The actual The Causes of Deflation Leading To
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 on the past 70 long period. The only cure for credit inflation like we have had is a big credit deflation (See page on Austrian economics). Thanks to government protection and encouragement banks managed to lend with first only small cash holdings in reserve. In the last decade our government and the Federal Reserve Bank required no reserves backing your deposits. They do not! We had a credit binge. Even the FDIC (Federal Deposit Insurance Corporation) and FNMA, Fannie Mae - the Federal National Mortgage Association both went bankrupt and had to get nationalized. You so the taxpayers now own them. Have got on the hook to pay for future failures.
The following can be a long list And also the shows why the argument for a deflation leading to hyperdeflation is real. The GREATER DEPRESSION that started in 2000 and may not 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 article on Kondratiev wave economic routine. We are in a Kondratiev wave winter right now. Most asset values will drop by 90 percent into 2016 and unemployment may hit 30%. Even the price of gold may drop in half. All this according to Robert Prechter of Elliott Wave International - Join Club EWI free at links on our website.
When seeking the cause of deflation we start to use to bear in mind that the cause was credit inflation. Many items on our list are manifestations of your credit bubble popping. Can be remarkable will be the depth and number of related items on record.
1. Associated with government almost all levels federal, state, county and city due towards the socialist neo-Keynesian belief that the economy can be micromanaged. Money is sucked outside of the free market economy to fund inefficient and bloated training programs. Eventually the largess grows staying one third of the economy and then causes it to get top heavy and die. The big government parasite in the area welfarism sucks all lifestyle from the economy.
This Kondratiev long wave took some 80 years start to get rid of and the next on can take 100 generations. The Obama administration has added 250,000 new federal positions and raised wages to government workers at a time when the non-public sector is hurting.
'As government expands - Liberty contracts' by Ronald reagan
2. Military waste. Wars and most of the investment property by all of the different divisions of our defense departments is poured down a dent in the ground-never end up being seen extra. Oil, food, time, materials, manpower, blood and lives disappearing.
3. Governments support of favorite industries that would not make it in an absolutely free economy. Industry bubble - unwise lending practices for everyone should own an at home nonsense. Government Oil depletion allowances meant there wasn't incentive to store or develop alternate energy sources. Solar recommended!
4. Property deflation - end of every mania - Prices down 33 percent already leading to reduced enlightening individuals, reduced capital gains tax revenue and reduced real estate property tax revenue. Robert Prechter says there seem a 90% drop by 2016.
5. The approaching stock market losses will make people feel poorer in order that they don't spend. Pension and retirement accounts throw money away on stock and bond investments hurting ability to spend those retirement. 90% drop estimated. In a secular bear market with a bear market rally (B wave) rally topping the actual world first months of 2010. 13 year head and shoulders top formation. If you draw a line connecting the bottoms of the index moves you acquire a straight line pointing right down to the power. This is a bearish technical chart pattern called a declining neck line.
6. Oils. High petroleum prices sucking money out of people's pockets that could gone to buying goods and services involving market. Are usually all a good oil food chain using dead dinosaur and prehistoric plant deposits for our energy instead of whale blubber like we used so that you. Oil money is distributed to foreign countries, which, in may sometimes is used to pay for attacks on America. Plus there is the inefficient gas guzzling autos, appliances, lighting and phantom loads on TVs, computers, microwaves etc. Heat rises appropriately. Why are all the working areas of refrigerators underneath the area developed be cooled down? Heat rises up through the complete refrigerator or freezer field. What a waste of trillions of dollars of oil all these years. Go solar.
7. Job losses - high unemployment meaning less money is around to buy goods and services. Thus, slow sales causes businesses to laid off more workers in a vicious circle cycle snowball effect. To supply the begin 2011 number of obvious 14 million plus unemployed in the U.S. This is the multiplier effect in economics backwards which will feed on itself creating hyperdeflation.
8. Collectable items, antiques, art and possessions typically loosing dollar value. Lower prices when we try to trade. They feel less wealthy and cannot buy because many necessities. Just about be many bargains in all kinds of property and possessions in the bottom without us even realizing sell assets to stay afloat. Antiques Roadshow on television is seeing a 30 percent drop regions of the country prices together with their estimates of value range has widened greatly. I expect it to leave the air in the following several years. John Lennon's white suit recently sold at a 50% transfer.
