What Are The Causes of Deflation In The Greater Depression?
By Delwyn Lounsbury - THE DEFLATION GURU
The causes of deflation are linked directly to fractional reserve banking causing fiat money inflation and the massive credit inflation of the past 70 years. Just cure for credit inflation like we had is a good credit deflation (See page on Austrian economics). Thanks to government protection and encouragement banks were able to lend with first only small cash holdings in book. In the last decade our government and the Federal Reserve Bank required no reserves backing your deposits. They don't! We had a credit binge. Your FDIC (Federal Deposit Insurance Corporation) and FNMA, Fannie Mae - the Federal National Mortgage Association both went bankrupt and had for you to become nationalized. You so the taxpayers now own them. All of us on the hook to pay for future failures.
The following is often a long list Individuals shows why the argument for a deflation leading to hyperdeflation is viable. The GREATER DEPRESSION that started in 2000 and wouldn't normally end until 2016. It's an end of a mania bubble and an 80 year long Kondratiev long wave cycle that all capitalist economies apparently go through. See the article on Kondratiev wave economic spiral. We are in a Kondratiev wave winter right well. Most asset values will drop by 90 percent into 2016 and unemployment may hit 30%. Even the associated with gold may drop in half. To face . according to Robert Prechter of Elliott Wave International - Join Club EWI free at links on this site.
When seeking the main cause of deflation we reason to remember that purpose is to see cause was credit inflation. Many items on this list are manifestations for this credit bubble gulping down. What is remarkable is the depth and number of related items available.
1. Connected with government any kind of levels federal, state, county and city due on the socialist neo-Keynesian belief that the economy can be micromanaged. Automobile dealers sucked on the free market economy to advance inefficient and bloated softwares. Eventually the largess grows regarding one third of the economy simply to causes it to get top heavy and stop working. The big government parasite for welfarism sucks all the life from the economy.
This Kondratiev long wave took some 80 years start to be able to and another on takes 100 ages. The Obama administration has added 250,000 new federal positions and raised wages to government workers at a time when the private sector is hurting.
'As government expands - Liberty contracts' by Taxation
2. Military waste. Wars and a great deal of the money spent by many different divisions personal defense departments is poured down an opening in the ground-never to be noticed again. Oil, food, time, materials, manpower, blood and lives abused.
3. Governments support of favorite industries that will not likely make it in a cost-free marketing tool economy. Real estate bubble - unwise lending practices such as everyone should own real estate nonsense. Government Oil depletion allowances meant there had not been incentive to save or develop alternate types of. Solar best!
4. Real estate deflation - end associated with a mania - Prices down 33 percent already leading to reduced wealth of individuals, reduced capital gains tax revenue and reduced real estate property tax revenue. Robert Prechter says there will be a 90% check out 2016.
5. Next stock market losses to create people feel poorer genuinely don't squander. Pension and retirement accounts throw money away on stock and bond investments hurting ability to fund those settlement. 90% drop predicted. In a secular bear market with a bear market rally (B wave) rally topping in the first months of year 2011. 13 year head and shoulders top organisation. If you draw a line connecting footwear get a thin of the index moves you obtain a straight line pointing right down to the right. This is a bearish technical chart pattern called a declining neck-line.
6. Engine oil. High petroleum prices sucking money out of people's pockets that would have gone to buying goods and services within the market. We are all on platform explosion food chain using dead dinosaur and prehistoric plant deposits for the energy rather than whale blubber like we used into. Oil money is sent to foreign countries, which, in some cases is once had pay for attacks on America. Then there is the inefficient gas guzzling autos, appliances, lighting and phantom loads on TVs, computers, microwaves etc. Heat rises authority. Why are all the working parts of refrigerators with the area meant to be cooled? Heat rises up through whole good refrigerator or freezer inbox. What a waste of trillions of dollars of oil all these years. Go solar.
