That’s a definitive negatory on deflation. I couldn’t possibly find it right now due to all the activity but i saw a chart on Zero Hedge that showed there hadn’t been any (real) deflation in the past 90 years since the creation of the Fed. There had just been slowdowns and speedups in inflation.
Now all logic says both that Deflation Must Happen, because it hasn’t happened for so long and deflation is an integral part of the economy. They learned that lesson in the Great Depression, because they had prevented deflation from happening for so long they ended up in a deflationary spiral.
In short; they had eliminated deflationary crises by simply kicking the can and stacking all of them on top of each other. Which is now coming due.
But the answer to Deflation is still the same; print and circulate more money. It actually is; if i was central bank president i would’ve already said 2 things: 1. the virus is the real deal and we need to prepare, 2. Here’s 2 trillion in liquidity. It won’t be for the stock market. it will be for mid to small sized businesses to lend directly from the Fed at zero interest rates to survive the initial virus impact and continue paying a percentage of wages rather then outright terminating employees, to make sure whenever this is over everybody still has a job to return to and they can go into lockdown without worrying about income.
Sounds completely reasonable right? It would be! But i also wouldn’t have printed $4,5 Trillion dollars during a bull market so my balance sheet would go from $0 to $2 trillion. If there EVER is a real recovery, rates would normalize, and the US would brankrupt itself overnight. So it’s a rock and a hard place: print nothing and deflate, print everything and hyperinflate.
Considering both Trump and Bernie have both announced massive spending plans with no way to pay for those, and while there will be a rush into the dollar as a safe haven first, no foreign country is going to buy bonds when they need cash themselves for supplies. Who in the damn hell is going to buy all these things when the world is on lockdown?!?!
The central banks that’s who. And they have only 1 way to do so. But this time the problem is compounded by >real intrinsic value< disappearing. It’s the other side of the coin. If Money represents Value, and Value is reduced while the amount of money stays the same, Money becomes worth less.
In practice you know this better as food inflation or “Bad harvest, less oranges, orange more expensive”.
Bonus points for spotting the trading places reference. So not only are we going to see more money, we will see less value that money represents. Prices will skyrocket, even during a deflationary episode.
And since the Repo Crisis on September 2019 meant the US effectively went bankrupt (because it forced the central bank to buy bonds >out of necessity because nobody else wanted them< which is the definition of bankrupt) the fed will have to keep printing now. There is no choice.
Inflation Must Happen. The charts that say interest rates will normalize at one point are stronger then the ones that say we’re headed for a deflationary spiral. NOBODY is going to tolerate a -3% savings rate on their bank account they’ll just pull cash out of the system.
Which are also more arguments for this going into hyperinflation at some point, we are, once again in a liquidity crisis. Those are deflationary in nature, after all if there is a premium on liquidity there is a premium on cash, cash increases in value vs real value thus; deflation. They will print this difference away just like in 2000 and 2008, balance sheet be damned.
BUT! now that real world value is plummetting and starts acting like a multiplier on the whole thing, when investors are desperately going to look for value to hold on to whatever money they have, interest rates will start to tick up. Slowly at first, but they will. (AKA we get deflation first as they adjust the amount they’re printing upwards, but they go too far for too long cause that’s all they ever do).
The bond market has been running on faith for a very long time. Once people realize it doesn’t matter whether they lose their money in bonds or lose it in WeWork shares, it’s lost either way. So it’s much better to bring it closer to home in the form of cash and gold/silver. (putting an even bigger drain on liquidity) (and i say both of those because they hedge each other: if the deflation persists, you spend the cash on more gold. If deflation then turns, the gold protects your value on the way up. You can always sell it at the next top.)
It’ll hit a tipping point where the bank won’t be able to print fast enough. Because if you see the central bank printing $1 trillion a day, you will start losing faith in the dollar real quick. That’s hyperinflation - a total loss of confidence in the currency. The dollar will eventually survive, but as a remade currency - the greenback is DOA.
So their preferred kicking the can one last time method will be trying to not print all the money at once and just let prices rise a little. then a little more, then a little more. After all, 10% monthly inflation isn’t 1000000% monthly inflation, right? No need to worry it’ll be fine. This didn’t happen in the Weimar Republic or Zimbabwe exactly like this before or anything.
Deflation won’t happen until the day they kill the greenback and allow you to exchange it for New Dollahs at a rate of $4 trillion to $400 or something like that. Nobody will have any left to care with at that point.
And the rich? https://www.zerohedge.com/markets/hundreds-billions-gold-and-cash-are-quietly-disappearing
As always. The Rich will be fine. It’s not about not-losing money. It’s about losing less then everybody else:
I have $10. You have $100. You have 10x my wealth. Bread stabilizes at a price of $1, because there are many more of me (poor) then of you (rich). You can buy 100 breads.
Crisis hits. I have $5. You have $70. You lost $30. I lost $5. In flat terms, you lost 6 times what i lost. You now have 14x my wealth. Bread stabilizes at a price of $0,5, because there are many more of me (more poor) then of you (more rich). You can buy 140 breads.
Welcome to Wealth Transfer 101. May i hang your Wallet?
I’ll stop here after that Zinger 
cause i could go on for hours, i really think we’re in the end game here. As usual, the normal caveats: I do have logic on my side as well as alotta charts, but no man can see the future. The moment somebody takes me seriously is the moment my predictions start falling apart, as people change their behaviour. So what ever you do or believe; it’s your own damn business (that’s why critical thinking is so important; i can’t do it for you because i refuse to take responsibility for your decisions).
Time will tell if i’m right or not. All i’m saying is i’ve got €1000 in cash next to my silver and gold, just in case i’m wrong and deflation pulls me way down. Considering 50% of Americans don’t even have $1000 in their bank account, relatively speaking, if gold becomes worthless i’d still be rich (cause cash will move in the opposite direction). Deflation is like turning back the clock, and since the US didn’t have it for 90 years, it’d be like owning $1000 in 1900. Considering my current wealth i’ll take that deal.
Just be smart bout whatever you decide to do. Don’t take my word for it, read what people opposite of me are saying, and ask yourself which sounds more likely, then construct your own events from your local situation as to what might actually happen. That’s what i like to call, an Informed Decision.