9. Credit tightens up. Banks and other lenders fears lead to strict lending standards. Businesses can't increase. A low interest rate is sure sign naturally . on transaction. It is an indication of weak demand and deflation. Transparency is code for more oversight & rules, coming from the way.
10. The internet has lowered the price doing internet business. This means it is much simpler to startup a commerce. Business and jobs also go offshore to cheapest issuers. Prices drop every year due for this and quantity of scale price reductions. Think calculators.
11. Delicacies. Farm commodities prices drop eventually due to weak have to have. Small farms harmed most. Reduced income means they cannot buy just as many goods and services also as new equipment. Now, in 2011 prices are up consequence reflation from your government and oil dollar figures. Right now, the high cost of food sucks money your own people's spaces. They can't manage to buy stuff or leave the house to dinning. Layoffs result. It's deflationary!
12. PIIGS - Portugal, Ireland, Italy and Greece. Inefficient government results in high unemployment causing spreading malaise in Europe and a spreading banking and labor crisis.
13. Rate drops. Savers and golden-agers counting on a safe return on funds have less of your budget to buy goods and services and to make rent or house payments. Then interest rates spiral up as businesses borrow at any rate to keep afloat. Bond prices tank meaning massive loses in value of debt instruments with junk bonds and corporate bonds hurt one of the most. Cities, States and Counties that cannot print money (like impact all civilian federal government can) can have the most mess.
14. The saving rate has climbed from 0 to 5% already common. Means an individual less money for products. This hurts business.
15. Increases in debt and paypal or credit card repayment means there is less money for assignments. This hurts business and several years . will maintain on.
16. People travel, eat at restaurants and vacation less. Companies are cutting way back on top notch airfare. Individuals are cutting back on the holiday plans. 106 motels are formed in foreclosure the particular summer of 2010 inside the San francisco Bay general vicinity.
17. Auto sales & leasing on paper. Since the bailout of GM and Chrysler, people are keeping their cars longer and fixing them. Stock price of Auto Zone parts store (AZO) inside of a high benefit.
18. Clothes and outlets hurting ignorant cut as well as do with less. Japan is within a long term 20 year long deflation. Property values just hit a 36 year low - summer of this year's. Japanese wear their clothes longer sometimes until they are threadbare. All of us catching their disease.
19. Bank bailouts and lending freeze up. Trillions of derivative dollars disappear despite government intervention to make use of and fix their xbox. Roaring 20's inflation up to 10% each year had bankers back then fearing the money they had lent out would be close to worthless in just 10 months. They clamped down and stopped lending creating the economy to be able to into a tailspin. The actual same thing is occurring right now only globally. The Greater Depression will be 2 times as long and two times the height and width of the 1930's depression owing to its Grand Supercycle weight scale.
20. Paying for entertainment and sports event attendance weak. Robert Prechter sees sports star salaries slumping from here on by way of reduced attendance.
21. State, county and city cutbacks and layoffs due to both lower sales tax and marketplace property tax revenue. 46 states possess been in the red already. California has a deficit of 17.3 billion dollars. Illinois has a 13.5 billion dollar deficit and 5 states are technically bankrupt as well as are laying off police officers and firemen.
22. CPI drops. Consumer Price Index chart on a down craze. Index does not include energy and food. Crazy! CPI hit 62% upward retracement level in 2011 and then reversed within.
23. socialized medicine means 16% of one 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 destroyer. Socialism is bad. Most health care insurance companies will setting off of business concern. 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 pull out from expansion plans. Cap and Trade is a job, incentive and profit killer and they will lead to an one-world-government program which means loss of our freedoms.
25. Middle-agers retire. They draw out their savings quit buying stuff including bigger homes. They live longer and start sucking social security, Medicare and Medicaid monies out rather than contributing.
26. Bankruptcies grow. People give up and not pay. 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 on the markets and park it in safe 90 day government T Bills at almost zero interest rates. You should do the same by-the-way. Cash in order to King!
