The Great Reflation Is Underway

[BobK71]

There is a certain amount to be said for owning revenue generating property in whatever guise it comes. If that is in the form of fiat money that inflates away over time in a predictabe way that works, the tricky part is when confidence is lost - see Zimbabwe for example. BTC is not immune from crisis in confidence either, but the benefit it does have is transparent operation and supply. Nobody can suddenly introduce another 21,000,000 out of a hat.

Real land, goods producing companies and factories, and service companies are also good bets.

Investing in 'real' assets might be fine if the price and timing are right, but the demand for most goods and services is inflated at the outset by the economy-wide distortions caused by the issuance of state money.  Much of the economy is based on serving the whims of the lucky, so both instability and inequality are constant features.

What this system is not is a true free market.

This is all by design.  The modern system is designed to take wealth automatically from savers, to push them into risky assets, so they help sustain all the asset bubbles that benefit the elites.

[Hydrogen]

This is all by design.  The modern system is designed to take wealth automatically from savers, to push them into risky assets, so they help sustain all the asset bubbles that benefit the elites.

Very interesting point. I question sometimes how deeply such a design may run.

I'll try to give you a real world example. In the united states many american families pride themselves on kicking their kids out of the house when they turn 18. In foreign countries, this trend is often non-existent. Young adults live with their parents well past adulthood and it may be fair to say there isn't the same negative stigma against this trend found in the USA.

Here's where things might get interesting. Americans have social security. Foreigners often lack an equivalent. In practice this could imply foreigners lacking a pension/retirement plan, rely more heavily upon their children to care of them when they get old. Wheras in the united states parents might believe they don't need to have a decent relationship with or do a decent job raising their kids believing they don't need their family to be there for them in old age as they have social security.

If it is true that elites have designed a system to divide society, break up communities and families to an extent to prevent people from uniting or coordinating effectively. Is it possible that even things like social security were engineered with an intent to divide the family unit under an illusion that the state & social security will provide for people, degrading families and communities in some subtle way?

[LoyceV]

I had to search the meaning of the word Reflation. Wiki:

Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle.

While the European Central Bank largely increases the money supply, our national government (the Netherlands) has raised several taxes and increased the government's spending as a share of GDP since 2008. They also increased VAT, which further increases inflation. So they're doing one thing according to Wiki's definition, and the exact opposite on the other thing.

I totally understand, 9 long years after the global financial crisis, the elites just can't seem to get inflation going.  Every time there's any sign of it, the hope is quickly crushed.

Or so they say...  The truth is that the elites can *always* get inflation if they want it.  All they have to do is print money and issue public debt until they get the inflation.  So it's a matter of 'won't' rather than 'can't.'

As a family with some savings, we don't need inflation. ECB is still printing enough money to slowly inflate away savings, banks give very low interests, taxes on savings alone are 5 to 30 times higher than the interest the bank pays. We don't have a capital gain tax, which is very beneficial if you're rich and own a lot of assets, but the common man sees his savings slowly evaporate.

We'll see high inflation for a while, but probably lower in the US than in Europe and Japan.  We'll also see good job and economic growth, and lots of stimulus and redistribution to the poor from governments and central banks to keep social tension low.

This leads to the poor being okay, the rich being okay, and the middle class paying the bills.

Your post was very quickly buried by spammers inhabiting this section.

I like reading BobK71's point of view, but indeed, it barely pops up without actively searching for his posts.

What this system is not is a true free market.

This is all by design.  The modern system is designed to take wealth automatically from savers, to push them into risky assets, so they help sustain all the asset bubbles that benefit the elites.

So what can we do to change this? I see this happen around me indeed. The low savings interest, high tax, and increasing inflation forces people towards risky investments with money they can't afford to lose.
The one difference we have in recent times, is much more free information. But most people (me included) don't get much further than watching the occasional documentary about it, agreeing to what I just watched, and going on with my life because I can't change it.

Is it possible that even things like social security were engineered with an intent to divide the family unit under an illusion that the state & social security will provide for people, degrading families and communities in some subtle way?

Social security is meant to keep people in line: give them enough not to protest, and enough to keep make them depend on the system so they don't attack the system.

[d1ceplayer]

If the so called elites are buying bitcoin instead of banning it, it just makes already rich bitcoin whales (which have pro-crypto agendas) richer. The amount of BTC they would need to buy is simply too high.

