake gold mine shares went from $65 in 1929 to S544 in 1935 and paid a whopping $56 per year dividend. Gold to high at $1,600. Additionally, the Anglo financial power elite will want a strong dollar for the next several years to hide $ in. <br /> <br />Lobby for a private gold backed money. Don't let government do the money thing again or they will do us in (again) with all the borrowing, counterfeiting of fiat money and the financial repression.<br /><br />See my site:<br />http://www.deflationeconomy.com<br />Delwyn Lounsbury - THE DEFLATION GURU.Delwyn Lounsbury - THE DEFLATION GURUhttp://www.deflationeconomy.comnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-81405061583459019112009-10-07T08:07:44.412+01:002009-10-07T08:07:44.412+01:00Financial innovation as described by Minsky leads ...Financial innovation as described by Minsky leads to greater increases in asset prices during booms as it permits greater amounts of borrowed funds to flow into asset markets making asset prices more sensitive to the business cycle. As a result the risks of debt deflation during cyclical downturns increases over time.Vanessahttp://www.asiarooms.comnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-79704611367369472922009-07-03T08:27:36.007+01:002009-07-03T08:27:36.007+01:00I'm tired of hearing people say "deflatio...I'm tired of hearing people say "deflation? Just press 'print' on a printing press (sell bonds or securities, whatever) and all will be fine". The reason the "printing press" failed in Japan, failed in the 1930s is the same reason monetarism could not contain inflation in the UK in 1980s: the money supply is endogenous...<br /><br />So, we print money, and give it to the banks (increasing the monetary base etc).<br /><br />QUESTION:<br /><br />Who is going to lend to a person who already has HUGE debt, is barely keeping up payments themselves and could loose their job and asset prices are falling (hence, lower collateral values and speculative incentive to investment)?<br /><br />(Probably) NO ONE!<br /><br />Who is going to borrow when A) they ALREADY have thousands dollars of debt and B. put deposits toward their bank, even suspecting their bank will become insolvent?<br /><br />NO ONE!<br /><br />Hey, presto, credit is part of the money supply (and money and liqudity, which is drying up, due to A) no loans being made and B)unemployment is rising due to overinvestment in land is needed to pay of debt). Enter debt deflation - the more debtors pay, the more they owe.<br /><br />As such, the printing press cannot work. Full stop. No point of increasing the monetary base, if it won't penetrate the market place.<br /><br />Moreover, even if you dodge financial authorities (through a helicopter...), and literally drop money to people, given debt is 300% of GDP, most people will probably spend the money NOT in the market place, but paying off debt (and it will take a while until banks regain confidence to lend again). <br /><br />Reflation is VERY VERY difficult once an economy turns downward (and has record high levels of debt).Steven Spadijernoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-7023253944337203592009-02-10T21:03:00.000+00:002009-02-10T21:03:00.000+00:00From one of the comments, I don't see that the cre...From one of the comments, I don't see that the credit markets selling off bonds prevents a reflation, should money printing occur.<BR/><BR/>Presumably one of the main ways to get the printed funds into the economy would be to buy back the bonds anyway, thereby maintaining their nominal value. The only escape from bonds would be either another currency or an asset.<BR/><BR/>If you can rule out another major country then that only leaves you with assets/consumption.<BR/><BR/>Given that money printing reduces the value of savings, and also the value of debts then money printing is one of the solutions advocated by Fischer because it is the equivalent of default, against the savers wealth.<BR/><BR/>This is perhaps faulty reasoning, I would be very interested to know some examples of how bond holders would be able to maintain real value, if there is a way.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-46351045895599414222008-12-17T14:38:00.000+00:002008-12-17T14:38:00.000+00:00If a house of cards begins to fall and you prop it...If a house of cards begins to fall and you prop it up, when your done propping it up you still have a house of cards. Even if they can intercede and reflate the deflationary death spiral are we just putting off and potentially exacerbating the inevitable crash/depression.