tag:blogger.com,1999:blog-912107698547747613.post5509781565878888403..comments2023-10-23T22:07:07.535+01:00Comments on London Banker: Deflation has become inevitableLondon Bankerhttp://www.blogger.com/profile/13358082683340132378noreply@blogger.comBlogger77125tag:blogger.com,1999:blog-912107698547747613.post-1008480164407930912009-04-14T08:02:11.034+01:002009-04-14T08:02:11.034+01:00Thanks u r informationThanks u r informationweb design companyhttp://www.vijayinfo.innoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-30692803743962637582009-01-29T01:18:00.000+00:002009-01-29T01:18:00.000+00:00If deflation sets in it will be short lived; nothi...If deflation sets in it will be short lived; nothing to worry about. At the end of 2009 and into Q1 2010, the change from disinflation to inflation will be dramatic, and that's what we should be worried about.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-12357503702247477812009-01-13T03:22:00.000+00:002009-01-13T03:22:00.000+00:00Then you should go out and buy as many houses as y...Then you should go out and buy as many houses as you can with the smallest downpayment you can obtain. Real estate does really well in inflation and even better in hyperinflation. Have you done that already before it is too late/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-67371280461420594482008-12-30T22:27:00.000+00:002008-12-30T22:27:00.000+00:00It will end in hyperinflation, and it will be here...It will end in hyperinflation, and it will be here within 12 months.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-81169258579684995232008-12-29T13:07:00.000+00:002008-12-29T13:07:00.000+00:00It’s proper that site is down: the more hiding pla...It’s proper that site is down: the more hiding places he/she points to you, those who needs to hide few millions (not more), the less is left for him/her or their business.<BR/>You do not discuss the solutions, no causes. Most “developed” countries are printing much more money than needed, and cut the base money stand on: production by globalizing very fast. And the same elements move the capital out without a $ or EU paid back in taxes or tariffs. And the same are looking for a place to hide the leftovers (few millions each) and cut the base even more…. Sounds like a rat hole seeking site.<BR/>Maybe that’s why the “leader” left. Good for him/her. It's normal.<BR/><BR/>Sergey GavryushenkoAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-53561108972405080092008-12-21T23:31:00.000+00:002008-12-21T23:31:00.000+00:00LB,Thank you for the wonderful work you have done ...LB,<BR/><BR/>Thank you for the wonderful work you have done here and Godspeed in your new career.<BR/><BR/>You will be sorely missed. But truly, a person of such clear vision and evident decency as you, definitely is needed in influential positions as we head towards the dark abyss of this crises. Your wisdom will be missed here, but if you can serve the greater good in your new job better than writing a blog, run with it.<BR/><BR/>All the best, thanksDrakehttps://www.blogger.com/profile/11413386807483123392noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-45446111997502881182008-12-21T22:01:00.000+00:002008-12-21T22:01:00.000+00:00I would say "Inflation has become inevitable". In ...I would say "Inflation has become inevitable". In fact, this false deflationary "scare" is setting the stage for the inflationary nightmare up ahead. Also, NYT has been carrying deflation-sounding articles recently - in my book this is a very positive sign that the deflation "bubble" is about to pop.EGhttps://www.blogger.com/profile/08973732578448639483noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-65669985258084581092008-12-21T21:45:00.000+00:002008-12-21T21:45:00.000+00:00Sorry Londonbanker - you took too long to come dow...Sorry Londonbanker - you took too long to come down on the wrong side, as as it will be apparent to you in hindsight. The current rise in dollar value is a complete head-fake, triggered by liquidations creating dollar demand and also US banks buying bonds. And I wonder, if we are in a "deflation", why is my food not getting any cheaper?<BR/><BR/>We are so used to thinking in terms of a fiat unit of money, i.e., the dollar, that I think everybody in the deflation camp is making the same mistake. Deflation will occur in terms of real money, i.e., gold NOT dollar/fiat money. What will occur in terms of the dollar will be massive inflation. You are underestimating/disregarding the role of the government. If the banks are not lending, it is not beyond the govt. to give money directly to a clamoring populace. Case in point is Obama's stimulus plan, to be financed by printing money. Also, the fed is monetizing everything in sight right now - from credit card bills to mortgages - there is no way that this tsunami of monetization will not cause cause extreme inflation. Deflation in terms of the dollar can only occur in the absence of the Fed - period. <BR/><BR/>People can't/won't keep their money in the mattress forever, simple reason being that they can't eat money or use it to cover themselves. This will initially bid up the price of things of daily necessities, i.e., food, commodities, etc. As more and more fiat money buys less and less real stuff, the prices will be bid up even more resulting in a an inflationary spiral that will seep into everything including stocks and real estate, but remember, this will be just a nominal increase as everything will fall in REAL terms (i.e., in terms of Gold).