Some early signs of hyperinflation

[peaccenicked]

http://www.northantset.co.uk/news/One-in-ten-shops-will.4852033.jp

The closing down of shops one of the reasons hyper inflation is on the cards. There is also lots of warehouse spaces emptying.

The Shipping crisis is another.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_323057.html?vgnmr=1
(http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_323057.html?vgnmr=1)

There is of course the introduction of quantitative easing.
http://www.iht.com/articles/2009/01/11/business/views12.php
(http://www.iht.com/articles/2009/01/11/business/views12.php)

There is another more technical explanation that has to do with gold backwardation.

I am not expert enough to verify all of the writers claims but his general drift makes sense.
http://news.goldseek.com/GoldSeek/1228499200.php
(http://news.goldseek.com/GoldSeek/1228499200.php)


I am sorry for sending the reader to so many places but they make my point so much stronger.

We need to prepare.

it is a bit depressing this stuff so I offer up some Peter Tosh (http://inthesenewtimes.com/2008/10/03/the-day-the-dollar-died-peter-tosh/).

[cyu]

I just can't take goldseek seriously - anybody that pretends gold actually has much intrinsic value is a nutcase. Instead of tracking gold, their resources would be better spent tracking food, housing, energy, clothing, etc - things people will actually use.

[cyu]

anybody that pretends gold actually has much intrinsic value is a nutcase.

...not all are nutcases of course. They may also be people who blew all their money buying up gold, and now just want to make sure they can sell it again at a profit.

The first rule of investment is that after you've bought something, you want other people to want it more than you. If you haven't invested yet, but want to, then you want other people to want it less than you.

So:
1. Play down the value of X.
2. Invest in X.
3. Play up the value of X.
4. Sell X.

I'd say the people who run the gold-tracking websites are at (or funded by those who are at) step 3.

[Niemand]

By no means are we on the verge of experiencing any Weimar-style hyperinflation, despite the best efforts of the Federal Reserve. Rather, the polar opposite is occurring and it is plain to see to all who enter any retail store. All the prices are slashed, the sales keep getting deeper and there is no bottom in sight for neither home or commodity prices.

While the actions of the Fed may lead you to believe that we are on the verge of hyperinflation, this is in error. This puts too much faith in Keynesian economics, which is in itself erroneous as it tries to blend socialism and capitalism and make some sort of "best of both worlds" scenario, and the Federal Reserve. The forces of deflation are hard at work, and as far as the market goes, these trends are generally unstoppable. It's a cruel cleansing process that will eventually cleanse us of our excessively greedy ways by way of the sobering New Depression that will soon encompass our lives and change the world forever.

Now, this is an extreme scenario, but unfortunately a very probable one. Should we assume that the Fed's actions are successful and the government triumphs over the New Depression, then we will witness hyperinflation, but the question then shifts from whether or not when the recession will end, but how far will the hyperinflation go? Should it obey the will of the Federal Reserve, it will eliminate deflation, which has already entrenched itself, and then phase itself out.

However, there is a great possibility that the monster the Fed is attempting to create could be so powerful as to render the American government to a Weimar-esque state that would be plagued by such terrible hyperinflation that daily essentials would cost incomprehensible amounts of money which would cause a crisis far worse than the impending New Depression and would sink this entire global system into chaos and would undoubtedly spell out the end of capitalism. The question is, what would survive this apocalyptic scenario? Would it be socialism, communism, anarchy, or a chaotic shit hole without rules or regulations? As this scenario, in my mind, is highly unlikely, I won't worry about it. I'm just focused on the deflation-driven New Depression which is beginning right before our eyes.

[peaccenicked]

By no means are we on the verge of experiencing any Weimar-style hyperinflation, despite the best efforts of the Federal Reserve. Rather, the polar opposite is occurring and it is plain to see to all who enter any retail store. All the prices are slashed, the sales keep getting deeper and there is no bottom in sight for neither home or commodity prices.


Woolworths ??

Are you Niemand ready to talk any sense whatsoever?

[peaccenicked]

Does inflation come from shortage or growth? Deflation is about shortage.

Inflation is about the realization of shortage.


there is no bottom in sight for neither home or commodity prices.



Absolute pish!

[ckaihatsu]

By no means are we on the verge of experiencing any Weimar-style hyperinflation, despite the best efforts of the Federal Reserve.


Hyperinflation is what happens to smaller, colonial economies when the overall, world economy hits a downturn, or else the colony suffers massive political instability, driving up the general cost of doing business.

The government, in turn, will try to compensate by printing more money -- that is, making money more available for liquidity / business / manufacturing purposes, but in the long run it doesn't help, and the value of the flooding money plummets -- this is described as 'inflation'.




The 1970s was the period when Keynesian deficit spending policies broke down in the face of "stagflation." It was also the decade that saw a sharp growth of European and Japanese imports of industrial goods into the US and a rapid deterioration in the share controlled by American companies of both the global and US markets in autos, steel, electronics and other sectors. The US share of auto production fell from 65 percent in 1965 to 20 percent by 1980. The United States produced 39.3 percent of the world's steel in 1955. By 1975 that percentage had fallen to 16.4 percent. In 1984 it was just 8.4 percent.


In a sense, the U.S. went bankrupt after losing the Vietnam War -- the war effort was its last grasp at retaining a piece of the pole position, but after losing the war it lost big because it also lost the war production economy that went with it. It was subsequently forced off the golden gold standard, now no longer the pacesetter for the world economy.




At the same time that President Johnson persuaded Congress to accept a tax cut in 1964, he was rapidly increasing spending for both domestic programs and for the war in Vietnam. The result was a major expansion of the money supply, resting largely on government deficits, which pushed prices rapidly upward. However, inflation also rested on the nation's steadily declining supremacy in international trade and, moreover, the decline in the global economic, geopolitical, commercial, technological, and cultural preponderance of the United States since the end of World War II. After 1945, the U.S. enjoyed easy access to raw materials and substantial markets for its goods abroad; the U.S. was responsible for around a third of the world's industrial output because of the devastation of postwar Europe. By the 1960s, not only were the industrialized nations now competing for increasingly scarce raw commodities, but Third World suppliers were increasingly demanding higher prices.