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-20527022112418334382008-11-24T04:42:00.000+00:002008-11-24T04:42:00.000+00:00THANKS FOR THE HEADS UP,,,,I AM NOW LIQUIDATING AL...THANKS FOR THE HEADS UP,,,,I AM NOW LIQUIDATING ALL STOCKS,BONDS,401K AND BUYING AND TAKING POSSESSION OF GOLD.I FIND IT COMFORTING THAT YOUR AVERAGE AMERICAN WILL NOT REALIZE WHATS HAPPENING UNTIL IT'S TOO LATE.THIS SYSTEMIC PROBLEN IS TOO BIG TO FIX.THE END GAME IS NEAR. ONCE EVERYONE PUTS ALL THEIR MONEY IN UNCLE SAMS HANDS (T BILLS) WE WILL ALL WAKE UP ONE DAY AND UNCLE SAM WILL SAY SORRY....FOLKS...WE MUST DEVALUE THE DOLLAR IN HALF AND SAY SORRY DUDE....IT'S "DO OVER TIME" <BR/><BR/>BB NEW YORKAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-87323584173482852562008-09-18T17:12:00.000+01:002008-09-18T17:12:00.000+01:00Citori (01 August 2008 11:05)Interesting comment '...Citori (01 August 2008 11:05)<BR/><BR/>Interesting comment 'Cowboy' :-), and agree with 'stock market is being sacrificed, but it will take a while to reach the end of the slaughter......' <BR/><BR/>In terms of your statement re: 'this is (thus far) an L shaped recovery... Question is ... how far does the falt line travel?'<BR/><BR/>Does the 'L' graph at <A HREF="http://www.geo-politics-101.co.nr/" REL="nofollow">GeoPolitics101</A> provide an interesting perspective? <BR/><BR/>JMCSwanAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-21708101524947091562008-08-10T04:51:00.000+01:002008-08-10T04:51:00.000+01:00Right, so let's assume the whole world is headed t...Right, so let's assume the whole world is headed towards deflationary spiral. That means that cash is the king. And this leads to very interesting question: which cash? US dollar is not necessarily the currency of choice given that US is way over-leveraged to compare with Germany. <BR/>The reason I'm asking opinions on this is simple. I think it's very difficult to predict the currency rate - so why not stick to real money? Gold?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-20409960986830128132008-08-10T02:32:00.000+01:002008-08-10T02:32:00.000+01:00As another layperson who thinks from a household f...As another layperson who thinks from a household finance point of view, I'm interested in this: "USA and UK decades of under-production, over-consumption, over-spending and under-investment"<BR/><BR/>It's the under-production and under-investment that interest me. Few economists talk about it much. And yet any housewife in America can see that we don't make our stuff here anymore - good luck even getting home-grown garlic, it's all from China now, as we've paved over our California garlic fields with McMansions. <BR/><BR/>We also are not taking care of the stuff we do have: our public schools are falling apart, our bridges falling down. The American Society of Civil Engineers warned three years ago that America needs to spend over a trillion dollars just repairing the infrastructure we've got.<BR/><BR/>My parents used to talk to me in the 70s about families who drive expensive cars bought on credit while failing to pay dentists to care for their children's teeth. Better to drive the old, paid-for car, maintaining it well, and protect the children's health and well-being. Buy books and nutritious food with cash on hand rather than plasma TVs and Hawaii vacations on credit.<BR/><BR/>It has seemed to me for some years now that the USA functions like the profligates my parents warned me against. We spend $ on wi-fi and cable networks for our cities, but the schools molder, bridges collapse, and levees leak. We invade Iraq to the tune of a trillion (adding all the funny accounts) but we don't have money to keep hospitals open. And of course we don't have money to provide basic healthcare to everyone but we do have billions to give insurance companies in profits. Oh yes, don't forget that our public health system has been gutted in the last generation, making us extremely vulnerable to plagues and pestilences, with no network of doctors or administrators to monitor and react.<BR/><BR/>Yes, America drives SUVs, lives in enormous houses made of vinyl and paper, and watches TVs the size of movie screens, but we don't have money for our basic needs. And we're broke.<BR/><BR/>Under-production and under-investment, indeed. But I suppose investing in infrastructure and decent public health care is socialism, dirty European-style socialism, and we can't have that...Leila Abu-Sabahttps://www.blogger.com/profile/14161833022292457787noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-70653856325828888952008-08-08T19:43:00.000+01:002008-08-08T19:43:00.000+01:00I'm sorry, it's "outstanding debit" in English of ...I'm sorry, it's "outstanding debit" in English of course, not "outstanding credit". We're using one and the same word for both.<BR/>Best regardsnormal beinghttps://www.blogger.com/profile/13450117693646115155noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-14531603716966521382008-08-08T19:32:00.000+01:002008-08-08T19:32:00.000+01:00@anonymous:buying power:In a deflation buying powe...@anonymous:<BR/><BR/>buying power:<BR/>In a deflation buying power is transferred to people whose outstanding credit is not defaulted upon or who own "hard currency".