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Old 12-12-2014, 03:47 PM
Danny B Danny B is offline
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Location: L.A. Ca.
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"So the Fed kept filling up the punch bowl[referring to the period between 2002 and 2005] . And as opposed to going into inflation of goods prices, it went into an inflation of asset prices. That's inflation in the same way, but its not called inflation. So if the stock market goes up we don't say, 'Oh my god, there has been inflation', or if housing prices double we don't say 'oh my god, there has been this enormous inflation', we say, 'How much richer we are!' But the problem is that we are not richer, it is simply an illusion of richness."Dave Colander - Professor of Economics at Middlebury College (Money for Nothing: Inside the Federal Reserve"

"Indeed, a study performed by Duke University found that roughly 20% of publicly traded firms manipulate their earnings to make them appear better than they really are. The folks who were surveyed for this study about this practice were the actual CFOs at the firms themselves.
The reality is that this practice is far more endemic than the 20% discovered in this study (itís likely over 50%)."
"SoÖ the prices of assets are fraudulent, the value of balance sheets is fraudulent, and earnings are fraudulent. This means that stock market caps, balance sheets, and income statements are all inaccurate representations of reality."

The main question that occupies my brain lately is; can you create hyperinflation in a digital currency the same as you would create hyperinflation in paper currency? The FED has failed to raise wages. Considering the attraction that capital has towards global-wage-arbitrage, that isn't a surprise. Can a CB create hyperinflation if it fails to create a wage-price spiral? If you look at velocity, employment, credit and savings, the inflative actions of the FED have only created mega-stagflation. Hyperinflation seems to go hand-in-hand with WAGE and price controls.
Stockman makes a good argument that; if you inflate one area, you deflate another area. If you contrast asset prices with consumer spending, this seems true. The FED promotes credit inflation which is a zero-sum game if the producing economy does not demand credit. There is a big demand for credit in the financial industry but, they don't create anything tangible. I suspect that hyperinflation can not occur if it can't move into tangibles. The oil bubble is a good example. Ultimately, the price of oil depended on consumption. The financial industry has unlimited demand for credit because leverage is ephemeral and unlimited. We will have a cascade of credit collapse as/when valuations return to reality. I don't expect a currency collapse. When credit dies, currency is all that is left.
How It Fits Together——QE, Deflation And Malinvestment | David Stockman's Contra Corner
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