7. Job losses - high unemployment meaning less cash is around to buy goods and services. Thus, slow sales causes businesses to laid off more workers in a vicious circle cycle snowball effect. With the beginning of 2011 several 14 million plus unemployed in the U.S. This is actually the multiplier effect in economics in reverse which will feed on itself creating hyperdeflation.
8. Collectable items, antiques, art and possessions in general loosing selling price. Lower prices when people sell. They feel less wealthy and should not buy lots of necessities. There will be many bargains in all kinds of property and possessions at the bottom as people sell assets to stay afloat. Antiques Roadshow on tv is going to a 30 percent drop in the most prices and their estimates of worth range has widened considerably. I expect it to set off the air in the other several a number of years. John Lennon's white suit recently sold on the 50% shift.
9. Credit tightens back up. Banks and other lenders fears lead to strict lending standards. Businesses can't know-how. A low interest rate is bound sign money is on good discounts. It is a sign of weak demand and deflation. Transparency is code for the more oversight & rules, anyway.
10. The world wide web has lowered the cost of doing online businesses. This means it is easier to startup a business. Business and jobs also go offshore to cheapest options. Prices drop each year than ever before and volume of scale price reductions. Think calculators.
11. Meat. Farm commodities prices drop eventually due to weak demand. Small farms get hurt a great number of. Reduced income means they cannot buy as many goods and services and also new computer hardware. Now, in 2011 prices are up merely because of reflation by the government and oil estimates. Right now, the high price food sucks money the actual people's bank account. They can't afford to buy stuff or go out to restaurants. Layoffs result. It's deflationary!
12. PIIGS - Portugal, Ireland, Italy and A holiday in greece. Inefficient government leads to high unemployment causing spreading malaise in Europe and a spreading banking and labor crisis.
13. Rate drops. Savers and retired people counting on a safe return on funds have less overall to buy goods and services and even make rent or house payments. Then interest rates spiral as businesses borrow at any rate in which to stay afloat. Bond prices tank meaning massive loses in value of debt instruments with junk bonds and corporate bonds hurt essentially the most. Cities, States and Counties that cannot print money (like the govt . can) get the most trouble.
14. The saving rate has climbed from 0 to 5% already in 2010. Means there is less overall for jobs. This hurts business.
15. Increases in debt and unsecured debt repayment means there is less money for getting. This hurts business and progress will continue.
16. People travel, eat at restaurants and vacation less. Companies are cutting way back on quality airfare. Consumers are cutting back on the trip plans. 106 motels have foreclosure during the warm months of 2010 here regarding San Francisco Bay discipline.
17. Auto sales & leasing more affordable. Since the bailout of GM and Chrysler, people are keeping their cars longer and fixing them. Stock price of Auto Zone parts store (AZO) with high use.
18. Clothes and stores hurting energy cut and also do with less. Japan is from a long term 20 year long deflation. Property values just hit a 36 year low - summer of the year of 2010. Japanese wear their clothes longer sometimes until they are threadbare. Have got catching their disease.
19. Bank bailouts and lending freeze up. Trillions of derivative dollars disappear despite government intervention to try and fix the problem. Roaring 20's inflation of up to 10% a year had bankers back then fearing the money they had lent out would bond with worthless in exactly 10 changing times. They clamped down and stopped lending causing the economy to enter a tailspin. The exact same thing is happening right now only throughout the globe. The Greater Depression in order to be 2 times as long and twice the height and width of the 1930's depression problems . Grand Supercycle scale.
20. Paying for entertainment and sports event attendance suffering. Robert Prechter sees sports star salaries slumping from here on consequence of reduced attendance.
21. State, county and city cutbacks and layoffs due to both lower sales tax and real-estate tax proceeds. 46 states are in the red already. California has a deficit of 17.3 billion dollars. Illinois has a 13.5 most important deficit and 5 states are technically bankrupt is actually are reducing police officers and firemen.
22. CPI drops. Consumer Price Index chart on a down way. Index does not include energy and supper. Crazy! CPI hit 62% upward retracement level in 2011 and then reversed across.
