It strikes me as tremendously deflationary– all of this conceptual wealth evaporating, because of all the inflated home equityblowning out of the ballon/nest eggs of the b-b-ers.

We were rich, now its all gone. all that credit, all that illusory stock-wealth and our illustion self worth that fueled all the business and consumerism and brisk economic trade within USA, this is just more contraction of the shrinking pile of dough we all thought we had.

So is it not clear?…its a DEFLATIONARY SPIRAL,
even if you print lots more bucks and try to pay off debts with Zimbaway dollars in a pantimime of balancing the books….that is just a side story of currency destruction. The main theme is deflation, economic lockup due to capitol vanishing

By bill hopen on Sep 13, 2008

The main theme is hyperinflation and the end of the US dollar. Deflation is the side story. You can’t have a deflationary depression with a fiat currency. The Great Depression happened when the dollar was backed by gold. Now the dollar is basically backed by the strength of the US economy. Paulson and Bernanke have made it clear that the big banks will not be allowed to fail. The dollar, however, will be.

By SiggySan on Sep 14, 2008

Siggy,

If you want deflation in a fiat currency look at Japan. You can increase the supply of dollars as much as you want, but you cannot change the velocity.

And if you don’t change the velocity those newly created dollars only sit on the balance sheets of collapsing intermediaries.

By pim(p)co on Sep 14, 2008

Deflation versus Inflation

That is the question. Credit collapsing is deflationary; however, I believe this will be fought tough & nail by the government/Fed. The danger is if foreign governments panic and sell their dollar denominated debt. This would trigger rampant dollar inflation. Japan did not have external debt in signficant amounts held by other countries.

By Robert Coulter on Sep 14, 2008

Deflation versus Insolvency.

Deflation is definitely occurring in the US with all the business evaporating but….

What if the US default on it’s payments? What will happen then?

Also, can global inflation offset US deflation?

Just questions to ask. I think the US is in bigtime trouble at this point.

By Gargamel on Sep 14, 2008

SiggySan,

True the dollar might well become equal to the value of Toilet paper (or less because its scratchier) but….

there will still be a world economy, with some valued medium of exchange,i.e. gold, silver, euro’s, swiss franks,etc. And that economy will be in deflation, its economic activity shrunken down to a small percentage of todays, less goods produced, little capitol available to invest or create more business activity.

The fact that zimbabwey dollars are a billion to a pound of beans has no effect on the world’s real economy (which happens to be deflating) So my point is, The side story of USD fiat currency becoming next to worthless will not effect the main world economic story….a world wide deflationary depression, mass enemployment, no investment capitol or credit availible, massively curtailed economic activity.

By bill hopen on Sep 14, 2008

Let the banks collapse. Let the people who work at the banks find real jobs. With middle class jobs sent off shore, there has been a short term run-up in corporate profits and CEO salaries.

However, the earning power of the middle class as been gutted. The US will need maybe one bank, with a small, modest mortgage office. One.

By FutureThink on Sep 14, 2008

“But remember The Lord your God, for it is he who gives you the ability to produce wealth”. (Deut.8:18)
I have been wondering how long God would continue to shower prosperity on a country that spits in his face. It looks to me as if he has finally had enough.

By Debbie Ryker on Sep 14, 2008

The bible also says I can take my new wife to her father and stone her to death if I find out she wasn’t a virgin when I married her. Is that the kinda of moral guidance we’ve been lacking Deb?

By Thomas Day on Sep 14, 2008

You’ll have to take your anger (which almost always come from guilt) up with the Lord. I did’nt make the rules, but like it or not, this cesspool, Godless, baby slaughtering country is going down, and it is never coming back, ever. It’s over. And if that offends you then I end with Shakespeare…”the sting of the rebuke is the truth”.

By Debbie Ryker on Sep 14, 2008

The world GDP is $50 trillion. The world supply of derrivatives is $1 quadrillion. Like Voldemort, these derrivatives are looking for a body to make them physical and real. Soon they’ll turn to smoke because NOTHING can make them real.

