Deflation

This chart is for the USA. I remember mid seventies to 79 the land went from 300$ acre to 1400$ then the eighties hit. High interest came along. By 1986 87. It fell to 800-850$ acre it stayed there till 2007. Then every real estate known to man went to the moon.
So I think real estate will come down but not to the 850$ level but could come down by 20-30% and stay there for the next maybe 30 years. It’s going to take awhile to catch up to pay some debt before the next boom.

I don't doubt that at some point there will be a liquidity/credit "event" that will come from treasury market dysfunction, and as with 2020 following the repo spike in 2019, they will print so fast it'll make our heads spin the next time they do it and at that point it should start to become obvious to even the most braindead sheep that fiat is not what you want to be holding, real things are, hence no real long term deflation. Also once that happens it's also the velocity of money that matters, once the velocity picks up it doesn't matter what interest rates are you can't stop an avalanche. Think Argentina/Venezuela, interest rates are in the 90's, doesn't make a shits bit of difference as everyone just dumps their pesos for real things as fast as they can. Never in history has a fiat currency disappeared because of deflation.

fred.stlouisfed.org/series/M2V

Big surge in the price of gold and to a lesser extent silver. Makes me think people are stocking up expecting something to happen, gold was up around 100 an ounce in the last day, 200 in the last week or so. To buy it most places are a little over $3000 an ounce. Wish I had a truck load of it!!

When you stop and think about it, money is actually a depreciating asset, no different than a vehicle. I bet many people if given the choice between $1000 dollars cash or the equivalent amount of gold, would likely choose the cash, not knowing that as soon as they get it it’s actually losing value.

Yes, currency is a depreciating entity, that is what that debt chart I posted is saying. Of course no "news" or government body will actually say this. But that is conspiracy talk I suppose. More debt means more currency created which means existing currency is devalued. So that is the tricky part of speculating on whether we see deflation or inflation. Debt will kepp being added but it will be governments and corporations doing it, these entities are immune to interest and debt obligations. Yeah, some will say corporations are capitalist and will fail if their debt goes to high except you never actually see that happening in the mega corporations - their debt keeps going higher while their shares also increase because financialization allows this. And we can also see government step in and save those chosen companies when really needed. So those big corporations aren't actually capitalist.

However the average schmuck can't keep expanding debt. And that is deflationary. So I see possibilities for conflict. Perhaps some will call it the system failing. Or better yet - capitalism failing. Of course, again, no one in the government or media can figure out that fixing interest rates is actually not capitalism. But I digress.

I do think there is some good news in what Powell is saying. Basically telling the "markets" who are expecting rate cuts any month now to go pound sand. Who comes up with this idea rate cuts are a given fact? Sure, 10% debt is excessive but 7 or 8% should be considered normal. Central bank at 5% and lending banks putting on 1.5 to 2% seems reasonable. Why do the "markets" say we need rate cuts?

No "news" on why gold suddenly moved. Could it be the squirrel was set loose again in the form of Bitcoin ETF to distract people so another adjustment can be made in metals? A bitcoin ETF in itself is a curious thing, once again government says bitcoin is bad and dangerous to people and government but then goes ahead and says expanding the casino playing with bitcoin via ETFs is perfectly fine.

Could be an interesting 6 months with the US election. Don't know. No recommendations from me. I am waiting out grain markets to see what occurs in the May and June time frame. We could see prices driven lower yet by the "funds" but if some of these funds actually trade based on generating profits then one could also say a pivot from other sectors into commodities is just as possible. I wonder who is the big entities buying gold. Maybe the "funds".

I beleive the polite term is "unsustainable".

The not-so-polite discussion then revolves around how something that is unsustainable then comes to an end.


I can't come to a conclusion whether we have inflation or deflation. Best I can come up with is having both, and I suppose that is where the word stagflatiion is derived from. As my last post says, some entities can expand debt endlessly and some can't so some create inflation and others create deflation and so whether a guy sees inflation or deflation will depend on what area of life a guy looks at.

I suppose I could conclude that the stock markets are following the debt graph. Meaning some of the same companies I see as being able to expand debt endlessly are also the ones with the ever increasing stock valuations and share prices.

It all seems simple enough. Pile your savings into bitcoin and the top performing stocks. The stocks are easy enough to pick out. Ut every time I think about doing such a thing, the word "unsustainable" pops into my head.