My previous works of “chart-art” have all sold at Sotheby’s for high 7 figure bids. I expect this one to do nothing less than 8.
“Doin’ the Hugh”
The Fly, June, 2010
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Joined Nov 10, 2007
23,418 Blog Posts
I dunno … the prices in the supermarket keep rising … the gas pump is going up … everyday items seem to be on the increase.
Stocks, though are going down.
I do love HH. The dude is eclectic.
I just gassed up at $2.419/gal. WallyMart is advertising thousands of price cuts. There is definitely a whiff of deflation in the air – smell it? Smells like that crude in the Gulf. The uptrend resumed on Thursday but Friday put it back under pressure……..and tomorrow could put it back into correction.
There is no inflation. Debt destruction bomb of all time will make sure that stays permanent.
The currency is fiat.
Deflation — unless the Fed is braindead — is impossible.
We are not backed by anything. Nothing but “The full faith and credit.”
Nothing.
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Jakey,
There is no going back to a gold standard… Stop dreaming. it would destroy the world economy.s
I have no expectations of returning to a gold standard.
In fact, I’m banking on just that.
Why would I be buying gold, otherwise?
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while i think the gold market is broken, this is the smartest thing i have heard in months.
We are suffering credit deflation…which is more powerful than monetary inflation…and, as I understand it, this will continue in volitile fashion until leverage is unwound. I buy or short gold according to which way the wind is blowing near the piss pipe I had jamed into my backyard lawn.
how the heck can there be inflation if no one can afford anything? You have to actually have demand. Inflation can’t happen if only the banks and the rich have money, right?
The rich have plenty of money, fyi. Noticed the art sales recently? They are off the charts.
Here’s how inflation happens… the Fed buys bad debt… wash, rinse, repeat.
They make their own money.
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I bid $100,000,000,000,000,000 (in a currency of my choosing)
Monsieur Le Fly, the Most Munificent and Artistic: I have rejoined the Peanut Gallery, after a long absence, at http://www.ibankcoin.com/peanut_gallery/index.php/2010/06/05/tater-tots/
Would that be Zimbabwe?
Saw RW Pelican in louisiana, covered in oil( no joke), its truly a travesty to watch innocent animals pay the price that BP should be paying.
I hope they leave that company to dry in the sun.
small town mayor lay it out clear. a fucking nightmare in the making.
http://www.cnn.com/2010/US/06/05/gulf.oil.disaster.mayors/?hpt=T1
Yeah, it’s a major blow to the nation. But this one is much more of a nightmare.
http://www.youtube.com/user/islandonlinenews
I know, Rand. It’s the most heart wrenching thing. It hasn’t hit south Florida, where we are, yet, but our hearts go out to LA, the animals, the fisherman, the locals. Gawd, it’s so awful.
This seems like a good idea to me and interesting from a financial standpoint.
http://techcrunch.com/2010/06/05/teardown-chegg/
The school I’ve been going to has the books included in the price of tuition. It’s a private school and I think it’s about $365/credit hour, quarterly. I’ve decided to change schools to a local one where books aren’t included in tuition, so yeah, that would be a huge savings.
Heaterman, did you see my post to you the other day when you talked about ACLH? I said I had shares, but hadn’t looked at it lately, and then after that post the SEC froze trading?
I wonder what usually happens after trading resumes. I am really uncertain on that company and can’t even begin to explain why I bought in, but I did listen to the radio broadcasts and I guess, must have been impressed.
Thoughts?
They will “solve’ the debt deflation “problem”, Fly. mark my words they’ll print 5 to 10 trillion dollars equivalent worldwide starting from September around the world.
The voice of reason. And a 35 year currency trader.
Will Fly listen?
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Of course Fly will listen… when it is time. Right now, he is right about deflation. He will continue to be right about deflation until deflation has played out. A double-dip sundae is in order. All of the sprinkles on the sundae will be gold however, because in the end, yes, they will print money at a faster pace than anyone ever thought possible.
The end-game will inevitably be hyper-inflation brought on by way too much printing of money.
There are some people who believe that hyper-inflation cannot happen with 25% unemployment. You will see it happen due to the sheer amount of QE that will be enacted. Remember, in the past, printing money meant actually printing paper and putting it to use in the economy. Now, we are no longer limited to physical money, so we can do more printing than has ever been attempted in the history of commerce.
