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The Death of Inflation

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biglentil's Avatar Mar 17, 2021 | 11:43 121
Quote Originally Posted by errolanderson View Post
Right from the horse's mouth . . . . The Bank of Canada stated they expect inflation to remain in-check as continued excess capacity puts downward pressure on prices. (If I’m not mistaken . . . this is called ‘deflation’).
Same ole jawboning I've heard from the crooks that run the CB for 20yrs, all while they debase the currency at the fastest rate in history. They have to obfuscate the truth to keep the market confused. The original and true definition of inflation is an expansion of the money supply, just like adding air to a tire is called inflating. Price increases are a symptom of inflation. No need to over complicate it. Over inflate a tire with air it explodes, there is no reinflating the tire afterwards, confidence in the tire is lost and the tire (dollar) gets thrown in the trash pile.

Alchemists for centuries attempted to turn lead into gold and they failed miserably. Attempting to turn paper into gold is no different, the failure of the fiat monetary experiment is quickly becoming apparent to everyone . It's never different this time.
Last edited by biglentil; Mar 17, 2021 at 12:36.
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Mar 17, 2021 | 11:46 122 I do like the various posts and opinions,

Most manufacturing capacity has moved to China, with container availability etc, they cant push “stuff” out fast enough.

Manufacturing is not, and hasn't been a strength in the Canadian economy, taxation, weather, low cost labour, regulatory, unions, etc push manufacturing else where, such as Mexico, Korea, India, and yes China.

So we have a economy in Canada that is a strength, natural resources and agriculture, competitive advantage opportunity, and Skippy does what he can to .uck it.

Thats just not good business 🙁
Last edited by Rareearth; Mar 17, 2021 at 11:54.
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  • Mar 17, 2021 | 18:19 123 If we say fu c you to China where will all
    those Amazon deliverys come from.
    Who will restock Walmart and Cabellas?
    Norico makes a pretty good 1911 way cheaper than anyone else.
    Paper Tiger with lots of political BS. Reply With Quote
    Mar 18, 2021 | 07:06 124 Fed Chair Powell again took the easy road yesterday or was it an act-of-desperation?

    No Fed rates hikes until 2023. That outta get investors all excited and save the stock market bubble.

    This about sums up how bad markets conditions are and incoming risk of fallout both to equities and commodities. Every artificially propped-up asset bubble is now at high-risk (IMO).

    Gold tried to rally on the Fed's 'easy way out' statement. But again faltering . . . . Reply With Quote
    jazz's Avatar Mar 18, 2021 | 07:30 125 errol, I share your concerns about all this, but lets look at Japan. They are a country that ran into these problems 30 yrs before the rest of us. Their govt only debt is 250% of gdp.

    Declining demographics, zombie companies, imports much of its raw materials and resources, hollowed out manufacturing base and they still carry on somehow. Not only does their CB print money, it also buys equities too in other countries.

    The short answer is, as flawed as it is, this system can easily carry on another generation. Reply With Quote
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  • Mar 18, 2021 | 07:30 126
    Quote Originally Posted by errolanderson View Post
    Fed Chair Powell again took the easy road yesterday or was it an act-of-desperation?

    No Fed rates hikes until 2023. That outta get investors all excited and save the stock market bubble.

    This about sums up how bad markets conditions are and incoming risk of fallout both to equities and commodities. Every artificially propped-up asset bubble is now at high-risk (IMO).

    Gold tried to rally on the Fed's 'easy way out' statement. But again faltering . . . .
    All he can do is talk..... literally. If he raises rates, he'll blow up every country in the world due to the recent debt binge. So CB's will continue to purchase their own govts debt and the bond market will likely turn into a zombie similar to Japan. Regardless im not touching it. If lumber futures are the canary in the coal mine and they do correlate with equities reasonably well. Hang on for runaway cost increases, it's only just begun. "Officially" everything will be roses, while supply of goods is impossible to obtain. The Beatles put it best, Back in the USSR. Reply With Quote
    Mar 18, 2021 | 07:56 127
    Quote Originally Posted by macdon02 View Post
    All he can do is talk..... literally. If he raises rates, he'll blow up every country in the world due to the recent debt binge. So CB's will continue to purchase their own govts debt and the bond market will likely turn into a zombie similar to Japan. Regardless im not touching it. If lumber futures are the canary in the coal mine and they do correlate with equities reasonably well. Hang on for runaway cost increases, it's only just begun. "Officially" everything will be roses, while supply of goods is impossible to obtain. The Beatles put it best, Back in the USSR.
    No doubt in my mind everything I use on the farm has greatly inflated in price in the last 6 months, I am not concerned about deflation! I am concerned about availability and the affordability of what I need to operate. Reply With Quote

