Mises Crack-Up Boom and "The Great Reflation" of 2008

[wizardwatson]

Mises Crack-Up Boom and "The Great Reflation" of 2008.

Earlier today I was pondering whether a hyperinflationary scenario would lead to skyrocketing stock markets and was shown this is the likely case in this thread:

Would stocks rally in early stages of hyperinflation?
(Great chart of Zimbabwe's Industrial Index posted by Otter Mii-kun)

I also posted this disturbing article from marketoracle:

Financial Markets Crash Greatest Opportunity in History!
(Predicts todays bounceback in the stock market)

From the above article I came across a term I hadn't heard before, the "Crack-Up Boom" coined by none other than Mises himself. Here's a good (albeit old) article on that topic:

The Worldwide Crack Up Boom, According to Ludwig Von Mises

And GoldSeek has an ongoing series on the Crack Up Boom:

The Crack Up Boom Part IX

What did I learn today?

Everyone is comparing this to 1929 but that was an deflationary depression. We're on the road to an inflationary depression. When LIBOR starts to crash, and people start fleeing bonds and cash (that they temporarily fleeing to due to mass liquidation caused by credit markets freezing) the stock market will probably shoot way up. Inflation will trickle down, and as people see their purchasing power diminishing, and a government that doesn't intend to quit printing, everyone will dump their money into anything that holds value.

Lather, rinse, repeat.

I also learned that all this talk of buying "illiquid assets" was just a shell game our US leaders were playing that was to mask the inevitable task they MUST undertake. Recapitalizing the broke-ass banks.

I don't know when the inflection point will happen. Meaning when inflation will get bad enough to where everyone starts fleeing cash and bonds, but from what I understand, this is basically a mathematical certainty.

"The Great Reflation" coined in the above MarketOracle article, basically refers to all this cash and liquidity that is coming in. And if you check out the above mentioned thread in RP forums, you can see the effect it has on a nations Stock Index (through the roof).

I encourage everyone here to read the above articles and understand Mises Crack-Up Boom as it, I think, is the key event that will occur.

In short, the system is screwed with the way the world leaders are acting, and only furthers my belief that this is a controlled crash. And by controlled crash, I mean controlled economic crash, as I think the Stock Market may have, or may very soon, have bottomed out.

[weatherbill]

yes! couple weeks ago I was saying once this liquidity becoems loosened, we are going to see inflation like never before, so get ready for the fals esecurity to come into play....and then the inflation to kick in, then we will see a vast amount of money going into precious metals and anything that holds value, guns ammo, silver, gold, food, etc

[Conza88]

The elites have tried the deflationary depression in the US... this time it's inflationary. imo.

I really need to get rid of my savings into gold and silver...

[wizardwatson]

yes! couple weeks ago I was saying once this liquidity becoems loosened, we are going to see inflation like never before, so get ready for the fals esecurity to come into play....and then the inflation to kick in, then we will see a vast amount of money going into precious metals and anything that holds value, guns ammo, silver, gold, food, etc

Yes, but the tipping point is when the 'masses' realizes that inflation is the chosen path of the elites. Right now, I don't think Joe Six Pack even gives a rats ass. And my guess is the MSM will dance around this primary issue as long as it can. I've already noticed on all the financial channels that any time any economist or pundit says "inflationary risk" they all come back with, "but we're seeing deflation right now, that's the big problem". So they're dancing around it.

But make no mistake, they HAVE to recapitalize the banks. So when these checks start clearing from the taxpayer to the banksters, first it will end up in the stock market, and slowly but surely inflation will pick up.

But I don't know enough with so many numbers out there, to make even a good guess about how long this will take, or even if it will happen faster than the governments of the world's attempts to do even more draconian $#@! (new world bank? new world currency?).

What we do know is that all the G7 countries are in lock-step with choosing inflationary depression over deflationary collapse of big morally and fiscally bankrupt institutions (their cronies and sugar daddies).

My gut tells me we'll know within a year how bad this is going to be.

[MoneyWhereMyMouthIs2]

Yes, but the tipping point is when the 'masses' realizes that inflation is the chosen path of the elites. Right now, I don't think Joe Six Pack even gives a rats ass. And my guess is the MSM will dance around this primary issue as long as it can. I've already noticed on all the financial channels that any time any economist or pundit says "inflationary risk" they all come back with, "but we're seeing deflation right now, that's the big problem". So they're dancing around it.

But make no mistake, they HAVE to recapitalize the banks. So when these checks start clearing from the taxpayer to the banksters, first it will end up in the stock market, and slowly but surely inflation will pick up.

But I don't know enough with so many numbers out there, to make even a good guess about how long this will take, or even if it will happen faster than the governments of the world's attempts to do even more draconian $#@! (new world bank? new world currency?).

Nice posts. Thanks.