What's not usually mentioned is the class-struggle component of this, namely that the obverse of the weakening of the business climate is the strengthening of the working class climate -- business is increasingly forced to face the workers on their own ground, with their own real, demands concerning living standards and working conditions. Business, despite receiving cheap money, must still deal with the demands of the local labor force or else it's *forced* to high-tail it to try to find a more robust local economy in which to do business.




Nixon promised to tackle sluggish growth and inflation, known as "stagflation," through higher taxes and lower spending; this met stiff resistance in Congress. As a result, Nixon changed course and opted to control the currency; his appointees to the Federal Reserve sought a contraction of the money supply through higher interest rates but to little avail; the tight money policy did little to curb inflation. The cost of living rose a cumulative 15% during Nixon's first two years in office.

http://en.wikipedia.org/wiki/History_of_the_United_States_(1964%E2%80%931980)#. 22Stagflation.22


In other words, Nixon couldn't appease both labor *and* business, because they are irreconcilable competitors -- labor was winning much from its years of militant actions in the '60s and '70s, which the U.S. bourgeoisie was willing to accomodate while it was still on top. Once its pre-eminent position slipped, though, it violently clamped down by monetizing the currency -- sending the surplus value to strengthen the value of capital, instead of returning it to labor in the form of wages and benefits.




The 1979 appointment of Wall Street banker Paul Volcker as chairman of the Federal Reserve Board by Democrat Jimmy Carter was a major turning point. It signaled a decision by the American bourgeoisie to defend its wealth and its international position by launching an offensive against the American working class. It marked the definitive end of the policies of relative class compromise and social reform that had been initiated under the New Deal. The central aim was to roll back the economic and social gains that had been achieved by the working class over the previous 40 years. This was to be achieved by shutting down major sections of US industry that could no longer provide a sufficiently high rate of profit and using mass unemployment as a weapon to attack the unions and break the militant resistance of the working class.

http://www.wsws.org/articles/2008/oct2008/bgr1-o13.shtml



Rather, the polar opposite is occurring and it is plain to see to all who enter any retail store. All the prices are slashed, the sales keep getting deeper and there is no bottom in sight for neither home or commodity prices.


The period we're in today is much different than what the U.S. economy went through in the post-Vietnam War era. The world economy caught a second wind, so to speak, from the entrance of the Chinese working class into the global economy right after the end of the Vietnam War. So, in this sense, maybe the war was actually a *draw* between the U.S. and China...?

For the past thirty years hyper-exploited Chinese labor -- numbering in the hundreds of workers in a single sweatshop room and living in squalid company-town dormitories -- has provided the adrenaline shot for world capital -- especially for U.S. debt, which has been able to balloon on credit with China as its patron.

This extreme shafting of millions of workers is the only thing that has kept consumer prices down, as it's underwritten the massive expanse in credit that we've seen manifested as a rolling bubble of credit that has boosted stocks, then the dot-com sector, then telecom, then energy, housing, commodities, and now mergers and acquisitions.

As long as the millions of workers from the countryside kept rotating into China's major cities to put in their time in the service of U.S. and E.U. consumption we continued to see phenomenal numbers for growth rates in the countries' economies where the hyper-exploitation was taking place: China, India, Pakistan, Malaysia, and elsewhere.





[...]

[T]he other engine of the Chinese economy has been the very high rate of investment. This has been the case with the building of factories, infrastructure and housing for the rapidly growing urban population. Building is one of the biggest drivers of China's expansion, contributing a quarter of fixed asset investment and employing 77 million people. This led, like in most capitalist countries in the last period, to a housing and real estate bubble which has now burst. Some analysts calculate that house prices in Shangai fell by 20% in the third quarter of 2008 and official figures show that house prices nationally stalled at 0.2% in October. At the end of October, Yan Yu, a business management scholar at Peking University, was already warning: "House prices here in Dongguan have fallen by up to 50% this year," leaving many homeowners owing more on their mortgages than their homes are worth. According to Macquarie Securities, "construction will contract 30% next year after expanding 9 percent in the first three quarters of 2008."

The contraction of the building sector has affected the production of steel, cement and a whole series of related industries. (Photo by DonDomingo on flickr)The contraction of the building sector has affected the production of steel, cement and a whole series of related industries. Steel prices in China have already fallen sharply. According to Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co., spot "prices of hot-rolled sheet have plunged almost 40 percent since the end of June". Zhengzhou-based Bayannur Zijin Nonferrous Co. is reducing zinc output by 30 percent. The price of zinc, which is heavily used in the building and car industries has already collapsed by nearly 50% on the world market.

It is the slowdown in production that is leading, as we have seen, to the danger of deflation, with prices in November growing only by 2.4%, the lowest rate in 22 months. The country's economic authorities have changed their approach from one of fighting inflation to one of attempting to prevent the devastating effects of deflation. "Declining prices, if they persist, generally create a vicious spiral of negatives, such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals, all of which will aggravate the economic downturn," warned Dong Zhiging in the China Daily.

[...]

From a position of hoping against all reality that China would help soften the blow of the crisis of capitalism in the advanced capitalist countries, there is now a serious possibility of China helping to drag down world trade and with it world economic growth. This is leading to a growing conflict with the United States. The recent visit by US Treasury Secretary Henry Paulson only served to underline this. While the US is putting heavy pressure on China to revalue its currency in order to make Chinese exports less competitive in the US, it would be in the interest of the Chinese economy to devalue its currency, particularly after the recent export figures. The stage is set for protectionism and trade wars. In any case, it is not even clear that a devaluation of the yuan would help boost Chinese exports. Her neighbour South Korea has seen a devaluation of around 30% of her currency and still South Korean exports collapsed by 18% in November. Even if your products are cheaper, they are not going to be sold if there is no one out there to buy them!

[...]