28. Gold to silver ratio bottoms April of 2006 hits new high 4/1/2011 from a mania blow off. Silver is a professional commodity. A weaker economy means weaker demand as evidenced by top in prices May 2011. May possibly of copper is already dropping within the first quarter of 2011. Economic booms are said to have a copper highest. This is simply because all the copper working at 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 silver and gold coins. Deflationary!
30. OTC, over the counter stock prices and share volume peaked back in 2000 with lower peaks in 2004 and 2007. Lesser total dollar amount traded shows trend of disappearance of market froth concurrently , as what has turned to be a 13 year head and shoulders topping formation using a downward neckline if you connect the lows. It's a secular bear market somebody!
31. Tea Party. The Libertarian party is actually the third largest political party. Libertarians are for free enterprise, small government, small armies for defense only and a do no harm temperament. People are cranky these mornings. Mood change to pessimism (waning) about government and elected officials. Theres a surge in conservative talk radio (Rush Limbaugh, Mark Levin) and conservative Tv series (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, more expensive of law enforcement officials and boarder patrol. Xenophobia (fear of strangers) as evidenced from your uproar inside the Manhattan Muslim mosque planned near the site of 9/11 attack and Arizona's new immigration statute.
33. Game playing is non-productive and results in reduced exercise leading to obesity, diabetes & other health drawbacks. Some are addicted to the stage that flunking from your school. World wide problem
34. Fishing license sales soar in Michigan. People are trying to find an associated with protein to supplement their diets.
35. Private pay colleges. People out of work plus retrain in the different scene. Some end up with an immense pile of debt with real job opportunity.
36. Medical tourism . Healthcare in other countries will be as much 1 third cheaper cost for medical and dental practices. Money leaves the U.S. for other countries.
37. End of trash society. People search the net and publications like Consumer Reports to find the best and longest lasting products. Companies build better products.
38. Sales of Kubota and other small tractor company sales are up - a back towards country - back towards farm sensation. Worry about crime and food availability. People seek 'elbow Room & off-grid.
39. Xenophobia - Gated communities. Fear of others. Concern with strangers. A person who can afford it seek sanctuary in upscale breating. There are immigration issues. Fight over mosque near World Trade Tower 9/11 online business. There is uproar over our Mexican boarder and fear of a drug and crime wave.
40. Solar & efficient home systems purchases - safety & savings.
41. Disintermediation. Borrowing short-term money flip around and lend it long period of time. If interest rates go up faster using a short-term money than the loans include made a concern . money, may possibly caught again like occurred during the savings and loan crisis back planet 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 stock markets. 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 college. He appoints all leftist people (Czars) in his administration, grows the measurements government by 250,000 jobs, balloons our debt and subsequently rams unconstitutional ObamaCare heath care rationing system across the U.S. citizen's throat. He raises taxes and gets business worried, uncertain and cautious while he turns fascist & tramples all over the U.S. Metabolism. Wrong war on entrepreneurs - soak the rich economic model = freeze up!
44. People mood lessens. TV news talk of 'these troubled times,' 'Flash Crash' and now 'these bad times.' A negative social mood started the year 2000. Realism and skepticism morph into realization and outrage. A waning society develops. Secular bear market stock rally ends in between of 2011 and the earth economy crashes past 2016.
45. New Tariffs and trade sanctions. The Smoot-Hawley bill passed in June of 1930 the bone-headed move which raised tariffs on 20,000 imported goods. The 'New Deal' socialism delayed the You.S. economic rebound and made unemployment worse some time past. Same socialist/isolationist trend is taking place today.
46. China, India, Columbia & other growth economies are providing cheaper services and goods thereby taking jobs and greater share of the market.
47. Terrorism. Three billion dollars more cash spent - a drain as evidenced by the Patriot Act and the hiring of more military & government staffs. All of it borrowed day-to-day money!
48. Limitations. Uncertainty is a business and job colossal. Every minute congress (and 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 pay for the government borrowing and deficit spending. Big government is a huge parasite sucking the lifeblood out of economy.
50. Problems in Persian Gulf. The red sea. Libya, a nuclear Iran. Hezbollah and Hamas join in Hatred of Israel. Oil is lifeblood of free airline. Obama throws Israel underneath the bus. Why?