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-53274889277599092342008-12-19T08:44:00.000+00:002008-12-19T08:44:00.000+00:00@ MishI take issue with your view that paying down...<I>@ Mish<BR/>I take issue with your view that paying down debts and reducing consumption are equivalent to saving. They are not. Saving requires a surplus over consumption that is retained for investment.<BR/><BR/>...<BR/>My point was that those few frugal souls that have bothered to retain a surplus over consumption and thereby generate savings over time are being discouraged from placing that savings in the hands of banks, brokers and even state treasuries by the negative returns now offered and the rampant corruption of the system evidenced by the extralegal and illegal actions so many feel free to take - including the US Treasury and Federal Reserve. The lawlessness and lack of accountability or transparency - in both private and public sectors - discourage me as much as the negative savings rate. ...</I><BR/><BR/>London Banker - I think we are in violent agreement. Your point is very well taken.<BR/><BR/>I simply am using a different definition of saving than you are. Unless there is agreement on terms there can be no debate. Using your definition, I agree with you.<BR/><BR/>I was using the official definition which is wages - spending = saving.<BR/><BR/>Actually the definition is slightly more complicated but in essence that is it. <BR/><BR/>In Austrian economic terms savings = production - what is consumed of production<BR/><BR/>E.g. an apple grower produces 10 bushels of apples and consumes 3 bushels. Savings = 7 bushels. <BR/><BR/>Those bushels might go bad so the grower sells them for gold and that gold is the savings. <BR/><BR/>Going one step further, the grower pays down a debt with some of that gold, the savings was still 7 bushels as that is what was left over "saved" from the production of 10 bushels of apples.<BR/><BR/>Mishmikeshedlockhttps://www.blogger.com/profile/07844630325255577301noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-40347122198259192262008-12-19T05:59:00.000+00:002008-12-19T05:59:00.000+00:00why didn't i discover your blog earlier? any occas...why didn't i discover your blog earlier? any occasional post will be greatly appreciated.classbuddyhttps://www.blogger.com/profile/11952219888125809222noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-83775693476202162072008-12-18T16:30:00.000+00:002008-12-18T16:30:00.000+00:00Somehow it seems significant that the fast capitul...Somehow it seems significant that the fast capitulation to the global Deflation thesis, which has unfolded over 5 short months, should reach its apex right as the US FED signals QE and Monetization. Because in an Austrian sense, we are now inflating big time. <BR/><BR/>Agreed, whether this transmits and gains velocity is the current question. I just find it notable that the case for Deflation is now clearly the consensus.www.gregor.ushttps://www.blogger.com/profile/14172143997858920566noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-44695822230614092682008-12-18T16:27:00.000+00:002008-12-18T16:27:00.000+00:00another name... not quite so popular, but it's the...another name... not quite so popular, but it's the person who woke me up, and i have profited immensely from said awakening:<BR/><BR/>Prechter.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-90348444171103718842008-12-17T02:53:00.000+00:002008-12-17T02:53:00.000+00:00To badly paraphrase Richard Curtis and Ben Elton's...To badly paraphrase Richard Curtis and Ben Elton's wonderful character Captain Darling, spoken shortly before his death.<BR/><BR/>"Wrote an entry in my diary on the way over here. Simply said, Bugger".<BR/><BR/>Good luck.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-24520463228966428472008-12-17T00:10:00.000+00:002008-12-17T00:10:00.000+00:00By the way, in a recent posting Karl Denninger ref...By the way, in a recent posting Karl Denninger referred to Kondratiev and Greenspan.<BR/>See:<BR/>http://market-ticker.denninger.net/<BR/>LA LA LA LA LA LA LA LA<BR/>Amongst the links to other article is this one:<BR/>http://www.thelongwaveanalyst.ca/pdf/07_12_04_News.pdf<BR/>THIS IS IT!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-72045573670124986912008-12-15T13:38:00.000+00:002008-12-15T13:38:00.000+00:00LB - I will miss your insightful posts. There are ...LB - I will miss your insightful posts. There are not many of us that comment on the State of the UK.<BR/><BR/>One area you miss though is predicting the end of the deflation. You hint at it with the brigans metaphor.<BR/><BR/>it seems to me that deflation is happening so rapidly that this phase may not last more than a year and then the switch to inflation will be rapid.