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Friday, May 15, 2020

Mailvox: debt deflation confirmed

A reader writes to observe that the concept of debt deflation is gradually leaking out into the mainstream discourse:
I found a little snippet that NeonRevolt posted from Reddit's Wallstreetbets concerning Debt Deflation. I will reproduce the two pertinent paragraphs below, and while I am unsure of the veracity of some of the other points, I find his conclusions in the second paragraph, which I have bolded for emphasis very interesting.

OKAY. So demand has been reduced dramatically around the world, our $21 trillion GDP has basically been paused for 2 months, so to keep it afloat (rough math), the government had to add $3.5 trillion to keep the economy running somewhat smoothly. That's a lot of printing, you idiots probably expect inflation. Wrong, step away from the US and look at what other countries are doing, the ECB (European Central Bank) and BOJ (Bank of Japan) are having to print trillions of dollars worth of EURO and YEN to keep their economies going, along with every other country getting pounded. Not only that, but since the US dollar makes up 70% of global transactions, in liquidity terms, trillions worth of euro and yen is MUCH MUCH more than any amount Jpow feels like printing, there's no way our printing could offset what the rest of the world is doing, so inflation isn't coming. If you want proof, just look at the euro/usd (going lower) and literally ANY emerging market currency is getting absolutely clapped vs the dollar.

Furthermore, not only is US corporate debt at an all time high, but emerging markets, the eurozone, and asia has borrowed more dollars than ever before at any point in history, basically everyone around the world's debt is denominated in US DOLLARS. So what's about to happen? It's already happening, demand for US dollars is going up because everyone around the world wants to borrow more to offset cash flow concerns and pay off existing debts, which will cause the dollar to increase in value. What happens when the whole world has debt in dollars and the dollar goes up in value? DEBT BECOMES MORE EXPENSIVE. This is DEFLATION, and in particular and even more terrifying DEBT DEFLATION, a phrase that would make Jpow absolutely shit himself (and he knows its coming). This has already started before the whole beervirus nonsense, look at Venezuela and Zimbabwe, they had too much dollar debt, no one wanted to lend to them anymore and whoops, their currency is worthless now. It's going to be like a game of musical chairs for people trying to get access to dollars, starting with emerging markets and eventually moving into the more developed economies. The result: massive corporate bankruptcies, countries defaulting on debt (devaluing their currencies) and eventually a deleveraging of massive proportions. This WILL occur and no amount of printing can stop it, it's already too far gone.

The reason I am sending you this is that I have been following your posts/darkstreams concerning debt, deflation and how money is created ex nihilo, with great interest. I am also aware of your stance versus inflation versus deflation, and while your arguments already convinced me completely that deflation is in order, this is further proof of your predictions.

In other words, think this is another example of:

Of all the words of screen and pen
The saddest are these:
Vox was right again.
Deflation is inevitable. It doesn't take any great mind or vast understanding of economics to grasp that. In fact, it has taken decades of intentional deceit and maleducation to convince the economic mainstream otherwise.

Labels: ,

72 Comments:

Blogger doctrev May 15, 2020 12:06 PM  

Tons more debt, two months of economic paralysis, and it's happening worldwide?

This isn't the cause of the world's debt problems, but it might be the excuse needed for the actual cure. Namely, repudiation of all debt incurred, execution of the guilty financiers (which is most of them), and economic shock therapy all across the board. A society like that is going to have no time for SJWs at any level, from lawyers to HR to Big Tech to governments- you produce, or you stay out of the way, but you are NOT going to be the load.

Or, you can bleed the native population dry to support the parasites until the thing explodes. I know which solution the elites will favor, obviously, but I think this time they might be in trouble.

Blogger Gr8Again May 15, 2020 12:21 PM  

If I'm understanding this correctly, deflation is happening because other countries are inflating more effectively than we are. Why can't we just inflate more?

