tag:blogger.com,1999:blog-4290163255778893789.post5313785213700853159..comments2024-03-16T05:19:07.061-04:00Comments on Retirement Blues: Credit Where It's Due (It Could Be Inflationary!)Jazzbumpahttp://www.blogger.com/profile/07337490817307473659noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-4290163255778893789.post-80650406809458524352010-11-24T16:21:16.004-05:002010-11-24T16:21:16.004-05:00Bad Tux: If money supply contracts, and prices rem...Bad Tux: If money supply contracts, and prices remain the same...<br />This begs the question: If less dollars are available to purchase goods and services, could it not lead to price inflation during a money supply deflationary period? Just curious.nanutenoreply@blogger.comtag:blogger.com,1999:blog-4290163255778893789.post-4026195539928377272010-11-23T22:41:06.696-05:002010-11-23T22:41:06.696-05:00I am happy to see that someone besides me notes th...I am happy to see that someone besides me notes that deflation is a <i>money supply event</i>, not a <i>price event</i>. If the money supply contracts and prices remain the same, volume of trade will contract (since there are no longer enough dollars in the economy to purchase all of the goods and services available at the proffered prices), so monetary deflation can happen without price deflation. Of course, the Austerians insist that this situation can never happen, despite the fact that it did happen during the Great Depression and is happening now and we have numbers to show that it's happening now. But then, Austerians live in a parallel universe of pink unicorns and cotton candy trees, not in <i>this</i> universe, so...<br /><br />- Badtux the Snarky PenguinBadTuxhttps://www.blogger.com/profile/01345749557330760251noreply@blogger.comtag:blogger.com,1999:blog-4290163255778893789.post-175532104215902242010-11-23T14:15:38.071-05:002010-11-23T14:15:38.071-05:00JzB: Don't discount the size of your "pea...JzB: Don't discount the size of your "pea brain". From what I've read, you've got a better grasp of the issues here, than I. (Then again, that might not be saying much.) To your most recent point: As you've noted previously, flushing the system all at once is putting us in Mellon territory. A slow burn is easier to control than a raging forest fire, for lack of a better metaphor. But, I'm still troubled by the notion that prolonging the inevitable could have unintended consequences that will compound the problem. (Like interest.)nanutenoreply@blogger.comtag:blogger.com,1999:blog-4290163255778893789.post-13540837905267168122010-11-23T14:03:29.114-05:002010-11-23T14:03:29.114-05:00Could be. Now we're getting into realms of de...Could be. Now we're getting into realms of deviousness that are more than my little pea brain can handle.<br /><br />It's also likely the not marking to market is a way of putting off the inevitable. Besides avoiding an unpleasant reality, it gives the insiders a chance to do whatever they need to do to escape any down-side effects. <br /><br />Which means we get screwed even worse.<br /><br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-4290163255778893789.post-47353581681665539352010-11-23T13:52:57.903-05:002010-11-23T13:52:57.903-05:00"Not marking to market... This makes inflatio..."Not marking to market... This makes inflation look larger than it really is-or makes deflation look smaller." <br />Perhaps this is why "they" suspended the rules on mark to market. If your analysis is correct, it would mean that deflation would be greater in real terms if the credit assets were valued at mark to market. Could one argue that increasing the money supply is being used as a buffer/reserve balance, for the inevitable questionable credit assets disappearing?nanutenoreply@blogger.comtag:blogger.com,1999:blog-4290163255778893789.post-75940019163031981402010-11-23T13:33:35.725-05:002010-11-23T13:33:35.725-05:00"Debt due on borrowed money" sounds abou..."Debt due on borrowed money" sounds about right to me. And marking to market means you write down bad debts. That is, you honestly realize that money is not being paid back, so that amount of credit has vanished in a puff of cold, hard reality, and the credit asset mo longer exists. <br /><br />Not marking to market means you pretend that this bad debt is going to be paid back someday. This makes inflation look larger than it really is - or makes deflation look smaller.<br /><br />Not marking to market now means you wait for the buzzards to roost at some later date. Meanwhile, they're still circling, and will not go away.<br /><br />So, no, you're not talking out your ass. Dig below the surface, and things are actually WORSE than they appear.<br /><br />WASF!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-4290163255778893789.post-27787064264119561372010-11-23T13:22:14.160-05:002010-11-23T13:22:14.160-05:00Thanks. I just wanted to let you know I don't ...Thanks. I just wanted to let you know I don't like being a pain in the ass. If I'm being one, I'll expect you to let me know going forward. <br />How does one define credit? The debt due on borrowed money? With all this suspension of mark to market on questionable assets what's the effect on credit. Or, am I talking out my ass?nanutenoreply@blogger.comtag:blogger.com,1999:blog-4290163255778893789.post-34467455683494200202010-11-23T12:33:54.392-05:002010-11-23T12:33:54.392-05:00Nanute -
Yes, I saw them. I do want to put up a ...Nanute -<br /><br />Yes, I saw them. I do want to put up a relevant post, but sometimes life gets in the way.<br /><br />Or I get distracted, and put up a different one.<br /><br />Anyway, this one was being revised when you commented, so it's been expanded a bit. <br /><br />Pestering is fine - don't worry about that. Sometimes I need help.<br /><br />Cheers!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-4290163255778893789.post-69560664917381621542010-11-23T12:04:04.867-05:002010-11-23T12:04:04.867-05:00Yes, and if we listen to Snowflake Snookie and the...Yes, and if we listen to Snowflake Snookie and the list of conservative economists screaming for the Fed to stop devaluing the currency and causing inflation (how that works, I can't tell), we'll be sliding further down the deflation ladder. <br /><br />I sent you two links in the Argentina post pointing to recent discussions on your pet peeve: M1 Multiplier being back in the spotlight. If you have seen them, excuse the pestering. If not, for your consideration: http://www.nakedcapitalism.com/2010/11/guest-post-the-fed-is-saying-one-thing-but-doing-something-very-different.html<br />And here is Ellen Brown on a different take on what the fed is doing re: QE2: http://www.globalresearch.ca/index.php?context=va&aid=22014<br />Brown is essentially saying that the Fed is paying down debt without added borrowing. It sounds plausible.nanutenoreply@blogger.com