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Tag Archives: deflation

  • Blog

    The End Of Money

    Prepare for the coming wealth transfer
    by Chris Martenson

    Friday, November 1, 2019, 11:03 PM

    19

    Today we live in a bifurcated economy: it is boom times for some and bust times for others.

    Your personal situation depends largely on how close you fall on the socioeconomic spectrum to the protected elite class, towards which the central banks are directing their money-printing firehoses.

    Why should we care about this bifurcation? History.

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  • Insider

    Off The Cuff: When Does The System Break?

    Where's the line where inflation will become hyperinflation?
    by Adam Taggart

    Wednesday, February 20, 2019, 10:13 AM

    19

    In this week's Off The Cuff podcast, Chris and John Rubino discuss:

    • When Does The System Break?
      • When will (hyper)inflation become the greater risk?
    • When Will The Central Banks Lose Control?
      • Their intervention is becoming increasingly desperate
    • Recession & Debt Exhaustion
      • These are limits that can't be 'printed away' forever
    • The Rise Of Authoritarianism
      • More countries are giving the State more power

    One of the most frequent questions we're asked here at Peak Prosperity is: When does all this blow up? When do the sins of the past — rampant debt/deificit spending, monetary meddling, cronyism, lies & propaganda, resource despoilage — catch up with us and force a day of reckoning?

    Well, in this week's podcast, Chris and John Rubino bravely attempt to answer. Their conclusions aren't pretty; it's better we be forewarned of the risks than slam into them blindly.

    Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content.

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  • Blog

    A Survival Guide For 2019

    How to safely navigate the 'Year Of Instability'
    by Adam Taggart

    Friday, February 1, 2019, 3:24 PM

    40

    With the bursting of the Everything Bubble, we declared last year as the 'Year Everything Changed'. This will be the 'Year of Instability', possibly preceding an upcoming 'Year Of Woe' in 2020.

    But look, we're not saying the world is the process of ending imminently. It's just that we've entered the part of the timeline when things are going to start to get really rocky.

    And we think it's much more useful to think of 2019 as the 'Year Resilience Matters'. It shifts the focus away from fear and instead towards the many things you can do to protect yourself and those you care about – and even to position yourself to prosper through the coming challenges.

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  • Daily Digest
    Image by tolomea, Flickr Creative Commons

    Daily Digest 1/2 – The Science Of Loneliness, Stop Reading What Facebook Tells You To Read

    by DailyDigest

    Tuesday, January 2, 2018, 5:56 PM

    11
    • The Science Of Loneliness
    • The dark side of your $5 Footlong: Business owners say it could bite them
    • These Will Be the Big Stories of 2018
    • Stop reading what Facebook tells you to read
    • Too much screening has misled us about real cancer risk factors, experts say
    • Why American doctors keep doing expensive procedures that don’t work
    • It's Time For Innovators To Take Responsibility For Their Creations
    • Americans Will Eat a Record Amount of Meat in 2018

    Read More »

  • Insider
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    Prepare For The Great Global Contraction

    How hard will we hit the ground?
    by charleshughsmith

    Saturday, May 20, 2017, 12:01 AM

    3

    Executive Summary

    • The repercussions of the Fed's Free Money Machine
    • Why debt-funded state control stagnates productivity
    • The importance of the 8-year cycle
    • What should guide investors' focus and decisions

    If you have not yet read Part 1: How Long Can The Great Global Reflation Continue? available free to all readers, please click here to read it first.

    In Part 1, we asked these questions: can we just keep doubling and tripling the economy’s debt load every few years? What if household incomes continue declining? Are these trends sustainable?

    In the near-term, we asked: is this Great Reflation running out of steam, or is it poised for yet another leg higher? Which is more likely?

    Let’s start by looking at the mechanism that funds the government’s deficit spending, i.e. its ability to borrow and spend enormous sums of money year after year.

    The Free Money Machine

    The state can afford to continue or increase fiscal stimulus (deficit spending) because the central bank (the Federal Reserve) has created what amounts to a free money machine. Here’s how the machine works.

    The federal government issues $1 trillion in new bonds to fund another $1 trillion in deficit spending. The central bank (Federal Reserve) creates $1 trillion with a few keystrokes, and buys the $1 trillion in bonds with newly created money.

    The Federal Reserve earns interest on the $1 trillion in bonds it now owns, but it returns this income to the Treasury, minus the Federal Reserve’s relatively modest expenses of operation. Let’s say the bonds carry an interest rate of 2.5%.  The government pays the Federal Reserve $25 billion in annual interest, and the Federal Reserve returns $20 billion annually, so the net cost of borrowing and spending $1 trillion is an insignificant $5 billion.

    If this isn’t entirely free money, it’s extremely close to free money.

    So in ten years, the Federal Reserve owns $10 trillion more in federal bonds (assuming the bonds are long-term and didn’t mature).

