View Full Version : Deflationary Hoax by Puru Saxena

16th November 2008, 08:36
Enjoy :cool:


16th November 2008, 18:03
Puru is all wet. We have deflation right now. FYI, bank credit fell by $121 billion last week alone.

If you want to argue that statement, then show me one single indicator that money in circulation is increasing rather than decreasing. Don't say "base money" because that is bank reserves. Don't say the Fed balance sheet because that is money lent to banks that are hoarding.

MZM & TMS are flat. M3 reflects repatriation of foreign investments converted to cash back into US banks, i.e, huge hedge fund money. Fuel is down more than 50% and that is taking many prices down with it. Crashing demand is now taking the price almost everything down except stuff in short supply. Thus it doesn't matter whether you measure money in circulation or prices, by any definition we have deflation.

16th November 2008, 19:47
I agree, prices do not drop in inflationary conditions right? Consumers still control by their spending habits if i am thinking correctly.

strongman shelford
16th November 2008, 20:03
I Would Like To Know How Much Time Banks Will Keep "hoarding" A Weak Thing Like The Dollar In Their Vaults.

16th November 2008, 20:13
And i might ask, what is the proof that they are hoarding US Dollars in their vaults? Might they not themselve be investing th funds?

16th November 2008, 22:08
And if I were a BIG bank with greedy tendencies and an "I don't give a **** about my country" attitude I would be taking the billions and billions of bailout bucks (b4) and I'd buy the HELL out of Gold and Silver.
IF I were a crooked bank,

And i might ask, what is the proof that they are hoarding US Dollars in their vaults? Might they not themselve be investing th funds?

16th November 2008, 22:22
Agreed, but my main point is that banks do not let funds set deflating. They invest on something with a return greater than zero!

17th November 2008, 00:38
Most of the confusion about this topic, from my perspective anyway, seems to come from the usage of the terms, inflation and deflation.

While sound money people understand the words in there historic sense as relating to an increase or decrease in the monetary base, almost everyone else understands these terms as it relates to the price of goods and services. This leads to some confusion.

So, I believe that you can have both an inflation of the currency base, as we have seen in the past few months, and we can have price deflation as credit tightens and producers lower prices to unload bloated inventories, which is also currently happening.

How long this goes on depends on a few things like how long America can continue to export its inflation to other countries and how long government intervention seeks to keep propping up prices here in the US. At some point however, there will likely be a Tsunami of inflation, (Lots of money and higher prices) hit America. We will at some point have to pay for all of the money we have borrowed.


Should We Worry About Deflation?