Deflation?

[john250]

OK, along with the stock market the commodity markets are tanking. Probably, to many of us on CT, that is more immediate to our finances.
Oil was what? $140/bbl at its peak? Now low $80's/bbl.
Corn hit $7.50/bu. around July 4. Todays close on Dec. Corn was $4.08.
Sadly, calves seem to be going down even as corn gets cheaper.
Now, the Great Depression was our last significant deflation. My life and my experience is with inflation as the problem.
Could we be headed back to $.30/lb calves and 1.50 corn? $1.00 gasoline? $20,000 homes? It seems a little far fetched, but a lot of things seemed far-fetched on Jan 1 2008.

 

[alabama]

Well if prices keep droping I need to sell my house and buy me one of those 20,000 homes next year.

 

[Earl Thigpen]

Well some of those numbers might come to pass but we will NEVER see $1.00/gal gas again. The rag heads will see to that. In fact they are meeting this weekend to discuss how much to turn the faucet off.

 

[john250]

Well some of those numbers might come to pass but we will NEVER see $1.00/gal gas again. The rag heads will see to that. In fact they are meeting this weekend to discuss how much to turn the faucet off.

Do they have as much power as we tend to think? They are also addicted to spending. If they just cut off the spigot, they don't get the checks.

 

[TexasBred]

Well some of those numbers might come to pass but we will NEVER see $1.00/gal gas again. The rag heads will see to that. In fact they are meeting this weekend to discuss how much to turn the faucet off.

Do they have as much power as we tend to think? They are also addicted to spending. If they just cut off the spigot, they don't get the checks.

They think they do. No way to even confirm their stated reserves. US usage is down so not as much demand. Still a good time to increase drilling and get that money pouring back into the economy. It is still profitable.

 

[john250]

Well some of those numbers might come to pass but we will NEVER see $1.00/gal gas again. The rag heads will see to that. In fact they are meeting this weekend to discuss how much to turn the faucet off.

Do they have as much power as we tend to think? They are also addicted to spending. If they just cut off the spigot, they don't get the checks.

They think they do. No way to even confirm their stated reserves. US usage is down so not as much demand. Still a good time to increase drilling and get that money pouring back into the economy. It is still profitable.

I'd like to drill 100 yards off the beach at Malibu. Short run, high priced oil has turned into more affordable oil and we need to keep it that way.

 

[HerefordSire]

OK, along with the stock market the commodity markets are tanking. Probably, to many of us on CT, that is more immediate to our finances.
Oil was what? $140/bbl at its peak? Now low $80's/bbl.
Corn hit $7.50/bu. around July 4. Todays close on Dec. Corn was $4.08.
Sadly, calves seem to be going down even as corn gets cheaper.
Now, the Great Depression was our last significant deflation. My life and my experience is with inflation as the problem.
Could we be headed back to $.30/lb calves and 1.50 corn? $1.00 gasoline? $20,000 homes? It seems a little far fetched, but a lot of things seemed far-fetched on Jan 1 2008.

You should enjoy it while it lasts because the exact opposite is going to happen.

"The way to solve this problem is to let people go bankrupt," Rogers said.

"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."

http://www.cnbc.com/id/27097823/

 

[backhoeboogie]

Herefordsire, That is the truth.

Some things were simply overpriced. An old travel trailer on a 1/8 acre in California is not worth $140K in my eyes. But if fools will pay that to avoid high rent, so be it. No one is willing to pay that right now so the value corrected itself.

There is much panic and uncertainty out there right now. Bargains can be had.

There were a LOT of people who were way overextended. Some are now thinking the way they should have been thinking all along.

Consider vehicles. The average consumer loses when he buys a new car. Some businesses have to have them to profit. Joe consumer is now thinking with a business case analysis just like businesses do. Let's hope so anyway.

