About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

23 comments:

  1. 1
    Dorothea says:

    “Stagflation” would be the worst scenario of all.

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  2. 2
    David Losh says:

    The Fed has already dumped a couple of trillion dollars into our economy. The World Bank, IMF, and Euro zone have dumped in another couple of trillion. We should have inflation by now. Instead we have a false sense of inflation by rising commodity prices. The poverty rate is increasing, with a massive redistribution of wealth to the upper 1%.

    What policies do you see that will change the course we are on? OK, what monetary policies do you see that will change the course we are on?

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  3. 3
    robotslave says:

    RE: David Losh @ 2

    Hey, there’s always price controls, right?

    Tripling the money supply (and holding the Fed rate at 0.25% for three years, with a promise of at least two more) didn’t work, sure, but maybe the problem was that we gave the newly (and quietly) printed cash to the wrong people, and not that we’re in a liquidity trap?

    Or if you don’t believe in liquidity traps at all, then clearly the way to solve all our problems is to go back to the gold standard. That would fix things right up, I’m sure.

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  4. 4
    Blurtman says:

    Deleveraging, accumulated and unrecognized bad debt, and a presumed deceleration in the issuance of new debt are all deflationary. I would imagine a shuttling of workers from the labor force to unemployment and then to disability social security also must be deflationary. Austerity is deflationary. Money printing has been an attempt to arrest the descent into a deflationary depression. Increased international demand for commodities is causing price increases. Does this add up to stagflation?

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  5. 5
    Pegasus says:

    RE: Blurtman @ 4 – No.

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  6. 6
    Dorothea says:

    RE: Blurtman @ 4 – I believe stagflation is high interest rates along with high unemployment, e.g. a fourth option that wasn’t listed in the poll. It’s been along time since I’ve studied macro, but I remember living through stagflation, and it’s alot worse than just bumbling along (i.e. stagnation).

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  7. 7
    Scotsman says:

    Bi-flation. Commodities are rising rapidly and steadily. Large assets are falling. The net result appears as stagflation but isn’t by traditional definitions. If the government survives we will eventually get a blast of inflation on top of devaluation.

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  8. 8
    Pegasus says:

    RE: Scotsman @ 7 – We will suffer through a lot of deflation after it becomes apparent that attempts to inflate are even more detrimental to our health. After a complete deflationary collapse we may get that inflation that we have been looking for in the past 5 years. Its years away. You can’t destroy half the value of the world’s assets and expect anything different. Our money is being wasted in trying to manipulate our way out this. Commodities that are allowed to run up for no fundamental reason and a stock market that has no fundamental value any more are prime examples.

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  9. 9
    Scotsman says:

    RE: Pegasus @ 8

    What we are really seeing is currency devaluation mixed in with increased global price competition. It looks like inflation to your wallet even if it doesn’t fit the strick definition.

    You’re half right on the deflation and debt/money contraction. What you miss is that currency destroyed by debt contraction is being replaced by stimulus and monetization. The net result is, for now, relative stability. That will not hold as the economy continues to globally equalize and repair.

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  10. 10
    David Losh says:

    We won’t get equalization.

    There are two seperate economies going on in the world today. One is government run, the other is private banking. Private banking is taking over. Governments talk tax rates, banking talks interest rates.

    We have a caveat because banking can securitize the loans they make, and resell the profit potential to the stock market.

    In order for government, or banking, to continue the population has to continue to pay. Well, what’s going to give first? Will people stop paying debt, or taxes? or both?

    We, here in the United States we may play this game of paying debt, and taxes because we have the money, but what about the people of Kenya, Spain, China, Korea, Brazil, Mexico, Canada, or Australia? Let’s not forget Northern Africa, and Somalia.

    Where would equalization come from?

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  11. 11
    Scotsman says:

    RE: Pegasus @ 8

    Government and bankers will not allow deflation in our managed economy as both taxes and consumption drop sharply. Enough monetization will continue to take place to offset expected deflation. But eventually this new special debt must be destroyed through default and further currency devaluation. That will be highly inflationary and by design

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  12. 12
    Scotsman says:

    RE: David Losh @ 10

    People may stop paying. They have in Greece where the black or under the table economy thrives.

