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Good-bye $26 trillion

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October 08, 2008 – Comments (13)

Bespoken has a post which tallies the decline in the world equity markets since last October, $26 trillion dollars which is 41% of the world equity markets.

Looks like the US leads the pack with $7 trillion in losses.

Hmmm....  I am not sure on the "exact" population difference between Canada and the US.  I always just use 10 times difference.  If that is the case, the loss per person in Canada is higher then the US.

I am still in the deflation camp, although I am watching these print money campaigns closely.  I still think the rate of loss from leverage will be faster then printing, but at some point that may change.  

And certainly high unemployment is deflationary because it pushes wages down.

13 Comments – Post Your Own

#1) On October 08, 2008 at 6:11 PM, kdakota630 (29.61) wrote:

10x the difference is a good rule of thumb. 

2008 census is 33,395,000.

U.S. 2008 census is 305,000,000.

So, 9x would be more accurate, but more of a pain to implement.

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#2) On October 08, 2008 at 6:33 PM, abitare (34.88) wrote:

Good find. I am hoping we only have deflation and not hyper-inflation etc...

I am in the deflation camp.

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#3) On October 08, 2008 at 6:50 PM, nuf2bdangrus (< 20) wrote:

Every dollar they print gets sucked into the system.  Gold will start to outperform, but other commodities may lag.

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#4) On October 08, 2008 at 7:08 PM, awallejr (79.45) wrote:

Kiss deflation goodbye.  The moves the Treasury and Fed have been making has completely changed the picture.  Interest rates will go to 1%.  Only way to get out of this mess IS through inflation.  And those guys know it.  That 26 trillion, btw isn't gone.  It just moved to other places.  It is still out there.  And when people start realizing that getting 1/2 %, even if safe, sucks, you might start seeing the bleeding stopping and even  selective buying again.

Right now people are scared more than anything.

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#5) On October 08, 2008 at 7:15 PM, goldminingXpert (29.50) wrote:

awallejr--kiss your rating good bye. Deflation is here to stay. The 26 trillion is gone--it was just a figment of the collective imagination.

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#6) On October 08, 2008 at 7:22 PM, awallejr (79.45) wrote:

Lol, my rating is already gone ;p

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#7) On October 08, 2008 at 7:45 PM, rudolphsteiner (< 20) wrote:

We're sunk. It's been inevitable for a while now. But I wonder what will happen in emerging economies.

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#8) On October 08, 2008 at 8:25 PM, dwot (38.95) wrote:

Looking at the population numbers for Canada/US it looks like the per capita loss are very, very close.

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#9) On October 08, 2008 at 9:50 PM, lquadland10 (< 20) wrote:

Oh my could Ron Paul be right? Was it really lost because after all it was just thin air made up out of paper. Well so much for globalization or as I call it the NEW WORLD ORDER.

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#10) On October 08, 2008 at 10:01 PM, Harold71 (22.02) wrote:

Deflation in stocks, yes.  I've been agreeing with that for almost a year.

Deflation in typical store prices?  Not likely.  The ratio of the money supply to the amount of good and services is a delicate balance, and the Fed is walking the tightrope.  They'll probably screw it up, and they like to err on the inflation side.  95 years of dollar devaluation proves that.

During the Great Depression, the Fed raised interest rates.  Yes, that's right, the Fed caused the "Great" of the Great Depression.  Ben Bernanke has openly admitted this and would love to talk to you about it, aboard his helicopter.

Also, the whole banking system is based on the fractional reserve system.  The banks don't have the money.  They lent it all out, times ten.  It was fun while it lasted.  If we all run on the bank, the Fed has to cough up $6 trillion...last time I checked.  What's another $6 trillion on the debt we can't pay anyways. 

Gold at $900 is seriously questioning deflation...well, it's seriously questioning the value of the USD.  Oil is not exactly cheap either. 

Inflationary Depression anyone?

If all the money that has been going into treasuries (actually pushing yields into negative territory recently) instead went into commodities, we'd all be saying it's inflation.  Commodity prices are one read on that.  So I think it is largely a matter of where the money feels safe.  Right now the money is scared stupid.  Most of it doesn't know what to do.  So most of it goes to the old standby, US treasuries.  The money will not be safe in US bonds forever, IMO.  The US has a Ponzi scheme going where it keeps selling more bonds to idiotic foreign investors to pay the interest on the previous bonds. 

The US national debt is in short-term treasury bonds.  Adjustable rate mortgage anyone?  Yes, the US Gov't already took one out for you.  Good luck with that.

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#11) On October 09, 2008 at 9:56 AM, dinodelaurentis (70.45) wrote:

Harold71,

my god, Inflationary Depression??!!

you've just given a name to the spider scuttling in the corners of my brain!!

just f^(%!#@ great! a New Way to suffer in a New World Order.

i picked the wrong day to quit sniffing glue.

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#12) On October 09, 2008 at 10:41 AM, Jhana9 (22.03) wrote:

I mostly just read and try to learn around here, but is there any reason we couldn't have deflation of certain assests (housing and equities for example) and have inflation right along with it (per Harold's comment)? Haven't we been having that for a while anyway? Could that happen if the dollar lost value even though commodities we in less demand due to a global slowdown?

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#13) On October 09, 2008 at 4:19 PM, jester112358 (28.85) wrote:

Good point about deflation in certain prices like housing while scarce resources like oil and food will continue to inflate.

 Also, as also pointed out:  the 26$T didn't disappear any more than it "appeared" in the last bull market.  It just changed hands.  For every seller there is a buyer.  If the buyer loses the seller wins, its a zero sum game.  For every house owner who has less equity (i.e. bought at the wrong time) there is a seller who pocketed major capital gains by selling during the housing boom.  Real weatlh only occurs due to increases in productivity via technological breakthroughs, everything else is financial hocus pocus. 

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