  • biglentil's Avatar Mar 18, 2021 | 08:22 128
    Quote Originally Posted by Hamloc View Post
    No doubt in my mind everything I use on the farm has greatly inflated in price in the last 6 months, I am not concerned about deflation! I am concerned about availability and the affordability of what I need to operate.
    Exactly. We can prebuy inputs for the current growing season, but who has the storage or ability to pre buy inputs for 2022 or 2023. If you plan on buying fuel, fert and chemical beyond 2021 you are technically short commodities. Im not willing to gamble on Errol being right that our input costs will fall. That's why I offset my risk of rising inputs by going long commodities, without the need of buying additional fuel tanks, sheds, and fert bins. Availability is a whole nother can of worms that dollars sometimes just can't fix. Parts and chemicals in particular.
    Last edited by biglentil; Mar 18, 2021 at 08:32.
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  • jazz's Avatar Mar 18, 2021 | 09:59 129 Bank of America statement on economy;

    https://markets.businessinsider.com/news/stocks/stock-market-outlook-inflation-stimulus-returns-bonds-investing-sectors-bofa-2021-3-1030175296

    excerpts

    "We believe we are at a secular turning point for both inflation & interest rates," Hartnett and a team of Bofa strategists said in a note Thursday. "We believe 2020 likely marked a secular low point for inflation and interest rates due to a reversal of deflationary secular factors, fiscal excess, and an explosive cyclical reopening of the global economy creating excess demand for goods, services and labor."

    "We believe the long-term asset allocation implications of 2020s inflation are bullish real assets, commodities, volatility, small cap, value & EAFE/EM stocks, and bearish bonds, US dollar, large cap growth," said BofA.


    So there is both inflation and deflation working its way through the economy. Looks like these asset classes are trading places.
    Last edited by jazz; Mar 18, 2021 at 10:07.
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    Mar 18, 2021 | 10:16 130 Over-indebtedness is ultimately 'deflationary' . . . . Reply With Quote
    Mar 18, 2021 | 10:18 131
    Quote Originally Posted by Hamloc View Post
    No doubt in my mind everything I use on the farm has greatly inflated in price in the last 6 months, I am not concerned about deflation! I am concerned about availability and the affordability of what I need to operate.
    Then add in $170 carbon tax on everything we need to farm for next year expenses.....

    Ahhh , farming is soooooo easy lol Reply With Quote
    ajl
    Mar 18, 2021 | 12:09 132
    Quote Originally Posted by errolanderson View Post
    Over-indebtedness is ultimately 'deflationary' . . . .
    As are tax increases. We have both on deck going forward. Price of oil nose diving at a time of typical seasonal strength. A bit worried about once the fundamentals of the grains complex, ie crop problems in china, South America, North America, Russia and Europe simultaneously, will make a violent swing the other way. Reply With Quote
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  • blackpowder's Avatar Mar 18, 2021 | 12:48 133
    Quote Originally Posted by shtferbrains View Post
    If we say fu c you to China where will all
    those Amazon deliverys come from.
    Who will restock Walmart and Cabellas?
    Norico makes a pretty good 1911 way cheaper than anyone else.
    Paper Tiger with lots of political BS.
    Funny you should mention that as the Chinese Type 81s and SKS are not banned, prohibited, or restricted.
    Politics you say? Lol Reply With Quote
    biglentil's Avatar Mar 19, 2021 | 06:23 134
    Quote Originally Posted by errolanderson View Post
    Over-indebtedness is ultimately 'deflationary' . . . .
    A dollar only comes into existence as someone else's debt. What value does the dollar have if debts aren't paid back? ZERO. That's why dollars are said to carry counterparty risk. When interest rates rise significantly to cool inflation, this time around defaults would overwhelm confidence in the dollar. Stagflation
    Last edited by biglentil; Mar 19, 2021 at 06:31.
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    Mar 19, 2021 | 06:50 135
    Quote Originally Posted by biglentil View Post
    A dollar only comes into existence as someone else's debt. What value does the dollar have if debts aren't paid back? ZERO. That's why dollars are said to carry counterparty risk. When interest rates rise significantly to cool inflation, this time around defaults would overwhelm confidence in the dollar. Stagflation
    There is also taxation as a means to cool inflation. I would not rule it out. However, most things happening now do not follow the script.....
    Confidence in the dollar is ultimately based on a nation's ability to successfully collect taxes Reply With Quote