51. Federal Reserve Bank - a dishonest immoral monopoly and cartel. Stupidity and bad timing now means its portfolio is now 50% mortgage securities additional types of riskier bank debt. Its bag of tricks is empty with short-term interest rates near zero. Helicopter Bernanke (He said - we consider helicopter involving money and dump it on any problem) is often a gradualist. In truth, he inherited this whole problem from Alan Greenspan and past fed heads and their bankster Anglo financial power elite friends that every one of us owe day-to-day money. The Fed cannot stop the deflation and also the Greater Problems. The power elite don't need the associated with the dollar going down further. They will have 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 found on earth. It will be strong.
The Federal Reserve Bank is a nefarious power elite one-world-government/new-world-order 1913 in order to take the whole freedom.
52. Interest percentage rise. Next everyone that ran into the safety of bonds gets caught. As interest rates rise, the fee for the bond drops causing capital mishaps. Robert Prechter says many corporate and state and municipal bonds become worthless in the depths from the Greater Depression. States, counties and cities which can experiencing reduced revenue since of drops in people's income along with drops in property taxes are already seeing their bonds reduced to junk status through ratings agencies.
Even workers, but debt been recently put on the watch list by Moody's.
53. M-3 down. The government does not publish total money supply figures currently. Why? Deflation shows up there first. M-3 is estimated to be down within.7% a big deflationary drop and will eventually lead to hyperdeflation.
54. Bank Failures. Were having bank failures at rates not seen because the 1930's. A lot 1,000 banks a year have gone under. So far, brand new regulators have swooped down and either taken over or arranged a merger of troubled banks. This may change simply because the numbers of bank bankruptcies increase. Will have them out of greenbacks and compelled to just allow them fail.
55. FDIC and Fannie Mae now taken over by our government. Government employees Deposit Insurance Corporation idea has a fatal catch. Propping up troubled financial institutions makes them take chances an get involved in unsafe banking practices because they think federal government will carry out due diligence there to bail them out. Now, you my partner and i the taxpayer will be saddled with trillions struggling with debt in the aftermath within the wash-out arriving at the FDIC and Fannie Mae.
56. Peak oil. All four 2005 becoming called the majority when petroleum production actually peaked. High oil and energy costs suck money right away from people's trouser pockets. They forgo purchases of appear to be and services causing those industries to contract. Deflationary! No money left to stuff.
57. Debt stress. 46% in the latest poll are debt stressed. Health and productivity undergo.
58. Credit card 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 those people that stopped looking for a job, went back to school, retired or on unemployment. Rate is really 17% . Proof the Obama socialist model does not work.
60. Commodities prices shedding. Consumer Price Index is from a long term downtrend. It reversed a 2011 bounce to the 62% (golden number) retracement level. Weak housing and automobile manufacturing that make use of a lot of copper. Topping price trends!
61. Industry deflation. 50% drop in prices several areas. Builder's confidence index is at new low. There are many layoffs in related industries. Many housing and commercial loans written on adjustable interest terms began to allow 2005 to 2007 are coming up for their rate reset or coming due. Many may not qualify to get whole new loan or perhaps able in order to the new higher money. It's a real drag overall economy.
62. Hedonic Pricing. The Apple computer of 2005 was $999 - the $999 Apple today is much better, faster, more memory, bigger screen etc. Free enterprise (along with Moore's Law or if the power of computers doubles every 2 yrs or so) means companies produce better and cheaper products do to innovation along with price reductions to level of scale. Modern 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 can be a herd animal and follows the herd or yet have been thrown using the cave and frozen to death. Not the way to invest, by the way, everyone piling into real estate, stocks or whatever at price peaks like some lemmings rushing over a cliff and into the ocean to die. Robert Prechter says 9/ll type of events only happen from a negative mood period. Plus, he says 9/11 was the start world war three.
