I wouldn't mind seeing some green in the future for that chart.Originally Posted by Zippyjuan
Must be nice not to have to work for a living.
I do not follow. I do work for a living. Rampant inflation has harmed us quite a bit. Some equalization of that through deflation could be a good thing. A deflationary economy encourages saving, whereas an inflationary economy encourages spending money as soon as you have it. Maybe I don't understand it that well, but it sounds to me like deflation could help us all save up enough to retire, whereas inflation could work towards preventing that from happening. I do understand that deflation can be harmful to an economy, but so can inflation, and the inflation has been rather painful. At the very least, seeing the blue go down closer to the center of the line would be nice.
I probably expect to turn 13k a yr cash in profits off of these " collectibles " in this downturn , as a part time thing , few hrs a week.
The problem is that during periods of deflation unemployment spikes dramatically. We've only had 1 serious period of deflation since the 1900s and that was the great depression. The housing crisis was a period where the blue was really close to the center. Those 2 periods were some of the worst times for workers, particularly the working poor, and really the only people that benefited were already wealthy people who owned a ton of cash/treasuries. Though, other already rich people were wiped out if they were heavy into equities or real estate. The negative consequences of inflation are massively overstated compared to the consequences of deflation. People seem to only think about goods they buy getting cheaper and not their labor....the worst part being that the price of goods never goes to 0, but the value of people's labor often does.
Last edited by John X; 11-25-2015 at 01:13 AM.
What if deflation happens in a slow and controlled manner until equilibrium is reached instead of too rapidly for the market to adjust comfortably? The current situation is that the Fed is inflating in a controlled manner. Market manipulation may be seen as a negative thing to us whether up or down, but they have been manipulating it to inflate for quite some time and it is getting out of hand.
Seriously loving it when Zippy, John X, et al, post here as though we operate in a free market.
Some silly facts regarding the silver aspect of our free market:
“Causing the price of silver to be depressed via a concentrated short position on the COMEX along with the ability to crush prices in an HFT second, to then scooping up physical metal (and covering paper shorts) at the self-created depressed prices.
What this also highlights is the madness and illegality of having the paper price on the COMEX setting the price in the physical market. If JPM hadn’t been capable of rigging silver prices lower in 2013, it would never have been able to buy back 100 million ounces of short paper contracts and buy many tens of millions of physical silver as well.”Today, the actual size of the silver market is, according to Bloomberg, of $5 trillion.
$5 trillion divided by 20 billion (physical market) = 250
250 X $20 (silver spot price) = $5,000 an ounce
If the price of silver were based directly on the real physical silver market, silver’s price should be at $5,000 an ounce.
This price may seem totally crazy, but who can pretend knowing exactly how an ounce of silver is worth, after decades of manipulation and turning real investors’ demand from the physical market to the « paper » one, and years of exponential monetary printing by all the planet’s central banks?
The actual spot price for silver has no real value and is not legitimate when we seriously compare the real physical silver market to the « paper » market and its myriad of financial derivatives.A few years ago, it was admitted in hearings that paper trades of silver averaged 100 times physical silver. Do any of you lead-dense-skulls out there get that? That's akin to shorting 100 billion shares of non-existent Exxon stock and buying the $#@! out of it when it tanks. Illegal as hell, yet instead of jail sentences, the practice has continued unabated to the point of 250 to 1.Meantime, JPM has built the longest position in physical silver in recorded history. It holds its grip on the silver price through its short corner in COMEX silver.
JPM profits in the billions trading silver. What the $#@!, Zippy, you too stupid to do the same with PMs? Instead, you come here daily to piss on the market and spout the green shoots mantra… yesterday's fake news tomorrow from Zippy dee doo dah
That's a fair point. One major problem with deflation is that it is typically a shock to the economy that wasn't expected. So people end up defaulting on loans or laying off employees because they suddenly don't have as much money as they thought they would. Its possible that a healthy economy could be expecting controlled and fairly mild deflation over the long term and be healthy.....but I'm not sure there has ever been an example of this.
It's strange....you complain about markets not being free but then you want futures markets and naked shorting to be outlawed by force. So what do you want, free markets or iron fisted governmental regulation of what consenting parties are allowed and not allowed to do with their own money?Seriously loving it when Zippy, John X, et al, post here as though we operate in a free market.
Some silly facts regarding the silver aspect of our free market:
A few years ago, it was admitted in hearings that paper trades of silver averaged 100 times physical silver. Do any of you lead-dense-skulls out there get that? That's akin to shorting 100 billion shares of non-existent Exxon stock and buying the $#@! out of it when it tanks. Illegal as hell, yet instead of jail sentences, the practice has continued unabated to the point of 250 to 1.