<BR/><BR/>I would welcome your comments, on my blog, email or wherever. Should you ever wish, I appreciate guest posts on my blog too.CityUnslickerhttps://www.blogger.com/profile/15929544047783163175noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-60466905070605223132008-12-15T09:26:00.000+00:002008-12-15T09:26:00.000+00:00London Banker,It has been refreshingly revealing r...London Banker,<BR/><BR/>It has been refreshingly revealing reading your insights. Will miss that, but thank you for leaving the blog up so we can review it from time to time in the coming year.<BR/><BR/>Regarding deflation, clearly we are in that now and you present a compelling case for continued deflation until the system becomes honest and openly worthwhile for savers and investors...'all else being equal.' <BR/><BR/>But, I think the above comment to yours is also relevant, "Dan said...The fed is currently creating the deflation. You need to look at the feds balance sheet. You will see that they haven't monetized yet...You will soon see inflation pop again by the middle of next year and the dollar and bond markets collapse..."<BR/><BR/>I think you are somewhat correct but that Dan is also correct and that the timing he mentions may not be too far off.<BR/><BR/>Aloha, BradMauibradhttps://www.blogger.com/profile/16759237357642699345noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-14971848377492470752008-12-14T19:42:00.000+00:002008-12-14T19:42:00.000+00:00Finally, a London Banker who isn't glib!I just dis...Finally, a London Banker who isn't glib!<BR/><BR/>I just discovered your blog today, and am already as sad as everyone else who laments the premature end of your blogging days. Your writing has certainly helped us to put the pieces together. <BR/><BR/>I've always wondered how you bankers truly operate, and as I read I grow increasingly nauseous because you clearly are painfully correct.<BR/><BR/>When you're back in the belly of the beast things will certainly get even more bizarre and infinitely more bloggable. But, after all, "loose lips sink ships" so your silence is commendable.<BR/><BR/>I've often been saddened by the fact that the "rabble" continually accuse the "overlords" of being evil sub-human fools. While many policies may have that net effect, your wisdom and generosity shows that some on "the inside" are insightful, decent people who very much care about doing the right thing.<BR/><BR/>The system is fundamentally flawed and too easily manipulated, but the system also involves very many good people- both those within it and those effected by it. I look forward to the day when the voices of these "better angels" are respected and acted upon.<BR/><BR/>In the meantime, Bush rode in on Enron and rides out with an even bigger bang. Exporting inflation, deflation, and violence- obviously what is jettisoned invariably washes back on your own shores. Apparently they believe that with this little trick of financial engineering the clock can be turned back to the era of American hegemony, and held there forever.<BR/><BR/>For better or for worse, such acts clearly mark the end of empire, and as they frantically pull levers and push buttons, because the long-term effects are unknowable, they're unwittingly hastening the demise of Amero-centric globalization. Without sounding naive, I'd like to think that policymakers will eventually have no choice but to do the right thing- that which truly makes the world a better place. Either that, or we battle/grind our way back to the stone age...<BR/><BR/>While your new employers wouldn't look too kindly on blogging, writing a book is still quite respectable, and we eagerly await yours!<BR/><BR/>"The End of History"<BR/><BR/>Best of luck, Mr. LB.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-78186779687579896832008-12-14T18:35:00.000+00:002008-12-14T18:35:00.000+00:00Heavens, this just makes it worse. Here we have th...Heavens, this just makes it worse. Here we have the beginning of an open debate between LB and Mish - two of the best economic thinkers on the planet - and one of the debaters is dropping out. <BR/><BR/>Has anyone got any positive ideas about where those of us who are trying to understand this mess can go? I suggest we keep this comments page running for a week or two (if LB agrees) and put up our suggestions about who is worth reading. Most of the economics blogs are written by people who fit Charles Munger's description of the man with a hammer - to whom every problem looks like a nail. The gold bugs are the worst offenders. LB and Mish aren't like them. Who else is worth reading? Mauldin? Weiss?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-58003547227725822632008-12-14T12:52:00.000+00:002008-12-14T12:52:00.000+00:00Good Luck and thanks for sharing.Good Luck and thanks for sharing.Lonahttps://www.blogger.com/profile/11598222157268567817noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-57934816418559468622008-12-14T12:00:00.000+00:002008-12-14T12:00:00.000+00:00@ MishI take issue with your view that paying down...@ Mish<BR/>I take issue with your view that paying down debts and reducing consumption are equivalent to saving. They are not. Saving requires a surplus over consumption that is retained for investment. <BR/><BR/>Reducing consumption by reducing borrowing does nothing to increase savings, it merely contributes to deleveraging of the economy. This is essential in a deflation, but not enough by itself to generate a savings surplus. And as production falls with the economic contraction, generating and retaining real savings becomes an ever greater challenge.