64. Anglo financial power elite. Next is hyperdeflation with a strong dollar. The Anglo financial power elite have almost all their money in America and won't stand in order for it losing further value. There are 1,500 or thereabouts family dynasties - who we all owe money to - the banksters (George Soros, the Morgans, Rothchilds, Warburgs, Goldmans and Rockefellers and so forth. They have already sold a whole bunch of their industry and now will be dumping and shorting stocks, bonds and commodities. It is all going to deflate in price by 90%. Gold may drop more than half. In 10 or 15 years from now (after obviously . Depression) we are runaway inflation again if ever 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 us is a huge international debtor, it's borrowed nearly $3 trillion from foreign governments. If interest rates should ever go up back as one might consider normal, the interest costs 're going to eat us alive. This is especially true if your US keeps on running this deficit spending insanity. Robert Prechter says interest rates will soar as people & businesses borrow any kind of time price to be afloat. 15% to 20% on 90 day T-bills always be in them according to Prechter. Nevertheless close to 0% currently. Money is on sale. Low interest are an indication of slow business activity - disinflation. High aprs suck money out of people's pockets just like high oil and food prices. Deflationary! Nothing leftover to buy stuff or go to be able to a restaurant etc.
66. The Austrian school of economic thought says each and time there is a mania with credit inflation at the primary there can be a big crash and burn. Every darn time! Credit inflation, fractional reserve banking and fiat/paper money) are the main cause of deflation. Deflation is the bitter remedy 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 fabricated from through loans, fractional reserve banking or government fixed income securities. So, the more regulations, greater it is to buy a loan, and the more scrutiny on banks - the more 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 cold weather.
70. Financial repression. The gist of monetary repression is that government waters down its currency fraudulently figuring fork out for for excess borrowing with inflated worth - less money. This is a rip associated with savers, middle aged people and others on a hard income. Just like a drug dealer who cuts his dope in order to sell more. Usually actually government bankruptcy! Game over! The U.S. dollar will get in a bull market until 2016. Budgets are King!
71. Fiat money. Fiat money is money simply no gold support. Fiat means 'let or not it's made' in French. History has shown that fiat currencies always go chest. Lobby for private gold backed money or else we get runaway inflation again in 10 times! It's the only solution to keep government honest. Don't let government or a central bank control the! They always inflate it to your moon.
72. One World Government - The Anglo financial power elite (The 1500 mega rich families that control all the world's central banks - the BANKSTERS) want a world government is the biggest story in the universe. The elite also been orchestrating a directed history - a weakening of free market capitalism (using all 71 above factors behind deflation) for that last 300 years to grind the center class into submission and global governance. They have now engineered the Greater Depression that started with the dot com mania 2000 peak and will eventually offer one-worldism as the answer. The greater depression will last into 2016-2018 and bring on a 90 percent drop in most asset standard costs. Gold may drop fifty percent. Unemployment will probably exceed 35 percent.
This global deflationary depression will be twice as big and twice as long as their 1930's depression that brought socialist fascist Franklin Roosevelt into power. Welcome to an Orwellian 'Big Brother' society is not leftists like Barack Hussein Obama doing their wet work. Counseling help you you think Obama, the socialist communist Marxist fascist Nazi, got the Nobel Peace Prize and the $1 million dollars (front money) that goes with it in quite months of his presidency? His tax the rich wealth redistribution is covert communist code - textbook Communism 1.
The Rothschilds, Rockefellers, Warburgs, Morgans, Goldmans, Oppenheimers, Schiffs etc. is actually giving you one option - global governance including an one world currency. A brave (Ha!) newer world in a person are told where to work, in order to live, in order to do the actual to think cradle to grave. Central banking using fiat money, wars, global warming and now a cruel crushing deflationary depression are usually their smokescreen for taking your freedom and independence. The likes of the UN, IMF, World Bank or Bank for International Settlements (BIS) will rule the marketplace order. Precisely the truth broadcasted by the web reformation and a return the privately run gold backed money can help to conserve us. Only gold is not someone's debt. Only gold is reputable.
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 G. Edward Griffin -
Robert Prechter says the bottom of delighted DEPRESSION will not be until 2016. He thinks prices will be down 90% on most assets which is unemployment will reach 30 percent. Cash will be King. Inside your have cash at that time, money will shop at huge discount. Because can see, there are a whole involving causes of deflation.
By Delwyn Lounsbury - THE DEFLATION GURU
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