How to Define Deflation In The Coming Greater Depression?
In Webster's New World Dictionary they define deflation as: A lessening of the amount of money in circulation, resulting in a relatively sharp and sudden rise in its value and a fall in prices.
When we define deflation we have to also define money as the socially accepted medium of exchange for value storage and payment.
Credit then is access to money - often with the charge of a fee or interest on an I.
O.
U, bond, note, bill or loan which are all really debt.
It is this runaway extension of credit that has peaked to a point of busting like a big purple pussy pimple.
Ludwig von Mises and Friedrich Hayek of the Austrian School of economics warned of the severe consequences of large credit expansions.
There are two kinds of credit.
Self-liquidation credit is paid back out of production profits - a good thing.
A valuable economic effect, the paying back of loans from business income.
Non-self-liquidating credit is not related to production but to consumer items like houses, cars, boats, credit cards or stock margin borrowing for speculation.
This kind of credit debt is a burden because no real production is there to pay the loan.
It sucks vitality from the economy.
This means there is less money saved to fund and foster business (the definition of capitalism).
You can define deflation as a rolling default of all this heap of non-self-liquidating credit.
This surely kills the good self-liquidating credit because deflation results in ever higher unemployment each year.
This means less money in peoples pockets to spend on businesses goods and services.
This means businesses have to lay off more people next year due to slow sales and so on.
This bust started in year 2000 with the dotcom climax top and will not end until 20016 - 2018 or so.
The bottom of the bubble will end with the Dow Jones stock average under 500.
We will define deflation as the retraction and reverse of the huge worldwide expansion.
Because few creditors expect default at the top they lend to weak borrowers.
The tree does not keep growing up into the stratosphere.
The credit expansion is ending.
Just look at the drop in real estate prices and the 9.
5% unemployment rate.
Peoples attitudes are getting downright ugly.
This is the socionomic effect Robert Prechter writes about - a mood change to that of pessimism.
So, define deflation as debt liquidation.
Confidence wanes, production slows and credit contracts.
Once started, it will go all the way to a final washout.
One cannot stop a pendulum this big.
It will swing way to far to the deflation side in the Greater Depression.
No matter how much money modern governments try to throw at the problem.
Define deflation as a social mood change from positive to negative (again a socionomic event).
Creditors, banks, debtors, and consumers get pessimistic slowly at first - then faster and faster.
The smart money or contrarian thinking investors get out first and into short positions.
Creditors get conservative and slow their lending.
Debtors start to pay off loans and start saving for a rainy day.
Americans are saving 6.
4% already here in the middle of 2010.
This is up from an unbelievable negative savings rate just a few short years ago.
Producers put plant and business expansion and hiring plans on hold.
Consumers get more price conscious and spend less while saving more in a deflation economy.
The velocity of money slows.
This is a slower speed of circulation of money and a commensurate slowdown in buying causing more price reductions.
This is actually the multiplier effect in economics.
In the multiplier effect in reverse people out of work can't buy stuff.
That means businesses have to cut back and layoff.
The newly laid off plus the 9.
7% already unemployed (20% if you count those that quit looking for a job) mean more reductions in consumer spending.
This thing can turn into a vicious cycle catching us all in a snowball rolling down the hill.
Watch out for a big drop in stock prices next.
It starts to feed on itself! Already, we are seeing a big 10% downward slide in the total money supply (M-3).
This is the total money supply of cash and cash equivalents that the government does not even publish anymore.
Why did they do that? Did they know we could first see deflation as the drop in the total money supply? They are hiding this just as they hid inflation data from us by not including food and energy in the CPI, Consumer Price Index.
In a slap to the government and a hurrah to the Amish, someone called this way of computing the inflation rate as - "Amish on a diet".
Amish people would rather travel by horse and buggy and not use fossil fuels.
You can define deflation this time around as a Greater Depression.
It will be three times larger and three times longer than the depression of the 1930's due to the huge increase in the size of government on the federal, state, county and city levels.
Here in the middle of 2010 with trillions pumped into the economy by the federal government the only jobs created were a 10% increase in federal employment.
The private sector can create a job for $100,000.
The President Obama recovery act creates a job for each $1,000,000 and in Los Angles it took $2,000.
000 of stimulus money to create one job.
Define deflation as a deep dark dangerous...
next go to website to learn how to survive and get rich.
