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food and fuel is indicative of inflation of yesteryear(by somkey

(2007-11-12 22:47:39) 下一個

"Inflation is a monetary phenomena."

That is...

Price inflation in the economy is always preceded by monetary inflation.

So...

Toconclude that the price of massive meals for your intestines orpre-filtered premium for your Porsche is indicative of CURRENTinflation could be considered by pure inflationists to be quiteblasphemous to the Austrian gods.

What we are seeing in higher prices for food and fuel is indicative of inflation of yesteryear.

Ifwe stop our tendency to judge price inflation as current inflation andlook at what is actually occurring now, what do we see?

We see contraction of credit in the economy through debt default.

We see contraction of credit in the financial system through asset deflation.

We see banks that posted mega-profits during the inflation cycle now posting mega-losses.

Wesee the Treasury and the Fed stretching the bounds of legitimacy to tryto prevent liquidity from falling through the black hole ofhyperdeflation.

We see fiat money being transmitted back into thin air.

We have run beyond the cliff edge and are now suspended in that thin air.

Whatever you do...

Don't look down.
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