22 Tuesday Nov 2016
Posted | November 22, 2016 9:30:53 | Economics
Every month I get together with Gordon T. Long to discuss the global macroeconomic picture and recent news. In this edition we discuss the post-election state of affairs, inflation and deflation prospects, treasury yields, and the housing market.
Here is a link to further discussion and charts regarding our Post Election Discussion
Mike “Mish” Shedlock
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CPI deflation would be a dream come true for American shoppers, especially the fixed income elderly. Bring it on. Let the average person benefit from productivity improvements already.
Maybe. But maybe deflationary events depend on a loss of buying power by those who must work for a living. They have no fixed income. Therefore, you may be advocating that laborers starve, or hire their wives, daughters, and sons out for night work.
I have a bit of an issue with that.
How about a different deflationary scenario? All fixed income people have their fixed income zeroed, and must beg for their freebees, or find work?
Truth be known, there’s a problem — perhaps the same problem — with each. But perhaps the injustice is worse with one or the other. Who knows.
Let’s try a different scenario: Maybe everyone gives up their simulacra, and tries to make a go of things without any form of transferrable wealth (money)? With charity and cold justice, we just might make it through.
I favor the slow decay fall over “going out with a bang”, when it comes down to it. Though “sudden rescue by the second coming of Christ” and the complete elimination of all previous authority, would be better… but that’s out of my hands.
Starve? Are people still making that claim in the U.S.?
Maybe human beings should be able to enter into voluntary exchanges with each other without state intervention? And the CPI chips should fall where they may.
The “Trump Reflation” (nonsense) will leave “experts” with egg on their faces … again.
Mish why r u saying another major devaluation n the Yuan by China to stop capital flight? Aren’t Chinese savers buying dollars r bitcoins right now before the next major devaluation r am I missing something here?
China is selling treasuries to prop up the yuan and stop capital flight, not because it wants to dump treasuries to abandon dollars as is widely reported. It does not want a falling Yuan but it does want to arrest capital flight. Yes, money is fleeing, but China is acting to prop up the Yuan (by selling treasuries) to help arrest the flow. A currency crisis could indeed start with the Yuan.
Are you sure its really ‘capital flight’, rather than just Chinese investors choosing to invest overseas? When we buy, say, index funds in European, Asian, Canadian, etc. stock or bond markets (ie: through Vanguard), is that not ‘capital flight’ from America? An economy such as China’s that is generating so much capital will certainly have capital to export.
A common mistake with Russia, such a huge oil and gas exporter always has to balance their ac with capital outflows.
Excellent interview, Mish!
As to the dollar, below is a piece that argues a great deal of wealth will be flowing into America seeking protection from the ravages fostered upon it. This is driven by policies that have been even worse than those America’s leaders have chosen to pursue.
America has been described recently as the cleanest dirty shirt in the closet, or the best house in a bad neighborhood, both place it as the least worse option. The reality is other options fail to pass the smell test and the dollar has not fallen far from its recent highs..
http://brucewilds.blogspot.com/2015/12/strong-dollar-acts-as-magnet.html
Steve Keen predicts a debt crisis in China. Plus a bunch of additional countries headed
For same. The rules of accounting really are a bitch when it comes to denying reality. Trouble ahead.