<BR/><BR/>My point was that those few frugal souls that have bothered to retain a surplus over consumption and thereby generate savings over time are being discouraged from placing that savings in the hands of banks, brokers and even state treasuries by the negative returns now offered and the rampant corruption of the system evidenced by the extralegal and illegal actions so many feel free to take - including the US Treasury and Federal Reserve. The lawlessness and lack of accountability or transparency - in both private and public sectors - discourage me as much as the negative savings rate. And so whether it is in the mattress, spread as small deposits at multiple banks, or even in gold, I will be content to preserve my meagre capital rather than trust it to any of the traditional offerings intermediated by the crew currently in change of the banks, brokers and governments.<BR/><BR/>@ All<BR/>Many thanks for your good wishes. <BR/><BR/>It would not be fair to my employer to risk any embarassment from my continued blogging, particularly as I have been critical of policies followed just about everywhere at some point. I am unlikely to stop being critical, so I have to stop writing.<BR/><BR/>I expect to make a real difference in both policies and outcomes through my efforts in my new position, and that will be my priority in 2009. <BR/><BR/>I'll be keeping the blog here up, and will transfer the early diaries from RGE that weren't posted here over in the next few days. That should give us an interesting basis for evaluating how my early criticisms and predictions have fared, as well as providing a bit more leisure reading for those interested.London Bankerhttps://www.blogger.com/profile/13358082683340132378noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-58883663321613903632008-12-14T08:34:00.000+00:002008-12-14T08:34:00.000+00:00LB, I appreciate your compositional skills. In a ...LB, I appreciate your compositional skills. In a wired world replete with error, this is truly an achievement. Of course, the analysis is good too, but it seems (as my beer-addled contribution shows) that good writing is in shorter supply. Do carry on, wherever that may be.<BR/><BR/>IgnorantinOttawaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-32016394726763222702008-12-14T05:58:00.000+00:002008-12-14T05:58:00.000+00:00LB,Many thanks for a wonderful blog -- my number o...LB,<BR/><BR/>Many thanks for a wonderful blog -- my number one favourite. I agree with many others that it would be great to see a monthly blog, even a bullet point list.<BR/><BR/>Best of luck in your new role.<BR/><BR/>CheersAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-42512608252842237122008-12-14T05:47:00.000+00:002008-12-14T05:47:00.000+00:00Anon from 13 December 2008 21:44 here again. One o...Anon from 13 December 2008 21:44 here again. One other point:<BR/><BR/>Bagehot's Lombard Street is a great instruction manual for currencies negotiable for gold and for countries with debts denominated in foreign currencies. The U.S. is neither. Furthermore, as you note, the dollar has rallied during the worst of this crisis, not sold off, suggesting U.S. counterparties (or U.S. investors with capital invested in foreign countries) remain more confident in the dollar than, say, the IKR, Hungarian forint, or even (dare I say it?) the GBP.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-11100836057911721102008-12-14T05:44:00.000+00:002008-12-14T05:44:00.000+00:00God bless in your future endeavors, LB.I agree wit...God bless in your future endeavors, LB.<BR/><BR/>I agree with you that countries that attempt to shield business failures from consequences should be penalized for it by demanding a higher risk-adjusted expected return. Bailout Nations need a higher hurdle rate.<BR/><BR/>But I don't think you successfully linked Bailout Nation to cutting interest rates. Lower overnight interest rates benefits those who borrow from the Fed the most, to be sure, but to the extent it is passed on to other borrowers, they have access to capital at lower rates that before. Consider U.S. Small Business Administration loans, which are tied to the Prime Rate, which is Fed Funds + 3%. Or Home Equity Lines of Credit (for those who still have home equity) at Prime or Prime -0.25%. <BR/><BR/>Some people complain that lowering the Fed Funds rate is a "blunt tool" that doesn't really provide a "focused stimulus" to get to the exact problem areas. If bailing out failed business models like AIG, Bear Stearns or the auto makers is the archetype for a "focused stimulus," give me the "blunt tool" that benefits everyone in the short- and intermediate-term: low rates.<BR/><BR/>We can argue about the long-term effect at the next Presidential election campaign. That's as far as any politician or Fed official can think anyway...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-20152633467520544492008-12-14T04:57:00.000+00:002008-12-14T04:57:00.000+00:00Thank you for sharing your valuable wisdom, insigh...Thank you for sharing your valuable wisdom, insight, and experience. Please check in every now and then. Best of luck.Anonymousnoreply@blogger.com