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The Single Most Reliable IndicatorIn this video excerpt, Elliott Wave Financial Forecast Editor Steve Hochberg explains one of the most important things to keep in mind when assessing a market, "Extreme opinions, shared widely, constitute the single most reliable indicator of an impending change of direction for a market." Enjoy your video excerpt. To find out more about the Wave Principle, be sure to watch the Club EWI video series: Learn the Why, What and How of Elliott Wave Analysis. This 3-video series is a great way to get started with the Wave Principle. You can watch these videos free with a Club EWI Membership.
Watch the Club EWI video series: Learn the Why, What and How of Elliott Wave Analysis. This 3-video series is a great way to get started with the Wave Principle. You can get these videos free with a Club EWI Membership. WORLD INFLATION MAP - UPDATED FOR 2009
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INFLATION DEFLATIONYour Inflation vs Deflation Debate in the Greater Depression By Delwyn Lounsbury - THE DEFLATION GURU Most people are in denial over the inflation deflation debate. Which will you have in the Greater Depression more inflation or a deep dangerous deflation? Most think government will bring inflation roaring back with Keynesian government stimulus like QE1 and QE2 (Quantitative Easing - Government stimulus - the Fed buys new government bonds and credits the government's account - printing money without putting ink to paper). Inflation is all you have known in your lives. Thus, you are not prepared for the inflation vs deflation change-wave and GREATER DEPRESSION. There is just too much government. Socialism is sucking the lifeblood out of business. Game over! The economy can't take anymore growth in government. Besides, the financial power elite rich banking families that we all owe money don't want their money to lose any more value. Our grandparents know what I am talking about. They lived through the depression. They knew borrowing and credit can get you into big trouble. In 1929 household debt as a percentage of GDP was close to 100%. It approached that level again in 2008. Now, as frightened people and smart businesses try to de-leverage their debt the level has dropped to 92%. The problem is government continues on a debt-fueled stimulus binge. President Obama, Benjamin Bernanke and Timothy Geithner don't understand that the cause of the crisis is too much government robbing the private sector of its creative juices. Their solution to the inflation deflation problem is trillion dollar spending programs, unconstitutional ObamaCare (rationind, euthanasia TAX) and wealth redistribution class warfare through higher taxes on the rich. This has been the biggest worldwide credit inflation of all time. We have only known incremental inflation robbing retired responsible savers and making speculators in the inflation and deflation wealth transfer the winners. Not any more. The Austrian School of economics says all credit inflation deflation crisis end in a deflationary bust. This one will be called the GREATER DEPRESSION. Think of the inflation deflation economy as a methamphetamine addict. The longer one takes meth and the more meth (inflation) taken, the sicker things get (hair and teeth fall out - sores develop all over their face). If they stop taking the withdrawal is brutal and painful. But they live. If they don't stop shooting up - they die. So it is with the economy once it starts out on the inflation road. It is going to end badly either way. The only cure for inflation is a deflation. The worst kind of inflation is the credit inflation we have had, as apposed to pure paper money or fiat money inflation. The cold turkey the world will have to experience to get the monkey of ponzi money off our back will be monstrous and brutal. The 1930's depression times three! Here goes. This has to do with the long wave cycle of inflation deflation. I'm going to ask you a question. What year (approximate) was the peak of our standard of living and why? I ask this all the time and never get the right answer. It was 1966 - 1967. Why? It only took one wage earner to afford and support a household then. Mom didn't have to work like. Children got attention, care and family values. Not like today. Things have degenerated. Morals and ethics have gone by the wayside. Crime and gangs are on the increase. The husband and wife are too busy to spend time with the children.