23. socialized medicine means 16% an once vibrant American free market economy will be controlled and micro managed by an inefficient government bureaucracy. ObamaCare (rationing, euthanasia and tax) is unconstitutional! This is often a job plus an incentive colossal. Socialism is inefficient. Most medical insurance companies can be placed out of business. The Health Care Affordability Act of 2009 is outright euthanasia and rationing!
24. Cap and Trade means more costly restrictions on business. So business people get cautious and withdraw from expansion plans. Cap and Trade is a job, incentive and profit killer tending to lead in order to some one-world-government program which means loss individuals freedoms.
25. Seniors retire. They draw out their savings quit buying stuff including bigger property's. They live longer and start sucking social security, Medicare and Medicaid monies out rather than contributing.
26. Bankruptcies grow. People give up and default. Business and lenders are weak - they write off losses and retrench.
27. Volatility increases. Flash crash of 998 points in the Dow. Fear increases. People pull money out for the markets and park it in safe 90 day government T Bills at almost zero interest cost. You should do the same by-the-way. Cash will be King!
28. Gold to silver ratio bottoms April of 2006 hits new high 4/1/2011 within a mania blow off. Silver is an advertisement commodity. A weaker economy means weaker demand as evidenced by top in prices May 2011. The price of copper is already dropping here in the first quarter of 2011. Economic booms are said to have a copper top. This is due to all the copper in industry, autos, appliances and housing.
29. Margin debt on stocks tops out at $384.1 Million-Sept. 2008.
Higher margin requirements recently on some ETF's (exchange traded funds) and gold and silver. Deflationary!
30. OTC, over the counter decrease in stock prices and share volume peaked back in 2000 with lower peaks in 2004 and 2005. Lesser total dollar amount traded shows trend of disappearance of market froth at the same time as what's turned out to be a 13 year head and shoulders topping formation having a downward neckline if you connect the lows. This can be a secular bear market we!
31. Tea Party. The Libertarian party is actually the third largest political event. Libertarians are for free enterprise, small government, small armies for defense only and a do no harm posture. People are cranky these days. Mood change to pessimism (waning) about government and elected officials. There is a surge in conservative talk radio (Rush Limbaugh, Mark Levin) and conservative Television shows (Glenn Beck). Join them and support upholding our Constitution before our freedom and liberty is completely gone!
32. Crime, Gangs and Mexican Boarder drug cartel problems - fear, higher cost of police arrest and boarder patrol. Xenophobia (fear of strangers) as evidenced your uproar in the Manhattan Muslim mosque planned near this website of 9/11 attack and Arizona's new immigration statutes.
33. Video game is non-productive and triggers reduced exercise leading to obesity, diabetes & other health factors. Some are addicted to the reason for flunking out of school. Across the globe problem
34. Fishing license sales soar in Michigan. Individuals are trying to trap an associated with protein to supplement their diets.
35. Private pay colleges. People out of work try and retrain in the different buy and sell. Some end up with a big pile of debt with real job opportunity.
36. Medical tourism . Healthcare in other countries is the most one third cheaper cost for medical and dental remedies. Money leaves the U.S. for other countries.
37. End of bin society. People search the net and publications like Consumer Reports vehicles and longest lasting goods. Companies build better products.
38. Sales of Kubota and other small tractor company sales are up - a back to your country - back towards farm innovation. Worry about crime and food availability. People seek 'elbow Room & off-grid.
39. Xenophobia - Gated communities. Being nervous about others. Nervous about strangers. Passengers can afford it seek sanctuary in upscale does not. There are immigration issues. Fight over mosque near World Trade Tower 9/11 site. Serious uproar over our Mexican boarder and fear for the drug and crime send.
40. Solar & efficient home systems purchases - safety & savings.
41. Disintermediation. Borrowing short-term money flip around and lend it long words and phrases. If interest rates go up faster on the short-term money than the loans they have made without the pain . money, built caught again like what happened during the savings and loan crisis back in the mid 1990's. Likewise, lower prices mean lower real estate commissions. Commissions drop to 5% & now 4%.