<BR/>Most people who work 40 years and plan to retire one day have outstanding credit, even if they don't realize it, because this credit may be in the form of a guaranteed government pension.<BR/><BR/>Hard currency is more difficult, because ultimately neither the dollar nor gold is a hard currency. Really hard currency is either an essential production factor or can be exchanged for the essential production factors even under adverse circumstances.<BR/><BR/>That means the dollar will be considered a hard currency in a deflation period as long as it is not defaulted upon. The moment the default happens, it will become essentially worthless and the dollar-holders will lose buying power.<BR/>Ditto for gold. In the very extreme case that one day you are hungry and want to exchange your gold into a nice meal and find that the owners of meals don't respect your shiny gold as decent currency (default upon you), you will suddenly realize that you have lost buying power by not holding hard currency.<BR/>The difference is, the default upon gold is very unlikely and would only happen in some kind of "mad max" world.<BR/>A default upon the dollar would mean to prohibit foreign ownership of US production factors (companies, property, etc.) or simply prohibit the import of dollars into the US. Extreme but at least thinkable. More likely is a simple default upon treasuries or agency debt.normal beinghttps://www.blogger.com/profile/13450117693646115155noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-69947479573468562912008-08-08T18:49:00.000+01:002008-08-08T18:49:00.000+01:00@democracyfirst:You're essentially implying the US...@democracyfirst:<BR/><BR/>You're essentially implying the US will default upon the Chinese and Saudi-Arabia, who will have no recourse and might not even admit it openly.<BR/><BR/>This amounts to protection money.<BR/>And yes - this would eventually lead to a nasty global deflation.<BR/><BR/>In this case I'd rather prefer an impartial rule of law than the "democratic" rule of a reckless people.normal beinghttps://www.blogger.com/profile/13450117693646115155noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-42063170889884555922008-08-07T15:12:00.000+01:002008-08-07T15:12:00.000+01:00Just like a central banker to delete my last post....Just like a central banker to delete my last post. You live in a world where you restrict the free flow of capital to elitists so in the real world why would you allow freedom of speech? Blogging while restricting speech is your attempt to control the responses. While there was sarcasm in my last post, it was clean. And, in it contained factual data on the relevant topic. You just lost a reader...........and you just started this blog.DemocracyFirsthttps://www.blogger.com/profile/05843460941735956631noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-1003244883303328152008-08-07T04:03:00.000+01:002008-08-07T04:03:00.000+01:00OK, LB, the preceding comment merits some REAL Lat...OK, LB, the preceding comment merits some REAL Latin for you:<BR/><BR/>Noli nothis permittere te terere.<BR/><BR/>And for our Anonymous friend, I have a bit of French:<BR/><BR/>Va te faire enculer, espèce de cochon!<BR/><BR/>SWKkilgoreshttps://www.blogger.com/profile/05837657348272070350noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-48341894625980124292008-08-07T03:52:00.000+01:002008-08-07T03:52:00.000+01:00LB -Unfortunately, it seems, every blog of any sub...LB -<BR/><BR/>Unfortunately, it seems, every blog of any substance inherently seems to serve as an open invitation to self-righteous fools, who imagine their hindsight is 20-20 and that they have some sort of monopoly on truth, to post unnecessarily caustic comments. Thank you again for sharing your insights and wisdom. <BR/><BR/>If you will tolerate a bit of mock Latin, illegitimi non carborundum, my friend.<BR/><BR/>SWKkilgoreshttps://www.blogger.com/profile/05837657348272070350noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-53144295569868724682008-08-06T17:41:00.000+01:002008-08-06T17:41:00.000+01:00Deflation can't beat the power of a printing press...Deflation can't beat the power of a printing press? Ask the Japanese. Ask the Fed during the 1930s. And, as far as printing presses, the Fed has not monetized any of this. Those blathering statements spewed by perma-bears are cluelessly inaccurate. The Fed has not bailed out anyone nor has the American taxpayer........yet. Blogging allows clowns to become subject matter experts to those who know even less. ie, The majority of people reading blogs. <BR/><BR/>The Fed's printing presses can't be fired up without a willful act of Congress for all of the conspiracy theorists who believe the Fed is some secretive private organization. Although it is secretive the government controls its charter. That means you control it.