Inflation

[The Dumb Gun Collector]

I will say this. I remember being super paranoid about inflation when Obama got elected. It never panned out. Trump and the boys blew out the deficit. Nothing to speak of. I am not saying it isn't coming, but things don't seem to be operating like they did in the late 70s through early 80s. Not yet anyway.

[vicious_cb]

I will say this. I remember being super paranoid about inflation when Obama got elected. It never panned out. Trump and the boys blew out the deficit. Nothing to speak of. I am not saying it isn't coming, but things don't seem to be operating like they did in the late 70s through early 80s. Not yet anyway.

They also didnt print stimulus and unemployment money for every american nor did they tank the economy and GDP with the excuse of the mysterious virus of unknown origin.

[SteyrAUG]

Not to worry, I have literally MILLIONS of reichmarks in the safe...so I should be pretty good.

[okie]

So as of right now, very little money is going into the so called real economy. Trillions are flowing into the markets, which is inflating asset prices from housing to gold to bitcoin, but money is actually being destroyed on main street, which is why unemployment is continuing to rise and velocity is falling.

Housing is its own unique bubble. Low interest rates have made housing available to people who previously couldn't qualify for a loan. So that has opened up new demand, while supply is being limited by the moratoriums on evictions and foreclosures. There's also a lot of speculation buying going on, with investors snapping up everything they can, despite the fact that most landlords are reporting empty properties and tenants not paying full rent. Some housing is also falling. Anything in cities and anything above about 300k is floundering, some spectacularly like in NYC.

And in reality, housing has already crashed, but the moratoriums aren't letting us feel it yet. The fed now owns half of mortgages, meaning the banks, had they not been bailed out of those, would be insolvent and failing right now as a result of people defaulting on their mortgage payments. When a bank becomes insolvent, they're allowed to transfer certain asset classes into the fed, and the fed creates some money that the bank can hold on its ledgers to meet reserve requirements. In previous decades they were only allowed to do that with bonds, then in 2008 mortgages were added to that list. Now as of 2019 it includes junk corporate bonds and the fed is also buying equities to keep the markets up.

For those who don't know, in September of 2019, there was a crisis in the overnight lending market. As some of you might know, banks have to buy bonds for the system to work. The treasury prints bonds, which are auctioned to the banks, which allows new money to be created. Well, banks didn't have enough liquidity to buy bonds and keep the overnight markets going, too. It was 2008 all over again, but this time bonds were the pin prick. The banks were simply insolvent. So the fed came to the rescue, but this time they didn't have to ask for permission from congress, so they swept the whole thing under the rug all quiet like and have been printing money and swelling their balance sheets ever since.

So this is just a straight up liquidity problem. Not enough money in the economy, which is deflationary. And with businesses going under and unemployment rising, money will continue to leave the economy. Why is there a liquidity problem? Taxation, overregulation, and money printing. These things transfer money from the real economy into government coffers and the pockets of the so called 1%. When new money is created, the 1% gets to use it first, before it devalues the old money. So in periods of past inflation, the 1% on wall street have basically been raiding everyone's bank accounts.

So in this bizarro backwards train wreck of an economy, the fed printing money to put stuff on its balance sheets is actually a sign of money leaving the real economy and going into like a liquidity prison from which there is no escape. It's like a giant black hole. And most of it seems to end up in derivatives, where the eventual crash will wipe it out overnight.

Now this doesn't mean that inflation can't be on the horizon. If and when the bubble does burst, the banks will need endless, exponential bailouts, and the fed is not only required to give them by law, it's in their interest to do so. See, the banks are shareholders in the fed, on whose balance sheet these assets go. So the banks can collapse and fold, and still end up owning the assets indirectly. So when all this does finally crash at some point, maybe in the not too distant future, most of the money will get wiped out like it did in march. Some estimate that 40 trillion was lost in derivatives in the march collapse. So that hasn't even been replaced yet.

So it's not really inflation, more of just a supply and demand thing. That's why housing is like 20% higher, but gas and other non asset commodities are still cheap. So the consumer price index is largely flat.

But in the endgame when the big one bursts, the fed will be required to print many trillions of dollars to bail out the banks, which could definitely cause high inflation. I think a lot of it will depend on how much and when they airdrop cash to consumers. Another thing is that if velocity picks up then money can definitely start trickling down from the fake economy and start inflating prices on main street. So if the money printing gets absurd, and people are expecting inflation, and therefore start spending, inflation will happen.

The other threat is money abroad being kept in corporations and central banks. If they see us printing lots of money, they might dump their dollars. There would be a game of hot potato where they would be paying each other in dollars and then sending that money right back home to us after they had paid their liabilities. And of course once the hot potato lands on us, we just have to hold it. So the system is kind of designed to deflate massively first before it hyperinflates, because it's the deflation that triggers all that money printing. Was the march the deflation and now we're entering into the inflationary phase? Possibly, and obviously no one knows, but at this point the indications say we're in deflation.