 

[TexasBred]

OK, along with the stock market the commodity markets are tanking. Probably, to many of us on CT, that is more immediate to our finances.
Oil was what? $140/bbl at its peak? Now low $80's/bbl.
Corn hit $7.50/bu. around July 4. Todays close on Dec. Corn was $4.08.
Sadly, calves seem to be going down even as corn gets cheaper.
Now, the Great Depression was our last significant deflation. My life and my experience is with inflation as the problem.
Could we be headed back to $.30/lb calves and 1.50 corn? $1.00 gasoline? $20,000 homes? It seems a little far fetched, but a lot of things seemed far-fetched on Jan 1 2008.

You should enjoy it while it lasts because the exact opposite is going to happen.

"The way to solve this problem is to let people go bankrupt," Rogers said.

"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."

http://www.cnbc.com/id/27097823/

Not totally unlike the treatment for any "addiction".

 

[HerefordSire]

Herefordsire, That is the truth.

Some things were simply overpriced. An old travel trailer on a 1/8 acre in California is not worth $140K in my eyes. But if fools will pay that to avoid high rent, so be it. No one is willing to pay that right now so the value corrected itself.

There is much panic and uncertainty out there right now. Bargains can be had.

There were a LOT of people who were way overextended. Some are now thinking the way they should have been thinking all along.

Consider vehicles. The average consumer loses when he buys a new car. Some businesses have to have them to profit. Joe consumer is now thinking with a business case analysis just like businesses do. Let's hope so anyway.

I have been following Jimmy Rogers for a long time. He says hyper-inflation will occur. I believe him. The feds are and will further debase our currency. This has a dilutive effect to all outstanding dollar bills. It will force us to invest because if we don't, we will lose buying power in the coming years. It more or less is prolonging the inevitable...major deflation like a depression, but the deflation will occur many moons from now.

 

[HerefordSire]

Not totally unlike the treatment for any "addiction".

I have quite a bit of knowledge of survival. In the future, when the inevitable occurs such when we have "major withdrawals", it would be nice to know how to make our own diesal fuel from our homegrown soybeans....and having solar panels to generate our power....and clean water from a well and sanitized....etc.

 

[TexasBred]

Not totally unlike the treatment for any "addiction".

I have quite a bit of knowledge of survival. In the future, when the inevitable occurs such when we have "major withdrawals", it would be nice to know how to make our own diesal fuel from our homegrown soybeans....and having solar panels to generate our power....and clean water from a well and sanitized....etc.

Hereford, we all probably need to take a refresher course in some of the old ways as well as the future ways of doing things.

 

[john250]

I agree that current policy will produce inflation. Once we are out of this election cycle, someone will have the guts to choke down the inflation. It has been done before, successfully. If we still have any willpower as a nation, it will be done again.

 

[backhoeboogie]

I agree that current policy will produce inflation. Once we are out of this election cycle, someone will have the guts to choke down the inflation. It has been done before, successfully. If we still have any willpower as a nation, it will be done again.

Supply and demand. Steel went sky high and they attributed it to China. Now I hear it has tapered too.

We were once advised to save our nickels to curb inflation. The economy is more global now and much of our goods are imported in the first place. Things are not the same. It will take new strategy or new manufacturing. We need to get back to basics and get back to being more innovative.

 

[HerefordSire]

I agree that current policy will produce inflation. Once we are out of this election cycle, someone will have the guts to choke down the inflation. It has been done before, successfully. If we still have any willpower as a nation, it will be done again.

I disagree because by causing inflation (hyper-inflation in this case) by debasing our currency allows us to pay back our debt with less dollars. We are more or less in a catch 22. Pay me now or pay me later. About all I can tell you is to read up on survivability.

 

[HerefordSire]

Not totally unlike the treatment for any "addiction".

I have quite a bit of knowledge of survival. In the future, when the inevitable occurs such when we have "major withdrawals", it would be nice to know how to make our own diesal fuel from our homegrown soybeans....and having solar panels to generate our power....and clean water from a well and sanitized....etc.

Hereford, we all probably need to take a refresher course in some of the old ways as well as the future ways of doing things.