<BR/><BR/>The Fed can stop deflation about as much as I can. Unless, they just decide to monetize government spending ad infinitum. That is never going to happen in the U.S. as revolt would occur. Frankly, no one in the government has a death wish nor would they ever do so beyond what is perceived as necessary in serious crisis. This is not Zimbabwe and all of those writing it will become as much, are freaking idiots. <BR/><BR/>Get ready for the great deflationary bust. A global one.DemocracyFirsthttps://www.blogger.com/profile/05843460941735956631noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-345850451503506112008-08-06T01:58:00.000+01:002008-08-06T01:58:00.000+01:00"I am all in favour of such activities but warn, t..."I am all in favour of such activities but warn, that this time around we must get the structural fundamentals correct, a priori. And no flip flop mathematical imagination to be applied here - the fundamental structure must be founded and applied in pure physics! Then the next step will be ours."<BR/><BR/>I was frightened before but now I'm terrified! You really should learn a little physics before you make an even greater fool of yourself.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-36317577496102535642008-08-06T00:56:00.000+01:002008-08-06T00:56:00.000+01:00"In short, I wonder whether I contributed - along ..."In short, I wonder whether I contributed - along with a countless others in regulation, banking, academia and politics - to a great misallocation of capital, distortion of markets and the impairment of the real economy."<BR/><BR/>In short, yes.<BR/><BR/>In short, go hang yourself.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-26645534224187095982008-08-05T19:47:00.000+01:002008-08-05T19:47:00.000+01:00Deflation can't defeat the unlimited power of the ...Deflation can't defeat the unlimited power of the printing press can it?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-55312733572974645302008-08-05T19:42:00.000+01:002008-08-05T19:42:00.000+01:00Great post LB. So what happens when Godzilla (defl...Great post LB. So what happens when Godzilla (deflation) meets Mothra (inflationary printing presses)? Which one wins?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-44437115226498173642008-08-05T18:56:00.000+01:002008-08-05T18:56:00.000+01:00Thank you for the update, London Banker. I look fo...Thank you for the update, London Banker. I look forward to reading your thoughts.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-84708733382033309972008-08-04T17:13:00.000+01:002008-08-04T17:13:00.000+01:00@ All Perhaps I should have noted that moments aft...@ All <BR/>Perhaps I should have noted that moments after publishing this piece I was headed to a week of cold, wet, windy fun at the British seaside. It seems I am missing the best discussion I have ever provoked on this blog and over at RGE, but I hostage to family and friends here. I am also limited to a half-hour a day on the public library internet, although no doubt that can be overcome with some searching about for wifi.<BR/><BR/>If I do not respond immediately here, it is not because I am not grateful or impressed with the comments offered. This is a great response, and I'm deeply moved.<BR/><BR/>I may respond to select comments in a follow up for this Friday.London Bankerhttps://www.blogger.com/profile/13358082683340132378noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-13252344955923329572008-08-04T16:29:00.000+01:002008-08-04T16:29:00.000+01:00May God have mercy on your soul because ignorance ...May God have mercy on your soul because ignorance is not a defense. For ages people have known the impacts that central banks have on economics. They distort the free movement of capital and cause market forces to be short circuited. But, what is most abhorrent is how central banks create a self-fulfilling environment where a country's wealth is ultimately destroyed through misappropriation of capital that ALWAYS is in the best interests of financial institutions as opposed to society. That very fact has masked the underlying deterioration of the American economy for decades. <BR/><BR/>Anyone who has a basic understanding of mathematics clearly understands there was never enough money and wealth in the global economy to pay back all of the global debt built up over the last thirty years. Therefore, the only possible outcome is via massive default. <BR/><BR/>I expect it is highly plausible we could get to the point where the government must default on some level of responsibility. Especially, if the Fed must monetize much of the default in order to keep the wheels from falling off. Were that to happen, I would expect the Fed would possibly default on foreign held debt.<BR/><BR/>A "for profit" central bank is an oxymoron. Central banks should be used as an engine for wealth in the underlying economy. Until this fact is recognized, we shall repeat this cycle again and again and again.DemocracyFirsthttps://www.blogger.com/profile/05843460941735956631noreply@blogger.com