I understand that you can't just print money and loan it to banks because they can't get it into the economy because no one wants to borrow even at 0% interest. But why not just print money and give it directly to people? TrumpBux redux! Wouldn't direct cash handouts and the associated inflation be equivalent to a partial debt jubilee?

Blogger RedSauceRob May 15, 2020 12:34 PM  

The thing to understand here is Brent Johnson’s dollar milkshake theory. It describes what is happening to a tee.

https://youtu.be/2qTOWuL7Zco

Blogger Shane Bradman May 15, 2020 12:38 PM  

What's interesting about this current depression compared to the several recessions and the Great Depression is that the economy was shitting the bed before every economy shut down. The 1920s is referred to as the Roaring 20s due to the eruption of wealth that occurred in America, and it was followed by a collapse because the stock market became inflated well above that wealth. There isn't wealth this time. We started in the negative and we've gone even more negative.

Blogger kurt9 May 15, 2020 12:39 PM  

We've generally had inflation my entire life, with the 70's (my childhood) being the worse. It would seem to me that a period of deflation would have to come sooner or later. Japan has had deflation since '92.

Blogger Iamblichus May 15, 2020 12:41 PM  

Hi Vox. I understand deflation is coming for US dollars. What about the other developed countries? will they go like Venezuela or will their currencies also contract like the USD?

Blogger Skillet May 15, 2020 12:49 PM  

So this begs the question, how does the average guy prepare for such a situation? How can one best weather the coming storm?

Blogger Zeroh Tollrants May 15, 2020 1:04 PM  

"Execution of the guilty financiers."

Oy vey, goyim. Your word are like another shoah. :D

Blogger millie78 May 15, 2020 1:15 PM  

In simple terms, issuing debt is inflation, paying debt is deflation. If debts are satisfied in newly minted dollars, the amount of debt decreases since the currency satisfies it. Printing money is essentially a jubilee because the debt no longer exists and no new debt is issued, reducing the amount of money in the system. In modern global finance, debt is money, increased debt is inflation, satisfying debt is deflation. In a debt- deflation scenario, debt decreases (through bankruptcy or bailout) AND lending standards tighten up, meaning little new debt is issued. Consequently, nominal prices drop because most purchases going forward are self-financed (i.e. Paid for with excess cash, not new debt) so people can only buy with money they have on hand which tends to be a smaller nominal amount than their previous credit line. (as evidenced by the fact that a "good" debt to income ratio is greater than one.)

Blogger Damelon Brinn May 15, 2020 1:17 PM  

I agree that deflation is coming, and I get what he's saying about the dollar versus other currencies. But could there still be inflation in the short term, before debt deflation outweighs it, if everyone prints enough money? Inflation of currency versus goods, I mean, not one currency against another.

Blogger bramley May 15, 2020 1:37 PM  

This is going to be bad, isn't it?

Blogger DaveofSpades May 15, 2020 1:38 PM  

Skillet,that's my question too. How do I handle my retirement find in light of deflation? Do I sell it all and put it into bonds? Cash?

Though I do look forward to being able to afford a chunk of land in the woods.

Blogger Section 8A May 15, 2020 1:40 PM  

The people at RealVision have been also saying the same thing about deflation. Their analysis has dovetailed perfectly with VD's. The dollar will become very strong, as mentioned above.

Blogger cecilhenry May 15, 2020 1:41 PM  

Do you expect a massive devaluation in the stock market too then??


There sure are a lot of 'out of nothing' dollars floating around in the past 3 months


And real estate??

Blogger sammibandit May 15, 2020 2:03 PM  

Just as soon as I think I understand this fractal shell game I'm finding myself without footing having had the rug of understanding pilled out from under me. I legit think this would be easier to grok in a child's game format since gambling comes so naturally. And that gambling exposes rats in the play system, reinforcing the SH (I'm hesitant to call it SSH at this age but idk).

That said, if VD is joking or writing like he's chipper I'm listening.

Blogger Jose Miguel May 15, 2020 2:03 PM  

@Skillet

Land and skills.