More that that is needed. There is plenty of informatiion on the internet regarding survival. I was thinking about paying someone minimum wage to sit in the A/C or heat, while they download, print, place plastic around the printed copies, and place in notebook binders for storage. I figure hard times could last about 10 years beginning sometime in the distant future... say 10 years from now.

 

[backhoeboogie]

Not totally unlike the treatment for any "addiction".

I have quite a bit of knowledge of survival. In the future, when the inevitable occurs such when we have "major withdrawals", it would be nice to know how to make our own diesal fuel from our homegrown soybeans....and having solar panels to generate our power....and clean water from a well and sanitized....etc.

Hereford, we all probably need to take a refresher course in some of the old ways as well as the future ways of doing things.

More that that is needed. There is plenty of informatiion on the internet regarding survival. I was thinking about paying someone minimum wage to sit in the A/C or heat, while they download, print, place plastic around the printed copies, and place in notebook binders for storage. I figure hard times could last about 10 years beginning sometime in the distant future... say 10 years from now.

I keep reading all this, and then the offers keep coming. There are no resumes floating and I just turned down $265K salary at Hobbs. Head hunters are calling routinely. Nothing has changed.

 

[HerefordSire]

I keep reading all this, and then the offers keep coming. There are no resumes floating and I just turned down $265K salary at Hobbs. Head hunters are calling routinely. Nothing has changed.


Sounds to me you are in the sweet spot. Not too many people like that. In my experience, one you have a specific ciritical knowledge in high demand, things are much easier. If you put back quite a bit of cash, you could really come out ahead if you play your marbles right.

 

[backhoeboogie]

There are opportunities out there.

The nuke industry was a dying industry for over 30 years. It is now blowing wide open. Those who survived the past 30 are all sitting sweet. Pirating is at an all time high. There is talk of retention bonuses to keep us at our current jobs.

Anyone who has navy nuke experience should start beating the bushes now for operations positioning. There are scheduling, planning, engineering, construction management, clerical - everything.

We used to build these things with mounds of hard copy paper. There were no computer tracking items back then. IT folks should also take note.

It takes people with high integrity. Everything else is learned.

My only point is things are not as bad as it seems or as bad as the media is making it out to be. Many folks are in a panic and they shouldn't be.

Anyone can do what I have done.

 

[HerefordSire]

There are opportunities out there.

The nuke industry was a dying industry for over 30 years. It is now blowing wide open. Those who survived the past 30 are all sitting sweet. Pirating is at an all time high. There is talk of retention bonuses to keep us at our current jobs.

Anyone who has navy nuke experience should start beating the bushes now for operations positioning. There are scheduling, planning, engineering, construction management, clerical - everything.

We used to build these things with mounds of hard copy paper. There were no computer tracking items back then. IT folks should also take note.

It takes people with high integrity. Everything else is learned.

My only point is things are not as bad as it seems or as bad as the media is making it out to be. Many folks are in a panic and they shouldn't be.

Anyone can do what I have done.

Very interesting. I guess you could say I prefer nuclear power. I will tell you this...do not underestimate the power of the financial mess in which we live in. I have never seen companies dissappear overnight before without hearing something ahead of time. It is as if their books are good one week and upside down the next. I am hearing about 1000 US banks are on the verge of becoming insolvent (keep $10,000 cash in your home safe). Britain has allocated $2 trillion dollars to disburse to banks. There are 9 banks in the US that will receive $250 billion tomorrow. These very high cash injections will allow the banks to continue lending money by keeping their capital ratios in line with regulations. As long as the Fed catches a bank holding credit swap derivative contracts from becoming insolvent and thereby causing the counter party of the credit swap contract to also potentially fail, and thereby causing another counter party of a credit swap contract to fail, etc. we should be OK. However, if the dominos are not caught in time, they can all become insolvent. That is what is so scary. On another post, I wrote about GM potentially failing because of their financing arm GMAC. I think they could be holding a big mess of credit swap contracts, but we will see very soon. Last I heard they were trying to merge with Chrysler, maybe to dilute the mess. Not sure though.