By Dan B on Sep 14, 2008

Wow!
Quite a lot of hatred being projected here. Jesus would be proud

By Jon T. on Sep 14, 2008

I agree with Debbie Ryker. I love this country, but when we shed innocent blood (abortion), kick God out of every part of our culture that we can, and embrace behaviors that God calls an abomination, we are pretty stupid, considering that God can crush us as an afterthought (read Isaiah 43). And, Thomas Day, anyone can pick this or that out of Scripture and make some contrary point (you need to understand a little about hermeneutics before you start down that path), but it is clear that Debbie has it right. Our country needs a revival. Right now we are a divided country and that results in destruction.

By Winston Hamerud on Sep 14, 2008

I agree with Debbie Ryker. I love this country, but when we shed innocent blood (abortion), kick God out of every part of our culture that we can, and embrace behaviors that God calls an abomination, we are pretty stupid, considering that God can crush us as an afterthought (read Isaiah 43). And, Thomas Day, anyone can pick this or that out of Scripture and make some contrary point (you need to understand a little about hermeneutics before you start down that path), but it is clear that Debbie has it right. Our country needs a revival. Right now we are a divided country and that results in destruction. By the way, I agree with Financial Sense Online (Jim Puplava), we are headed for a hyper-inflationary depression.

By Winston Hamerud on Sep 14, 2008

Debbie is a nut.
If what she says is true, it would apply to every country in the world. Exceptions might be Muslim countries.

By Walt on Sep 14, 2008

Gee, China is baby killer #1, and Godless too.

Their economy is going gangbusters.

I guess God just hates Americans.

By Don Mason on Sep 14, 2008

Winston, eating shrimp is also an abomination according to God—-so if you have eaten shrimp, you have also embraced an abomination.

By Walt on Sep 14, 2008

Looks like I stirred up a hornets nest…..
As for China, #1.. their economy is starting to tank, their stock market is down 35%!!!! but nonetheless …sometimes God raises up countries to bring down other countries. God loves his creation, but neither will he be mocked, and it is not a bit hateful of me to say it.
But,let us suppose God is not intentionally bringing this country down. I will approach it from a different angle. Is it not true, do we not read that at every level of governmant, city, state and federal, as well as throughout the corporate and banking world…. has there not been fraud, deceit, and corruption at every level, and to a degree that is difficult to grasp or comprehend? Thats what we keep reading. Would not an adherence to a widespread moral code have prevented this upcoming disaster? In a massive fashion, our own evil, greed, and immorality have brought down the American empire. I am NOT a socialist, but how can free enterprise live in a society this selfish, and greedy. Men cannot be trusted to refrain from stealing and exploiting their counterparty. So now, because we were horrific stewards of our freedom, it will be taken from us. We are in the financial death spiral as we speak. When we emerge from this dark tunnel, I fear that freedom will not await us on the other side.

By Debbie Ryker on Sep 14, 2008

‘Men cannot be trusted to refrain from stealing and exploiting their counterparty.”

Agreed.

Like my Grandmaw always said ,”Never trust a preacher that owns more than two suits.”

By Don Mason on Sep 14, 2008

I get my freedom, and all of you do too, (in a roundabout way) from the barrel of a gun. Human condition over the last 100,000 years or longer. Might makes right. “those who beat their guns into plowshares will be ruled by those who don’t”.
Be as religious as you want, I choose to believe that I am my own control mechanism.
Banks and governments fail for the same reasons now as always, Banks and governments always fail. We all die, eventually, and whether it looks like a scene from a Disney movie, or it just goes black, don’t matter.

By bustafunk on Sep 14, 2008

“How many religious leaders have proclaimed the very things we as a nation are experiencing right now.”

A small minority of right wing Christian zealots.

“to have a one world currency per Revelation the US dollar must fail..remove the veil from your eyes and see the world change before your very eyes.”

I suppose you can bend current events to fit your preconceived agenda.

A valid point to consider about your fear doctrine from the book of Revelations…..