    It's no wonder that some economist propose…

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  • Insider
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    The Ka-POOM! Survival Guide

    How to end up on the winning side of the Wealth Transfer
    by Chris Martenson

    Saturday, March 11, 2017, 5:02 AM

    22

    Executive Summary

    • Understanding the details of the Ka-POOM! theory
    • The end game: hyperinflation
    • Transitioning to tangible (vs paper) assets
    • The critical importance of timing as things switch from deflation to runaway inflation

    If you have not yet read Part 1: When This All Blows Up,  available free to all readers, please click here to read it first.

    Ka-POOM!

    Now it’s time to revisit the Ka-POOM theory which posits that bubbles will be blown, then they will deflate (or threaten to, more precisely), and that will then be met with more money printing.  Our view is that this cycle will continue until the entire system is utterly ruined, the underlying currencies destroyed.

    What the 2008 financial crisis made clear is that when natural market forces work to purge the oversupply of poor-quality debt from the system. The bad mortgages (think subprime), the bad sovereign debts (think Greece), and the loan portfolios of over-extended financial institutions (think Citibank) represented ‘poor quality debt.’  When the market (finally) figured out that those debts would never be repaid at face value, or perhaps at all, turmoil erupted.

    During times like these a vicious sequence begins: the market demands higher interest rates for the increased risks it sees. This makes debts harder to service, ultimately triggering defaults, which only compounds the difficulties as interest costs and defaults spiral ever upwards until the system is purged.  Think of it as nature’s way of removing bad credit from the world, the way a lion chases the lamest antelope first.

    Because in our fiat currency system ‘all money is loaned into existence’ (see chapters 7 and 8 of The Crash Course on-line video series), during periods of high debt default, the money supply shrinks. Money is created when a loan is made and, conversely, money disappears when a debt defaults (or is paid back). This is the textbook definition of deflation—a common symptom of which is falling prices the cause of which is that there’s just less money (and/or credit) available to chase goods and services.

    As a reminder, money is a claim on real wealth and debt is a claim on future money.  All that happens when we borrow more and more is that we push our problems of paying for what we want out into the future.  Which means that…

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  • Blog
    Shutterstock

    When This All Blows Up…

    Understanding the how & when of the next economic crash
    by Chris Martenson

    Saturday, March 11, 2017, 5:01 AM

    23

    This report marks the end of a series of three big trains of thought. The first explained how we’re living through the Mother Of All Financial Bubbles. The next detailed the Great Wealth Transfer that is now underway, siphoning our wealth into the pockets of an elite few.

    This concluding report predicts how these deleterious and unsustainable trends will inevitably ‘resolve’ (which is a pleasant way of saying ‘blow up’.)

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  • Blog
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    2016 Year In Review

    A Clockwork Orange
    by David Collum

    Friday, December 23, 2016, 1:03 AM

    20

    Every year, friend-of-the-site David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. As with past years, he has graciously selected PeakProsperity.com as the site where it will be published in full. It's quite longer than our usual posts, but worth the time to read in full.

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  • Insider

    Off The Cuff: Repercussions Of Rising Rates

    Rising interest rates are the big story right now
    by Adam Taggart

    Friday, December 2, 2016, 1:54 AM

    19

    In this week's Off The Cuff podcast, Chris and Mish Shedlock discuss:

    • A Bottom For Miners?
      • Mish thinks this may be a good purchasing window
    • Hit To Housing
      • Rising interest rates are kryptonite to home prices
    • Vanishing Jobs
      • Trump can't replace the jobs lost to automation
    • The Year Of The Iconoclast
      • Anti-establishment platforms gather steam around the world

    After years and years of declining/0% interest rates, the trend may be reversing. Market interest rates have risen faster over the past month than in decades.

    Chris and Mish see this as having implications that will ripple through all asset classes. As Mish warns:

    I’m watching interest rates just rise and rise. And the thing here is everyone’s betting on this massive inflationary scenario under Trump. I’m not sure I get it. Now, long term, we can all look at this and say, “Yeah, he’s going to take less money in in taxes, he’s going to waste more on infrastructure, he wants to increase military spending.” Of those, the only one I agree with is lowering taxes but the analysis is negative, negative, negative from Congressional CBO and all the people who figure this stuff out.

    So we’ve got this surge in interest rates and money pouring into the dollar. The dollar’s going higher. I look at all of this and I think, “Hmm, a surge in interest rates. Ah, it’s likely to affect an ugly market.” The rising US dollar impacts exports in a negative fashion. The stock market is incredibly overvalued. And we know what generally happens when interest rates rise: I’m looking at a potential deflationary bust. Especially when we factor in Trump’s trade policies that might very well cause a global trade war.

    Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today.

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  • Blog
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    Hell To Pay

    The final condition for a market crash is falling into place
    by Chris Martenson

    Friday, September 23, 2016, 9:23 PM

    37

    Those familiar with my writing know I put the word “markets” in quotes because we no longer have a financial system where legitimate price discovery is a regular — or even recognizable — feature.

    It's destined to fail. What more can be said about such a flawed system?

    Well, a lot as it turns out. 

    And failure to pay attention at this stage of economic and ecological history will prove to be exceptionally painful.

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