Eventually, faith in the US Government will erode, and all faith in it’s dollar will also erode.
A big step toward the failure of the government is going to happen in November. After the mid-term elections, you are going to see a government unable to pass a single bit of legislation. Unlike in boom times when gridlock is good, in times of strife, a government unable to act will spell doom.
That is all in the future, in the meantime, enjoy the FAZmobile and deflation.
Unless he started trading currency at age 11, it would appear that an age limit is being violated here…
Yes, but he’s copped to that.
He’s got a special dispensation, since he’s Oz-stralian. And a freaking currency whiz.
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Deflation will be evident in the prices for most goods. Velocity of money will likely crater, and M3 already looks awful. As more and more numbers start to roll in over the next few weeks, this should become apparent.
Inflation, or rather a rise in prices resulting from legitimate supply and demand balancing, may be evident in the cost of needed commodities such as food and energy.
Hyperinflation is possible a little further down the road, but so is revolution / rebellion.
Velocity of money has cratered. For like, two years now.
What does it matter? There is nothing backing the currency. Are you fucking blind?
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hillbilly:
I think people are making too much about V. To me V is just a marker for recession/growth, that’s all. It’s not exact but it’s pretty good.
In his book, Human Action, Mises I think correctly described V as tautological. It represents the speed with which money travels and is transactional based.
IT doesn’t mean I don’t think there aren’t any head winds, however I think the idea that we will have deflation misses the pertinent point as to who has the power of the press.
The plunge in V is more than a marker for growth in this case. V had to go down as a result of the government’s bailout/recapitalization of large, corrupt, incompetent bankers/hedge funds (e.g., GS). If I’m a big bank, why seek risky avenues to inject money into the system – – just borrow at zero from the FED and loan it back to the gov’t risk free. What Jake misses is that money is printed by banks, not just by the government.
Purdy:
I think here’s a flow of funds story going on there.
Agreed, Purdy, but the biggest bank, and the biggest printer is the Fed. Notice what’s on their balance sheet lately? Why not take it all? Who cares, right?
And who is going to buy Euros even if they are on sale? I think my old per diem Dmarks will be valid coin in 7-11s across Bavaria by this time next year…
There will be huge devaluation. It will happen in Europe first, even though we are in much worse shape.
The level of debt is simply unsustainable. I expect a Tea Party Candidate like Jindal or Christy to win the Presidency. At that point, the gloves come off. A voice of reason will inform the populace that yes, we are fucked and have been fucked for a long time. Class warfare will be the order of the day; think 90% tax rates on the highest income earners and estates over 250K and means testing for Social Security – the middle class will demand it. The U.S. will tell its foreign creditors to eat shit and die. You can’t argue with compound interest and math. It’s going to be a tough haul for about 10 years.
I expect a Tea Party Candidate like Jindal or Christy to win the Presidency.
As a tribute to the last Louisiana governor to make a bid for the presidency, Jindal’s campaign slogan will be “A chicken curry in every pot”.
If you don’t know who the other guy was, don’t ask what happened to him.
Shot up, and caught up!
Lol.
BTW — my favorite saying of his was “Don’t tax me, don’t tax thee, tax him behind that tree!”
(I think chicken in every pot was Hoover, not Huey, btw.)
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My memory ain’t so good I guess. Did a quick google search and it appears Hoover was the most famous one to use it. Original quote dates back to 17th century France though.
No idea why I thought Huey said it. Must have been it sounded more like a populist crooked Louisiana politician than anything else.
BTW, Earl was the real cool one of the bunch.
Has anyone seen rates as of late?
Where is this inflation that you claim? You fuckers are ancient gold standard motherfuckers.
Yes, deflation is evident. Maybe Mr. “Student of the Depression” Bernanke will take notice?
The question is — how can deflation prevail when there is no anchor to the monetary system? Why not just start printing greenbacks on toilet paper?