The majority of Zionist Jews living in Israel today are secular Jews.

Does the Book foretell that Israel will be full of Jewish Atheists before the Rapture?

If not, you have a lot of waiting to do.

By Don Mason on Sep 14, 2008

You religious people should youtube some Richard Dawkings,or Sam Harris. There is no GOD condeming our country. America has been ENRON’d. It’s a crime. And it would not surprise me that our leaders are actually involved.

By will on Sep 14, 2008

Good gosh whenever things get tough, the religious rhetoric really picks up. I would think god has nothing to do with finance…and pick your reasons for that. Just the same, I’d imagine there is no human on earth that knows god’s will. I question the humility of those that claim to. That being said, it is defensible to know the will of history, as regards finance markets and their punishment. It seems to me, the punishment being exerted on the financial markets today is along the lines of “Those who forget their history, are doomed to repeat it”.

By u4yeah4 on Sep 14, 2008

Chris Martenson has put up a very informative bunch of videos. It is here: http://www.chrismartenson.com/crashcourse
Video #18 talks about how we have pillaged every drop of oil, every gold/coal/copper mine and there is nothing much left. The basic premise is that our money system is exponential but the earth is spherical and has limited resources so you cannot be on that exponential curve forever - even if dog is with you.
You guys should watch it before trying to explain everything from your extensive bible knowledge.

By Ashwin on Sep 15, 2008

Religious bible robots cannot comprehend reality, or therefore economics. Deb abortion has nothing to do with the economy, so instead of fear mongering I suggest you try to problem solve with the rest of us. When people in your community begin starving to death, please don’t tell them it is because of their lack of faith in your beliefs. Bibile thumpers like you voted the country into the hands of religous conservatives bent on destroying the value of the dollar.

By sethd on Sep 15, 2008

I wish people would stop pretending to be prophets and knowing what God’s thinking of at any given moment.

What’s happening to the US has already happened to the British Empire from 1945 to 1970. Can you imagine a place which used to rule every timezone go bankrupt, lose nearly all of it overseas territories (except for HK and the Falklands), and see it’s unit of currency go from $3.5 USD to $1.5 USD all within a generation or two. That’s essentially what’s happening here.

By Randy on Sep 15, 2008

“god” was made up by a bunch of con men just like the ones running finance these days.
“god”, lol

By santa on Sep 15, 2008

god is a mind virus , sort of like “real estate always goes up”.

By washyourbrain on Sep 15, 2008

Folks, there are a lot of folks who believe in a universal supreme spirit (God or whatever) but don’t subscribe to being visionaries as to what it has *planned* for humanity, esp in light of recent financial turmoil. Even Ben Franklin believed that deity allowed the ways of humanity to unfold without interference. I’d bet that a slew of right winger types would either call Franklin a heretic or a non-Patriotic American.

By Randy on Sep 15, 2008

Why would God bless America?

By Andrew Shand on Sep 15, 2008

:Why would God bless America?

It might have something to do with what Washington had said but probably out of context. He’d said that the reason why his army had won was due to divine providence because all the odds were stacked against him for the length of the war. So all and all, it was a type of destiny, divinely inspired or not but still, having been two centuries ago, I still don’t see whether or not the current fiscal crisis has any bearing to Washington’s musings.

By Randy on Sep 16, 2008

I think that our leaders are responsible for this mess.So the correct thing to do is to change them.Hopefully the next group will continue the money creation;but will -now that we;through our Government;will control the Banks and Insurance companies;give the newly created money to the people at the BOTTOM of the dinero-chain so that they can pay off their mortgages and therefore keep OUR financial companies afloat.
We should end up as a nation of home-owners who earn a living taking in tourists from the rest of Earth who come to enjoy the incredibly cheap living -for them-conditions and the charms of our young sex-workers.
And we shall all be young!

By Frank Hayes on Sep 18, 2008

think everthing is okay because the fed will bail out everyone. not so quick. to do so requires the printing of vast numbers of dollars. down goes the dollar, in comes inflation.

By robert on Sep 18, 2008