ADRIAN ORR our NEW RBNZ GOVERNOR

[Bjauck]

That $1 purchasing power has been slashed due to events created by the US president in 1971.

The continuation of QE over that same time period has made your cash more and more worthless.

House prices have not increased your fiat currency has decreased along with its purchasing power.

Do you think that any inflation in (for example) house prices should only be in reference to the amount of gold needed to buy them, as opposed to NZD or USD?

[TeslaGod]

Anotherwords, what you are saying is simply called "inflation"

Inflation is simply the loss in purchasing power over time and QE is not the only key factor influencing inflation.

Inflation has been flat for decades and has struggled to rise .

When you print trillions of dollars in a short period of time it makes you believe inflation is on fire.

In reality when the money printing stops, (it has in NZ) interest rates rise (hopefully not)

Deflation follows it's normal course.

I know this sounds strange but they need to raise the inflation target to at least 3 or 4% to keep the economy stimulated.

Or they will eventually lower interest rates possibly negative in a few years creating further asset price inflation.

Wealth gap increases.

[TeslaGod]

Do you think that any inflation in (for example) house prices should only be in reference to the amount of gold needed to buy them, as opposed to NZD or USD?

That's more of a political question than an economic question.

What I can say is the U.S has the largest, technically most advanced war machine in the world (hint hint wink wink)

[FTG]

As I alluded previously, the battle between deflationary & inflationary forces continue, and post GFC that battle has only intensified. In fact since Covid blew up we have all witnessed it intensify at an even greater rate. The rollercoaster ride has had some even wilder peaks & troughs.

NEGATIVE interest rates, House price explosion, Oil price going into negative pricing & then reversing & charging, Gold price peaking and then FALLING, PE Ratios across the globe going to ATH's, Debt levels (Private & Public) blowing out to unprecedented levels, etc etc.

So where is all this going? That's still the big debate, but one that very few truly know or understand. Central Bankers included. Keep in mind that there is also a tremendous amount of "smoke & mirrors" in play here. A small example of this is well BEFORE Covid; Sept - Dec 2019. A new sick canary appeared in the mine. Very quietly, the US Repo market spreads started to misprice, and the FED stepped in and desperately started to throw the kitchen sink at the Repo market. To give some context, this had last occurred as a precursor to GFC, in mid 2007.

What we can do is look to history as a guide to what MAY happen. Just remember though, "markets seldom repeat, but will rhyme".

Historically one subtle but very important marker has been that in nearly every country which has experienced a period of Hyperinflation (recent example Zimbabwe), at some stage just prior, the country has first experienced DEFLATION (less money chasing the goods & services). Deflation often results in the nominal prices of goods & services actually falling. Banks, enterprises & citizens start trying to get their hands on cash and whenever possible hoarding it.

However, the tremendously destructive forces of deflation are truly revealed when an implosion of debt eventually occurs. That creates an situation where in nominal terms the debt stays the same, but the assets & income supporting that debt FALLS.

In summary, I proffer that the answer to the question on whether it's Inflation, Deflation, or Stagflation that starts dominating globally over the next 1-5 years is going to be shown by seeing how all the debt gets treated & dealt with. The debt that was already at unprecedented levels prior to Covid and has expanded exponentially since.

Finally, here's a little tidbit for you. The average corporate JUNK Bond rate in the US is now yielding an average of 4.3%pa (another all time low btw). A junk bond is generally accepted as being rated at below BBB, so the market recognises a higher a chance of failure; as in potentially losing ALL your capital!

So you get a 4.3%pa return and if all goes well, your money back. Yeeha! Yet, the "official" inflation rate in the US is now over 5%pa.

Crazy huh!

[SBQ]

As I alluded previously, the battle between deflationary & inflationary forces continue, and post GFC that battle has only intensified. In fact as we have all seen, since Covid blew up, it has intensified at an even greater rate. The rollercoaster ride has had some even wilder peaks & troughs.

NEGATIVE interest rates, House price explosion, Oil price going into negative pricing & then reversing & charging, Gold price peaking and then FALLING, PE Ratios across the globe going to ATH's, Debt levels (Private & Public) blowing out to unprecedented levels, etc etc.

So where is all this going? As i said, that's the big debate. But very few truly understand. Central Bankers included. Keep in mind, there is also a tremendous amount of "smoke & mirrors" in play. A small example of this is well BEFORE Covid, Sept - Dec 2019. A new sick canary appeared in the mine. Very quietly, the US Repo market spreads started to misprice, and the FED stepped in and desperately started to throw the kitchen sink at it. For some context this had last occurred in mid 2007, as a precursor to GFC.

What we can do is look to history as a guide to what MAY happen. Just remember though, "markets seldom repeat, but will rhyme".

In history one subtle but very important marker shown, is that in nearly every country which has experienced a period of Hyperinflation (recent example Zimbabwe), at some stage just prior, the country has experienced DEFLATION (less money chasing the goods & services). Deflation often, but not always, will result in prices of goods & services actually falling. Banks, enterprises & citizens start trying to get their hands (some hoarding) on cash.

However, the destructive forces of deflation really show when an implosion of debt is triggered. In nominal terms the debt stays the same, but the assets & income supporting that debt FALLS.

Finally, here's a little tidbit for you. The average corporate JUNK Bond rate in the US is now yielding an average of 4.3%pa (another all time low btw).
A junk bond is generally accepted as being rated at below BBB, so the market recognises a higher a chance of failure; as in potentially losing ALL your capital!

So you get a 4.3%pa return and if all goes well, your money back. Yeeha! Yet, the "official" inflation rate in the US is now over 5%pa.

Crazy huh!

Not really crazy. No different to all the seniors in NZ that typically rely on bank term deposits for their cash because they're so risk adverse. Recently NZ CPI 3.3%? But I see ASB offering 1.2% for 1 year. Gee these people must be clueless about inflation.

[JBmurc]

1. Stocks: all-time highs
2. Home prices: all-time highs
3. Incomes: all-time highs
4. Job openings: all-time high
5. US Core Inflation: highest since 1991
6. Fed: we need 0% rates through at least 2023 & trillions more in bond buying to boost asset prices & increase inflation...

WTF ?????

[TeslaGod]

1. Stocks: all-time highs
2. Home prices: all-time highs
3. Incomes: all-time highs
4. Job openings: all-time high
5. US Core Inflation: highest since 1991
6. Fed: we need 0% rates through at least 2023 & trillions more in bond buying to boost asset prices & increase inflation...

WTF ?????

I can't be the only person who sees these as positive and good things.

I mean all time highs on the sharemarket

It's a share trading forum.

As a trader why would I be angry at that?

[Bjauck]

1. Stocks: all-time highs
2. Home prices: all-time highs
3. Incomes: all-time highs
4. Job openings: all-time high
5. US Core Inflation: highest since 1991
6. Fed: we need 0% rates through at least 2023 & trillions more in bond buying to boost asset prices & increase inflation...
bye they
WTF ?????

Yep strange times. Maybe they are expecting more twists and turns from the Covid snake?

[smpl]

As a trader why would I be angry at that?

Because the music will stop and soon we will see who is still standing.

[TeslaGod]

Because the music will stop and soon we will see who is still standing.

Fair enough

I'm guessing you sat this boom out.