Gary Shilling On How to Invest In the Age of Deleveraging and Deflation, Part I

[jackgoldman1]

Demographics is a key issue, plus debasement. Debasement benefits and grows banks, brokerage middle men, owners, and governments. Demographics means baby boomers will become the most frugal over achievers changing their light bulbs to save money. The debt reduction and demographics are deflationary. Only printing press money is inflationary but that has little effect. All other factors are deflationary. The people who print dollars are robbing America blind. Protect yourself.

[gerwazjana]

Question: Is Gary Shilling a Keynesian? What school of thought does he belong to?

[human1s]

Yes DEFLATION is the problem (replying to the previous commenters here) - because we're just entering a CREDIT CONTRACTION, i.e the very thing that has been used as money (~95% of "money" IS credit) is collapsing. This will make availability of money more scarce and strengthen money RELATIVE TO goods and services.

[eovid]

@human1s the problem is there is nowhere for the money to go. no industry here, no economy here, no jobs here. better to hand out shopping coupons. Stimulus that has nowhere to go. wall Street wants it that way.

[human1s]

@eovid thnx for reply. I don't see why Wall st would want it the way you describe it. Altho brokers may make money in turbulence, we currently see funds, clearing houses, banks etc go bust. Let's face it; we have all enjoyed a 40 year boom period with easy credit. No one complained until now when things are beginning to implode.

[888greeting]

@human1s Yes! Well said and an intelligent comment. We are in the beginning stages of a credit bubble deflationary (contraction) period. As Mr Shilling says, it's SUPPLY and DEMAND. There is ready and large Supply of credit, but Demand is falling. There just isn't any demand there for anyone to get further in debt. Cash will be the one thing everyone will want but will find it hard to keep and accumulate. And only cash can pay your bills and buy food, shelter and clothing.

[tigranvartanovitch]

"War times are inflationary; peace times are deflationary." Is Zimbabwe at war? Was Germany and Poland at war during the early 1920s? In case you haven't noticed, Shilling, the US is fighting several wars at the moment. Let's see: food up, gas up, precious metals up; dollar sinking like it's wearing concrete shoes. Looks like inflation to me. Beware of people who quote government statistics: they haven't twigged it yet...

[thruid3]

His advice for the Fed is to be "Careful" that they don't lose credibility ??!!!!

[thruid3]

He probably lives at a nursing home and doesn't have to go to the grocery store.

[crockrocks111]

This guy predicted deflation like 40 years ago....hummm let me see...home prices were like 10,000 now the same home is worth 1million.

[HandyMan101]

deflation? moron. someone should inform this poser what the price of groceries and commodities are doing.

any idiot know the fed is expanding the money supply.

that is the definition of inflation.

[mateo3470]

There is no overall deleveraging and that's a fact. Just look at the Z.1.

[jackgoldman1]

We have mal-investment due to fake Federal Reserve bank debt notes. We don't need computers but elite subsidize this sector as well as banking and other sectors. It's the New World Order taking over. If you work for them you get pensions. If you don't you get a 401k. Socialists subsidize Israel, not Palestine so Israel is doing great. Same for any other subsidy. It's the success and failure of socialism. The ethnic cleansing of Christian white males has been very effective. Socialism is failing.

[lintburger]

Defaltion? Where? Food, gas, commodities, insurance, financial services, taxes everything has gone up. Housing? CPU? Deflation is great for workers and savers not so for banks. The banks will always win. Always. Inflation first, collapse, massive deflation afterwards.

[guitarguy2395]

So if you got every person to rip up a $50 dollar bill of their own money that would take a lot of the paper that is losing value out of cycle. Would this give a dollar more value? I'm only 15 so i don't exactly understand all of this

[vegaspilot03]

@guitarguy2395 technically yes, it would decrease the money supply (real-dont expect the govt to report that) BUT more importantly, actual paper money makes up a very small fraction of the Total Money Supply, most of it being "digital" money. In Other words, If Everyone tried to get all their cash out of the bank, there wouldnt be enough printed actual paper money to go around, not even close. most of it is just .... a creation by the FED.

[JoeyFudd]

I wonder why our fiat paper dollar is worth anything, Economics teaches that a paper currency needs (1) scarcity and (2) trust. The Fed's job seems to be to inflate the currency while talking like inflation hawks.

[pismo10]

He believes the purely fictitious inflation numbers issued by the govt. The govt wants inflation, loves inflation, it is their only way out of the debt trap they are in.

[craigcommerce]

Not only has he never bought grocerys or gas, he doesn't know we are at war!

[eatandtravel]

@craigcommerce

Food and fuel prices are increasing due to global demand. World's population is increasing.

[pismo10]

@eatandtravel ...and weakness in the dollar.

[vegaspilot03]

@eatandtravel HA! yes while true, it wouldnt be nearly enough to drive prices to these levels this quickly, i would look at something else... maybe.. money supply chart???

[tapdog88]

Oh good, all our money will go farther. I love these scholars, I wonder if he's been to the grovery store lately? All of you check out the debt clock and check out the difference between the monetary base and the currency and credit derivatives on the banks books. 2 trillion monetary base, 577 trillion on the banks books. By the way reserves are money. All banks in the United States are members of the Fed. Wake up.

[eatandtravel]

@tapdog88

Stop and listen to him because you might learn something. Reserves aren't effectively money. If you are surrounded by food, will you get fat? You have to use the food to get fat. If reserves aren't loaned out, the money supply doesn't increase.

One last thing, when loans aren't repaid, money is effectively being destroyed. Are you telling me that the trillions of derivatives will be honored or be money good? I don't think so. The supply of money is decreasing.

[ExquisiteDoom]

@eatandtravel The argument boils down to wether or not the government will have a propensity to inflate or not. Wether the government will bow down to peer pressure, or not.

If it becomes politically impossible to bail the banks out again, it will not, but i doubt it severly. Just look at Greece, the ECB bowed down to peer pressure from the greek government which is a lot less sensitive to greece than the federal reserve is to the american government. And i'm sure you know more examples.

[yabcoder]

the only thing he can say is going down in price are these new technologies. the only reason the prices on this stuff is going down is because otherwise people would not buy all that shit that they dont really need. Everyone allready has a phone, a tv and a car allready why do we feel the need to buy more of this shit. well i tell you that is changing and that is why commoditiees are going up up up. You cant even buy some silver coins that the US mint is supposed to be making because of short

[ianjames67]

I thought we were at war.

[sassylassy526]

Great interview Josh Lipton.

[tim3687]

This is a great interview: "The fed does not create money. It creates RESERVES". Do you have a date for this broadcast? Thanks.

[tim3687]

Do you have a date for this broadcast? Thanks.

[th86stone]

7:49 oh somebody somewhere will get this money out somehow, you can bet on that. And yes the fed prints money, maybe not physically, but they sure charge the govt to "create" it. the fed is a PRIVATE corporation, not tied to the govt.