    Collapse remains a remote but real possibility.

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  13. 13
    Pegasus says:

    RE: Scotsman @ 11 – We are blowing air into a busted balloon and the world knows it can’t work for long. Sooner or later that balloon will have to be allowed to completely deflate. After that occurs we can talk about re-inflating the balloon.You are probably 5 years away from that and a whole lot of deflationary pain before that.

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  14. 14
    Blurtman says:

    RE: Scotsman @ 9 – So gotta have gold.

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  15. 15
    Scotsman says:

    RE: Pegasus @ 13

    Wrong. Read more- there is a balance and wider range of options with any fiat currency as long as there is faith. Without faith, collapse. Then nothing matters.

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  16. 16
    Scotsman says:

    RE: Blurtman @ 14

    Maybe. Not a gold bug. It’s really just another fiat currency with little real utility if the sh*t hits the fan.

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  17. 17

    RE: Dorothea @ 1

    I Voted Stagflation

    It covers the gammot of MASSIVE lower total workforce numbers [whether they count ‘em unemployed or not]….coupled with high energy/food costs. Housing is the orphan child, chronic collapsed total workforce numbers make housing prices lower.

    Very different and worse than just a depression where food/energy go down in price with increased job scarcity.

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  18. 18

    By Blurtman @ 4:

    Deleveraging, accumulated and unrecognized bad debt, and a presumed deceleration in the issuance of new debt are all deflationary. I would imagine a shuttling of workers from the labor force to unemployment and then to disability social security also must be deflationary. Austerity is deflationary. Money printing has been an attempt to arrest the descent into a deflationary depression. Increased international demand for commodities is causing price increases. Does this add up to stagflation?

    Tim uses the term “stagnation” in his poll, and he’s done that in the past. I’m not sure what he means by that in the context of this poll, which seemingly addresses inflation/deflation. Does he mean stagflation?

    As to your question, I think you could have negative growth events in country one, and positive growth events in country two lead to stagflation in country one.

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  19. 19

    By Scotsman @ 11:

    That will be highly inflationary and by design

    I had to just look to see if the poll was about monetary policy of fiscal policy. I don’t think those in charge of monetary policy would purposefully create inflation, because that’s the gauge by which history will judge them a success or failure. Those in charge of fiscal policy don’t care.

    Every member of Congress in 2006 allowed the country to nearly collapse. How many of them were blamed for that? We elected one of the President (although we didn’t have a real choice).

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  20. 20

    RE: Blurtman @ 4 – The Shuttled American Workforce

    Isn’t All Headed for Social Security, Most Aren’t Old Enough

    Many end up in mom and dad’s basement. 19% of all males to age 18-35 recently don’t work….that’s nationally, in our high priced area of more workers per household, I imagine this % of males is higher….

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  21. 21
    Blurtman says:

    RE: Scotsman @ 16 – As you say, everything functions on faith. But gold has been valued longer than any fiat currency. And it has international appeal. And it does not represent any one country or government. I suppose the parallel to printing is mining more, or releasing stores into the market. But in the short term, as prinitng continues, it seems to be a trade of refuge. And as long as you can sell gold for fiat, or trade of things, I suppose it will be somewhat liquid. There is no inherent value in any type of currency including gold, but for what people bestow upon it. And I see folks losing faith in fiat before losing faith in gold.

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  22. 22
    David Losh says:

    RE: Blurtman @ 21

    There’s a report that shows guns have out performed gold in value. Gun stocks out performs gold certificates.

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  23. 23
    LFP-Guy says:

    RE: David Losh @ 2

    Given the choices on this pole I believe we will see evidence of all three. Why wouldn’t inflation be total, or for all items? If wages don’t rise in the economy then there is a loss of support for non-consumable items.

    Consumables=inflationary
    non-consumable=deflationary
    market trade and general economies=stagnation

    The people in the system are desperate to hold this system together without any pain. The balance sheets need to be washed. Somethings gonna break.

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