When SHTF

[68Camaro]

There will be a stable end state, eventually. The reason we "care" about Europe is that we are extremely unstable ourselves. The only reason we appear "stable" is because we have a central bank that answers to no one and prints money at will, which the Europeans cannot yet do, and because the USD is still the defacto reserve currency. It's a temporary stability. The reason we care is because - well, it depends on the person, but:

a) it will get ugly over there, and many of us know people there, or have family there
b) business here is tied to there, so businesses here will be damaged, which will lead to a depression in the US, with no clear exit strategy.
c) it will get ugly here. It will either last as a depression for years (best case), under a semi-police state (likely), or lead to civil war (possible), or a larger war (it has happened before, so why say it couldn't happen again)

[Sheikh_yer_Bu'Tay]

If we believe in Peak Oil (which is a fact, so we should), then we should consider a very long crisis, so how can we rule out a long and painful 10-20 years deflation?

Instead of me speculating with my answer, let me ask some leading questions for you to think through. Let's start with, what do you think will happen, and when, in our culture, during a prolonged period of flat to negative economic growth, increasing joblessness, rising prices, increased scarcity of good. This starting at a point where we have already been flat to down for more than a decade, where we are more in debt that we can produce as a society in many years, and with people already completely tapped out, nervous, scared. What's going to happen? What first, then what next? Then what after that?

I say look to Japan. All of that has already happened. Their debt to GDP is right around 200% and they have already liquidated the bad debts and re-capitalized their industries, have they not? There were no riots I am aware of. They had an orderly transition.

Look to Russia. What happened there was the opposite. When the USSR fell, all Soviet satellite countries suddenly were on their own. It was hell at first. Lots of chaos. Everything that could not support itself was liquidated. Now they are re-capitalized and lean and mean. Their bad debt is long gone.

In the end... it 's going to be default, liquidation and then re-capitalization. Better buy LOTS of ammo.

[68Camaro]

I say look to Japan. All of that has already happened. Their debt to GDP is right around 200% and they have already liquidated the bad debts and re-capitalized their industries, have they not? There were no riots I am aware of. They had an orderly transition.

Look to Russia. What happened there was the opposite. When the USSR fell, all Soviet satellite countries suddenly were on their own. It was hell at first. Lots of chaos. Everything that could not support itself was liquidated. Now they are re-capitalized and lean and mean. Their bad debt is long gone.

In the end... it 's going to be default, liquidation and then re-capitalization. Better buy LOTS of ammo.

Not sure of your point. Japan is Japan - it's not a Western culture, they behave differently, at least on the surface, for a time. We aren't Japan, clearly.

We aren't Eastern Europe/Russia either, but what went down there has ended up "better" (for many), eventually. But not for all. And it was VERY ugly for a long, long time. And continues to be ugly for some - parts of that area aren't yet done with their problems.

Off to bed, enough solving the problems of the world. Whatever happens is way above my pay grade. Interesting times, indeed...

[balz]

If we believe in Peak Oil (which is a fact, so we should), then we should consider a very long crisis, so how can we rule out a long and painful 10-20 years deflation?

Instead of me speculating with my answer, let me ask some leading questions for you to think through. Let's start with, what do you think will happen, and when, in our culture, during a prolonged period of flat to negative economic growth, increasing joblessness, rising prices, increased scarcity of good. This starting at a point where we have already been flat to down for more than a decade, where we are more in debt that we can produce as a society in many years, and with people already completely tapped out, nervous, scared. What's going to happen? What first, then what next? Then what after that?

I think this will be difficult to predict, and this is the whole point of this thread I believe. We are experiencing something that never happened before on this planet. Our whole economy - and we I talk as a human - is based on infinite growth but now with the end of cheap oil there will be no more growth. So then it's about how to deal with less and less...

Many believe every fiat money failed, but some fiat money, when it was controlled by elected representatives or NOT private institutions, were able to do better. Andrew Jackson (if my memory is good) had a good fight against the Second Bank of the United States 150 years ago.

The problem I see is that I don't know yet how it will turn out. Deflation (preserving the elite wealth but killing the economy, as the bankers tried to do in Jackson's time) or inflation (turning the tables and allowing the economy to recover).