Inevitably this economic crisis will have a massive impact on the consciousness of all layers in society. Above all the legitimacy of the leadership of the CCP, which has led the country to the restoration of capitalism, will be shattered. China's economic growth has created a fresh, multi-million strong, young working class and it has now started flexing its muscles. In the next period we will see ever wider layers of the Chinese working class enter the path of struggle.

For thirty years the Chinese workers have observed the leadership of the Communist Party gradually moving towards capitalism, seemingly without the interruptions in growth that we have observed periodically in the West. Now China is facing its first real recession, the Chinese workers will begin to see the other side of capitalist counter-reforms. In spite of everything they will see that the "market" is not the solution, but is actual the cause of the present crisis.

http://www.marxist.com/china-hit-by-global-capitalist-crisis.htm



While the actions of the Fed may lead you to believe that we are on the verge of hyperinflation, this is in error. This puts too much faith in Keynesian economics, which is in itself erroneous as it tries to blend socialism and capitalism and make some sort of "best of both worlds" scenario, and the Federal Reserve. The forces of deflation are hard at work, and as far as the market goes, these trends are generally unstoppable. It's a cruel cleansing process that will eventually cleanse us of our excessively greedy ways by way of the sobering New Depression that will soon encompass our lives and change the world forever.


"Greed" / morality has *nothing* to do with it, as anyone who's around economics knows -- there are major, large-scale economic trends involved here that play out along their own paths, much like seismic activity in the earth's crust.

I also wonder who this "us" is that you're referring to, because, as in any other historical time, there are *two* antagonistic class forces at work -- *one* of them *could* be called greedy while the other class just hasn't even had the opportunity for it at all.



Now, this is an extreme scenario, but unfortunately a very probable one. Should we assume that the Fed's actions are successful and the government triumphs over the New Depression, then we will witness hyperinflation, but the question then shifts from whether or not when the recession will end, but how far will the hyperinflation go? Should it obey the will of the Federal Reserve, it will eliminate deflation, which has already entrenched itself, and then phase itself out.


To have hyperinflation there has to be a larger economy that stands to benefit by buying out the smaller, colonized economy in peril.

These days there's no "top dog" anymore -- the U.S. has slipped both economically *and* now militarily, exposing its dependence on the world economy -- or, more precisely, the driving forces of it, like China.

Even as we speak, though, China's juggernaut has ground to a halt, with implications for the U.S., E.U., and the rest of the world's economy. There's no creditor to come out on top when (almost) everyone's a debtor, or, more to the point, there is no new virgin workforce to take advantage of and squeeze out after a thorough exploitation.

As Marxists we know that capitalism inevitably runs up against the declining rate of profit, no matter how well it's doing or how expansive its territory is. Now that that's happening, on a truly comprehensive, worldwide scale, there's no place to go -- outer space just wouldn't *begin* to be profitable, despite what the space-mining sci-fi movies might have us think.

So we're already witnessing the retrenchment and withdrawal into regional, nationalized spheres of balkanized economics. The really fun part comes when these retracted national interests still want to continue their customary ways of vacuuming up resources from anywhere -- they soon bump heads with other nations doing the same thing and then the fireworks *really* begin, euphemistically speaking.



However, there is a great possibility that the monster the Fed is attempting to create could be so powerful as to render the American government to a Weimar-esque state that would be plagued by such terrible hyperinflation that daily essentials would cost incomprehensible amounts of money which would cause a crisis far worse than the impending New Depression and would sink this entire global system into chaos and would undoubtedly spell out the end of capitalism. The question is, what would survive this apocalyptic scenario? Would it be socialism, communism, anarchy, or a chaotic shit hole without rules or regulations? As this scenario, in my mind, is highly unlikely, I won't worry about it. I'm just focused on the deflation-driven New Depression which is beginning right before our eyes.


I'll consider that, in the absolute contraction of economic growth and a traditional scramble for world resources, we would experience the hyperinflation you're talking about. The funny thing is that, in the current period, we're *not* seeing steady or growing rates of consumer consumption the way we did in the post-World War II period of expansion and modernization.

Perhaps this period will be *very* different, now that so much of the world has been suburbanized and mollified with cheap Big Macs. *I'd* like to know what's going to happen this time around when the respective national economies begin to get a little stir crazy, but there's just no telling for sure. I'd like to think that their standstill will be the definitive signal for the world's working class to kick into high gear, with fewer impediments to global solidarity than ever before. Call me an optimist, or maybe even a realist, on this...!


Chris





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-- Of all the Marxists in a roomful of people, I'm the Wilde-ist. --

[fabiansocialist]

They may also be people who blew all their money buying up gold, and now just want to make sure they can sell it again at a profit.

If I were holding gold at the moment, I would continue holding it. Not try to realise some paper profit. The problem is not exclusively with the dollar (though it is the most egregious example) but with all major currencies: Is there going to be continued deflation or will this give way to rapid inflation (even hyperinflation) as the USA and other major economies frantically unleash massive liquidity in the markets? I have no clear idea. I do know gold tends to be a fairly good repository of purchasing power (ignoring 1980 - 2003).

[Niemand]

Does inflation come from shortage or growth? Deflation is about shortage.

Inflation is about the realization of shortage.




Absolute pish!
Inflation is when there are too many dollars chasing too few commodities. Do you see people shopping excessively anymore? No. Therefore, how can inflation arise when no one is getting these dollars? What will happen with the Fed's newly printed money is that it will be taken and used to pay off debt's and the rest, if there is any, will be saved. Thus is the psychology of the american consumer right now.

What we have right now is not a shortage of commodities or resources, but a shortage of both capital and confidence. Therefore, hyperinflation, or any form of inflation, is highly unlikely to arise in the foreseeable future.


By the way, try not to be a dick next time you get into a conversation over economics, "comrade".



"Greed" / morality has *nothing* to do with it, as anyone who's around economics knows -- there are major, large-scale economic trends involved here that play out along their own paths, much like seismic activity in the earth's crust.

Economics is driven by humans, and to understand economics you need to understand the human mind. Societal views of greed, consumption, and thrift are very intrinsic to economic developments the world over. The market is not some sentient being or some infallible tool, rather it is an extension of ourselves and a reflection on the human mind.