I'm hoping my generation will be able to be property owners. My grandfathers' owned their own houses outright before they were 25.

Blogger Richard May 15, 2020 2:28 PM  

So this begs the question, how does the average guy prepare for such a situation? How can one best weather the coming storm?
This is what I have done: First: Get out of debt (including paying off your house) so you can’t be manipulated. Second: Accumulate capital in forms that cannot be confiscated or manipulated (gold/silver can be confiscated; the price of even the most conservative stocks/bitcoin can be manipulated relative to other things). I think what Owen Benjamin is doing is smart (his ‘capital’ is his homestead; his ability to produce income to support his family is what he can do with his own hands/mind). In my case I bought solar panels for my house in Arizona so that I am independent of the power grid—hard to confiscate that). Third: Form/join a community (e.g. church) with like-minded people that will help each other. Fourth (probably the most important): Get close to God and realize that he has not called you to be possessed by a spirit of fear.

Blogger Brett baker May 15, 2020 2:28 PM  

According to Louis L'amour, in the 20s it seemed like the economy was booming because of employee turnover. Of course he was working in the Great Plains at the time.

Blogger Don Vance May 15, 2020 2:36 PM  

'how does the average guy prepare for such a situation?'

Its tough now that everything is digital including dollars. I use to consider diversifying into oil funds (digital), gold funds (digital), bonds (digital) or land (higher taxes)

Just a fact of life, I get it coming or going. It can all be manipulated by our masters. The only thing I really believe in is avoiding debt, working a steady job (trades) and being self insured as much as possible.

Blogger Unknown May 15, 2020 2:40 PM  

I second this. What asset should my small savings be in? (other than land obviously)
Is there a way to make this deflation work in my favor?

Blogger Harambe May 15, 2020 2:46 PM  

Pay off your debt. save money. live cheap. have a valuable skill.

Blogger Mr.MantraMan May 15, 2020 2:52 PM  

So it won't take a wheelbarrow full of dollars to make a trip to the liquor store? Asking for a friend.

Blogger eclecticmn May 15, 2020 3:00 PM  

My IQ is 140 and I took a year of econ in college but macro never made sense. I have something bordering on a learning disability in understanding this stuff. Maybe it is because I am a bottom up thinker, needing to anchor to reality then build on that. I do not understand debt deflation or even money for that matter. Is there any help for me? To a person on the ground in the US what does debt deflation mean incrementally? How about long term?

"Speak as you might to a young child, or a Golden Retriever." - Jeremy Irons in Margin Call

Blogger Matt May 15, 2020 3:13 PM  

Step 1 is to get yourself out of debt ASAP.

Blogger Darren May 15, 2020 3:14 PM  

Live within your means.
Make that a longterm life philosophy, instead of looking for shortcuts and secret edges to exploit.

Blogger dc.sunsets May 15, 2020 3:15 PM  

Macroeconomics at the exchange-rate level is a different species than is domestic economics.

Food prices are rising because, rather than the last 39 years of the Fed creating credit and handing it to hedge fund managers and CONgress (creating asset price inflation and runaway growth in medical spending and what amounts to welfare, corporate and otherwise), new credit-money was handed to Joe Sixpack.

You can't violate Say's Law with impunity. Creating purchasing power by any means OTHER than production simply increases the amount of money chasing whatever is in the marketplace. It doesn't add to what is available for purchase.

Taken to extreme, you have the situation in the USSR where people had rubles but the shelves were bare. This is what flooding a nation with credit-created-from-nowhere produces.

Under FIAT money, money was debt so debt was wealth. People forgot that an IOU is nothing until it's paid-back. We now have a world drowning in "wealth" that is nothing but IOU's that depend on all other IOU's performing, when mathematically we long ago passed the point where this was true.

All that "wealth" is an illusion. So is training people to forget that it's not about money-in-hand, it's about product available for purchase.

