Could the Weimar Hyperinflation Happen Again in America?

[Atilla]

you do realise bond yields are gona be pushed to near 0 soon yeh?

And i can think it though, perhaps better than you? Hence i dont follow the main stream internet forum, youtube theory of hyperinflation.

No way dude...

VAT will feed into prices next year.

US will also be soon enough importing inflation when China allows currency to float a little.

You are very short sighted imho.

 

[N Rothschild]

Thats if the yuan moves in the direction you THINK its going to.

And yields will go to near 0, its the last move the fed has to fight deflation.

 

[Atilla]

This isnt a dig, i am genuinely interested as to why you think you are correct, even though by your own admittance you arnt constantly profitable? Bit of a paradox going on there.

Well there lies the $6m question?

TA and FA not quite the same. Time factor, capital and liquidity, focus and last but not least psychology all play their part.

I've got my protractor and slide ruler out now and working it out. I'll give you the answer in couple of minutes... :cheesy:

 

[LondonJimmy]

N Rothschild,

How are you defining inflation and deflation? Money supply or prices? If you answer this then we can have a discussion.

 

[N Rothschild]

um they are one and the same.

fall in money supply = fall in prices.

 

[N Rothschild]

Right, who here can answer me why the fed need to push treasury yields to near 0 to fight delfation? Anyone?

 

[Atilla]

um they are one and the same.

fall in money supply = fall in prices.

You are only looking at supply side here...

What about the demand side of the equation...

You'll get totally skewed results...

 

[N Rothschild]

You are only looking at supply side here...

What about the demand side of the equation...

You'll get totally skewed results...

demand doesnt matter.. can have all the demand in the world, if there is less money to pay for it..prices will fall.

Are you telling me the real demand for housing in the UK has fallen to the same ratio as prices? er no.

 

[LondonJimmy]

um they are one and the same.

fall in money supply = fall in prices.

LOL bigman, I didn’t think you were that ignorant.

Re money supple and prices, there is a difference.

Firstly, I think in terms of money supply. The government has messed around with the CPI throughout the years that it is crap for the purpose of historical comparisons.

With regard to the money supply, check out the quarterly Fed Z1 report, levels page.

If you believe that money is debt then the level of debt is contracting across the spectrum. The exception being the federal government debt. We have forces of deflation affecting households and businesses while the Keynesian government tries to re-inflate.

Governments tend to win the battle in the end. This does not necessarily lead to hyperinflation, or even high inflation. Look at the stimulus of the 1930s and 1940s. There was only modest inflation in the 50s and 60s. High inflation did not happen until the 1970s.

The trouble nowadays is that attitudes of people towards their currency could change. In the 30s-60s in the US they did not have fiat money. There was a gold standard (of changing degrees). People therefore did not really lose faith in their currency.

We now only have money backed by the promise from the government. This is why the sovereign default theme is so important.

In all countries where citizens start to distrust their paper money they spend their money quickly before losing value. Serious inflation is certainly a possibility.

 

[N Rothschild]

LOL bigman, I didn’t think you were that ignorant.

Re money supple and prices, there is a difference.

Firstly, I think in terms of money supply. The government has messed around with the CPI throughout the years that it is crap for the purpose of historical comparisons.

With regard to the money supply, check out the quarterly Fed Z1 report, levels page.

If you believe that money is debt then the level of debt is contracting across the spectrum. The exception being the federal government debt. We have forces of deflation affecting households and businesses while the Keynesian government tries to re-inflate.

Governments tend to win the battle in the end. This does not necessarily lead to hyperinflation, or even high inflation. Look at the stimulus of the 1930s and 1940s. There was only modest inflation in the 50s and 60s. High inflation did not happen until the 1970s.

The trouble nowadays is that attitudes of people towards their currency could change. In the 30s-60s in the US they did not have fiat money. There was a gold standard (of changing degrees). People therefore did not really lose faith in their currency.

We now only have money backed by the promise from the government. This is why the sovereign default theme is so important.

In all countries where citizens start to distrust their paper money they spend their money quickly before losing value. Serious inflation is certainly a possibility.

Oh so money supply and prices arnt connected? Well feel free to enlighten me, as you have failed to do so in your post as you didnt once mention "prices"

As for the rest of the post, we appear to be on the same page here.. so not entirly sure what your point is?

 

[N Rothschild]

May i suggest you lot start reading some stuff from independent strategy etc? Then maybe you can be as ignorant as me. Unfortunately i doubt you could afford to pay for there data on your spread betting proceeds

 

[Atilla]

demand doesnt matter.. can have all the demand in the world, if there is less money to pay for it..prices will fall.

Are you telling me the real demand for housing in the UK has fallen to the same ratio as prices? er no.