..... Society is imploding. Disinflation is now mutating into deflation which will mutate into the GREATER DEPRESSION. The price effects of deflation are simple to see than inflations effects. Deflation will cause outright across the board declines in both goods and investment asset prices. This decline will happen in a few years time rather than the 80 years it took inflation to reach the unsustainable pinnacle we hit in 2000. It will be brutal. Get prepared for the next phase of the inflation deflation climax! Cash will be king. The whole problem with inflation deflation cycles is they are leading us into the GREATER DEPRESSION which will probably bottom in 2016 and last until 2020 and wipe out many people and businesses. Credit inflation deflation cycles always end badly. Think CRASH. The unwinding of a credit inflation binge is the worst because of all the foreclosures, car repossessions and bankruptcies. Credit inflation is much more dangerous than currency inflation. It is a mania right up there with tulip bulbs. A balloon going to pop! The only cure for inflation deflation is a crash. No refuting this one. The question is when. NOW! We are 10 years into the GREATER DEPRESSION. The peak was year 2000 when we had the dot com top & bubble bust. The NASDQ stock market has not even gained back 50% of its loss since 2000. Look at a 10 year chart of QQQ the NASDQ stock exchange index if you don't believe me. Inflation is also a form of government bankruptcy. Modern day governments borrow and create money on top of the tax revenue they bring in. They purposely spend more than they bring in with the intent to pay it back with dollars worth less down the road. Also called financial repression it is outright fraud and they know it. This is the big cheat and lie going on. You are being duped as the governments technically go bankrupt. For years my real estate business card had this printed right on it - INFLATION SURVIVAL COUNSELING. Now it's going to be DEFLATION SURVIVAL COUNSELING. Only those who had money to invest in investments that win in the inflation deflation wealth transfer like real estate and stocks made out. The government was purposely screwing those that saved for retirement and the elderly on fixed incomes. They knew the money would be worth less each and every year. They planned on it. It is called financial repression. See my article on it… Inflation can be disguised because it usually is a slow process. It can change from price increases in goods and commodities over to increases in value of investment assets thereby confusing even the experts. Keep in mind that the general price changes are effects of the cause - which is increased volume of money and increased amounts of credit. The old saying was - "Only government can take a usefully commodity like paper - put ink on it - and make it worthless." Our bedfellow for the past 100 years, insidious infectious inflation, has its roots in both increased money creation & credit creation. All that funny money is chasing limited goods and services. That is inflation deflation. Not rising or falling prices people. Get it straight. Rising prices are just the symptom. Also while I'm thinking about it, its war on terrorists not war on terrorism. You can't have a war on an idea. 95% of all U.S. paper money is in other countries. There is a heavily traded derivative market called euro dollars futures and options. Euro dollars are short term debt instruments (90 days) on the futures and options exchanges. No. Not the Euro – it is based on dollars in Europe. This market trades billions worth of contracts each day of the week. You see, people and businesses holding dollars are hedging interest rate risk with these derivatives. The price is sky high right now. But, when (not if) interest rates go back up these instruments will crater. You can expect 15 to 20 percent interest rates on 90 day safe government T bills and euro dollars in the future as things become crazy and the world gets wound up around the axle of deflation. People will be borrowing at any rate just to stay afloat. Today short term interest rates are almost zero that is why euro dollars are trading near the record highs. With inflation deflation struggles low interest rates actually mean there is little demand for money. It is a symptom of a weak economy. Low interest rates on T Bills, Bonds and real estate are the canary in the coal mine. Proof the economy is deflating. The almost zero interest rate on T bill rate also means there are no arrows left in the Fed's quiver to goose the economy. Game over! Money is on sale and no one wants it. M-3 Total money supply is dropping - See Graph. America has exported heaps of inflation to other countries with all the dollars we created. We lived high-on-the-hog. When oil, gold and most commodities are purchased they are priced in dollars. The dollar is the reserve currency of the world for this reason and due to the fact we had the largest and safest capital markets. Remarkably, the dollar will probably strengthen in the world markets in the coming troubling times. Safety first! So, we bought raw resources (real things) with chits of paper and later computer entries zapping through fiber optic undersea cables at light speed that were loosing value. We got to drive the big gas guzzler cars. We got to eat the steak, live the high life and aspire to the Hollywood lifestyle at the expense of the rest of the world. No wonder the other countries hate us. They are jealous. This is all ending. China is the next empire. Write it down. You can plan on a 90% drop in prices of real estate, stocks, corporate and municipal bonds, commodities (yes gold maybe in half and silver especially since it is an industrial metal) and antiques/art/collectable items. This will be a nightmare. I expect "Antiques Roadshow" to go off the air. You can't eat that old stuff. Anyway, inflation is a wealth transfer from creditors to borrowers. Governments, borrowers and investors in the right assets are winners in the game. Everyone was paying back debt or rolling it forward in bigger and bigger bailouts in inflated money on a worldwide basis - not just in the U.S. We were using our houses equity like an ATM machine. Those on fixed incomes and the retired are the ones that were hurt most. Banks have just about quit lending. People have slowed down their buying, going out to restaurants or traveling. 106 motels and hotels are in foreclosure in the San Francisco Bay Area the papers reported recently. We just had a worldwide bank lock up. The banks were not even lending to each other let alone borrowers. Deflation is slapping inflation around when it comes to the inflation deflation debate. To my way of looking at it, this same kind of bank lockup was the cause of the 1930's depression. Banksters & lenders saw that the money they had lent out during the Roaring 20's would be worthless in 10 years time at a 10% inflation rate per year. So, they all started clamping down out of fear. They called in loans coming due and would not lend out new money. Everything went bust. And that was a time when gold coin money still circulated. Also, government wasn't 1/3 of the economy sucking tax money at a 50% plus rate from private job growing businesses along with you and me like a big parasite. WORLDWIDE DEFLATION is upon us. CASH WILL BE KING. It's going to be called the GREATER DEPRESSION because this one will be three times as long and three times bigger than the 1930's depression. You need to prepare now! This is serious! In the inflation deflation struggle, deflation is winning. Just look at real estate. Just look at the money supply graph below. It's dropping like a rock. The inflation deflation problem will mean asset prices will be down 90% from peak by 2016 and even gold may drop in half. Unemployment levels may hit 35%. The inflation deflation economic cycle probably peaked with the 2000 dot com stock mania bubble climax peak. The deflation phase may not bottom until 2016 to 2018. At that time most of your assets may have lost 90% in price and unemployment could be 30%. Even the price of gold may drop in half. CASH IS KING in deflation. Japan has seen deflation for 20 years and now the rest of the world is catching the epidemic. You cannot stop the pendulum from swinging. Major economic turmoil will continue until the inflation deflation debate ends in wringing inflation out of the system in this Greater Depression. Copyright 2010 by Delwyn Lounsbury - THE DEFLATION GURU Use of this article allowed with attribution back to: http://www.deflationeconomy.com
INFLATION DEFLATIONThe Inflation Deflation Debate continued Inflation Deflation? Which is the Consensual Opinion? Weekly Chart Update – Google - These charts are intended to help the contrarian investor gauge the prevailing opinion in the inflation deflation debate. The latest data points show that inflation worries are rising in excess of deflation fears. The following charts show how searches for ‘inflation’ are competing with searches for ‘deflation’. The idea is that when ‘inflation’ searches are growing in excess of ‘deflation’ searches, inflation fears dominate. Conversely, when ‘deflation’ searches are growing in excess of ‘inflation’ searches, deflation fears dominate. The contrarian investment strategy would be to oppose either conviction at its extreme; that is, the contrarian should insure against deflation in an environment of hysteric inflation fears, and conversely insure against inflation in an environment of manic deflation worries. The first chart uses plain search volume indices from Google insights, whereas the second chart uses the relative out-performance of those indices (compared to searches about ‘finance & investing’). I invert the ‘deflation’ parts (red) to show how the two search items are competing with each other. When the blue parts are high, people are searching for ‘inflation’. When the red parts are very negative, people are searching for ‘deflation’. The black line is the aggregate of these two. When it is rising, inflation fears dominate, and when it is falling, deflation fears dominate. The charts indicate that inflation fears are reaching extreme levels – indeed, the indicators are at their highest points since 2008. The contrarian investor might begin to find some bargains in insuring against deflation from here. Source: www.greshams-law.com Inflation/Deflation-google search chart Money Supply Charts - Government Puts Pedal To The Metal - It Won't Work This Time