Goods availability is likely to crater in the next couple years, and if politicians attempt to make people whole by creating trillions in credit, all it will do is crush the average man's standard of living even more.

Did the Trump Admin open Pandora's Box by seizing the Fed's credit creation system? Only time will tell. For nearly 40 years we witnessed credit-inflation on an unprecedented scale, but because it flowed into asset markets (including the value of debt itself) no one cared...we all seemed to get rich.

Now, much of that wealth (in the form of debt, and in asset prices rationalized by its wealth-effect existence) is likely to disappear (mostly chaotically) but goods availability may plummet as well, meaning that prices could rise or fall but affordability will plunge for many things.

Oh, how the sky darkens with chickens coming home to roost. On second thought, that must be locusts....

Blogger millie78 May 15, 2020 3:19 PM  

No. The collapse of credit is the relevant indicator, not the issuance of script currency. Debt is issued out of thin air, so inflation occurs when a debt is created. Printing money to pay debt, by definition only occurs after the debt exists. Debt exists first, then money which is why printing money is deflationary. Vox's book The Return of the Great Depression explains this in more detail, I highly recommend it.

That said, prices for some things might increase because supply collapses relative to demand (like beef and pork) but on the whole the price of most things will collapse (like new cars, clothes at bankrupt retailers, etc.) Note that increasing prices for specific things is driven by particular issues but the general price level is guided by monetary policy. As such, don't make the mistake of thing that spending more on groceries is due to inflation. Spending more on EVERYTHING is due to inflation.

Blogger 7916 May 15, 2020 3:20 PM  

@7

Get out of debt.
Own real property not in a city.
Have skills to build businesses that don't require massive capital and can be cashflowed and operate without debt, even if you have to stay small. Employees add a lot of overhead cost.
Get married, have children, homeschool them. Train your sons to go toward trades or college with actual skills and job prospects. Train your daughters to be excellent homemakers and home economists, and help marry them off early. Don't gamble in the stock market. read more books. Own good tools and know how to use them.

Blogger Aeroschmidt May 15, 2020 3:39 PM  

Deflation dictates hold real productive assets without debt.

Blogger Andrew May 15, 2020 3:41 PM  

All the credit money currently in the system will eventually be replaced with base money (ie. dollar bills). So face-ripping deflation, sure, but not in dollar terms.

Blogger Mathias May 15, 2020 3:49 PM  

cecilhenry,

I have an answer for this, and I disclaim any relation (or lack thereof) it may have to Vox's response.

Ultimately, what matters are two ratios: Rate of Creation vs Rate of Destruction and Amount of Dollars vs Amount of Dollar denominated obligations. The former drives the latter, but the latter is what ultimately determines the dollars fate. If you understand how dollars are created and destroyed, you know that Creation must eventually lag behind destruction, and that there are far fewer Dollars than Dollar denominated obligations. Thusly deflationary crash will be the ultimate result of the system. All that money being "printed" now will mostly go towards servicing Dollar denominated obligations and thereby will be destroyed as those obligations are satisfied. Thusly, even in the short-to-mid term we should expect deflation on average, and eventually a deflationary crack-down.

Generally, evaluating an economy in real life is the same as an MMO, all that matters are the relative sizes of sources and sinks, and the impetus that drives currency from source to sink.

Blogger Akulkis May 15, 2020 3:56 PM  

@7

In an inflationary period, the currency is devalued.
In a deflationary period, currency increases in value.

The strategy for inflation is to hold as little currency as possible -- convert it into tangible items as soon as possible. (Ultra-example: Germany during the period of hyper-inflation; employees were demanding to be paid every day, at both lunch and the end of the day, so that they could buy as much as possible before prices rose even higher.)

In a deflationary period, there's less cash, so it's value relative to tangible goods rises. During such a period, you want to sell off as much tangible goods that you have no immediate need for -- you can buy them later for less.

Blogger Ominous Cowherd May 15, 2020 4:12 PM  

How many trillion did Uncle Sammy just borrow into existence? How many more trillion will he borrow into existence this fiscal year? The government is the borrower of last resort, and the central bank will lend to infinity, and beyond!

