Tuesday, May 8, 2012

Hyperinflation is just around the corner...central banks are printing money...it's coming...just wait...it's almost here...you'll see...

How many times have we heard these ridiculous inflationists tell us that all the "money printing" by central banks GUARANTEES that inflation is just around the corner?

In the past four years the world's five major central banks: Fed, ECB, BOJ, SNB, BOE have "printed" over $5 TRILLION. And guess what?? Commodities and gold are collapsing.

Here's the breakdown (all figures in trillions $)

Fed 2.2
ECB 2.2
boj 0.4
boe 0.26
snb 0.3

Total = $5.36 trillion.

Not to mention the record deficits everywhere--in the U.S. Europe, Japan, etc.

Still...no inflation.

But don't worry...it's coming!

What a bunch of dopes.


Anonymous said...

...and that treasury bonds are unsustainable bubble, accident waiting to happen
the Peter Schiff story goes like this: we are borrowing at teaser rates, once investors realise that US government is paying debt by printing, the interest rates are going up and hell is going to break loose. 'cause markets are not stupid and Austrians know

BS Police said...

gold down 25 bucks & u that a collapse? More endzone dancing by another dumb ass bear. Music to my ears!

Bob Roddis said...

I’ve never predicted imminent hyper inflation. We’ve still had significant price inflation in the midst of a collapse in real estate prices as a result of the Keynesian funny-money housing boom. Mike Norman and the other Normaniacs absolutely positively refuse to understand basic Austrian School concepts. The initial problem caused by fiat funny-money creation is the distortion of the price, investment and capital structure due to the impairment of economic calculation. General price inflation tends to come later although it might not come at all, especially if prices in general should have been falling in order to approach reality based prices in the midst of additional fiat funny-money creation. Presently, we still face the possibility of a collapse in stock prices and a further real estate collapse even in the face of additional funny-money creation because funny-money prices do not reflect reality.

As John Carney wrote:

MMTers do not seem to fully appreciate the problems of ignorance and calculation that inform Austrian economics. They seem to recoil at even thinking about them because of the implications for the limits of political action.


Anonymous said...

Hey Bob, here is a prediction for you:

I predict one day the Sun won't rise on the east. True story man.

Do you see what I did there? Pretty much the same like "austrian rabbles' and useless advice: "wait for it, is coming!". Even if is true, timing it's everything, you don't understand nothing about uncertainty, risk and markets!

BTW, we still are waiting for UK hyperinflation Mises predicted when UK abandoned the useless gold standard and followed Keynes to prosperity path. We are still waiting for it, when it's going to happen Bob? Soon? When I'm dead?


mike norman said...

Anon: Exactly. Useless advice.

miller B said...

so the uber accurate, scientifically proven Austrian school predicts funny money printing always leads to hyper inflation unless it doesn't, then well call it price distortion . And if you don't appreciate the genius in this you're ignorant.

I guess I'll start paying triple for everything so prices reflect the Austrian reality (trying to help you out here).

sounds more like a cult. " my predictions always come true unless reality gets distorted".

Calgacus said...

treasury bonds are unsustainable bubble

Yup. One Dollar bills selling for One Dollar are an unsustainable bubble.

I'll take anybody's dollar bills off their hands for only 99 cents. After all, who knows when they'll suddenly become worthless! Act now, this is a limited time offer before the GREAT HYPERINFLATION!!!!

Bob:The initial problem caused by fiat funny-money creation is the distortion of the price, investment and capital structure due to the impairment of economic calculation. What "distortion", what price, investment and capital structure? There is no market, no money, no price, no capital structure etc before the fiat funny money creation. Money is fiat money & always was. Every unit of money everywhere was fiat money created by someone printing it.

Governments have wisely stopped playing the greater fool game of running a government gold shoppe, inflating the gold bubble by trading their intrinsically valuable fiat money for worthless gold. All the benefits & more of the gold standard are gotten by creating a labor standard, a JG, which exchanges fiat money for something valuable, the thing which has always backed all money, human labor.

Of course MMTers are against fiat money creation for the hell of it. But because saving causes deflation, depression and unemployment, and to non-inflationarily do the many things the evil gubmint does better than the "private" sector, money creation is necessary.

MMTers do not seem to fully appreciate the problems of ignorance and calculation that inform Austrian economics. They seem to recoil at even thinking about them because of the implications for the limits of political action. No, we understand them much better than the Austrians do. They're embedded into the theory. Money is demanded solely occurs because of ignorance, uncertainty, lack of crystal balls. If people had the foresight that the idiot rational expectorators say, then as Keynes said, "why would anyone want the stuff?"

MMTers (avant le lettre) have been productively interacting with Austrians since Marx & MacLeod each debated Bohm-Bawerk. But the MMTers have been reaping all the benefits, incorporating insights, using Austrians as foils for thought. The Austrians at least are not "Not even wrong". But the Austrians pretty much forget nothing, but learn nothing. When they do, they become MMTers. :-)

Bob Roddis said...

The “US Inflation Calculator” says that if something cost $1 in 1971, it cost $4.98 in 2006 and $5.66 in 2012.

The “Annual rate of inflation change” was 397.8% in 2006 and 466.4% in 2012.