They can't do that much beyond causing price crashes with bans, and we already saw how that played out for China. We are about to hit an all time high after China basically banned all exchanges, think about that again.

All they can do with bans is temporal price crashes which will get bought up again, restoring confidence since the more times bitcoin resurges after bans, the less effective said bans are. This is why the market has not reacted at all at the South Korean ICO ban and Swiss ICO ban. Once you do it once, the next time is not interesting for the market, so the next time exchanges are banned somewhere else, it will be the same. You simply can't stop this at this point, pandora's box has been opened. Get in and get yourself a strong bitcoin position or be lefit behind, no other options.

Reflation is necessary. It is so important for the next rise of bitcoin. Just suppose a condition, everyone is buying bitcoins and nothing is wrong about it.

Prices don’t go down and they are just jumping up and up. So do you believe that in that ideal condition there would be chances of more fame of bitcoin? Definitely no, for the downs and ups are the beauty of business.

[syaripudin]

I think this will cause panic for the billionaires with the fear of getting more competition. it is undeniable that the movement of crypto price increase some percent is from the role of the middle class down. this will certainly make people upscale to enter the crypto activity because of course they want to get a bigger advantage of course this thing that will make the middle class down the more marginalized. of course there needs to be a counterweight in order to avoid too much inequality.

[BobK71]

This is all by design.  The modern system is designed to take wealth automatically from savers, to push them into risky assets, so they help sustain all the asset bubbles that benefit the elites.

Very interesting point. I question sometimes how deeply such a design may run.

I'll try to give you a real world example. In the united states many american families pride themselves on kicking their kids out of the house when they turn 18. In foreign countries, this trend is often non-existent. Young adults live with their parents well past adulthood and it may be fair to say there isn't the same negative stigma against this trend found in the USA.

Here's where things might get interesting. Americans have social security. Foreigners often lack an equivalent. In practice this could imply foreigners lacking a pension/retirement plan, rely more heavily upon their children to care of them when they get old. Wheras in the united states parents might believe they don't need to have a decent relationship with or do a decent job raising their kids believing they don't need their family to be there for them in old age as they have social security.

If it is true that elites have designed a system to divide society, break up communities and families to an extent to prevent people from uniting or coordinating effectively. Is it possible that even things like social security were engineered with an intent to divide the family unit under an illusion that the state & social security will provide for people, degrading families and communities in some subtle way?

This is very interesting.  While the weakening of human relationships is a profoundly tragic outcome that I believe is directly associated with elite-controlled money, I'm still hoping and thinking that this one is not intentional.

The modern system, at the center (like the UK in its heyday and the US today,) is two-faced.  For the tiny number of top elites, we have huge state-sponsored benefits.  For everyone and everything else, the system seeks to make free markets run as far as possible.  After all, you need a smooth-running economy to make the world trust your debt.  What this does is to make as many things into commodities as possible, making money more powerful than it is in traditional society.  When money can buy almost everything, you don't need people as much.  Even in old age, you can have almost everything you need, with money.

So the weakening of family bonds occurs as part of the weakening of all human bonds.  As for the social safety nets, my belief is that they were started as part of the alliance between the politicians and voters to jointly benefit from issuing money and debt.  These programs were started after the Great Depression and into the 70s, since bankers were blamed for the Great Depression.  After the debts had run too high, by he 80s, the bankers were back at the center of the winning alliance.

Public old-age benefits are also an effective, but artificial, way to encourage people to take risks while they're working.  This also helps to inflate and sustain asset bubbles.  (Social Security benefits are not high: if that's all you have, it's a pretty poor existence.)

I'm a believer in free markets.  Without the distortions of imperial state money, I think we would have a lesser material life, but would be happier.  Our economic growth would be slower but in step with our growth as human beings in relationship with each other.  This might be the ultimate reason why the fight against elite-controlled money is worthwhile.

[BobK71]

I had to search the meaning of the word Reflation. Wiki:

Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle.

My use of 'reflation' has a similar meaning but specifically refers to inflating away the debt in the system, so everything can start afresh.  (Some people call it the system reset.)  So I named it the 'great' reflation, as it will address the long-term imbalance between asset and real-economy prices built up since inflation was 'tamed' in the early 1980s.

