Just In Time Whiplash

in LeoFinance2 years ago

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Is @taskmaster4450 the only one who can see it?

Inflation is not a problem.
We are about to get absolutely ravaged by deflation.
The GREATEST DEPRESSION is coming.
And it is not going to be pretty.

In the above linked post Task talks about many of the reasons why deflation is the real threat right now. Inflation is not a forward-looking indicator. If we want to know what's going to happen in the future, talking about prices going up in the last 6 months is not at all helpful.

Many people wrongfully assume that the inflation debate is a relevant one to focus on. As I and Taskmaster know... these higher prices we are seeing are completely and utterly unsustainable. There comes a point where citizens simply can't afford the higher prices. This makes inventory increase. More supply makes prices lower. Lower prices means workers get laid off and/or paid less. The economy will contract. All of these issues point to one devastating outcome: DEFLATION.

Essential vs non-Essential

Some products are essential, and some are not. Examples of essential products are food, water, shelter, power, gasoline, medical care and medication. Examples of non-essential products are new phones, clothes, computers, gasoline, alcohol, furniture, art, appliances, etc. Notice how gasoline is listed as both essential and non-essential. This is where things get tricky. Many non-essential items become essential within certain contexts, and vice-versa.

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Everything is relative.

There's a big difference between using gas to go to work and using it to joyride around town. Also, there are many essential product that get wasted and overused because they are abundant and cheap. See what happens when everyone has to penny-pinch to get by. Even though food is essential that doesn't mean that citizens can afford to continue buying the same products they were a year ago after losing their job. That hardship trickles down into all other purchases that person makes. There are many many variables to consider here.

JUST IN TIME business model.

This is the main topic of discussion I wanted to bring up that many are not even factoring into the equation. Supply-lines have been hit hard by things like COVID policy and sanctions against Russia. Corporations have been scrambling for years now trying to keep up with the changing environment of the global economy. Evolution is happening in real time, and evolution is ugly and surrounded by failure/death.

Everyone was using the Just In Time business model to eek out some more profits. During the pandemic, we saw that this greedy (but efficient) model was the cause of many supply shocks to the system. It stands to reason that many businesses out there are going to try to avoid this happening again at all costs. This kind of fishtailing whiplash could be just as damaging in the opposite direction.

If businesses are all of a sudden stepping out of their comfort zone and stockpiling product that they wouldn't normally stockpile, what happens when those products don't get consumed? When combined with all the other topics being discussed, this makes deflation even worse.

Conclusion

Inflation is an irrelevant indicator that shows us what's happened in the past. The real threat to the economy has always and will always be a deflationary death-spiral. Prices going up temporarily while the supply-lines are shocked shouldn't even be considered inflation, as inflation is an irreversible expansion of the money supply, not a temporary deflation of essential/non-essential products.

Nearly everyone in the world is ignorant to these factors and variables when it comes to the global economy. Everyone would rather just complain about the price of gas going up rather than actually try to understand these issues. When the majority is ignorant, the minority can capitalize on that ignorance.

We can reasonably assume that everyone is going to complain about "inflation" being a problem. We can also assume the FED, in their infinite wisdom, will continue choking the economy with increased interest rates during perhaps the worst possible time to do so.

Now is not a good time to be bullish on anything except for the value of USD. If everyone is complaining about inflation and the value of the dollar going down... yep, that's when you bet against the market and make sure you have a balanced position going forward. The Dollar is strong and it will become even stronger with increased rate hikes. For me personally it's all about having as much BTC, HIVE, and USD as possible. It's time to consolidate into the secure communities that we actually believe in rather than going all in on some random new project. I will not be caught off balance again. Greed and desperation are punished in crypto, and I've learned that the hard way a dozen times now. Stay grizzled.

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It is really disturbing and frustrating in some point to see deflation trend at the moment which have affected a lot of Investments making it lose it value and profits but since it definitely not a surprise seeing such, we just have to keep all hopes alive to witness inflation pump up again.

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I will not be caught off balance again.

I keep on saying that to myself for years... I guess being more flexible and open rather than searching for patterns is a better way. Everyone was waiting that after covid we would have a good amount of time of "well being around the world", and now this fuckery... Are we living the matrix or what?

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It's good for the Earth if demand (consumption) goes down. Of course, it'd be good for the Earth if three quarters of the human population died. What's good for the Earth is (obviously) good for the long-term survival of our species. So, bring on Covid with a high mortality rate and the Great Depression. Let's do this.*

*This comment is for entertainment purposes only.

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We are in for a mixture of inflation in prices of basic necessities and deflation in value of all the assets you already own including your fiat currency.

Whatever paltry amount they raise interest rates it's not anywhere close to the actual rate of inflation which is 15% - 20%. So they raised interest rates by 0.75%, how many raises are they really going to do to get close to the real inflation rate?

The question remains, where to park your assets now? Precious metals, BTC and crypto.

Can't you just print money to infinity? 😎

No more deflation.

the fed doesnt print usd so no.
only commercial banks print usd via loans
we see that even 0% interest isn't good enough incentive in this climate to issue loans.

Do you believe ia late now to invest in gold or silver? I know you are not financial advisor, but i like your point of view! Just your opinion!

PMs aren't an investment imo.
They are a redundant backup.
Anyone who wants to actually build value shouldn't be looking to PMs.
PMs are great if we want an oh-shit button in play during a banking crisis.
But they are worthless unless you Physically own them.
I personally like silver better than gold, but both are good hedges.
An appropriate amount would be 1%-3% our net worth into PMs.

Yeah, I've been harping on about this for a while... and I think Cathie Wood of ARK has been saying it forever.

When prices are high, demand drops... the market is always searching for equilibrium and doesn't often need the US Fed to come in after the fact and double down on everything.

Tom Cruise didn't star in The Perfect Storm. George Clooney did. Otherwise fine comment. :)

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True.. It's better to stick to what we believe in. No time for random experiments.
Isn't the US Dollar the strongest currency?

I agree that the current price increases are not sustainable. It's kind of crazy how people say that the rates increases will continue to go up but I think that will quickly fall when people stop buying.

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Perverted prudence ! if only the world woke up to the lie and then forced to confront sobering deflationary truth. Like yanking the rug out from under the entire space. Deflationary money running wild across every market spot, including stocks.

 2 years ago (edited) Reveal Comment

this post isn't even about crypto.
im not reading this wall of garbage based on false assumptions and ignorance.
this post is about economic deflation, just-in-time business models, and the inevitable contraction of the world economy. yeah, your coin isn't going to help. maybe next decade during the next depression.