We previously covered the deflation in Britain when they went off the gold standard. That was in the ballpark.vincecate wrote:John has called for the CPI to drop 30% like in the early 1930s. Do you think anything like that has ever happened in a pure fiat money system? Do you think that could happen to the USA under Bernanke? He wrote a famous paper on fighting deflation and has lots of ideas on this.
If Bernanke is given free reign, it will be difficult to get a normal deflation. If nobody stops him, my suspicion is there will be complete chaos within 12 months. There's already been a lot of chaos all over the world in the past 6 months. It started getting bad within a couple months of the start of QE2 as the inflation made it difficult for people to feed their families. If Bernanke is given free reign and does a QE3 and a QE4 the chaos will get 10 to 100 times worse in the next 12 months in my estimation. I believe there will be riots and revolutions all over the world, including the US. I believe in the US gangs will kick or shoot people's doors down and go in and take what they want on a frequent enough basis that it won't even be reported on the news. Most people don't know this, but gangs of youths have been randomly attacking people in cities all over the US. I believe this is being covered up by the police and the national media on purpose. For example, on July 4 in Milwaukee, eyewitnesses made reports of numerous attacks but the police denied that any attacks occurred. However, when the attacks were stepped up a notch at the opening of the State Fair, the facts could no longer be denied. Under those circumstances I would expect housing values to eventually fall 90% in such areas but food will be hard to come by and could get very expensive if you can even get it by normal channels. I don't think normal measurable markets will exist in a lot of places if Bernanke is given free reign.
I think the 1929 crash end point lines up with the 2008 crash end point. Then the April 1930 rebound lined up with the April 2010 high before QE2 was put in place. Then QE2 held everything in place for 1 more year and now we are in 1930 but 1931 could hit quickly if things go into free fall and the clock catches up.vincecate wrote:If you line up 2008 and 1929 like you did with the stock market, it was only the first 3 years that had deflation. Once they made it illegal for people to own gold, they got inflation. So in some sense we are past the deflation part of the great depression in our current crisis.
What life will be like day to day in every large US city if Bernanke's policies continue.
http://www.foxnews.com/us/2011/08/06/hu ... tate-fair/
http://www.csmonitor.com/USA/2011/0809/ ... nvolvement