Regarding inflation vs. deflation

There is an ongoing debate about what the US is going thru and what it will go thru: inflation or deflation?

Martin Armstrong says we are in a deflationary monetary cycle. And in the big picture, he is right.

However,

Groovygirl has always said, it depends where you are. And gg has always said, it doesn’t matter how cheap a product/service is, if you don’t have any money to buy it. It is always about can your wages buy the necessaries or not? It really doesn’t matter the actual price, it’s the relation. Can you pay cash to buy a car or must you borrow? Can you borrow? Can you afford the monthly payment? A house? College? Health care? What percentage of your monthly income is spent on debt? 10%, 25%, 50%? If your wages go down, it could turn into 75% overnight?

I remember my grandfather talking about the Depression. He said he was much better off than many people because he had a steady job. He didn’t get a raise for 10 years, but he could save money and buy a car, because prices were low or relatively lower than before 1929/1930. He didn’t have to go in debt to survive. He could pay for food and rental housing and some extras like a car. And he wasn’t ever unemployed during that time.

People were in trouble during the Depression, because they couldn’t get a job, couldn’t earn enough (Farmers) to buy food and shelter, or couldn’t keep a steady income over that 10-year period and fell into debt to buy necessities. So, prices were expensive to them and many were starving and homeless.

It’s the relation of wages (employment) to prices. That’s why people are protesting for a higher minimum wage.

(That’s why people are leaving California with its high state income taxes and high property taxes for the Midwest. That’s why seniors are flocking to states, like Florida, that have no state taxes. People that can move are moving. They can do math and they can save 10-30% simply by moving to a different state and might get a better or steady job.)

But in Germany in the 1930’s, it was all about inflation. But inflation in prices didn’t keep up with wages (because of the country’s debt and their short-term solution of currency manipulation). It was still about the disconnect between wages and prices, but this time is was an inflationary macro environment.

So, structure investments, jobs, and assets to bring in income/gains that will keep up with prices in your home currency. And don’t forget about taxes. Income taxes and other taxes were not as extensive in the 1930’s as they are now. They must be considered in the “price” of living and assume they will go up.

Latest Video Interview from Martin Armstrong

Click here for latest interview with Martin Armstrong dated April 12, 2015 with uswatchdog.com.

groovygirl thought this interview was a good, compact form of Martin’s October 2015 Turning Point and the following impact, what he is calling the “Big Bang” or blow up/reset of global debt.

Quote:

Will the Fed finally raise interest rates?  Armstrong contends, “The Fed will have no real choice. . . . The Fed will come under significant pressure to raise interest rates because the newspapers and Congress will blame them and say they are creating a bubble with low interest rates.  The more they raise interest rates, the higher the stock market will go.  I know that sounds crazy . . . historically, interest rates bottom with the markets.  I mean, you lose confidence and people won’t borrow.”

side musing: still the big debate about inflationary or deflationary. Groovygirl still contends that the US will have both, so prepare/hedge for both. GG also believes that parts of the globe will have inflation and other parts will have deflation. Groovygirl thinks this is one of the main reasons that this global debt reset will be so confusing and shocking.

As you know, gg has been into real estate investing lately. A perfect example of inflation and deflation happening at the same time within one market. US high-end real estate asset prices have been increasing and low-end real estate have been collapsing in price. And the mid-range depends on where you are in the US. Whatever market(s) you are investing in, educate yourself and understand all aspects of that market.

Pimco

groovygirl is keeping an eye on the outflow of funds from PIMCO. 12% now? Click here.

The number is not necessarily the issue. The issue is why pull money just because Gross left? Doesn’t sound right. Something else happening. And if it’s happening at PIMCO, is it a bond market problem. The government can solve a PIMCO problem. The government can not solve a systemic bond market problem. What is it? Don’t know. Have to wait and see. Is this a global issue? And where are the funds going? Stocks? Cash? Overseas?

 

Blog Post from Martin Armstrong dated July 24, 2014

Click here for a post from Martin Armstrong dated July 24, 2014 entitled World Central Bank Secret Agreements.

From the link above:

That strategy depends on the rest of the world remaining strong. But if we see a turn down 2016-2020, it is hard to imagine Europe surviving the coming political storm.

groovygirl thought this was very important. This seems the only option to “control” the European debt implosion as everyone else is in a debt collapse, too. It’ s hard for a group of drowning men to save each other. May be impossible, but it gives us an idea of what the “first world”, US allies will try to do. Of course, there is that nasty unknown of shadow dark pool trading…..

Interview with M Armstrong on USAWatchdog

Click here for a great interview with Martin Armstrong dated May 11, 2014. H/T to SW.

“Cold war”

groovygirl has been pre-occupied with another investment activity. See previous blog post for the details. Groovygirl will still continue to post about economics, gold and silver, and global debt.

groovygirl has been paying very close attention to the new Cold War with Russia and the crisis in Ukraine.

Click here.

Russia is making friends in the mist of this crisis.