Those results are derived from very conservative assumptions. All of that occurred against a general collapse in real estate prices.


Anonymous said...

There wasn't a price hike by a factor of 1.17 between 2006 and 2012 (this would mean that for example, a car which costed 30000 USD in 2006, in 2012 costs 35100). Prices index haven't increased since 2007, WITHOUT accounting real estate deflation.

Even money aggregates haven't increased really that much (even if you add government 'debt' and FED balance sheet expansion).

Please, don't let facts get between you and ideology!

Bob Roddis said...

How is a government table of recorded statistical price hikes "ideology"? I presumed you already understood their methodology.

Why should/would price hikes be uniform in any event? Who said they should be?

Gas is up, computers and houses are down. What's the point? Pursuant to the government's methodology, we've had "inflation" and Mr. Norman said we haven't.

Tom Hickey said...

My definition of "inflation" is when wage haven't keep pace with prices over a period, so that the real wage is falling with respect to the general price level and the majority is paying more and getting less goods, savings and equity are are declining at the middle, and private debt increasing at the middle and bottom. This takes place when a disproportionate share is distributed to the ownership and financial class. This happens regardless of the monetary system.

Anonymous said...

Bob, there were economic crashes and crises throughout the metal-backed money period. The world largely turned its back on the gold standard following the great depression.

The property boom and 2008 crisis was mainly the result of out-of-control money creation by banks/ the financial sector.

A system with a smaller, much more limited banking sector, more money issued directly by government and more balanced global trade, would be more sustainable, less prone to crashes, and would deliver better economic and social outcomes.

If metal-backed money had worked spectacularly well in the past compared to "funny" fiat money, then there might be a good reason for going back to it. But it didn't.

Global economic growth and improvement in living standards since 1945 has been unprecedented in the history of mankind (despite your unfounded assertion that proper "economic calculation" is impossible with "funny" fiat money).

The crashes, depressions and abysmal lower class living standards of the metal-backed money period, on the other hand, all occurred despite your assertion that only metal-backed money makes proper "economic calculation" possible.

The way forward is to reduce the distortionary power of the financial sector and to establish more balanced global trade, not to go back to a metal-backed monetary system that never really worked in the first place.

But if you want to hold your wealth predominantly in gold or silver, then go ahead - no one's stopping you.

Leverage said...

I look at this Bob and it blows my mind: GDP vs. CPI

Indeed capitalists have been hoarding so much wealth, the same people you defend above everything! Because the explosion in wealth has been outstanding. Humanity NEVER have been richer per capita, only that a few people are hoarding all the gains on this outstanding increase in productivity that literally blows your mind. Take in mind that during this period humanity population has gone from roughly 2 bill to 7 bill.

It's fucking amazing, it blows my mind!

We don't need more growth or inflation or whatever in reality, we have already more than we will ever need and can reasonably spend in a lifetime. A single car factory can produce more cars that it can serve in a single year.

We need sharing productivity and reducing consumption and everybody will be fine and very happy. In less than a century no one will have to do manual work involuntary and machines will provide everything.

Why the fatalism? Only money shenanigans and gold standard mentality is stopping us from creating paradise on earth, now that population is decreasing resource worries should be gone and the universe (or God if you are a believer) has provided us with practically unlimited wealth (energy). The Sun in a single day provides several orders of magnitude more energy than humanity has ever consumed.

Why all the fatalism!? There is plenty of wealth to take over. Calvinism was an evil and its inheritance it's still being destructive.

All this 'lust' and obsession with non-issues, plus psychopaths (10% in finance, and probably politics, and 40% by contagion of toxic environment) exploiting it, with brain short circuits wrecking havoc, etc. Just when there is literally unlimited wealth at our hands with the right balance.

Tom Hickey said...

Leverage"I look at this Bob and it blows my mind: GDP vs. CPI"

And look where the break out occurs. Post 1971.

As you say, Leverage, the issue is distribution. It's only "inflation" to the degree that the real wage hasn't kept pace with growth so that the bulk of productivity increase has been profit share rather than wage share.

Clonal said...


You are incorrect in your observation - I have modified the above graph put it on a log scale, and shortened the observation periods CPI and GDP

The change occurs about 1981 - starting the Carter administration, when the first set of banking deregulations took place. Aug 15 1971 had no impact (and I would not expect it to have - The US was already de facto a fiat economy before this - Nixon closing the gold window just formalized it) - However, the deregulation and the accompanying explosion in deficit spending begining in the Carter years is what you are seeing.

All would have been fine, had Reagan eased the taxes on the bottom 90% instead of easing the taxes on the top 10%. The result would likely have been much more income and wealth equality than we currently have, and much more equal distribution of the fruits of the increases in productivity that everybody talks about.

y said...

GDP passes over CPI at exactly the same time the US current account starts to go heavily into deficit - i.e. inflation is being 'exported'.

However, the GDP from this point on are going increasingly to the wealthiest in society. So perhaps the effect of inflation remains the same for those on low wages, given that their wages start to stagnate as a result of the CAD?


Tom Hickey said...

OK, wrong about the graph, but it still seems to be what actually happened regarding real wage and share distribution.