  • helmsdale's Avatar Mar 23, 2021 | 08:11 136 Shortages of plastics, and semiconductors.

    Semiconductor shortages are idling RAM truck production plants. Soaring prices are likely going to drive consumer prices up for everything.

    So... if a board on your combine fails this fall, will you be able to get parts? And if you cant get parts, will you be able to bypass it to keep on going? Reply With Quote
    Mar 24, 2021 | 08:53 137 Surprise slump in U.S. manufacturing released today.

    U.S. durable-goods orders fell by $2.9 billion or 1.1% in February, compared to January’s 3.5% increase. The data were weaker than expected; expectations called for durables good to increase 0.7%.

    The report noted that this is the first drop in durable goods orders in nine months.
    Excluding transportation, new orders fell by 0.9%. Core durable goods orders also missed expectations as economists were calling for a 0.6% rise.

    Gold traders appear to view critical support at $1,700 an ounce. Reply With Quote
    biglentil's Avatar Mar 24, 2021 | 09:37 138 Reply With Quote
    jazz's Avatar Mar 24, 2021 | 09:46 139
    Quote Originally Posted by errolanderson View Post
    Surprise slump in U.S. manufacturing released today..
    Buying bonds and putting stimulus cheques into peoples accounts wont be enough to float this boat. They need individuals to take on the next debt bomb because govts and the fed are at the end of their rope here.

    They will have to go negative across the board on rates, which will tank bond yeilds as well and put pensions an fixed income investors in jeopardy. Pension funds hold as much as 30-50% in govt issued debt. Govt debt is dead money. So I imagine more funds switching to hard assets aka farmland and the like. Reply With Quote
    Mar 25, 2021 | 09:22 140
    Quote Originally Posted by jazz View Post
    Buying bonds and putting stimulus cheques into peoples accounts wont be enough to float this boat. They need individuals to take on the next debt bomb because govts and the fed are at the end of their rope here.

    They will have to go negative across the board on rates, which will tank bond yeilds as well and put pensions an fixed income investors in jeopardy. Pension funds hold as much as 30-50% in govt issued debt. Govt debt is dead money. So I imagine more funds switching to hard assets aka farmland and the like.
    Commodity price crunch is now upon us . . . stock wash straight ahead (IMO) . . . . Reply With Quote
    Mar 25, 2021 | 11:24 141 Haven't we already had inflation in stocks, housing, land..............? Reply With Quote
    biglentil's Avatar Mar 26, 2021 | 07:11 142
    Quote Originally Posted by jensend View Post
    Haven't we already had inflation in stocks, housing, land..............?
    Bingo! Inflation is the expansion of money supply which has grown by 40% in the last year. Supply is shrinking but somehow the inflated money supply is going to purchase more goods and services (price deflation)? Does that make sense to anyone?
    Last edited by biglentil; Mar 26, 2021 at 07:20.
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    Mar 26, 2021 | 07:37 143 Nothing makes sense, that’s the problem. All I know is that data is concocted, statistics are cooked, real values are erased, news is censored, looney tunes on social media can print whatever they want, whenever they want, press is bought off and politicians and philanthropists pull the strings . Carbon, one of the most important staffs of life is now our most deplorable villain. ( Oh and they figured out a way to lock us up, we’re only allowed to line up for their medicine.) Now you tell me, how can I with Econ degree in hand say all available information points to inflation or deflation? Garbage In - Garbage Out.