I'll consider that, in the absolute contraction of economic growth and a traditional scramble for world resources, we would experience the hyperinflation you're talking about. The funny thing is that, in the current period, we're *not* seeing steady or growing rates of consumer consumption the way we did in the post-World War II period of expansion and modernization.So what do you think will happen?

For you to claim that the working class in the United States has not been driven by greed is nonsense. Class consciousness has been at an all time low recently, and the working class has been brainwashed into thinking its part of some new "middle class". I can't say much for the proletariat of other nations, but certainly in the U.S. a sweeping majority of proletarians have abandoned their class and convinced themselves they were so much more. Now, obviously, that illusion has come crashing down and at a heavy price.

[cyu]

The problem is not exclusively with the dollar (though it is the most egregious example) but with all major currencies


The question of deciding whether to hold currency or gold is a rich man's game. What they are after is individual wealth - since the wealthy are anti-social in the sense that they are more concerned about their personal well-being and care less about the well-being of the general population.

From the non-capitalist viewpoint though, currency and gold isn't as important. Since it is the non-capitalists that have to do the work anyway, their source of wealth is the raw materials, machinery, and information needed to produce things. Thus, if the people of your country actually have to work for a living, it would make more sense for them to spend their currency and gold, in order to purchase the raw materials, machinery, and information needed to do their jobs.

The true wealth of a nation is its productive power. It is collective wealth and requires the cooperation of everyone who works for a living.

If a country only relies on collecting currency and gold, it's not going to last long. If all the truly productive nations are spending their gold and foreign currencies in order to buy raw materials, machinery, and information, then the amount of gold and currency floating around the market will go up. If the productive nations become willing to only spend gold, but not accept it as payment - instead accepting only raw materials, machinery, etc as payment, then eventually gold will become practically worthless and the nations that concentrated on gathering gold in their vaults will be bankrupt.

[ckaihatsu]

Inflation is when there are too many dollars chasing too few commodities.


Another way of putting this is that there are too many dollars in circulation, relative to the number of commodities being "demanded" in the market. The proportional value of each dollar is less than it used to be in the recent past because those holding the commodities want to make sure they get solid value for the products they sell.

This can be viewed in political language as well: When the U.S. was on the postwar Bretton Woods gold standard the rules of the game were: "We're on the gold standard." After the rise of competition from Europe and Japan, and the losing of the Vietnam War, the U.S. had to change the rules, and it said: "We're going to devalue the U.S. dollar by going off the gold standard. This will allow us to use a short-term sleight-of-hand by calling a dollar a dollar and paying our debts with it when it fact it's now been hollowed out -- try to keep up!"

Still *another* way of putting this is that other currency-based economies aren't taking you and your currency that seriously anymore. No one wants to underwrite you and your spending. In the post-WWII era all the countries around the world wanted U.S. dollars because its economy was on top and growth was strong -- it inspired confidence in continued, future solvency. Funny thing -- *so* many people wanted and got dollars that it just became too tempting and easy to print the damn things -- it even created bubbles of notional value abroad, in what's called the Eurodollar market. Too much of a good thing kinda spoils everything, huh? Well, we have bubbles of our own in the current period, they just aren't based on the U.S. economy / currency...!



Do you see people shopping excessively anymore? No. Therefore, how can inflation arise when no one is getting these dollars?


Niemand, no one is shopping anymore because they aren't seeing increases in their wages, and now they're being laid off at increasing rates. Forget the economics of it all -- this is *class warfare* (well, okay, *due* to economics). Growth rates (in GDP) are plummeting, so this is the *stagnation* part, but this time around, as opposed to the '70s, there's no *inflation*, because we have had terrific underwriting of U.S. debt. The industrializing ("developing") economies (like China, India, and others) *have* had impressive growth rates and surpluses in the past few years because their countries have been industrializing at the tail end of the centuries-old phenomenon, and so they've been able to hyper-exploit their respective workers. Squeezing out labor value means profitability, growth, and low-cost goods to foreign consumers in the E.U. and U.S. In fact, the capitalists of these caffeinated economies have been experiencing such good productivity that they've been accepting *post-dated checks* from the consumers of the U.S. and E.U., just to get the stuff off the shelves -- (!!!) How hot is that?!

But the bingeing is now screeching to a halt, because even hyper-leveraged credit has its limits, and all it takes is for *one* sector to drag a bit -- like housing -- and suddenly all the momentum gets pulled back a bit, banks become unsure of how fast we should "pretend" to be going, and then it all unravels and no one wants to take a risk anymore -- just *talking* about it is making me feel-- that's right -- *depressed*...! : D



What will happen with the Fed's newly printed money is that it will be taken and used to pay off debt's and the rest, if there is any, will be saved. Thus is the psychology of the american consumer right now.


Nope. Nope, nope, nope. It's *not* "psychology" -- it's *economics", particularly Marx's Declining Rate of Profit. I had the, *ahem*, -clairvoyance- (hahahahaha) to whip up a little illustration of this well ahead of time. Please feel free:


A Business Perspective on the Declining Rate of Profit

http://tinyurl.com/2bvq3a


[EDIT: Again, the printing of money is just a technicality -- if no one is providing the * labor value * -- exploited workers -- to provide the actual *stuff* that you're consuming with that funny money, *then* you have hyper-inflation. The U.S. does *not* have inflation, as we both agree, but *neither* is it in any solid position to pay off its debt -- which has been ballooning. And now the U.S.'s super-nice, buddy-buddy business friends are running into stormy weather, so what's the goddamn, fucking point of it all, anyway?????? Jesus H. Christ, if the U.S. were a person it'd be reaching for the overdose of sedatives right about now...!]



What we have right now is not a shortage of commodities or resources, but a shortage of both capital and confidence. Therefore, hyperinflation, or any form of inflation, is highly unlikely to arise in the foreseeable future.


Yes, we have global overproduction, not only of consumer items, but also of * capital goods * -- meaning bank credit -- and so the * entire financial infrastructure * of the world (not just toys) is looking pretty cheap and tawdry right now.