JPM profits in the billions trading silver. What the $#@!, Zippy, you too stupid to do the same with PMs? Instead, you come here daily to piss on the market and spout the green shoots mantra… yesterday's fake news tomorrow from Zippy dee doo dah
Look up the United States from 1870-1913.
There were long periods in that time that were not healthy economically
https://en.wikipedia.org/wiki/Panic_of_1873
https://en.wikipedia.org/wiki/Panic_of_1884
https://en.wikipedia.org/wiki/Panic_of_1893
https://en.wikipedia.org/wiki/Panic_of_1896
https://en.wikipedia.org/wiki/Panic_of_1901
https://en.wikipedia.org/wiki/Panic_of_1907
The deflation during that time was not expected and controlled and reeked havoc on the economy at large.
It was so unhealthy that the United States went from a land of peasant farmers to the first middle class in history and the largest economy on Earth in 40 years. The government always caused bank panics then like now. They weren't as big though, and the government didn't step in to solve them, so they were just speed bumps.
By that standard we've had nothing but uninterrupted prosperity since WWII.
Deflation is good if you are a consumer- bad if you are a producer. Unless you are able to cut your labor costs (trim jobs) to reduce costs to match the price declines, you either make less off everything or actually lose money on what you produce which could force you out of business. Either way, it leads to high job losses. Workers won't accept lower pay for the same job so they get their hours cut. Sometimes by 100%. Deflationary periods are nearly always associated with recessions.
Inflation is good if you are a producer, and bad if you are a consumer, plan to retire, or desire to save.
Wages also tend to rise with price inflation. The question is are prices or wages rising faster. If you want to retire the questions is "are the returns on your investments keeping up with the rate of inflation?"
Wages rise slower than prices during inflation. They fall slower than prices do during deflation. And luckily for the U.S middle class at the end of the 19th century, deflation didn't lead to unemployment. But looking at the U.S. since 1970, it sure looks like inflation leads to unemployment.
But ideally the periods of deflation and inflation will balance each other out, as you see them doing all through the chart Zippy posted until the time of FDR. The disadvantages of one will soon be corrected as the pendulum swings the other way. As you can see, we've gone a very long time with nothing but uncorrected inflation.
That's only the question if you already have enough to live on for the rest of your life just from the principle, with no growth. If you, like most people, expect to invest that principle in something that grows, then you don't just want to keep up with inflation, you want to outpace it. For everyone who has retired over the past 75 years, they have had to face constant inflation, year after year, unmitigated by any deflation, eating away at that.
I'd rather have a currency that is losing value over time than deflationary depressions every few years to offset inflation.
You don't have deflationary depressions without first having inflation. Have sound money, and no government backing of the banks, and you get slow, steady deflation, poor and middle class getting wealthier, and no extended unemployment.
I agree but you don't need to have that be the choice.
It isn't price deflation that matters so much as nominal incomes falling across the board. It is a pretty key difference. You can have benign price deflations and rising nominal incomes in a period like the late 90's when you have technological growth. Deflationary depressions only come about when nominal GDP falls.
If you target nominal incomes you can have a currency that has roughly zero change in purchasing power over the very long term.
When I first bought in, Engelhard Prospector cost me $8.25 and Maples were $9 out the door from the local store.
AMPEX is asking $20-21 each for prospectors today, Maples are $18-19 right now.
Not really feeling the whole sky is falling thing quite yet...
Then again I have no intention on selling my silver, it is for SHTF trade currency or to be passed down if it doesn't.
That doesn't describe any period in US history, so I'm not sure how you know what will happen other than purely based on politics.
But the dollar also lost value in the 90s. I agree the economy was doing well then.
There were also long periods that were very healthy economically. In fact the whole period is still the hallmark for prolonged economic growth.
Why?
Keep in mind this loss of value can't go on forever, and it can't end well.
The economy did do well, but by having overly loose monetary policy it led to a bubble and bust.
If the Fed targeted nominal incomes there would have probably been mild deflation and you likely wouldn't have had an overheated economy. The flip side is also true. If the Fed had targeted nominal incomes starting in 2008, monetary policy would have been much looser and recovery would have likely been quicker.
I agree....I was just pointing out that it wasn't a time period that was absent of the boom and bust cycle. There were booms and very severe busts.
Except for a few brief, government driven recessions, it describes Industrial Revolution era United States. If you want to debate these things you would be best served to read up on them.
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