42. Socialism is a wasteful inefficient growth of government and allocating scarce resources instead of the free sells. Dangerous! 'Killing the goose that laid the golden egg,' ObamaCare is pure socialism which kills free enterprise - economy implodes.
43. Barack Hussein Obama - socialist president turning fascist - was a Marxist in education. He appoints all leftist people (Czars) in his administration, grows the sized government by 250,000 jobs, balloons our debt then rams unconstitutional ObamaCare heath care rationing system over the U.S. citizen's throat. He raises taxes and gets business worried, uncertain and cautious as he turns fascist & tramples all over the U.S. Metabolic rate. Wrong war on entrepreneurs - soak the rich economic model = freeze up!
44. People mood lessens. TV news talk of 'these troubled times,' 'Flash Crash' leaped 'these bad times.' A bad social mood started 3000. Realism and skepticism morph into realization and dislike. A waning society develops. Secular bear market stock rally leads to the middle of 2011 and earth economy crashes past 2016.
45. New Tariffs and trade actions against. The Smoot-Hawley bill passed in June of 1930 was a bone-headed move which raised tariffs on 20,000 imported goods. The 'New Deal' socialism delayed the Ough.S. economic rebound and made unemployment worse back then. Same socialist/isolationist trend is going on today.
46. China, India, South korea & other growth economies are providing cheaper products or services thereby taking jobs and greater business.
47. Terrorism. Three billion dollars more income spent - a drain as evidenced by the Patriot Act and the hiring of more military & government workers. All of it borrowed money!
48. Regulations. Uncertainty is a business and job killer. Every minute congress (and almost every other government group) is in session we lose more freedoms.
49. Threats of new taxes along with the canceling the Bush tax cuts - a business killer. Bailouts mean taxpayers take on trillions of risk. Taxes, fines, fees rise to be charged government borrowing and deficit spending. Big government is a major parasite sucking the lifeblood out of economy.
50. Problems in Persian Gulf. The red sea. Libya, a nuclear Iran. Hezbollah and Hamas take part in Hatred of Israel. Oil is lifeblood of the west. Obama throws Israel under the bus. Why?
51. Federal Reserve Bank - a fraudulent immoral monopoly and cartel. Stupidity and bad timing now means its portfolio is now 50% mortgage securities some other types of riskier bank debt. Its bag of tricks is empty with short-term mortgage rates near zoom. Helicopter Bernanke (He said - we can take helicopter loads of greenbacks and dump it on any problem) is a gradualist. In truth, he inherited this entire problem from Alan Greenspan and past fed heads and their bankster Anglo financial power elite friends that most of us owe financial resources. The Fed cannot stop the deflation and enhanced Depression. The capacity elite don't want to see the value of the dollar going down further. They'll need sold their real estate back in 2006 and will certainly now be selling and shorting stocks, bonds and gold. The U.S. dollar is still the reserve currency worldwide. It will be resilient and strong.
The Federal Reserve Bank is a nefarious power elite one-world-government/new-world-order 1913 in order to take all our freedom.
52. Interest rates rise. Next everyone that ran to your safety of bonds gets caught. As interest rates rise, the sourcing cost of the bond drops causing capital deficits. Robert Prechter says many corporate while stating and municipal bonds will be worthless in the depths belonging to the Greater Depression. States, counties and cities which are receiving reduced revenue due to drops in people's income along with drops in property taxes are already seeing their bonds reduced to junk status through ratings businesses.
Even government employees debt has been put on the watch list by Moody's.
53. M-3 down. Brand new does not publish total money supply figures anymore. Why? Deflation shows up there first. M-3 is estimated to be down 9.7% a huge deflationary drop and give you hyperdeflation.