So it's *not* a _shortage_ of capital -- it's an *overabundance* of capital. It's counterintuitive because you would think that, hey, if there's plenty of money everywhere then how come we're not all sick-rich? Unfortunately it's more like such a flood of money that we're all chest-high in it, and it's also jamming up the factory equipment that *is* around....

Also counterintuitively, when the banks come out to vacuum up all the excess liquidity they bring it all in and just sit on it and say, "No, sorry, we're not going to extend any new credit or make any new loans because you all saw what just happened -- the shit just went all over the place, it got everywhere and no one could get it back to us, much less accompanied with your own money back as interest-rate fees. Nuh-uh, no dice, Mr. and Mrs. Main Street."

So the banks just sit on it, let it decompose, and then wail to the U.S. government about how it's all decomposing and there's no action going on and so they need a $700 billion bailout just to make it look like something's going on. So they use the taxpayer money as lubricant in their financial orgy parties, so that their financial institutions can "get to know each other better" and go after the little ones and fuck and consolidate.



Economics is driven by humans, and to understand economics you need to understand the human mind. Societal views of greed, consumption, and thrift are very intrinsic to economic developments the world over. The market is not some sentient being or some infallible tool, rather it is an extension of ourselves and a reflection on the human mind.


Nah -- the market is *not* some kind of giant Rorschach test, and that's for the *objective* reasons stated above.



So what do you think will happen?

For you to claim that the working class in the United States has not been driven by greed is nonsense. Class consciousness has been at an all time low recently, and the working class has been brainwashed into thinking its part of some new "middle class". I can't say much for the proletariat of other nations, but certainly in the U.S. a sweeping majority of proletarians have abandoned their class and convinced themselves they were so much more. Now, obviously, that illusion has come crashing down and at a heavy price.


Yup. Guess we'll see -- heh, heh, heh...!

[peaccenicked]

The crisis of over-production has to be put in terms of geopolitics. The Anglo-saxon world
has shifted its focus of production to the east.


The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy. http://www.telegraph.co.uk/finance/4229198/Shipping-rates-hit-zero-as-trade-sinks.html


The problem has become the financing of trade. It is like putting a vice on the money supply, to the trade industry. It means that American imports are being held at bay, now at a growing rate.

Gold is not a solution but a key indicator of market volatility. Gold in barkwardation,
is saying there is more physical gold that investors want to keep than they want to invest in commodities. This indicates that productivity as a competitive activity is becoming docile.
Gold is a peripheral utility but it remains a shadow standard for all currencies. China
is not even in the top ten of gold holders but that could change as fiat currencies become flattened by the process of devaluation that the dollar's fall has precipitated.

There is much chaos, with unforeseeable consequences, but what can be said is that production, particularly in the US, is under attack from the financial oligarchy. The banks are the weapons of this attack.
Hyperinflation is the only outcome.

It s just a matter of when.

[cyu]

Hyperinflation is the only outcome.

It s just a matter of when.

What is a currency strike? When the population has been divided into one group that has a lot of currency (or gold) and another group that actually has to work for a living, a currency strike is when the second group stops accepting the existing currency (or gold) as legal tender.

In effect, this renders the first group broke. The result? The second group has more to share among themselves because the first group is no longer living off them. How does the second group decide who gets what? That depends on their policies - maybe they barter, maybe they share equally, maybe they just establish a new currency to use.

Although this scenario describes hyperinflation with respect to the existing currency (or gold), it does not affect any new currencies the second group decides to establish.

If the second group is not particularly leftist, then in the future, there may emerge yet another group with vast amounts of the new currency, while everyone else does the real work... nothing another currency strike can't cure - it could conceivably keep going until the selfish give up on the notion that they should keep trying to accumulate more stuff.

[ckaihatsu]

What is a currency strike? When the population has been divided into one group that has a lot of currency (or gold) and another group that actually has to work for a living, a currency strike is when the second group stops accepting the existing currency (or gold) as legal tender.


We've been seeing, in effect, a currency * lockout * -- where, despite the extortion of hundreds of billions of dollars by Wall Street, the economy is seeing a drying-up of capital for growth-driving manufacturing. This is * deflation *, due to capitalist hoarding, which is the *opposite* of inflation.

I don't want to quibble, but I very much doubt that we'll be seeing hyperinflation, and that's because the developing / "emerging" economies (China, et al) continue to look to the consumer markets of the U.S and E.U. as destinations for their goods, as debt-ridden as they are. If there was some off-planet economy that could serve as the new-kid-in-school object for the attentions of the financial elite then the story might play out differently, but in reality there's not.

There are no new territories or markets to vie for as there was in the 20th century -- the Cold War has turned into the Chilly War and not much new has happened, except for the squeezing of China's labor over the past thirty years to hide the First World's ballooning debt.

It's pretty eery how the advanced economies continue to hold sway over the geopolitical terrain despite being economic has-beens -- in *any* other similar situation we would expect, and see, hyperinflation, but the rules are different when you're at the top of the world and there's nowhere else to go.

The U.S.'s military is certainly past its prime but it can't be wholly written off, either, since it continues to occupy bases all over the world. Perhaps we're entering into a period of global feudalism, along the lines of what I've described here:



http://en.wikipedia.org/wiki/Global_Village


Wikipedia doesn't have an entry for this, but I'd like to put forward a meaning for 'Global Village (political)', which would be:

"Welcome to neo-feudalism, the colonization of the entire globe. You're fucked into substandard employment and insufficient income no matter where you live. You will be stuck in the same location, from cradle to grave, almost as much as the serfs of feudalism were, despite all the awesome transportation lying around, now well out of *your* reach, plebe.

Of course you're being watched and dominated over, but, instead of it being from a singular local asshole from the nobility it now could be anyone from a shifting tableau of globally networked assholes on different work shifts.

A large portion of your crops-- I mean wages, must be forked over through taxes to pay for the simple upkeep of a state of society that hasn't changed in generations. Enjoy the technically-upgraded-but-same-ol'-same-ol' bread-and-circuses -- it's good enough for the likes of you and your kind, prole.