Groovygirl is very concerned about the global economic consequences from this situation regardless of the end result in Ukraine. At the very least, this will speed up the economic alliances and economic separation of the BRICs. The direct trading of currency, energy, and commodities that started in 2010 is accelerating. At the worst, all global trade, which has helped and driven all growth (including the US) in the last 20 years will slow dramatically or stop all together. Iraq is now back in Iran’s influence, Russia and China are in direct currency trading and strengthening every day. GG has heard some commentators say that Russia doesn’t have the money, technology, or labor to expand its commodity reserves. But China does. In fact, China is doing that very thing already in Africa. India may be on the fence, but they know their geographical location and they have billions to feed. They have to be on the fence.

To sum up: too much is global debt will slow trade and change currency power. The unanswered question is: will political conflicts accelerate us all toward that decline.

 

Latest blog post by Martin Armstrong dated March 31, 2014

Click here for Martin Armstrong’s latest blog post entitled Is Obama Just Outclassed by Putin? dated March 31, 2014.

gg says: groovygirl isn’t sure if Obama is outclassed by Putin, but he is certainly out-statemened. Is that a word? What gg means is that, say what you will about Russia/communism/etc, Putin is one of the best statesmen and politicians ever seen of late. He is strategic. And you can bet he doesn’t do anything without exploring and anticipating all the possibilities and consequences ahead of time. He is well-prepared, and his actions are well-thought out. That’s something the US seems to have fallen short on.

Putin also has something on his global side that the US doesn’t seem to consider, growing hatred of America’s butting into everyone’s business under the guise of the “war on terror”. (He also has Russian nationaliam from within.) There was a time, when the USSR was seen as a force to be protected from. Now, that may or may not be true, but it is not Russia that is getting bad global press about eavesdropping on Merkel’s phone calls, it is the US. This hypocrisy is not lost on the rest of the world, and it is and will be used by Putin to his every advantage. And being the “underdog” is also in Putin’s favor.

This little spat with Putin is very concerning to groovygirl. It is big. At best, it will bring together the alternative trading currency and SWIFT systems that have started in Asia much quicker than thought. At the worst, it will start a regional war that the US is sure to lose and will not be backed by the people of the US. If Obama does not handle this Putin thing well and start aggressively rebuilding relations with Europe, Asia, and South America (instead of running to Saudi Arabia), this will be the middle of the big wave that changes global power not by war, but by currency and capital. gg doesn’t know who is advising Obama on foreign relations, but he is ill-advised. Putin is using the exact same tactic that the US used prior to the fall of Russia: protecting the little guy/country from the big, bad empire. And it will work for him just as it worked for the US.

The US can not continue sanctions, it will just drive the BRICS and their new trading system closer to a global alternative and cause even more global capital to go into hiding. The US can not use military action, the world and the US people are weary of long invasions. The US must take drastic and targeted actions to restore trust that it is a world leader by example, not a tsar and tyrant. The eroding of trust and confidence is at the core of this decentralizing cycle, causing all sorts of issues from global currency to capital flow to riots and revolutions to stock markets to NSA to government coups. It is a lack of confidence that is causing all the long time systems and institutions to be questioned, and in some cases, challenged.

This will be very interesting to watch. 

The big question is will these systems be torn down and rebuilt into something balanced and fair and really better, or will that be in name only and be tyranny under a more peaceful and tranquil guise? Once people get power, no matter how noble the original thought, they tend to try and keep that power no matter what. Even if they have abandoned the noble thoughts long ago. Power comes and goes. But character, the essence of man/woman when money, power and status are stripped away. Things like the search for truth, continuing education, openness, empathy; these things should not be changeable or put away when one’s power is threatened. These things are stoic, intertwined with the character, unwavering.

meekness is not weakness or powerlessness, but power under control.

GEAB N 83

Click here for the full free summary. This was published March 16, 2014. FYI: this is from an European slant. Always know who the audience is, it helps decipher truth.

Layout of the full article:
1. BUILD A TRAP TO DIVERT EUROPE AWAY FROM IT’S OWN DESTINY
2. MASS ATTACKS ON EUROPE
3. CAUSE A NEW IRON CURTAIN TO FALL ON EUROPE
4. FORCE EUROPE TO CHOOSE SIDES
5. FIND THE INTRINSIC RESOURCES IN EUROPE TO FREE ITSELF FROM THE TRAP – Eight strategic recommendations      

Catherine Austin Fitts

New interview with Catherine Austin Fitts with Sound Money via zerohedge. Click here. Good one!! Worth a listen. About 24 min. Catherine has a very good understanding about how governments work and how they centralize economics and money and that impact on you and me.

High Frequency Trading

Tyler Durden via zerohedge had an excellent article this morning about the amazing winning percentages of HFT platforms. Apparently the big market for “winning” is currencies. Making fiat money on fiat money with the fastest computer. Fake money and fake traders. Welcome to the virtual world.

Click here.

But the most interesting thing about this post is not that computers control HFT trading, that the fastest and closest computers always win, that these HFT fat fingers can take down a market in milliseconds, or that currency markets are the main trading market they use to do it.

The scary thing about this chart is that there is a losing side to the winning computer’s HFT bet. Those extraordinary profits were taken from someone’s capital, debt, or savings. And who is that losing side? This is a another angle of the biggest wealth transfer in history.

Side musing: gg thought this little item about Ukraine’s gold air-lifted to NYFed for “safe-keeping” was interesting. Click here. Maybe it is collateral for that billion dollar loan?