54. Bank Failures. We are having bank failures at rates not seen after the 1930's. Doing 1,000 banks a year have gone under. So far, federal government regulators have swooped down and either taken over or arranged a merger of troubled banks. Foods change when the numbers of bank bankruptcies increase. Are going to out money and made to just let them do it fail.
55. FDIC and Fannie Mae now taken over by our government. The federal Deposit Insurance Corporation idea has a fatal catch. Propping up troubled financial institutions indicates they take chances an get involved in unsafe banking practices as they simply think brand new will groundwork in checking there to bail them out. Now, you when compared to the taxpayer will be saddled with trillions owing money in the aftermath for this wash-out reaching the FDIC and Fannie Mae.
56. Peak oil. 4 seasons 2005 will be called all seasons when petroleum production actually peaked. High oil and energy costs suck money right out of people's pockets. They forgo purchases of items and services causing those industries to contract. Deflationary! No money left to buy stuff.
57. Debt stress. 46% in a recent poll are debt stressed out. Health and productivity suffer.
58. Unsecured debt pay downs. For families making $50,000 or more, a record 50% are paying down their card debt.
59. Unemployment close to 10%. Keep this in mind does not count runners that stopped purchasing a job, returned to school, retired or on redundancy. Rate is really 17% . Proof the Obama socialist model does not work.
60. Commodities prices dumping. Consumer Price Index is in a permanent downtrend. It reversed a 2011 bounce to the 62% (golden number) retracement level. Weak housing and automobile manufacturing that use a lot of copper. Topping price developments!
61. Marketplace deflation. 50% drop in prices in a number of areas. Builder's confidence index is at new lowered. There are many layoffs in related industries. Many housing and commercial loans written on adjustable interest terms classes . 2005 to 2007 are coming up for their rate reset or coming due. Many may not qualify for getting a whole new loan or perhaps able to make the new higher costs. It's a real drag on healthiness is the main economy.
62. Hedonic Pricing. The Apple computer of 2005 was $999 - the $999 Apple today is far better, faster, more memory, bigger screen etc. Free enterprise (along with Moore's Law insects power of computers doubles every a couple of years or so) means companies produce better and cheaper products caused by innovation along with price reductions to involving scale. Better units produced the cheaper each unit is. Think calculators.
Even brand new uses hedonics in their statistics.
63. Socionomics (Read Robert Prechter's books) A marriage of sociology and economics about societies mood swings from positive (waxing) to negative (waning). Man is a herd animal and follows the herd or he'd have been thrown outside of the cave and frozen to death. Not the in order to invest, with the way, everyone piling into real estate, stocks or whatever at price peaks like a great number of lemmings rushing over a cliff and into the water treatment to meet your death. Robert Prechter says 9/ll type of events only happen in the negative mood period. Plus, he says 9/11 was the beginning of world war three.
64. Anglo financial power elite. Next is hyperdeflation with effective dollar. The Anglo financial power elite have every bit of their profit in America and won't stand regarding it losing these days value. Many 1,500 perhaps family dynasties - who we all owe money to - the banksters (George Soros, the Morgans, Rothchilds, Warburgs, Goldmans and Rockefellers as well as. They have already sold most their real estate and now will be dumping and shorting stocks, bonds and commodities. Everything is going to deflate in price by 90%. Gold may drop more than half. In 10 or 15 years from now (after larger Depression) we're runaway inflation again if for example the dollar is not private money backed by gold. Lobby for and support it or else we will receive an one-world-government (or a Hitler) and lose all our freedom and liberty.
65. The united states is a gigantic international debtor, it's borrowed nearly $3 trillion from foreign governments. If interest rates should ever get higher back to what one might consider normal, the interest costs will certainly eat us alive. You'll never replaced if the us keeps on running this deficit spending insanity. Robert Prechter says interest rates will soar as people & businesses borrow at any price to remain afloat. 15% to 20% on 90-day T-bills become in they according to Prechter. They may be close to 0% currently. Money is on sale. Low rates are a sign of slow business activity - disinflation. Excessive charges suck money out of people's pockets just like high oil and food prices. Deflationary! Nothing left over to buy stuff or go out to a restaurant etc.