While the European Central Bank largely increases the money supply, our national government (the Netherlands) has raised several taxes and increased the government's spending as a share of GDP since 2008. They also increased VAT, which further increases inflation. So they're doing one thing according to Wiki's definition, and the exact opposite on the other thing.

I'm not as familiar with Europe as with the US, but it's as I would expect -- just enough stimulus and redistribution to keep people from physically rebelling, but not enough to really reset the system and have a chance at re-igniting growth -- hence the seemingly contradictory rhetoric and actions on both sides of the Atlantic.

The classic 'good' solution is to drive inflation while letting gold go up, but apparently they are afraid of that, for now.

As a family with some savings, we don't need inflation. ECB is still printing enough money to slowly inflate away savings, banks give very low interests, taxes on savings alone are 5 to 30 times higher than the interest the bank pays. We don't have a capital gain tax, which is very beneficial if you're rich and own a lot of assets, but the common man sees his savings slowly evaporate.

Slowly eating away savers' wealth has been a hallmark of the modern system.  If you are, naturally, concerned with the moral implications, then, truly 'you ain't seen nothing yet.'  As bad as it is, it is among the more benign side effects of elite controlled money.  The worse ones include deflation, manipulation of the mass media regarding international affairs, conflict and war.

So what can we do to change this?

As I wrote in other posts, this will unfortunately be a multi-century struggle.  The only true cure is public awareness, but the corruption is deep and impossible for most people to see, and the system is good at distributing the 'benefits' around to keep a lot of people content and quiet.

Remember that the US itself started as a rebellion against the British-led global system run by its state-bank alliance.  It was enlightened enough to kill its central bank twice, keep up the trade barriers through most of the 19th century, and defeat the British-backed attack on its integrity during the Civil War.  A big, strong economy that stands firmly outside the world system is the biggest conceivable threat to that system.  (And gloriously so, if you ask me.)  But what happened?  Without popular understanding, all that was for nothing.  Britain was able to co-opt American elites, and in a few decades the US became the *heir* to the head of that system.

The struggle will be long but worth it, if anything is worth anything.  One key, I think is to explain money and finance in a way most people will understand.

[OROBTC]

...

BobK71 just wrote:

"As I wrote in other posts, this will unfortunately be a multi-century struggle.  The only true cure is public awareness, but the corruption is deep and impossible for most people to see, and the system is good at distributing the 'benefits' around to keep a lot of people content and quiet."

I had never seen this idea expressed like that.  The truest words I have seen written in quite sometime.  Yes, it will take centuries because of public laziness and The Elite's excellent reading of what they can get away with.

Bitcoin has been one little escape hatch for many of us (here).  Those who never bought any BTC have lost even more financial ground as a result of the machinations by The Elite.

[BobK71]

...

BobK71 just wrote:

"As I wrote in other posts, this will unfortunately be a multi-century struggle.  The only true cure is public awareness, but the corruption is deep and impossible for most people to see, and the system is good at distributing the 'benefits' around to keep a lot of people content and quiet."

I had never seen this idea expressed like that.  The truest words I have seen written in quite sometime.  Yes, it will take centuries because of public laziness and The Elite's excellent reading of what they can get away with.

Bitcoin has been one little escape hatch for many of us (here).  Those who never bought any BTC have lost even more financial ground as a result of the machinations by The Elite.

Thank you!

As reluctant as I am to see conspiracy where I don't have multiple pieces of evidence, it's hard to see the system as anything other than a highly organized and unified operation.  Why was the system so universally effective at enticing and forcing poor countries to borrow dollars, and productive countries to lend dollars?  (If you read 'Confessions of An Economic Hit Man.')  Who among the elites knew this was important?  How did the system understand enough to begin cultivating India as the next imperial bubble in the 90s?  All this takes coordination and long term planning.  I still hope I'm wrong at least to some degree.

[BobK71]

To supplement the original story:

Between the OP and today, Bitcoin has gone to $19K and come back down to $8K, and the total market cap of all cryptocurrencies is still less than 10% of that of gold.

So the full reflation hasn't happened, yet.  But the elites have thought it wise to raise the value of Bitcoin by quite a bit, from the last stable value of about $300, to at least prepare for the reflation, if it should become necessary.

