Inflation or deflation?

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BearBones
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Inflation or deflation?

Post by BearBones » Sun Feb 14, 2016 8:21 am

technovelist wrote: If its price has been severely inflated, then this must be one of the cases of hidden inflation that everyone is always whispering about, since given the enormous increase in central bank balance sheets in the last 10 years or so, gold doesn't look severely inflated to me.
This is an argument for inflation, right? Price of gold may go up due to increased money supply. Curious what current opinions are as to where we are going from here. Although I have tended to be more concerned about inflation, MT and others have made strong arguments in past about upcoming sustained deflation, like Japan.

Does an "increase in central bank balance sheets" portend inflation? Or is this just money that is not destined go into circulation? Help me on this: is this MB vs M2, M3 or MZB?

I am beginning to wonder if sustained or severe deflation is not, in fact, a larger concern:
1. Aging of the population, not only in the US but even more in Japan, Europe, and China.
2. Satiety. The US and other countries have now had a sustained period of historically low interest rates. While credit has been inexpensive, many have bought/upgraded/refinanced their home and autos, and the demand may decrease going forward.
3. Sick economies. Especially southern Europe. Immigration will only exacerbate, as discussed elsewhere.
4. Fear. Not only do we have strong memories of 2001 and 2008, but fears of ISIS and other forms of extremism are on the rise.
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technovelist
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Re: Inflation or deflation?

Post by technovelist » Sun Feb 14, 2016 9:04 am

BearBones wrote:
technovelist wrote: If its price has been severely inflated, then this must be one of the cases of hidden inflation that everyone is always whispering about, since given the enormous increase in central bank balance sheets in the last 10 years or so, gold doesn't look severely inflated to me.
This is an argument for inflation, right? Price of gold may go up due to increased money supply. Curious what current opinions are as to where we are going from here. Although I have tended to be more concerned about inflation, MT and others have made strong arguments in past about upcoming sustained deflation, like Japan.

Does an "increase in central bank balance sheets" portend inflation? Or is this just money that is not destined go into circulation? Help me on this: is this MB vs M2, M3 or MZB?

I am beginning to wonder if sustained or severe deflation is not, in fact, a larger concern:
1. Aging of the population, not only in the US but even more in Japan, Europe, and China.
2. Satiety. The US and other countries have now had a sustained period of historically low interest rates. While credit has been inexpensive, many have bought/upgraded/refinanced their home and autos, and the demand may decrease going forward.
3. Sick economies. Especially southern Europe. Immigration will only exacerbate, as discussed elsewhere.
4. Fear. Not only do we have strong memories of 2001 and 2008, but fears of ISIS and other forms of extremism are on the rise.
Deflation is good. It wipes out unsustainable debts via losses including bankruptcy, and allows the economy to move toward a closer alignment with consumer demand.

However, of course big debtors don't like it. And who are the biggest debtors? Governments.
Another nod to the most beautiful equation: e + 1 = 0
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