Deflation is possible, but the spending necessary to prevent it will be far more politically feasible.

Blogger weka May 15, 2020 4:31 PM  

Bad? Nah. You have a big internal economy and the only place that will collapse is the Clinton archipelago. The supply chains are causing too many problems and most first world countries will make as much as possible internally Or internally plus client states

Your state or province or city will survive.

The dollar debt based system may not, but the USA is due for a currency exchange.

Have courage, and damn the bankers. It will be lives, fortunes and your sacred honour on the line for the next while.

Blogger The World War II Fanatic May 15, 2020 4:43 PM  

Why does Germany love Israel so much?

https://www.jpost.com/Diaspora/Antisemitism/Burning-of-Israeli-flag-leads-to-German-law-to-ban-torching-of-all-flags-628142

Blogger Winterborn May 15, 2020 5:01 PM  

@#3 Thanks RedSauceRob, good video take on it. Much appreciated.

Blogger Azure Amaranthine May 15, 2020 5:54 PM  

"That's a lot of printing, you idiots probably expect inflation. Wrong, step away from the US and look at what other countries are doing, the ECB (European Central Bank) and BOJ (Bank of Japan) are having to print trillions of dollars worth of EURO and YEN to keep their economies going, along with every other country getting pounded."

Still inflation, it's just that our dollars will be worth more compared to those other currencies, though still less against actual resources. Debt deflation? Against our debts to those countries, yes, otherwise the opposite. More than anything else what would result is "our" economic parasites holding more sway than those of other countries, though also over everyone in our own country.

I'm fine with being called an idiot if I'm missing something here, go ahead and tell me. All I see is that relative value isn't objective value.

"If debts are satisfied in newly minted dollars, the amount of debt decreases since the currency satisfies it."

No. The new dollars are further debt themselves by the time they're printed, so this isn't decreasing debt, it's more like an economic heart going into overdrive to try to compensate for plummeting blood pressure. That leads toward hyperinflation rather than being a cause of deflation.

TL;DR: I don't know the balance of our debt to the other countries inflating more than us, but this is being the winner in the race to be the last fiat loser. Everyone on fiat still loses in the end.

Blogger Nihil Dicit May 15, 2020 6:29 PM  

This is the dollar price of 1 gold ounce and you can see it crash, stabilize and slowly approach the previous high in 2013.

Gold is a manipulated market. Those prices are the result of interventionism, not a stable currency. The real remaining prop of the dollar is the fact that it is still the primary currency for oil purchases, forcing anyone who wants oil to "buy" dollars. That's why China, Russia, et al., are so eager to set up systems for settling petro transactions in their own currencies.

Blogger Doktor Jeep May 15, 2020 6:42 PM  

Is this the end of boomernomics?

Blogger Darren May 15, 2020 7:07 PM  

The real owners of the land of nations do not want us peons to have such true independence. Easier to control a free spirited people if they just "grant" a license to the peons to temporarily have title rather than actual ownership of where they live...

Blogger Azure Amaranthine May 15, 2020 7:24 PM  

"Debt exists first, then money which is why printing money is deflationary."

No. Money IS debt. You can argue that if it's given to the little guy to pay down debts to banksters that it's LESS comparative debt, but it's still debt. Printing money is inflationary.

Blogger Yossarian May 15, 2020 8:31 PM  

If I understand this correctly: nations around the world will try to pay off their debts by getting as many dollar loans as they can -> dollar gets deflated -> market prices get adjusted accordingly meaning lower salaries but with the same buy-value as before -> outstanding debts don't get adjusted which means they increase relative to the value of the dollar in the market -> those who own the debts get richer and richer.

But if everyone's in debt what's the incentive of authorities to honor the debts? Why would someone throw someone else in debt-prison if they themselves are guilty of the same crime? It would be like Angela Merkel accusing Hilary Clinton of eating babies. What am I missing?

