Six Bizarre Things: Credit Deflation

A columnist for Investors Business Daily notes tweets by a chief banker, commenting on six bizarre things, inscrutable among keynesians, but perfectly understood by Austrian economists.

"The first oddity is a loss of control over prices. The best central bankers can do is export deflation elsewhere, triggering currency wars.

That's right.  Inflation was fun, wasn't, you could screw the little guy with complete control over the last forty plus years.  Up up up, but now it is falling, and there is no control, and it benefits the little guy.

"The second oddity is negative nominal interest rates, a desperate attempt to prevent fx appreciation but in time a threat to credit growth."

I suppose you could say an inability to sell nothing, asset-less backed credit, due to oversaturation, except at a loss, is odd, for there is no rational limit, but you have reached an irrational limit to a criminal enterprise.

"The third oddity is the weakness of world trade growth, which may reflect more than a whiff of post-crisis protectionism."

Well, the price-competition juggernaut that wiped out small productive businesses competing against huge "below-cost due to massive EZ credit" is drying up.  It is the biggest portion of international trade, so yes, it will show alarmingly and first.  Yippee...  here is the Hegemon's report:




















Some serious dipping going on... this is exciting...  this means massive cut backs on consumeristic stuff, junk people toss and kill themselves over on black Friday, and a vacuum into which materialistic stuff, the nicer stuff people keep, specialty goods, goes up.  The more that green line goes down, the better for the little guy.

Next...

"The fourth oddity, now recognised by Fed, is the ropey nature of the US recovery, reflecting weak wage growth and energy production cuts."

Shipping used to be cheap, and now it is getting cheap again.  The oil wars, in which we have been defeated, were very good for the big guys.    Cheap transportation is wonderful to see.  Also, wages will fall.  The man can congratulate himself on the tax revenue increase from the poor on $15 an hour, but one way or another wages will fall.  This is good, because costs will fall faster, meaning the little guy is getting an ever better deal.

"The fifth oddity is believing what central banks say they're going to do. Given BoE, SNB and now the Fed, markets need more scepticism"

When were they ever understandable, let alone credible?  Their definitions of the terms they use are ludicrous.  Scepticism was necessary 40 years ago.  Now that the game is over, you begin to question?

"The sixth oddity is forecaster bias. Initial consensus forecasts for US growth since 2000 have been too high in 12 out of 15 occasions"

Well, of course.  This is the choir who will be on hand to tell the masses when their pensions are gone, and they have to sweep streets to eat like their Soviet pensioner counterparts, "no one saw this coming." their job is to manufacture the contradiction so the dialectical materialists can exploit the cognitive dissonance.  Or in other words, never waste a good crisis.

You cannot complain about what is coming when it gets here.  You knew.

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