[neilgin1]

and when you dont KNOW how this will turn out, thats why you turn to a store of wealth, that for millenia has maintained tradeability, silver

[balz]

and when you dont KNOW how this will turn out, thats why you turn to a store of wealth, that for millenia has maintained tradeability, silver

Yes, this is what I do! I'm stacking silver (well I was, as now my gf insists that we pay our debts now), but I'm always looking at the edge. And I'm curious about what may happen in the next crisis and if we could get deflation over inflation which might affect silver/gold prices.

[Nickelmeister]

Camaro and neilgin what you say makes sense. This is the difficult part for me. I see two scenarios.

First scenario: The States do not want to let public deficit take the economy down and they print as much money as they can to avoid that. We get hyperinflation and PM prices skyrocket. Gold is the best investment. Silver is good too.

Second scenario: The big debtors do not want their fiat money becoming useless as that's how they make their money so they do everything they can to put pressure to avoid any kind of inflation and they live happily with deflation as they have tons of cash. PM prices plummet and those who have cash can make a good deal but those who bought silver at 40/oz are in deep trouble. Bonds are the best investment.

I'd really like to know more about what will happen: HYPERINFLATION or DEFLATION?

Balz - read this: http://fofoa.blogspot.com/2011/04/defla ... ation.html

It is an essay written by the very respected FOFOA which, I believe, provides the definitive answer to your question.
Spend a lot of time on his blog. It is extremely complicated and deep, but you will learn something every time.

[Sheikh_yer_Bu'Tay]

I say look to Japan. All of that has already happened. Their debt to GDP is right around 200% and they have already liquidated the bad debts and re-capitalized their industries, have they not? There were no riots I am aware of. They had an orderly transition.

Look to Russia. What happened there was the opposite. When the USSR fell, all Soviet satellite countries suddenly were on their own. It was hell at first. Lots of chaos. Everything that could not support itself was liquidated. Now they are re-capitalized and lean and mean. Their bad debt is long gone.

In the end... it 's going to be default, liquidation and then re-capitalization. Better buy LOTS of ammo.

Not sure of your point. Japan is Japan - it's not a Western culture, they behave differently, at least on the surface, for a time. We aren't Japan, clearly.

We aren't Eastern Europe/Russia either, but what went down there has ended up "better" (for many), eventually. But not for all. And it was VERY ugly for a long, long time. And continues to be ugly for some - parts of that area aren't yet done with their problems.

Off to bed, enough solving the problems of the world. Whatever happens is way above my pay grade. Interesting times, indeed...

My point is all this has happened before and we have all gotten through it. Japan recapitalized it's bad debts and avoided social breakdown, lawlessness and riots. Japan has remained an export nation. They are self-supporting. Everyone else around the world has chosen different paths and the masses have suffered greatly for it. In the end, it didn't matter what path was chosen. Liquidation and re-capitalization was the final option.

I am tired of all the hand wringing and worrying about the inevitable. Why do we have to support the un-supportable? Greece is unwilling to support itself. It's system is non-sustainable without massive injections of other people's money and they are unwilling to make any worthwhile changes. Why does my future have to be ruined to prop these people up? Why? Why do I, via wealth confiscation, aka "tax dollars" have to prop up these losers? They are going to fall anyway.

Out in the woods, firefighters often have to set "backfires" to stop a bigger conflagration. They sacrifice a large area of trees to save the greater forest. Too simple of an analogy, I know, but this is for real. It is time to set the financial backfires to save the rest of us. It is time to liquidate what cannot support itself.

To make a small profit, I am already working 80 hrs per week. Once the full impact of the Obama, Reid, & Pelosi "New Deal" takes effect.... I don't know that I will be able to keep my doors open. What am I suppose to do? Work 100 hrs per week so some others get paid for 6 week vacations and free health care? They get retirement at 55 while I work until I drop?! What the Hell?! It's time to light a Greece fire and let it burn down.

[68Camaro]

Ah, you're complaining about the paths TPTB are following.

That seems like a separate topic from what I think was the original thread topic.

I agree that patchwork solutions aren't solutions and often lead to worse problems later.

And I agree it shakes out eventually. Question is, how long does it take, how deep and how broad is the pain.

[Sheikh_yer_Bu'Tay]

I am sorry to stray from the OP. I am very tired and cranky right now. My posting will drop off a lot from here on out. I gotta get really ready for the financial fire storm that's coming. F it! Burn it down.

[balz]

Camaro and neilgin what you say makes sense. This is the difficult part for me. I see two scenarios.