Don't even bother to bother the upper crust with your imagined woes -- the rich and famous are enjoying lifestyles that even Robin Leach will never be privy to, so don't even * think * about disturbing them -- that's an offense that's punishable with jail time.

Remember, it takes a village to raise a child, so you'd better get on that right away!"



In effect, this renders the first group broke. The result? The second group has more to share among themselves because the first group is no longer living off them. How does the second group decide who gets what? That depends on their policies - maybe they barter, maybe they share equally, maybe they just establish a new currency to use.


I agree wholeheartedly with this approach -- in times of deflation / capitalist hoarding the regular people suffer inexorably because the rivers of economic flows dry up and so nothing moves. The only way to get past this Depression situation is to provide a new basis for the functioning of society, preferably one in which labor itself is in control of determining the material basis of society, including what is considered valid politics or not. This thread has been a source of good discussion on this topic:


'Can the value of labor be calculated?'

http://www.revleft.com/vb/showthread.php?t=98199&goto=newpost


I advocate the establishing of a global, labor-value-based currency to remedy the economic situation. Please see:



global syndicalist currency

[...]


If the workers of the world could set up their own global currency and get away with using it and supplying to it from capital-based production, I'd be impressed! It would be a massive syndicalist network -- the revolution's got to start * somewhere *, right?


This is basically advocating a global syndicalist currency that would be worker-controlled, cut across national boundaries, retain full labor value, and provide a broad range of trans-national goods and services through regular distribution channels.

All labor provided towards supplying the currency would necessarily be revolutionary acts, and could take place on a variety of scales, in a mixture of patterns of participation, gradually growing in size as cities once did. Transparency of accounting and operations would provide ongoing credibility, with worker-controlled decision-making -- call it stochastic soviets, if you like...!



accounting / logistics

A side benefit of a socialist revolution is that it would mark a definitive starting point of workers' rule. This point on the timeline would allow us to clearly separate, for the purposes of running a socialist economy, that which are *assets* from that which are *resources*.

The only definition that might be a little tricky would be the delineation of that specific labor time which is used to reproduce the labor force, or "socially necessary labor time". Once we have defined this as a baseline, any extra labor hours put in would be officially considered as a surplus, producing surplus goods and services. These could either be consumed in leisure / pleasure, or else they would go into the *assets* (or possibly *resources*) category, as additions to the infrastructure of the communist economy.

[...]

If, by an "accounting algorithm" you mean use of a spreadsheet -- or of a series of nesting spreadsheets, from local to regional to global -- then I agree with you. We don't need *mathematical* sophistication -- we just need to keep track of shit, that's all.

All labor hours can be tracked as inputs into specific production runs that have specific outputs of goods and services. The goods and services can be defined by the number of labor hours ("man-hours" in the current, questionable terminology) that go into producing them. So in this way, each tangible good or minutes of customer-consumed service can be specifically, definitively quantified.

We can also account for the use of specific assets / equipment, and resources, and attach this information to each good or service from each production run.

Obviously certain locales will have better infrastructure (factories) than other locales for the production of the same goods or services -- this means that efficiencies in production will vary, and will not necessarily correspond appropriately to outstanding human need in the nearby area. The workers will have to coordinate outputs from a generalized regional to figure out the logistics of redistributing the outputs from various production runs, from various locales, so as to best supply the most pressing human needs. (On the flipside similar logistics will have to be calculated for obtaining resources to supply the production runs.)

[ckaihatsu]

"Hyperinflation Begining in China and Will Destroy the U.S. Dollar"

http://www.marketoracle.co.uk/Article8320.html


The article above has been brought to my attention as a good source of economic analysis for where China's economy is headed. While it contains good information it is erroneous in its prediction that China's currency is on the brink of hyperinflation. The crux of this thesis comes from this statement, early in the article:


> The US's trade deficit requires China to print money!


This is the typical knee-jerk, superficial analysis that we always see from bourgeois quarters -- it focuses *only* on the money supply, or liquidity, while ignoring growth rates (GDP) and economic relationships to other countries.

Fortunately the information that the article contains gives us the means to think for ourselves so that we can take other factors into account.

Note the burgeoning inflation -- or 'printing of money,' as the article puts it -- in China's economy -- this means that the working class there is providing so much labor value that their own buying power is increasing to alarming levels -- alarming to the interests of capital, that is.

"Inflation" is always a red-flag word -- it evokes the image of a balloon being filled up with nothing but hot air, about to burst into irreversible catastrophe if it keeps ballooning at the rate it's going.

But let's look at this inflation, combined with China's red-hot growth rate and ask: Why would the Chinese government want to do what's *not* in the best interests of business? Wouldn't business *want* do sell their goods at *higher* prices, and have a *strong* domestic demand for these goods?

Yet the government brings in the * inflation * word, or says the economy is "overheating" -- what's hidden here is that the industrializing economy is doing *so* well that its dependence on the *labor* of the Chinese workers becomes *very* apparent.

If China's government did *not* peg its currency, the renminbi, to the U.S. dollar (in addition to the other vault-filling measures detailed in the article), it would become so strong and valued on the world markets that it would effectively usurp all other currencies as the new gold standard of currencies.

In order to maintain the peg, or fixed ratio, the U.S. economy has gone into a gargantuan deficit while the Chinese economy -- that is, the workers' labor -- has funded it. In November I posted a snapshot of the U.S.-China relationship that continues to be a valid summation:



The funny thing about government intervention into a market-based economy is that it only works if the intervention serves to actually make its national industries *profitable*.

These posts are both very *dated* and almost sound propagandistic in light of current events. Since there's no need for massive accumulations of capital in order to start up large industrial concerns, it doesn't matter anymore whose vaults are bigger.

Note that Wall Street *turned down* the $700 billion+ of free government money because it actually wouldn't do *jack shit* since there are no *markets* anymore for financial goods, like mortgage-backed securities. We're in a classic case of overproduction, only this time it's an oversupply of *finance* in relation to the markets that can make use of it.