Too obvious? 😉
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That depends on how you define deflation/inflation. In the average American non-economic terms, it means hard assets i.e. housing, land etc.. are losing value, while expenses i.e. education, healthcare, insurance are increasing > rate of inflation. Oil is the wildcard. Who the fuck knows what it will be down the road. The dollar will be the last fiat currency standing because it has been the de-facto standard for the past 70 years. Prior to WW2 nobody would have believed the pound would be replaced by the dollar.
i dont beleave deflation is going to happen to a large degree, i also dont beleave inflation will occur to a large extent either…
my basis for this opinion is with deflation its harder to pay your bills ,not what the chosen one has in mind.
and inflation ,just a touch mind you brings the money out making it easier for you to pay your bills, which is what the chosen one wants
but are we talking the value of the dollar ? or the fact that big bussiness will over price their stuff ,which on a level playing field would cause more harm than good..
there is a fine line that needs to be taken and i do think they are trying to stay the line…your just not going to pay your morgage making $2.00 HR
“Big business?” — They have no power, outside demand. They have to fight inflationary forces, tooth and nail, hence smaller candy bars.
Why would you think big business is more powerful than the Fed? They are in thrall to them.
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justa question of where the tipping point to acceptance of extremism is when shit gets bad enuf. there, you will have another ww. the question is, will the human race survive this one en mass? ..and inflation/deflation/value of currencies…eh. its all a game/not real. when the shit hits the fan you’ll be very aware of the things that truely have value, although they should already be common sense.
Of course there will be another world war. That is quite clearly the only way out of the mess we have. The human race will survive, as it always does. However, there will be massive amounts of casualties in this war. When the shit hits the fan, gold will be as worthless as dollars, because you can’t eat it or kill with it. Well, I suppose you could kill with it, but it would be a bad choice for a weapon.
After the dust settles, gold will be worth quite a bit, but the people who go into the war with the gold, will not be the same people who come out with it.
How do you know we haven’t been under attack the whole time?
http://www.youtube.com/watch?v=Obh9RyT30w0
Hey, you know what?
It doesn’t matter if we are doing deflation or inflation. I am not an economist, even though i can predict better than 99% of those clowns.
I will just respond to what the market is giving me.
Yes, that’s true enough and at the moment the market is giving us the “D” word.
As I said I think we’ll see record money printing going on the latter part of the year. I think Japan will be a huge player in this too.
So… how does one “invest” such a wonderful circumstance on the long side?
NO negative divergence yet on the weekly chart, the final TOP of the bull market should come in July/August this year. Maybe around 1240-1250 SPX.
Jake- you mentioned deflation earlier here. If you have not done it recently and are inclined, your deflation thoughts might make a good post on your blog.
Deflation is bullshit, I thought I made that clear. We have no anchor, we can print away deflation.
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Inflation is impossible because there are quadrillions worth of debt to deflate…gold is still valid because deflation will end the current financial paradigm.
Exactly the impetus to make dollars worth less, no?
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Here is the point i can never understand regarding the inflationista theories — sure, the government can print more money, but to cause inflation ultimately this money has to get into people’s hands to create excess demand. Currently, everyone is so debt laden that there is no demand, the banks won’t lend because folks aren’t credit worthy enough, and there is no job creation, so no extra wages and no wage pressure.
So, printing presses or no presses, how does inflation occur in this situation? Wouldn’t they have to just start mailinng everyone free money or creating millions of new gubbmint jobs, or something?
by buying back treasuries ?
How does that make the cost of goods rise?
buying back treasuries from people such as old ladies increases the money supply by putting money in to the hands of citizens who spend it or deposit it in to the banks
also more stimulus
how else ?
Fair enough, but i guess i’m having a hard time seeing how these things are going to overcome the effects of deleveraging and credit destruction, which is so dramatically reducing demand and effectively reducing the money supply.
I would think we would need to see much more aggressive actions on the part of the government to both offset these forces and result in significant inflation. In simple terms, there is a lot of money that was formerly in folks hands that would need to be replaced somehow, and so far im not seeing that being effectively accomplished.
I really don’t have a sophisticated grasp of both sides of the argument though, so i’m basically just trying to better understand the inflation argument and how these deflationary forces are supposed to be more than offset.
The Fed is buying back bad debt right now. That’s part of the magic of making your own money. They are in essence, “Brady-Billing” our own shit debt. They can do this as long as people have faith in our currency.
When that faith runs out, “apres moi, le deluge.”
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I think the Spam Protection test should be required of every politician for daily entry to the capitol building.