Copyright 2010 - http://www.
deflationeconomy.
com Reprint rights allowed with attribution back..
When we define deflation we have to also define money as the socially accepted medium of exchange for value storage and payment.
Credit then is access to money - often with the charge of a fee or interest on an I.
O.
U, bond, note, bill or loan which are all really debt.
It is this runaway extension of credit that has peaked to a point of busting like a big purple pussy pimple.
Ludwig von Mises and Friedrich Hayek of the Austrian School of economics warned of the severe consequences of large credit expansions.
There are two kinds of credit.
Self-liquidation credit is paid back out of production profits - a good thing.
A valuable economic effect, the paying back of loans from business income.
Non-self-liquidating credit is not related to production but to consumer items like houses, cars, boats, credit cards or stock margin borrowing for speculation.
This kind of credit debt is a burden because no real production is there to pay the loan.
It sucks vitality from the economy.
This means there is less money saved to fund and foster business (the definition of capitalism).
You can define deflation as a rolling default of all this heap of non-self-liquidating credit.
This surely kills the good self-liquidating credit because deflation results in ever higher unemployment each year.
This means less money in peoples pockets to spend on businesses goods and services.
This means businesses have to lay off more people next year due to slow sales and so on.
This bust started in year 2000 with the dotcom climax top and will not end until 20016 - 2018 or so.
The bottom of the bubble will end with the Dow Jones stock average under 500.
We will define deflation as the retraction and reverse of the huge worldwide expansion.
Because few creditors expect default at the top they lend to weak borrowers.
The tree does not keep growing up into the stratosphere.
The credit expansion is ending.
Just look at the drop in real estate prices and the 9.
5% unemployment rate.
Peoples attitudes are getting downright ugly.
This is the socionomic effect Robert Prechter writes about - a mood change to that of pessimism.
So, define deflation as debt liquidation.
Confidence wanes, production slows and credit contracts.
Once started, it will go all the way to a final washout.
One cannot stop a pendulum this big.
It will swing way to far to the deflation side in the Greater Depression.
No matter how much money modern governments try to throw at the problem.
Define deflation as a social mood change from positive to negative (again a socionomic event).
Creditors, banks, debtors, and consumers get pessimistic slowly at first - then faster and faster.
The smart money or contrarian thinking investors get out first and into short positions.
Creditors get conservative and slow their lending.
Debtors start to pay off loans and start saving for a rainy day.
Americans are saving 6.
4% already here in the middle of 2010.
This is up from an unbelievable negative savings rate just a few short years ago.
Producers put plant and business expansion and hiring plans on hold.
Consumers get more price conscious and spend less while saving more in a deflation economy.
The velocity of money slows.
This is a slower speed of circulation of money and a commensurate slowdown in buying causing more price reductions.
This is actually the multiplier effect in economics.
In the multiplier effect in reverse people out of work can't buy stuff.
That means businesses have to cut back and layoff.
The newly laid off plus the 9.
7% already unemployed (20% if you count those that quit looking for a job) mean more reductions in consumer spending.
This thing can turn into a vicious cycle catching us all in a snowball rolling down the hill.
Watch out for a big drop in stock prices next.
It starts to feed on itself! Already, we are seeing a big 10% downward slide in the total money supply (M-3).
This is the total money supply of cash and cash equivalents that the government does not even publish anymore.
Why did they do that? Did they know we could first see deflation as the drop in the total money supply? They are hiding this just as they hid inflation data from us by not including food and energy in the CPI, Consumer Price Index.
In a slap to the government and a hurrah to the Amish, someone called this way of computing the inflation rate as - "Amish on a diet".
Amish people would rather travel by horse and buggy and not use fossil fuels.
You can define deflation this time around as a Greater Depression.
It will be three times larger and three times longer than the depression of the 1930's due to the huge increase in the size of government on the federal, state, county and city levels.
Here in the middle of 2010 with trillions pumped into the economy by the federal government the only jobs created were a 10% increase in federal employment.
The private sector can create a job for $100,000.
The President Obama recovery act creates a job for each $1,000,000 and in Los Angles it took $2,000.
000 of stimulus money to create one job.
Define deflation as a deep dark dangerous...
next go to website to learn how to survive and get rich.
Copyright 2010 - http://www.
deflationeconomy.
com Reprint rights allowed with attribution back..