These gargantuan numbers being thrown around serve as political propaganda more than anything else. By the numbers alone the U.S. is FUCKED compared to the trade and credit surplus that China has, in terms of U.S. Treasury securities.

However, by the yardstick of capitalist accumulation -- which we as members of the proletariat have no personal interest in -- the U.S. and China are now joined at the hip because China depends on consumer purchases from the U.S. market, backed by ballooning U.S. debt, while the U.S. depends on cheap, hyper-exploited labor in China to make those consumer products.

In the press these two act like petulant children -- I'm reminded of the movie Stepbrothers which illustrates the relationship perfectly (and is a very funny comedy if you like stupid-style humor).

Forget the superpowers of the 20th century -- we need a new term, like megapower, to describe the symbiotic double-power that comprises the U.S.-China economy.

Revolution in china-against our own?
http://www.revleft.com/vb/showpost.php?p=1290548&postcount=30

[peaccenicked]

http://www.youtube.com/watch?v=ccMJclKpBQI&eurl=http://inthesenewtimes.com/

This firmly puts hyperinflation on the agenda.

[ckaihatsu]

It is only important that we acknowledge that inflationary measures and and a productive slump cause currency devaluation and hyperinflation.
So, if and when it happens we as socialists are more prepared for it than taken by surprise.


This is >>> utter bullshit <<<. The U.S.'s national debt and current accounts deficit have been, and are, so huge that if they would have any direct bearing on the U.S. dollar we would have seen currency devaluation and hyperinflation long ago.

Since the dollar is a major currency, representing a major economy, it enjoys far more backing and confidence in its markets than it should, by the numbers alone. And since it floats against all other currencies its strength is ultimately measured in relative terms, as against the Euro, or whatever. This detaches it rather neatly from representing just one national economy, the U.S.'s, which is what 1971 was all about, when the U.S. went off of the Bretton Woods dollar-gold convertability standard. In that one moment the entire definition of the currency changed, and with it the national identity, the national culture, and the country's relationship to other countries.

We should *not* be rushing to hold hands in a circle *or* hoarding gold *or* preparing for the U.S. to turn into a Third World country overnight. While the *national* economy has obviously been slowing down and shrinking in size, this does *not* mean that living standards would necessarily slip dramatically -- I refer to the massive underwriting of U.S. debt from China, and to the massive production of cheap consumer goods by hyper-exploited Chinese workers.

If we get flustered so easily by *only* looking at the economic news from mainstream sources we're just playing right into the hands of the ruling class -- we *must* look at the overarching political relationships among the factions of the ruling class to see how they're managing the global infrastructure among themselves. This tells us far more than a linear approach to the balance sheets can.

[ckaihatsu]

Understanding the economic crisis

http://www.revleft.com/vb/understanding-economic-crisis-p1345339/index.html#post1345339

[MMIKEYJ]

I just can't take goldseek seriously - anybody that pretends gold actually has much intrinsic value is a nutcase. Instead of tracking gold, their resources would be better spent tracking food, housing, energy, clothing, etc - things people will actually use.
Gold has a long track record of retaining value.. something like 6,000 years.

Thats going to be hard to go against.

[MMIKEYJ]

This is >>> utter bullshit <<<. The U.S.'s national debt and current accounts deficit have been, and are, so huge that if they would have any direct bearing on the U.S. dollar we would have seen currency devaluation and hyperinflation long ago.

A dollar from 1913, When the Federal Reserve first started is only worth 3 or 4 cents today... There's your currency devalutation... And the people have to work harder and harder to get the same amount of goods now.

The inflation of the currency is an invisible tax put on you without you even knowing it.

[Lynx]

A dollar from 1913, When the Federal Reserve first started is only worth 3 or 4 cents today... There's your currency devalutation... And the people have to work harder and harder to get the same amount of goods now.

The inflation of the currency is an invisible tax put on you without you even knowing it.
Are you referring to constant dollars?
http://en.wikipedia.org/wiki/Constant_Dollars

[MMIKEYJ]

Are you referring to constant dollars?
http://en.wikipedia.org/wiki/Constant_Dollars

Well, I dont use the term, but I suppose you could call it that.

[Lynx]

Well, I dont use the term, but I suppose you could call it that.
Well, the chart speaks for itself. The kind of slope skiers prefer.

[cyu]

Gold has a long track record of retaining value.. something like 6,000 years.

Thats going to be hard to go against.


You do understand that this kind of argument is a logical fallacy don't you?

What if I told you that people also believed the earth was flat for thousands of years, or that people believed the sun revolved around the earth for thousands of years?

What if I told you that slavery and monarchy also has track records of thousands of years? Would you say those are also hard to go against?

Let's hear some logical arguments from you then. What makes gold worthwhile?

If you became financial advisor for your country / company, would you advocate that it increase, maintain, or decrease the amount of gold in its treasury? If I became financial advisor for my country and I suggested a policy of spending all the gold in our treasury in order to improve the productive power of my nation, would you say my nation would be worse off?

When the Spaniards discovered gold in the New World, they thought they won the lottery. So they spent a lot of effort shipping all that gold back to Spain. What did they get? A lot of inflation.

You don't even need to read anti-capitalist economists to get a good view of just how useless gold is - just read Adam Smith's Wealth of Nations.

[MMIKEYJ]

You do understand that this kind of argument is a logical fallacy don't you?

What if I told you that people also believed the earth was flat for thousands of years, or that people believed the sun revolved around the earth for thousands of years?

What if I told you that slavery and monarchy also has track records of thousands of years? Would you say those are also hard to go against?

Let's hear some logical arguments from you then. What makes gold worthwhile?

If you became financial advisor for your country / company, would you advocate that it increase, maintain, or decrease the amount of gold in its treasury? If I became financial advisor for my country and I suggested a policy of spending all the gold in our treasury in order to improve the productive power of my nation, would you say my nation would be worse off?

When the Spaniards discovered gold in the New World, they thought they won the lottery. So they spent a lot of effort shipping all that gold back to Spain. What did they get? A lot of inflation.