Blogger Brett baker May 15, 2020 8:54 PM  

There are stills for sale under $1,000. Your friend can make up to 200 gallons a year tax-free.

Blogger crescent wrench May 15, 2020 9:16 PM  

I'm interested in what happens to mortgage holders from a realistic standpoint.

Mass corporate bankruptcies will utterly ruin the employers that drive the suburbs, causing defaults en-masse.

The last time this happened radical boomer bailouts were offered in the form of mortgage relief.

If remote work out-runs the crash I suppose people can move to Texas where the bankruptcy homestead exemptions extend to the first 10 acres rather than some small denomination not indexed to inflation.

Blogger Damelon Brinn May 15, 2020 11:36 PM  

Printing money is inflationary.

It might depend on what happens to the money. If they keep giving it out to individuals and we go out and spend it on pizza and new cars, that could be inflationary. If we use it to pay down debts, that's deflationary.

Blogger Azure Amaranthine May 16, 2020 2:15 AM  

"It might depend on what happens to the money. If they keep giving it out to individuals and we go out and spend it on pizza and new cars, that could be inflationary. If we use it to pay down debts, that's deflationary."

Best case scenario where we immediately pay down debts, it's neutral. It's just shuffling debt around. Any other use is strictly inflationary, though giving it directly to the people is better than pumping it through the financial system and then banks that will leverage and inflate it even further.

What we did is halfway between giving it to the people or the banks -- giving it to the people in their bank accounts.

"But if everyone's in debt what's the incentive of authorities to honor the debts? Why would someone throw someone else in debt-prison if they themselves are guilty of the same crime? It would be like Angela Merkel accusing Hilary Clinton of eating babies. What am I missing?"

The important point isn't who has the fake money, it's who's collecting the interest and then buying land and material with it. It's easy to say that everyone's in debt, it's harder to recognize that certain people "own" all of that and collect on it.

Blogger Bibliotheca Servare May 16, 2020 2:16 AM  

Bad time to refinance (and extend) a mortgage, then? Not that it's ever a good time/idea, just this is an especially bad time to have done that, no?

Or am I misunderstanding the implications of this?

Blogger map May 16, 2020 2:24 AM  

crescent wrench wrote:I'm interested in what happens to mortgage holders from a realistic standpoint.

Mass corporate bankruptcies will utterly ruin the employers that drive the suburbs, causing defaults en-masse.

The last time this happened radical boomer bailouts were offered in the form of mortgage relief.

If remote work out-runs the crash I suppose people can move to Texas where the bankruptcy homestead exemptions extend to the first 10 acres rather than some small denomination not indexed to inflation.


REFINANCE.

Interest rates are barely above prime and many are below prime.

https://www.barchart.com/economy/mortgage-rates

Blogger Archella May 16, 2020 3:00 AM  

Another thing to understand about deflation is the pyschological element. Debt based finance can obfuscate this. If people start to see falling prices as an actual thing, they will wait to purchase things, to get a better price. Once this happens, it's off to the races. We're not there yet.

Blogger Damelon Brinn May 16, 2020 9:56 AM  

Another thing to understand about deflation is the pyschological element.

Yes. People are used to inflation and borrowing. The other day one of my co-workers was talking about getting some work done on his car, and others in the department were trying to convince him to trade it in on a new one, pointing out that some local dealers are offering 84 month loans. They can't imagine a situation where a debt would get worse in the future, let alone one where debts get called in.

Blogger Tars Tarkas May 16, 2020 10:08 AM  

millie78 wrote:In simple terms, issuing debt is inflation, paying debt is deflation. If debts are satisfied in newly minted dollars, the amount of debt decreases since the currency satisfies it. Printing money is essentially a jubilee because the debt no longer exists and no new debt is issued, reducing the amount of money in the system. In modern global finance, debt is money, increased debt is inflation, satisfying debt is deflation. In a debt- deflation scenario, debt decreases (through bankruptcy or bailout) AND lending standards tighten up, meaning little new debt is issued. Consequently, nominal prices drop because most purchases going forward are self-financed (i.e. Paid for with excess cash, not new debt) so people can only buy with money they have on hand which tends to be a smaller nominal amount than their previous credit line. (as evidenced by the fact that a "good" debt to income ratio is greater than one.)

