Inflation vs. Deflation

Inflation vs Deflation

Are we facing inflation or deflation?

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JM Bullion

Podcast Summary

0:00-3:34 Introduction

Wait till Next Year For Job Growth

3:34-6:20 Discussion of the perennial false forecasts of the Fed that the economy will accelerate in the second half of each year. Job growth in today’s economy equals one person getting fired and getting two part time jobs. Discussion of the lack of GDP growth.

The Fed Apologists Get Aggressive

6:20 – 11:40 The Fed apologists are congratulating themselves claiming that the economy is fine and there is no inflation and there has been no crash. Seems like passengers sitting in a 747 where three of the engines have gone out, the plane is still aloft and has been for awhile since the announcement was made and the passengers are convinced and tell each other everything is fine! As long as the stock market is higher the Fed apologists gloat.

According to Ben Bernanke in 2009 QE was supposed to be a temporary program and it has turned into a six year one. The assets bought by the Fed were supposed to be sold, now we are told by Ms. Yellen they will be sold by the end of the decade (they won’t).

Even though QE is ending the Fed is going to roll over the existing bonds that they have and reinvest the interest, thereby creating an ongoing QE.

The Fed is also propping up the stock market not just by zero interest rate policy and QE but also by buying stocks too! Yellen and the Fed are supposedly in charge of the economy instead of the people in charge of the businesses that should drive the economy.

Negative CPI – A GIFT from the Bureau of Labor Statistics

11:40-13:19 the “surprise” negative CPI number provides the Fed with cover to say that there isn’t enough inflation so rates should stay low for a “considerable period of time”.

When (IF) we Raise Rates, The Fed Threatens

13:19- 15:20 The Fed added that while they would keep rates low for a considerable (indefinite) period of time, that WHEN they do raise rates they will do it quickly! The Fed knows no matter what they do they must keep rates low.

The Government doesn’t manufacture anything- they manufacture economic “reports”

Why Doesn’t the Fed Just Hand out Money to People Instead of to Banks?

15:20 – 17:30 The proposal that government hand out money is discussed. A scheme like this puts the elite in control and allows them to dictate how much money the people are going to get. Handing out money, like printing money with out any corresponding increase in production, is inflationary.

Review of the Fed Meeting and Minutes

17:30-19:37 The Fed will continue to keep interest rates low for a considerable period of time– which period of course can be extended.

Will the Fed reverse course and reinstitute another round of QE?

Inflation vs Deflation

19:37 -22:54 A recent debate between Harry Dent and James Rickards regarding inflation and deflation is discussed.

The Credibility of the Fed

22:54-27:15 The credibility of the Fed is discussed and how they retain it, to a point. The BRIC nations no longer trust the Fed and are moving to reduce their reliance on the U.S. Dollar. QE is being stopped to gain credibility. The Fed has stopped QE before and started it again and may do yet another round.

The Attack on the Fed Naysayers

27:15-33:00 Discussion of the Keynesian gloating that the Fed has been successful. Discussion of the definition of an economist- the study of how markets work, vs a Keynesian- how to interfere in the economy to produce a result. Surgery is not biology.

The Fed’s number one job is to keep rates low as the US government can’t afford higher rates as it has no fiscal responsibility. Neither Democrat nor Republican party offers meaningful deficit reduction plans.

Consumer spending is up due to sub prime credit extention on autos and credit cards

33:00-39:00 Lending institutions are willing to lend at double digit percentage rates for autos and consumer credit but mortgage lenders are less keen to do so at single digit interest rates.

Borrow money to go to college, use a credit card and take out an auto loan.

The Job Market & Entertainment

39:00 discussion of the state of the job market, foreign national visas, part time work and the minimum wage. Discussion of educational opportunities in the age of the Internet.

Discussion of the entitlement mentality- how do YOU expect me to live off this wage, vs how can I live off this wage.

Part time vs. full time real estate agents and the structure of the real estate brokerage industry are discussed.

Inflation vs. Deflation

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Further Reading

Janet Yellen and Negative Interest Rates

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