I tend to think that we're basically on pause right now, and when we turn the economy back on I think the deflation will continue. If not for the money printing and government intervention in march, we all know the markets would have fallen a lot further, and taken all asset prices with them. So I think right now it's like we've basically called a time out so we can huddle up and try to concoct some game saving play. I don't know how long we have or if we have additional time outs still to play. I doubt it though. I think at some point in the very near future we're going to finish what we started in march.

One more huge thing that everyone needs to consider and then I'll shut up lol.

To this point, the government has been extremely careful to trickle in only enough money to consumers to prevent an all out depression, but not enough to increase velocity, and therefore cause inflation. If they did cause inflation before a period of high deflation, people would essentially be gifted anything that is borrowed. So like if you have a house that you owe a lot of money on, that you're in danger of losing if the economy doesn't pick back up, if we go straight into high inflation then you'll be able to sell something, like a car maybe, and then use those inflated dollars to pay off your house.

What this means is that the banks would lose big time. They would lose the money, their stock would be worthless, and they wouldn't have the assets. So basically someone is going to get the shaft before this is all over. If inflation comes first, the banks lose. If deflation comes first, the banks win.

Now there's a lot of talk about deep state this and shadow government that. It's the banks, okay. The richest people call the shots. Shocking, I know. So it's kind of hard to believe that all of these politicians they've bought are going to turn against them and just make it rain.

If the government airdrops enough cash to people to cause inflation, my feeling is that it's going to be only after deflation has let the banks repossess all the assets that they rightfully own. Which they could start doing on day one if the moratorium is lifted.

Also think about this: If there's a crash, everything will go bust. Asset prices will plummet. People will owe like 300k on a house, 50k on a car, 25k in student loans, maybe another 20k in credit card debt. And that house in a deflation might now be worth only 100k, the car maybe 20k. And people aren't going to want to buy assets, because they'll have their own loans to pay, and don't want to catch a falling knife even if they don't.

Boomers mostly will be the ones who have liquid assets, and they'll be scared to spend them because they will be expecting a second great depression, so they'll think the money they have saved is all they'll ever get for the rest of their lives. So even rich people will be spending like they're poor.

Then you also have to consider that so many people will be trying to access their money to pay debts to keep their house that there might be a run on banks, in which event the banks will freeze accounts and possibly even convert deposits into banks stock. And do like a thing where they only give everyone maybe a few hundred dollars a week. So the banks might actually confiscate everyone's cash and redistribute what's left after they use what they need. Meaning even people who have liquidity right now might not when this goes down, meaning they won't be able to buy your assets, meaning you won't be able to raise the cash you need to save your house.

So all this shit gets repossessed and put on the fed's balance sheets. So the fed owns the mortgages, the student loans, the credit cards, etc.

So what if the fed says, You know, if you'll just go ahead and sign everything over to us, we'll let you stay in your house as a renter (think back to what the banks did in 2008), and we'll just go ahead and forgive your student loans and credit cards. You would do that in a heartbeat, ostensibly saving them the expense and trouble of going to court, evicting, etc. But in reality, they just want to gain title before the hyperinflation sets in, which would allow you to finally sell something and pay off your house. Not saying that's what will happen, but it's something to think about.

So the government kind of controls how this plays out, and whether it's in our favor or the bank's favor. If the government airdrops lots of cash like Biden promises then we win. If not, the banks win. What you have to ask yourself though is if they're going to screw the banks why haven't they done it yet? Why have they been so careful to only drop enough money to keep people from starving? Why didn't they just airdrop thousands a month back in march?

The answer to me is that they're deliberately keeping velocity low to prevent their printing from causing inflation. Maximum benefit to the banks, combined with maximum harm to consumers. The banks and wall street love the printing, as long as it's not going to us. So in my mind they've already proven they're going to screw us and do what the banksters tell them to do.

Could totally be wrong, and there could be some angle to this I haven't seen yet, so take everything I say with a grain of salt. But I think these are questions you definitely have to ask yourself, especially since this all jives with the talk coming out of Davos, which is basically the global elite regurgitating whatever the banksters are telling them. So this whole idea of everyone owning nothing and renting it from the banks is pretty much exactly what the people in Davos are telling us in plain English. So they're basically telling us they're coming after the assets, and my hypothesis seems like a pretty efficient way for them to do that.

[pag23]

We only have a few years to pay off the mortgage and that is real only debt we have...credit card balance is a minimum and wife is a saver

I try and max out my 401k into a Roth to save on future taxes...

What worries me is not as much inflation but the raiding of my future savings and earnings and loss of social security....

[Honu]

Today a house tomorrow a car the next day a toaster the next a loaf of bread and the next only a slice

Wheelbarrow are handy for inflation

Not to worry, I have literally MILLIONS of reichmarks in the safe...so I should be pretty good.

[utahjeepr]

Not to worry, I have literally MILLIONS of reichmarks in the safe...so I should be pretty good.

At least those might have some collection/novelty value.��

[SteyrAUG]

At least those might have some collection/novelty value.��

Funny thing is they are still mostly worthless. Pretty sure you can get a 500 million reichsmark note for about $20 today. They are a handy reminder that eventually paper can become only paper so play accordingly, that is their greatest value.

[utahjeepr]

Wanna trade for Philippine victory notes?