If all money is debt, the existing debt cannot be wiped out by printing money because the newly printed money was borrowed into existence.
At best it just changes whose balance sheet the debt is on.

Blogger Ominous Cowherd May 16, 2020 11:19 AM  

Bibliotheca Servare wrote:Bad time to refinance (and extend) a mortgage, then? Not that it's ever a good time/idea, just this is an especially bad time to have done that, no?
Unanticipated deflation screws borrowers. ``Unanticipated,'' because if you had anticipated it, you wouldn't have borrowed.

Yes, if deflation is coming, get out of debt, not deeper into it.
map wrote:REFINANCE.

Interest rates are barely above prime and many are below prime.

Beware, many refi's have worse terms than the mortgages they replace. Many mortgages are secured only by the property, many refi mortgages are secured by you and the property.
It's the difference between being able to walk away, and having to declare bankruptcy.

More importantly, refinancing is juggling debt. The best course of action is to get out of debt, deflation or no.

Blogger Ominous Cowherd May 16, 2020 11:28 AM  

Tars Tarkas wrote:

If all money is debt, the existing debt cannot be wiped out by printing money because the newly printed money was borrowed into existence.

At best it just changes whose balance sheet the debt is on.

Governments are always willing to borrow their own currency.
Once we abandon the fiction of repayment, it gets a little easier to see what's happening.

Blogger sammibandit May 16, 2020 2:19 PM  

I thought map was banned. I've been trying to find the post detailing it but haven't had luck.

Blogger sammibandit May 16, 2020 2:25 PM  

Never mind. http://voxday.blogspot.com/2020/03/how-money-is-created.html?m=1

map was banned March 30th of this year.

Blogger Azure Amaranthine May 16, 2020 2:33 PM  

"Gold is simply too big of a market to manipulate."

Any market where men can change the parameters AT ALL is manipulable. This definitely includes gold, it even includes all of the more common minerals than gold, every last one of them including things like silicon and non minerals like water. The more common and more easily accessible it is the HARDER to manipulate, but it's all still manipulable. Heck some places have manipulated markets for AIR, now, the old standby joke, look at carbon credits.

Gold is a manipulable market, end of story.

Blogger Azure Amaranthine May 16, 2020 3:20 PM  

"map was banned"

Subsequently unbanned.

Blogger map May 16, 2020 5:41 PM  

sammibandit wrote:Never mind. http://voxday.blogspot.com/2020/03/how-money-is-created.html?m=1

map was banned March 30th of this year.


Well, I made an error in judgment when I stridently insisted that "debt isn't money" until I reviewed relevant literature and saw that it was. So I had to apologize to Vox and company.

Yes, commercial banks have the power to create money by issuing debt. So, I am on board with the "money as debt" meme that we all share.

In fact, money is a non-interest bearing debt.

Blogger Gallant May 16, 2020 5:52 PM  

The libertarian in me from years back would say blah blah they have a right blah blah competition blah blah. . . Big Tech has taken THAT guy, beat, garotted, shot, and stabbed him, left the remains rotting in the ground for 4 months, burned whatever was left and flushed the ashes down the nastiest truck-stop latrine in Nevada.

Blogger Snidely Whiplash May 16, 2020 7:22 PM  

@map. My apologies. I deleted several of your posts working under the memory that you had been banned. I made the mistake of not reading the thread or checking.
You are still wrong, of course.

Blogger map May 16, 2020 9:19 PM  

Snidely Whiplash wrote:@map. My apologies. I deleted several of your posts working under the memory that you had been banned. I made the mistake of not reading the thread or checking.