    How did that happen, I liked myself?🥴
    Last edited by sumdumguy; Mar 26, 2021 at 09:00.
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  • jazz's Avatar Mar 26, 2021 | 07:45 144
    Quote Originally Posted by biglentil View Post
    Bingo! Inflation is the expansion of money supply which has grown by 40% in the last year. Supply is shrinking but somehow the inflated money supply is going to purchase more goods and services (price deflation)? Does that make sense to anyone?
    The expansion of the money supply only causes inflation if the velocity of that supply is increased as well, which means consumers get it and it gets spent multiple times across the economy. If that doesnt happen, then its devaluing that money supply. Usually banks get it and lend it out, but what bank is going to lend to someone who hasnt worked or paid rent in a year.

    I dont think that kind of inflation is happening. First just a fraction of stimulus ever gets to the common man. And in these days what is he or she going to buy with $1900? More likely to pay rent or debt and the reddit crowd to stick it in Gamestop. Maybe groceries.

    Durable goods orders just decreased. That would be the most likely place for someone to spend $1900, on a fridge that might last a decade.

    Supply might not be shrinking at all, it might just be a covid related trade logjam. Thats why I am worried about grains as well.

    https://www.cnbc.com/2021/03/26/personal-income-february-2021.html
    Last edited by jazz; Mar 26, 2021 at 07:48.
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    biglentil's Avatar Mar 26, 2021 | 19:23 145 MMT is a pipe dream, there is no such thing as a free lunch the Piper always gets paid. Expand the money supply 40% sooner or later the dollars will purchase approximately 40% less. Reply With Quote
    Mar 26, 2021 | 20:39 146 I’m not sure that’s exactly true, money supply does need to expand with population. Reply With Quote
    Mar 26, 2021 | 22:29 147 I have been wrong more than right
    Buying land etc. But in spite of my ineptitude I have tons of cash and no debt. After 1/2 my life on the minus side if the ledger.even with a divorce.
    I just have to wonder how these big outfits go broke. We have had a good run. How can they screw that up. It is not the 1980s.
    Now we have the maddness of
    Covid programs , get 60,000 pay back 40 , some folks have 3 corporations, triple up. You have to take it , at least that makes me feel less guilty.
    Because we all will have pay for it even if you did not take it.
    If that is not inflationary, what the hell is?
    How can it not be?
    I read with great interest , trying to figure out what to do now.
    All I know is if the banker tells you something, do the opposite. Reply With Quote
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  • Mar 27, 2021 | 03:32 148 This is where I’m going to steer all over the road and possibly hit-the-ditch, which some will enjoy.

    Asset bubbles are not the result of true inflation (IMO) rather greed. Oh, oh, I’m feeling some skid . . . .

    Are today’s market values truly inflationary? Proof-in-the-pudding is; can prices hold up if the stock market doesn’t? If asset prices drop at the first hint of financial market distress. . . . are prices really inflationary or simply manipulated creating mass greed inflating prices. To me, there is a difference, this is not inflation. Oh, oh, think I’m headed for the ditch for sure.

    Let’s say economic reality strikes right out-of-the-blue . . . heaven-for-bide. Wall Street bonuses suddenly dry up. Keysian economic theory of forced money printing (to continually save-the-day) no longer has much appeal or impact on markets . . . say it can’t be true! All asset prices suddenly drop.

    Is this true inflation? Gold certainly doesn’t think so.
    OK, I hit-the-ditch . . . . Reply With Quote
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  • Mar 27, 2021 | 07:46 149 Could someone please pinpoint a time in history when an economy was working perfectly? Reply With Quote
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    LEP

  • jazz's Avatar Mar 27, 2021 | 07:52 150
    Quote Originally Posted by farming101 View Post
    Could someone please pinpoint a time in history when an economy was working perfectly?
    50s and 60s. Mid 90s?

    https://wolfstreet.com/2021/03/19/i-truly-believe-that-we-the-rich-will-emerge-from-this-crisis-stronger-and-better-as-we-the-rich-have-done-so-often-before-jerome-powell-in-wsj-op-ed/

    Very illustrative in that article the massive wealth gap that has been created by money printing.


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