Ofcourse it matters!!!

Please don't jump around subject going off in tangents.

fall in money supply = fall in prices.

Look we've had this all before but here it is again. Basics...

Total (Money Supply x Frequency of Transactions) = Total (Goods and Service x Price)

So without comparing Economic activity (freq of transactions) and demand for goods and services your equation is way too simplistic.


We've had all this before. Key questions are the transactions mechanism as to how the money supply feeds into the real economy. Just considering one side (supply side of money) doesnt' give a good picture.

 

[N Rothschild]

Still waiting for my answer on why the fed needs to push treasuries to 0 yield.

 

[N Rothschild]

Ofcourse it matters!!!

Please don't jump around subject going off in tangents.

fall in money supply = fall in prices.

Look we've had this all before but here it is again. Basics...

Total (Money Supply x Frequency of Transactions) = Total (Goods and Service x Price)

So without comparing Economic activity (freq of transactions) and demand for goods and services your equation is way too simplistic.


We've had all this before. Key questions are the transactions mechanism as to how the money supply feeds into the real economy. Just considering one side (supply side of money) doesnt' give a good picture.

You look at economics at total face value, what the text book says. This is the problem. I actually want to bang my head agasint the desk when trying to talk to you about this ****, but hey..its not my problem if you continue to be a losing trader on your "correct" economic theory

Seriously stop and think about this for a second, you believe your an economics master and your theory is correct, yet you don't make money! And don't blame it on TA. There is something fundamentally wrong with this and you need to sit down over a nice glass of scotch and think about it..

If in 2009 you applied your hyperinflation theory to the markets, short dollar, short treasury futures (long yields) and long gold evenly across your portfolio. Well you would be making money in gold (for now) and you would be getting thumped in treasury's and dollar.

 

[LondonJimmy]

Oh so money supply and prices arnt connected? Well feel free to enlighten me, as you have failed to do so in your post as you didnt once mention "prices"

As for the rest of the post, we appear to be on the same page here.. so not entirly sure what your point is?

If you can't work it out for yourself I am not sure I should bother, especially when you post like ipso facto you are correct.

Modern definition is that inflation and deflation tend to relate to prices. In the long run changes in the money supply tend to equate to changes in price, but the modern definition relates to prices.

Older economics textbooks refer to the money supply. I buy into this definition. If we look at the last three decades then there has been plenty of inflation (increase in the money supply) but prices for things like computers, plasma tv's, calculators etc. has been falling due to advances in technology. These prices would suggest a deflationaty environment by the modern definition, whereas if you look at the money supply you would see that we were in an inflationary environment during the last 3 decades.

 

[N Rothschild]

If you can't work it out for yourself I am not sure I should bother, especially when you post like ipso facto you are correct.

Modern definition is that inflation and deflation tend to relate to prices. In the long run changes in the money supply tend to equate to changes in price, but the modern definition relates to prices.

Older economics textbooks refer to the money supply. I buy into this definition. If we look at the last three decades then there has been plenty of inflation (increase in the money supply) but prices for things like computers, plasma tv's, calculators etc. has been falling due to advances in technology. These prices would suggest a deflationary environment by the modern definition, whereas if you look at the money supply you would see that we were in an inflationary environment during the last 3 decades.

Well your last paragraph is totaly incorrect. The last 2 decades haven't shown deflation, they have been disinflation, not the same things at all.

Would you like me to educate as to why this dissinflation occured? Although "If you can't work it out for yourself I am not sure I should bother"

 

[Atilla]

You look at economics at total face value, what the text book says. This is the problem.

Screw the text books. Going off on another one of your tangents. You and your presumptions...

You telling me economic activity, wages, capacity and consumer demand has no effect on prices none what so ever?

Are you stating that only the money supply determines price?

If Ms rises prices increase
If Ms falls prices fall


So productivity and output, goods and services in circulation and imports and exports have no bearing on price along with supply and demand?

 

[N Rothschild]

Screw the text books. Going off on another one of your tangents. You and your presumptions...

You telling me economic activity, wages, capacity and consumer demand has no effect on prices none what so ever?

Are you stating that only the money supply determines price?

If Ms rises prices increase
If Ms falls prices fall


So productivity and output, goods and services in circulation and imports and exports have no bearing on price along with supply and demand?

Well considering money supply determines, employment, productivity, output etc..i would say yes that only money supply determines prices (across the board), obviously not for specific items individually.

 

[N Rothschild]

Listen up Atilla, maybe this will helpy you become a sucsefull trader.

Liqudity is all that matters.

The End.

 

[N Rothschild]

and im still waiting on why fed needs to push yields to 0, from you two experts.