You are still wrong, of course.


Meh...

That's all right.

Is it possible to put back the posts?

Blogger Snidely Whiplash May 16, 2020 9:41 PM  

No. They're gone.

Blogger map May 17, 2020 12:47 AM  

Azure Amaranthine wrote:Any market where men can change the parameters AT ALL is manipulable. This definitely includes gold, it even includes all of the more common minerals than gold, every last one of them including things like silicon and non minerals like water.

But what is the mechanism of this manipulation?

Blogger map May 17, 2020 12:53 AM  

"What happens when the whole world has debt in dollars and the dollar goes up in value? DEBT BECOMES MORE EXPENSIVE. This is DEFLATION, and in particular and even more terrifying DEBT DEFLATION, a phrase that would make Jpow absolutely shit himself (and he knows its coming)."

I think the flaw in this argument is that the excessively printed Euros/Yen/Pounds do not have to go to the US dollar. They can go to gold. There is a Euro price of gold, a Yen price of gold, and a Pound price of gold. The rise in the gold price against all currencies would take the pressure off a shortage in US dollars. Sure, the dollar is currently worth more than other currencies because the US is inflating less...but...it is still inflationary.

As long as you keep seeing the gold price rising across currencies and especially the US dollar, then you will not see this deflation happening. If the dollar price of gold turns down, and substantially, without the economy opening up, then you have potentially dangerous deflationary event, where things like getting and staying out of debt is necessary.

Blogger Akulkis May 17, 2020 3:35 AM  

"No. Money IS debt. You can argue that if it's given to the little guy to pay down debts to banksters that it's LESS comparative debt, but it's still debt. Printing money is inflationary."

No, not all money is debt.
For example, specie coin is not debt.

Fiat currency is debt.
Real bills (90-day receivables) are debt.

*SOME* money is debt.

Blogger Azure Amaranthine May 17, 2020 5:40 AM  

"But what is the mechanism of this manipulation?"

Supply and demand for the most simple mechanism. Technically anyone at all holding any supply can make this fluctuate, but the more held the more fluctuation someone can cause. One of the things this would look like in practice is gold gradually increasing in price, due to it being stockpiled and then held long enough for the market to begin behaving as if it no longer existed. Perhaps not coincidentally, this kind of stockpiling is camouflaged in an inflationary fiat environment.

Another mechanism of manipulation is providing grants to people to develop technologies that circumvent the necessity to use gold. For instance, alloys for certain kinds of electronic circuits, or improved recycling of circuits that do use gold. This doesn't affect cosmetic value of gold, but it potentially lowers industrial demand, and thereby overall price of it.

Akulkis, I know, OUR printed dollars are debt though, and are what we were talking about.

Blogger VFM #7634 May 17, 2020 10:19 AM  

I'm just hoping the GE shifts as much of the deflation pain as possible onto the backs of the usurers.

Blogger sammibandit May 17, 2020 10:03 PM  

Not my call to make. Sorry, map.

Blogger Ominous Cowherd May 17, 2020 10:33 PM  

@65 Akulkis, there is a reason I like to distinguish between money and currency.

Blogger Snidely Whiplash May 18, 2020 1:42 AM  

almost all the "gold" traded in today's markets is actually paper derivatives and fraudulent guarantees. When you cannot clear a trade at the "market" price, as has been common recently, the "market" price is being manipulated.
Every market has supply and demand, you don't have to control the supply to control the market, particularly if the supply is predictable.

Blogger Azure Amaranthine May 18, 2020 6:46 AM  

Yes, information manipulation is also a mechanism for manipulating prices, as seen in "carbon credits" and insider trading. There are many potential means of manipulation.

Blogger Akulkis May 18, 2020 12:33 PM  

"almost all the "gold" traded in today's markets is actually paper derivatives and fraudulent guarantees."

If you can't touch it, you definitely don't own it.

And even some things you can touch, you still might not own (for example, a house with a mortgage).

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