Deflation vs. Inflation and money: All money is bullshit. ALL money. Gold, dollar$, all of it. It is all based on one thing: The CONFIDENCE of a civilized and law-abiding society. If people don’t eat en-masse, then the only real currency will be food and automatic weapons. If the rule of law collapses, then money is meaningless, as the gun will be the claim to property. So the armageddon trade is pointless. Those gold bars won’t help Marty Schwartz if they are firing bullets down at the Wal marts.
Assuming there is no meltdown of society, it falls to law (or more specifically lawlessness). If the banks and companies can do whatever the hell they want without fear of prosecution, then f@ckery of everyone but them will continue regardless of monetary policy. Conversely, if everyone in the country stopped paying their mortgage, then what could they do about it?
And finally, assuming we don’t shoot and we throw the crooks in jail, it all comes down to confidence, with consumers, home buyers, investors, small businesses, lenders, etc. Print a google-jillion dollars, and if it’s all parked in the Fed as reserves from the banks, all the printing is meaningless. The global debt bubble is still real, and as long as it is unwound in a balanced way, it should pass over time. But a big unwind of a one sided debt can cause our Devildog economy and markets to run all over again, EVEN IF IT’S NOT REALLY THAT BAD. The panic fuels panic and fuels liquidation of weak hands. It’s all confidence, again.
Jake is right–the money is based on nothing. But all money is based on nothing. It’s all a big pile of behavioral finance, stupid human emotions, and the degree to which laws are enforced or not. Personally, I believe the lawlessness of the world to be a FAR greater danger than any amount of monetary printing, and the biggest risk out there. And it doesn’t look to be getting any better with time.
Lawlessness is precisely why they saved the economy rather than letting is crumble the first time. This time down, it will be much more orderly, in an attempt to stave off massive rioting and looting. I suspect the slowed down approach will work for a while…. until Obama gets a slug in his head….
Dude…great post.
Nice post Prospectus!
All money is based on nothing, true, but in an economy money is essential. Therefore, even in primitive, bang your club over Olg’s head systems, man will seek to use specie to make up for trading Mammoth skins for tusks of ivory.
They will need something portable and rare.
It ain’t gonna be Beanie Babies.
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Good post Jake
you saved me the trouble
Where is inflation? This ancient and thus by definition, naive, non gold standard MF amateur whimpers; it takes no Stanford MBA to know supermarket stats do not include changes in unit costs. For example, package volumes have changed – Tuna 6 1/2 or 6 oz. can is now 5 oz., a pound of fresh coffee was 16 oz. is now 10 oz., most production Ice Cream was 32 oz. is now 24-30 oz., Hellman’s mayo was 32 oz. is now 30 oz., standard big roll of Paper Towels was 55 sheets is now 45 sheets. Go figure for yourself. Ask the lady pushing the shopping cart. Data not statistically verified by government agencies and massaged at NYU and Wharton. Waiting for the beat down, assholes. Don’t tell me inflation is more than groceries. No shit Sherlock.
inflation will outlive us all
All true, But companies are pocketing the profits.
Matt Simmons: “Theres another leak, much bigger, 5 to 6 miles away.”
What happened to that story – debunked?
This guy is one of those doomsday prognosticators that got a bit of attention earlier on. He then decided he like the limelight and thus started spouting off ridiculous shit just to get more attention. Isn’t he one of the wack jobs promoting the use of a nuke on the well?
Consider this; flow takes the path of least resistance right? Which way do you think has less resistance; coming out a broken pipe or migrating through 18,000 feet of rock? I can see how more leaks would pop up near the existing site (think 10’s of meters); but to believe oil from the reservoir is going to work it’s way through 18,000 feet of formation and come out 5 miles away is baffling.
those are some fancy pants
Fuck BP…never buy their gas again…there u go..plain and very simple..dont ever buy BP gas again…bye bye..asswholes
Then I guess you won’t buy any gas. You realize oil goes through shared pipelines from the field into huge storage tanks. The oil used to make BP’s gas could just as easily come from an XOM or CVX reservoir. The reverse is true as well.
I will go out of the way to buy BP. I don’t want to see these people get laid off. Government workers are a different story. Cosmo Kramer knows what it is like to be laid off. I am still mad at H&H Bagel for letting me go.