[IMAR]

Great thread! In our current economy, it was indeed controlled by elites because our economy is actually controlled by money that's why I called it ecomoney. What I know right now is that the value of money decrease a lot as I could only buy so much items for the amount of money I have. Thanks for the deep view about inflation and reflation, first time I encounter the word relation. Thanks.

[BobK71]

I think this will cause panic for the billionaires with the fear of getting more competition. it is undeniable that the movement of crypto price increase some percent is from the role of the middle class down. this will certainly make people upscale to enter the crypto activity because of course they want to get a bigger advantage of course this thing that will make the middle class down the more marginalized. of course there needs to be a counterweight in order to avoid too much inequality.

Yes, big inflation will expropriate a lot of holders of the wrong kinds of wealth.  (As I wrote, this is why big inflation is a last resort of the elites.)

I think it's hard to say which classes benefit the most.  When the rich buy cryptos as insurance against the possibility of the Great Reflation, they buy a lot, and in proportion to their current wealth.

As always, being rich allows you the privilege of diversifying your investments much better than those lower down the ladder.

[IndzheborgC]

Money, debt, and finance can get as complicated as you want.  But they can also be stunningly simple when looked at the right way.  And I like simple.
 
...
Imagine late 19th century central banks suddenly receiving a lot of gold from heaven, and you have almost the right picture.  Just that they have to first convince the public that this is gold.
...

This has already happened in history and led to the decline of Spain to the XVII century.

In the treasury of the empire, united by that time under the scepter of Charles I of Habsburg, golden rivers flowed. The treasures brought from Mexico and Peru by the conquistadors made the country fantastically rich. This period has gone down in history as Siglo de Oro - the Golden Age of Spain.

If at the end of the XV century in Castile was the most successful sheep in Europe, wine cultivation flourished in Andalusia, and in Toledo - weapons business, then by the 16th century Spanish peasants and artisans could not only not sell their produce outside Spain, competition within the country.

By the end of the sixteenth century, the price of bread had risen fivefold, and the general level of prices in the Spanish state had increased fourfold. The servants of the king, who received a salary from the treasury and had no connections with the colonies, immediately became impoverished. In addition, all economically active subjects of the corona rushed to the colony for easy profit.

[BobK71]

This has already happened in history and led to the decline of Spain to the XVII century.

In the treasury of the empire, united by that time under the scepter of Charles I of Habsburg, golden rivers flowed. The treasures brought from Mexico and Peru by the conquistadors made the country fantastically rich. This period has gone down in history as Siglo de Oro - the Golden Age of Spain.

If at the end of the XV century in Castile was the most successful sheep in Europe, wine cultivation flourished in Andalusia, and in Toledo - weapons business, then by the 16th century Spanish peasants and artisans could not only not sell their produce outside Spain, competition within the country.

By the end of the sixteenth century, the price of bread had risen fivefold, and the general level of prices in the Spanish state had increased fourfold. The servants of the king, who received a salary from the treasury and had no connections with the colonies, immediately became impoverished. In addition, all economically active subjects of the corona rushed to the colony for easy profit.

Thanks for the info.  This goes to show gold is nothing more than another form of money.  When the quantity of money in circulation increases, the price of everything goes up.

The difference between physical gold and fiat money, though, is that fiat is issued by humans who have an incentive to maximize the issuance.  (And yes, the issuers are destroying their own system in the long run.)  The supply of gold is harder to control.

The central problem with the Spanish (and for that matter all later global empires: the Dutch, British, and now the American) Empire is that the value of money and debt were not determined by the market but artificially propped up by imperial power.  This created perverse incentives for the elites (see above) and also distorted all production and price levels, so that once the imperial power collapsed from issuing too much money/debt, people couldn't make a living any more, because production capacity had been driven artificially high during the financial bubble.

[Deubila]

To supplement the original story:

Between the OP and today, Bitcoin has gone to $19K and come back down to $8K, and the total market cap of all cryptocurrencies is still less than 10% of that of gold.

So the full reflation hasn't happened, yet.  But the elites have thought it wise to raise the value of Bitcoin by quite a bit, from the last stable value of about $300, to at least prepare for the reflation, if it should become necessary.

Your information is too good. I think so too.
Full inflation has not yet occurred.
As many sources have thought it wise to raise Bitcoin's value a bit, the job has changed, at least in preparation for inflation, if it is true. I need to be mindful.