What is Inflation

Georgi Stankov and Erik Paradis, August 24, 2015


Dear George,


This author has expert tools to dissect the Markets in real time. The interesting things to me are the crashes in dollar futures, euro fx.. it goes on. This is a systematic deflationary event. Money in these markets is being vaporized. BUT, its all good on CNBC, life goes on.

Eric, Canada


Dear Eric,

I cannot open the link, can you send it one more time. I do not think that this term is correct – systematic deflationary event. What we now observe is indeed the evaporation of currencies value but this is a classical inflation. Only that this time we will not carry a basket of dollars to buy a single egg, but only credit cards that do not function.

Read my latest financial article.



Well, if liquidity disappears in assets that are formerly used in situations of falling liquidity – what do you call it?




Dear Eric,

here is the official definition of deflation:

In economicsdeflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate).

Although the values of capital assets are often casually said to “deflate” when they decline, this should not be confused with deflation as a defined term; a more accurate description for a decrease in the value of a capital asset is economic depreciation. (This is your failure.)

And :

In accountancy, depreciation refers to two aspects of the same concept:

  1. the decrease in value of assets (fair value depreciation), and
  2. the allocation of the cost of assets to periods in which the assets are used (depreciation with the matching principle).

For me depreciation of assets leads to destruction of wealth. This automatically leads to devaluation of the currency linked to these assets:

Devaluation on modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. “Devaluation” means official lowering of the value of a country’s currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. In contrast, depreciation is used to describe a decrease in a currency’s value (relative to other major currency benchmarks) due to market forces, not government or central bank policy actions. Under the second system central banks maintain the rates up or down by buying or selling foreign currency, usually but not always USD.

From this latter definition it becomes clear that essentially devaluation of a currency and depreciation of assets are the two sides of the same coin – lost of value of a currency to purchase goods – and this is called inflation.

Many terms assessing the same phenomenon. The marketplace has too much money – 300 – 500 times more money in real or virtual circulation than the GDP of the real producing economy. As long as the dark cabal could hide this gargantuan discrepancy between money value and real material value, which I call “world inflation”, you have different artificial safe havens where you can deposit this excess money and pretend to be a real wealth.

The moment when this financial fraud or Ponzi scheme begins to unwind, this affects all assets and then all such phenomena as depreciation of assets, devaluation of a currency to other currencies lead to the same final result – the revelation of the world inflation – the printing of money and other financial products as CDOs out of thin air or with a computer click – and then the loss of money value as purchasing power, which is again experienced inflation. Period.

With love and light



OK, agreed. I just wanted to mention that today even the TLT – a 20-30 year bond etf of US treasuries was flat, along with a few other risk assets like the 10 year bond unable to trade with any liquidity. That may or may not say anything about inflation or deflation, but it does say risk is coming back to the Markets in a very big way.

The presence of an absence of a store of value could be a good precursor to allowing inflation to pop up, so you are right, I was wrong in calling it deflation then.


BTW – I have met more people with ascension symptoms in my local community in the past few weeks, mostly heart chakra activations. Most do not readily believe in their own LBP or ascension symptoms so far when I reluctantly mention the topic to them after hearing about their symptoms.



For instance, when you have the S&P chart with the latest losses shown as a vertical downfall of the curve in the last few days below, it actually shows how much value the share certificates of the investors have lost – estimated $9 trillion worldwide this last week. This chart is in its essence an inflation chart that shows the loss of value of the share certificates which are denominated in dollars and thus assesses the inflation of the dollar for this particular form of fiat paper (toilet paper) money. At the end what the shareholders can only do with these US share certificates is to wipe their asses in case they have enough money to buy food and have a digestion, which is highly questionable at this point in time:

http://www.theglobeandmail.com/globe-investor/markets/stocks/chart/?q=spx-i (click for six months period)


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