First scenario: The States do not want to let public deficit take the economy down and they print as much money as they can to avoid that. We get hyperinflation and PM prices skyrocket. Gold is the best investment. Silver is good too.

Second scenario: The big debtors do not want their fiat money becoming useless as that's how they make their money so they do everything they can to put pressure to avoid any kind of inflation and they live happily with deflation as they have tons of cash. PM prices plummet and those who have cash can make a good deal but those who bought silver at 40/oz are in deep trouble. Bonds are the best investment.

I'd really like to know more about what will happen: HYPERINFLATION or DEFLATION?

Balz - read this: http://fofoa.blogspot.com/2011/04/defla ... ation.html

It is an essay written by the very respected FOFOA which, I believe, provides the definitive answer to your question.
Spend a lot of time on his blog. It is extremely complicated and deep, but you will learn something every time.

Thanks for the link! I'll read it later today!

[SteelCityCopper]

Second scenario: The big debtors do not want their fiat money becoming useless as that's how they make their money so they do everything they can to put pressure to avoid any kind of inflation and they live happily with deflation as they have tons of cash. PM prices plummet and those who have cash can make a good deal but those who bought silver at 40/oz are in deep trouble. Bonds are the best investment.

If you are talking about paper purchases, I agree. Physical will be difficult (if not impossible) to find at low prices. Folks are so tied to the COMEX price for physical it's almost sickening. The value of physical should not be married to COMEX pricing now or in the future come massive inflation or deflation and it won't. If you hold physical regardless of whether you bought it at $40 or $4, consider yourself privileged to be ahead of the game and ahead of the massive sheeple stampede looming on the horizon. COMEX pricing will mean nothing when that happens... unless of course you are a trader (or flipper of physical) like some here

[68Camaro]

Balz - read this: http://fofoa.blogspot.com/2011/04/defla ... ation.html

It is an essay written by the very respected FOFOA which, I believe, provides the definitive answer to your question.
Spend a lot of time on his blog. It is extremely complicated and deep, but you will learn something every time.

Thanks for the link! I'll read it later today!

Ahhh, you gave him the answer to the test! I was trying to make him do his homework!

Seriously, if there is a most likely scenario, I believe it's the one laid out at link above.

[silverflake]

Steelcitycopper you nailed it. Just hold a handful of eagles in your hand then hold FRNs in your hand. Silver (and gold) strike a chord somewhere in our DNA that tells us that it truly is the real wealth. I am about ready to just dump my SLV and IAU in my IRA. They have done well over the years but they are tied to spot pricing and run by JP Morgan. Volatility in my face every day kills me too. Keep stacking and keep the faith.

[balz]

I've read the URL and I'm not sure I understand it. Very complex. But from what I understand I don't think the author understands the crisis that is to come. I agree with him that inflation is likely in a normal condition, but that crisis will not be anything but normal!

[68Camaro]

I've read the URL and I'm not sure I understand it. Very complex. But from what I understand I don't think the author understands the crisis that is to come. I agree with him that inflation is likely in a normal condition, but that crisis will not be anything but normal!

Read it again, and perhaps some of his other works. He understands...

He is wordy, maybe too much so, but he writes well. To cut to the chase - you wanted the answer to your question, it's hyperinflation, ultimately. (Not that - in my mind, there won't be a little deflation mixed in there, for a time.)

[Nickelmeister]

Balz - read this: http://fofoa.blogspot.com/2011/04/defla ... ation.html

It is an essay written by the very respected FOFOA which, I believe, provides the definitive answer to your question.
Spend a lot of time on his blog. It is extremely complicated and deep, but you will learn something every time.

Thanks for the link! I'll read it later today!

Ahhh, you gave him the answer to the test! I was trying to make him do his homework!

Seriously, if there is a most likely scenario, I believe it's the one laid out at link above.

I give him the cheat sheet and he doesn't even study it

[balz]

I've read the URL and I'm not sure I understand it. Very complex. But from what I understand I don't think the author understands the crisis that is to come. I agree with him that inflation is likely in a normal condition, but that crisis will not be anything but normal!

Read it again, and perhaps some of his other works. He understands...

He is wordy, maybe too much so, but he writes well. To cut to the chase - you wanted the answer to your question, it's hyperinflation, ultimately. (Not that - in my mind, there won't be a little deflation mixed in there, for a time.)