Paper currency is backed by taxes, that enforces the fact that paper will be in demand by the populace becuase it is law that they pay their taxes in US$, as the US is the sole suppiler of the currency and taxes and paid in it, $ wil be in demand.
The govement as printed a lot of money of the last 2 years, it as not gotten into the system, as housholds repair balance sheets credit will not expand until they are repaired. Banks will lend to you today, but only to people who don’t need a loan, they will not lend to anyone else, therefore balnace sheets will continue to repair and reduce the money supply in turn.
If you could pay your taxes in gold, then gold would be more in demand as currency, but it’s demand is a store of wealth right now.
$ are backed by taxes.
What is gold backed by? does not make it fiat also?
Fly is correct there is no inflation to be seen and there as not been for 2 years, we just had inflation with $140 oil, dow 14000, etc etc, when it shows it it will be seen in the bond market 1st.
LOL. How many fiat currencies have outlasted gold in the last… 5,ooo years?
You betting on the dollar as that last outpost? “This time is different?”
Good luck, my best to you.
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pain is unavoidable.
http://bit.ly/atAn1M
printing paper will eventually pair the deleverage of the markets at a point , deflation will occurr along , in my opinion, till the thing has rolled out nicely .. but not for years .. months..
Gold is and always will be a quite safe store of wealthness , while mass currencies electronification will set masses ( people ) on personal-credit-status ( dollar or whatever the global currency will be .. ) , controlled and everything , by world authorities .. leverage will be permitted , in some way or another , only to instutional players , with new rules ..
If everything survive ( and has to survive as nations across the globe want to ) gold will hardly loose value as the global comunity go ahead printing and bubbling/debubbling a way or another .
They will find a way to assess better and convert debt into something other , the thing shift around .
There’s no revolution or utopia around the corner . Just slow re-solution
Thank you, to a friend from overseas. (This is a global problem, after all).
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Emergency Fed Meeting tomorrow? I got the word because Kramerica Industries was hired to bring them raincoats (The Executive-slightly used) as it is supposed to rain in D.C.
http://www.federalreserve.gov/boarddocs/meetings/2010/20100607/advancedexp.htm
Great! they won’t have the meeting before the market open. It is as though they want the gap down before they come and save the day. Am I reading this right?
At some point on Monday, we will see what people saw in Oct 08, 87 and 29. At some point we will see more than 3%. We may bounce. But at some point we will see the abyss. Question is – have you got your balls oiled?
What is with this thinking? I’ve seen this prognostication a million times this weekend.
Its not just thinking. Its strategizing and leveraging fear on Monday. You want details?…you can search me on twitter.
Why will we crash again? Didn’t that just happen in May? What am I missing?
Fly,
Can you give some guidance re Dumas’ FTK sells the last couple of days? Obviously this doesn’t, on the surface, seem to be the most bullish sign for FTK. Then again, given how semi-retarded he is, maybe it is.
Thoughts?
Dumas is great.
I highly recommend The Count of Monte Cristo.
Le Trois Mousqueteers!
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I bid $27 million.
Hey, assholes – Mr. President, fairly intoxicated as he is, would like to remind you of his prediction for tomorrow’s trading action: PAIN.
As an aside, I would like to offer this nugget of wisdom: Until you are banking coin like Le Fly, listen to his advice instead of offering yours to him.
it appears tomorrow will bring Armageddon.
“Well, there will be inflation. First, you have to have inflation before you can have hyperinflation. I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.”
Jimmah Rogers
Dr. Fly
Is tomorrow a dip buying day? Say, buy off the prior lows (1040ish) due to oversold conditions?
Or is it a day to trample women and children while securing a spot on a lifeboat?
i am a wee bit skeptical that support will hold again…but this descent has been pretty fast.
nevermind, tomorrow looks like bad mojo
you’re a fucking creampuff. get in there at 1015.
The Stanley Cup finals are so much better than the lame NBA finals.
JakeG…Thank you for that ubber sweet comment on the other blog…but showing real face maybe not such a good thing…ouch.
Never!
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Well with “the banned one” wishing for my untimely death, having haters know what you look like…not such a great thing sadly…. ((Jake))
wheres your folio go in>>>>>>>>
http://www.youtube.com/watch?v=KRdaI3AXljw&feature=related
Take a moment out, for grace.
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