66. The Austrian school of economic thought says each each time there is a mania with credit inflation at the generator there are a big collapse. Every darn time! Credit inflation, fractional reserve banking and fiat/paper money) end up being cause of deflation. Deflation is the bitter cure for government and the populace living beyond their means by borrowing. Credit deflation happening now!
67. Banking 'Transparency' UK banks, HBC and Lloyds, are joining a worldwide trend toward more transparency or increased regulation and oversight. Every country's currency supply created from through loans, fractional reserve banking or government fixed income securities. So, the more regulations, the harder it is get a loan, and also the more scrutiny on banks - a lot more calories deflation grows as lending slows.
68. End of deficit spending plus budget reductions-trend grows.
69. Kondratiev wave theory-80 year Spring/summer/fall now past few months.
70. Financial repression. The gist of economic repression simple fact government waters down its currency fraudulently figuring invest for excess borrowing with inflated worth - less of your budget. This is a rip from savers, middle aged people and others on a constant income. Similar to a drug dealer who cuts his dope that you simply to sell more. The actually government bankruptcy! Game over! The U.S. dollar will relax in a bull market until 2016. Money is King!
71. Fiat money. Fiat money is money simply no gold backing. Fiat means 'let you choose made' in French. History has shown that fiat currencies always go crash. Lobby for private gold backed money or else we get runaway inflation again in 10 ages! It's the only to help keep government honest. Do not let government or a central bank control the money! They always inflate it to your moon.
72. One World Government - The Anglo financial power elite (The 1500 mega rich families that control all of the world's central banks - the BANKSTERS) want a world government is we've got story each morning universe. The elite tend to be orchestrating a directed history - a weakening of free market capitalism (using all 71 above causes of deflation) for that last 300 years to grind the middle class into submission and global government. They have now engineered the Greater Depression that started a concern . dot com mania 2000 peak and will offer one-worldism as remedy. The greater depression will last into 2016-2018 and potentially provide a 90 percent drop practically in most asset prices. Gold may drop in half. Unemployment will probably exceed 35 percent.
This global deflationary depression will be twice as big and twice prolonged as their 1930's depression that brought socialist fascist Franklin Roosevelt into operate. Welcome to an Orwellian 'Big Brother' society making use of leftists like Barack Hussein Obama doing their wet work. At any time you think Obama, the socialist communist Marxist fascist Nazi, got the Nobel Peace Prize and the $1 million dollars (front money) that goes this particular in the first months of his presidency? His tax the rich wealth redistribution is covert communist code - textbook Communism information and facts.
The Rothschilds, Rockefellers, Warburgs, Morgans, Goldmans, Oppenheimers, Schiffs etc. will be going to giving you one option - global governance so an one world currency. A brave (Ha!) newer world in anyone are told where to work, how to live, to be able to do the actual to think cradle to grave. Central banking using fiat money, wars, around the world and now a cruel crushing deflationary depression already been their smokescreen for taking your freedom and liberty. The likes of the UN, IMF, World Bank or Bank for International Settlements (BIS) will rule the marketplace order. Just the truth broadcasted by the online market place reformation as well return the privately run gold backed money can help us. Only gold is not someone's debt. Only gold is straightforward.
PS COLLECTIVISM IS COMMUNISM. I HANG MY HEAD & CRY ABOUT THE NEFARIOUS GLOBALIST CONSPIRACY. Read 'The Creature from Jekyll Island - A Second Look at the Federal Reserve' by T. Edward Griffin -
Robert Prechter says the bottom of fantastic DEPRESSION won't be until 2016. He thinks prices will be down 90% on most assets and that unemployment will reach 30 %. Cash will be King. Ought to you have cash at that time, money will shop at a big discount. If you can see, there are a whole lot of causes of deflation.
By Delwyn Lounsbury - THE DEFLATION GURU
Use of it article allowed with attribution back to:
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