Back in the 1970's I wrote a newsletter called THE ECONOMIC SURVIVAL LETTER. In it the U.S. ECONOMIC CYLE timeline was related to the presidential election cycle every four years as the party in office sought to get a mini boom going to get reelected. There were other longer cycles also but they all followed the pattern that follows: 1. Monetary ease 2. Boom-short lived 3. Price inflation 4. Monetary restraint 5. High interest rates 6. Tight money 7. Business slowdown 8. Stock deflation 9. Rising unemployment 10. Cries for monetary stimulus - repeat cycle Then I said: CONTINUED CYCLES LEAD TO RUNAWAY INFLATION AND THEN A DEPRESSION! How to invest in silver, gold, foreign currencies, treasury bills, real estate, commodities, art, antiques, tax havens, home businesses, food, firearms, home security and much, much more timely information. ..... Now, here in 2010, I expect gold to drop in half and the U.S dollar to stay stong for a few years and then drop like crazy as the government tries to reflate. Treasury bills and the last five above are good. Anyway, I shut the newsletter down when Paul Volker took over at the Fed. I realized he was going to slow the inflation down. My last issues in 1978 were about investing in real estate and how to invest to reduce taxes. As a postscript, I am here to say we have had our runaway inflation. As a real estate agent in California since 1968, I have seen it first hand. Next is deflation leading to the Greater Depression. The world will experience the pain of the cure. Real estate and most other assets prices will drop 90% from peak and bottom in years 2016 to 2018. CASH IS KING in the inflation deflation struggle! And don't forget it.
Inflation vs Deflation First Step, Understand It There is still time to prepare if deflation is indeed in our future. August 16, 2010 By Elliott Wave International "Fed's Bullard Raises Specter of Japanese-Style Deflation," read a July 29 Washington Post headline. When the St. Louis Fed Chief speaks, people listen. Now that deflation -- something that EWI's president Robert Prechter has been warning about for several years -- is making mainstream news headlines, is it too late to prepare? It's not too late. There are still steps you can take if deflation is indeed in our future. The first step is to understand what it is. So we've put together a special, free, 60-page Club EWI resource, "The Guide to Understanding Deflation: Robert Prechter’s most important warnings about deflation." Enjoy this quick excerpt. (For details on how to read this important report free, look below.) When Does Deflation Occur? By Robert Prechter To understand inflation and deflation, we have to understand the terms money and credit. Money is a socially accepted medium of exchange, value storage and final payment; credit may be summarized as a right to access money. In today’s economy, most credit is lent, so people often use the terms "credit" and "debt" interchangeably, as money lent by one entity is simultaneously money borrowed by another. Deflation requires a precondition: a major societal buildup in the extension of credit (and its flip side, the assumption of debt). Austrian economists Ludwig von Mises and Friedrich Hayek warned of the consequences of credit expansion, as have a handful of other economists, who today are mostly ignored. Bank credit and Elliott wave expert Hamilton Bolton, in a 1957 letter, summarized his observations this way: In reading a history of major depressions in the U.S. from 1830 on, I was impressed with the following: (a) All were set off by a deflation of excess credit. This was the one factor in common. (b) Sometimes the excess-of-credit situation seemed to last years before the bubble broke. (c) Some outside event, such as a major failure, brought the thing to a head, but the signs were visible many months, and in some cases years, in advance. (d) None was ever quite like the last, so that the public was always fooled thereby. (e) Some panics occurred under great government surpluses of revenue (1837, for instance) and some under great government deficits. Near the end of a major expansion, few creditors expect default, which is why they lend freely to weak borrowers. Few borrowers expect their fortunes to change, which is why they borrow freely. The psychological aspect of deflation and depression cannot be overstated. ... Read the rest of this important 90-page Robert Prechter's report online now, free! Here's what else you'll learn: What Makes Deflation Likely Today? How Big a Deflation? Why Falling Interest Rates in This Environment Will Be Bearish Myth: "Deflation Will Cause a Run on the Dollar, Which Will Make Prices Rise" Myth: "Debt Is Not as High as It Seems" Myth: "War Will Bail Out the Economy" Myth: "The Fed Will Stop Deflation"
Inflation Deflation - Which Will We Have?
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