As an exemple, the dollar chart in the middle of the page, which shows that the dollar value shrinked to 1% of what it was worth... The only time the dollar got stronger was in the Depression. It leaves my questions unanswered: if one believe (and I do) that the coming collapse will be far worst than the Great Depression because of Peak Oil (just to name this one), then wouldn't it make sense for the dollar to go up?

[68Camaro]

A gold standard, by the way, does not prevent either deflation or inflation.

Early in the century we had a period of intense inflation (1916-1920), followed immediately by intense deflation (1921-22), before the Roaring 20s and some quasi-stability that lasted into 1930. The Great Depression was another, but much more significant, deflationary event. Demand went down, wages went down, prices followed. Value of a dollar went up.

The dollar was backed 100% by gold then, recall. They couldn't print more. It, and gold, went up and down together.

Now the dollar is backed by nothing. They need more, they print them. A trillion more? No problem. A trillion trillions? No problem. Just print them. What are they worth? Nothing more than the paper they are printed on. (Which is pretty good fancy paper, but not worthwhile for much else.)

[Mossy]

We might see a deflation, but it will be expressed in what people think of as "money". The dollar will not be that money.

The various PTB are tying all currencies together so none of them become the alternative money, so no deflation. Not expressed in currency, anyhow. We may end up seeing the use of coins outlawed, or no longer "legal tender", and the government repudiation of the dollar so all debts become payable in some other currency. That worries me.

[Nickelmeister]

We might see a deflation, but it will be expressed in what people think of as "money". The dollar will not be that money.

The various PTB are tying all currencies together so none of them become the alternative money, so no deflation. Not expressed in currency, anyhow. We may end up seeing the use of coins outlawed, or no longer "legal tender", and the government repudiation of the dollar so all debts become payable in some other currency. That worries me.

We are already seeing massive deflation - especially in real estate - when measured against true money (gold).

[texcollex]

Now the dollar is backed by nothing. They need more, they print them. A trillion more? No problem. A trillion trillions? No problem. Just print them. What are they worth? Nothing more than the paper they are printed on. (Which is pretty good fancy paper, but not worthwhile for much else.)

What, have you not priced toilet paper lately?

[68Camaro]

[balz]

A gold standard, by the way, does not prevent either deflation or inflation.

Early in the century we had a period of intense inflation (1916-1920), followed immediately by intense deflation (1921-22), before the Roaring 20s and some quasi-stability that lasted into 1930. The Great Depression was another, but much more significant, deflationary event. Demand went down, wages went down, prices followed. Value of a dollar went up.

The dollar was backed 100% by gold then, recall. They couldn't print more. It, and gold, went up and down together.

Now the dollar is backed by nothing. They need more, they print them. A trillion more? No problem. A trillion trillions? No problem. Just print them. What are they worth? Nothing more than the paper they are printed on. (Which is pretty good fancy paper, but not worthwhile for much else.)

BTW, I just LOVE that FOFOA blog! (What is FOFOA for, BTW?)

I understand what you say... and what he says. But what worries me if that what we will live will be completely different from any other crisis in the past. The periods of deflation didn't last long because the increasing population and cheap energy NEEDED that money.

With Peak Oil, we will experience a decline in human population, maybe one third to two third, depending if one is optimistic or pessimistic. That would be very different from anything that occured in the past.

Wouldn't that decline in population cause massive deflation?

[68Camaro]

BTW, I just LOVE that FOFOA blog! (What is FOFOA for, BTW?)

I understand what you say... and what he says. But what worries me if that what we will live will be completely different from any other crisis in the past. The periods of deflation didn't last long because the increasing population and cheap energy NEEDED that money.

With Peak Oil, we will experience a decline in human population, maybe one third to two third, depending if one is optimistic or pessimistic. That would be very different from anything that occured in the past.

Wouldn't that decline in population cause massive deflation?

Back in the late 90s thru around 2002, there were two secret bloggers, supposedly big bank insiders, whistleblowers, essentially, who were blogging about insider stuff and what really went on. They called themselves "Another" and "Friend of Another" (FOA). Then they just disappeared, stopped blogging, and to the best of my knowledge no one knows where they went. Then came Friend of "FOA", who picked up where they left off, and he calls himself that, FOFOA.

Dunno about you dude, but i"m not gonna live to see that happen, and PM s are timeless, will always have value, even if things inflate or deflate a bit.