You don't even need to read anti-capitalist economists to get a good view of just how useless gold is - just read Adam Smith's Wealth of Nations.
The difference in track records IMO is that golds purchasing power has not changed in thousands of years. 2,000 years ago, if you had a one ounce gold coin, a man could buy a finely made suit. Though it might consist of a toga, a handcrafted belt, and a pair of sandals.. Today a one ounce gold coin will still get you a suit and a pair of shoes.

Silver too.. Back in 1950 a silver dollar OR a paper dollar would buy you 4 gallons of gas.. If you still had that silver dollar from 1950, you could STILL buy 4 gallons of gasoline with it, although you wouldnt be able to buy it with the paper dollar.

Thats the difference.

[cyu]

So are you going to answer my question? Let me ask it again: If you became financial advisor for your country / company, would you advocate that it increase, maintain, or decrease the amount of gold in its treasury? If I became financial advisor for my country and I suggested a policy of spending all the gold in our treasury in order to improve the productive power of my nation, would you say my nation would be worse off?

Let me tell you how "value" is determined in a capitalist economy. A market economy works on supply and demand. The more demand there is for something, the higher its price. This should encourage suppliers to produce more of that thing, thus bringing the price back down again. However, if supply is simply too limited (for example, because you can only create gold in nuclear reactions, or because there were only so many vintage Ford Mustangs made in that year, or because Picasso died and isn't painting any more Picassos), then the price will not come back down as long as there is demand for it.

Now one of the fundamental aspects of capitalism is that some people have much more money than others. How does this affect supply and demand? Well, it turns out that demand is not measured in units of people, it is measured in units of money. Thus each rich person has far more effect on the demand for a good he wants than a poor person. If there are a few millionaires demanding Picassos, while there are thousands of poor people demanding bread, the market will divide its resources according to who has more money to spend. The greater the disparity between rich and poor, the more resources will be devoted to servicing the rich, and the less will be devoted to producing bread. Thus Picassos have "value".

Where does gold play into this? It's because wealthy investors have been convinced that gold is a "store of wealth" or a good "safe" investment. The more rich people that believe this, the higher the "value" of gold.

It would actually be a good thing if we could convince all wealthy capitalists to convert their entire fortunes into gold. If all the gold is in their hands, all the rest of us have to do is stop accepting it as payment for anything. This in effect renders all their gold worthless. We produce the food, we produce the electricity, we build the homes, we make the clothes. If they can't trade gold for any of that, then they are f**ked.

Of course, it's not easy to get into this scenario of course. There will always be poor idiots or agents of the wealthy that try to convince the rest of us that gold is worth something. We just have to educate (or expose) them.

[MMIKEYJ]

So are you going to answer my question? Let me ask it again: If you became financial advisor for your country / company, would you advocate that it increase, maintain, or decrease the amount of gold in its treasury? If I became financial advisor for my country and I suggested a policy of spending all the gold in our treasury in order to improve the productive power of my nation, would you say my nation would be worse off?

Let me tell you how "value" is determined in a capitalist economy. A market economy works on supply and demand. The more demand there is for something, the higher its price. This should encourage suppliers to produce more of that thing, thus bringing the price back down again. However, if supply is simply too limited (for example, because you can only create gold in nuclear reactions, or because there were only so many vintage Ford Mustangs made in that year, or because Picasso died and isn't painting any more Picassos), then the price will not come back down as long as there is demand for it.

Now one of the fundamental aspects of capitalism is that some people have much more money than others. How does this affect supply and demand? Well, it turns out that demand is not measured in units of people, it is measured in units of money. Thus each rich person has far more effect on the demand for a good he wants than a poor person. If there are a few millionaires demanding Picassos, while there are thousands of poor people demanding bread, the market will divide its resources according to who has more money to spend. The greater the disparity between rich and poor, the more resources will be devoted to servicing the rich, and the less will be devoted to producing bread. Thus Picassos have "value".

Where does gold play into this? It's becaue wealthy investors have been convinced that gold is a "store of wealth" or a good "safe" investment. The more rich people that believe this, the higher the "value" of gold.

It would actually be a good thing if we could convince all wealthy capitalists to convert their entire fortunes into gold. If all the gold is in their hands, all the rest of us have to do is stop accepting it as payment for anything. This in effect renders all their gold worthless. We produce the food, we produce the electricity, we build the homes, we make the clothes. If they can't trade gold for any of that, then they are f**ked.

Of course, it's not easy to get into this scenario of course. There will always be poor idiots or agents of the wealthy that try to convince the rest of us that gold is worth something. We just have to educate (or expose) them.
I would let the supply of gold go all by itself.. The point of going onto the gold standard is that there is no way to centrally plan the economics.. no way to set interest rates... The only thing I would regulate would be how much currency banks would be able to issue over their supply of gold. Perhaps 100% reserve financing..

Either way, when countries get unproductive like America gold will flow out of the country, reducing the amount of money and making Americans spend less, and forcing them to get productive and export more products so they could regain gold. We wouldnt be able to buy anymore imports until we had exported something.

The supply of money (gold) would auto regulate itself from country to country the way it used to..

Again, the only difference this way is that money cannot be controlled any manipulated by a group of elitist bankers.

[cyu]

The point of going onto the gold standard is that there is no way to centrally plan the economics... The only thing I would regulate would be how much currency banks would be able to issue over their supply of gold. Perhaps 100% reserve financing


Sounds like typical pro-Mises stupidity to me. If you don't like centrally planned economies (which I don't either), then enforcing a gold standard is contradicting your own goals. How can you both not allow the government to get involved in economics, while at the same time force banks to back their money with gold?


Either way, when countries get unproductive like America gold will flow out of the country... forcing them to get productive and export more products so they could regain gold.

Idiots on both sides if this is the case. The foreign countries would be idiots if they are accepting gold as payment, instead of goods with more intrinsic value, like food, oil, electronics, machinery, technology, etc.

...and Americans would be idiots if they are trying to get more gold into America, instead of goods with more instrinsic value, like food, oil, electronics, machinery, technology, etc - stuff that can directly improve the productive ability of the nation.