Do we agree that we're headed for inflation and not deflation?
KUCH
Posts: 1,186
Certainly most of us would agree that Commodities (PM's) are a hedge agaisnt inflation, that's one reason why we're stacking. The opposite outcome is deflation and commodities or PM's would not be a safe haven, right?
I believe we are in a inflation cycle and that cylce will continue. Who believes we are headed for a deflationary cycle and why?
I believe we are in a inflation cycle and that cylce will continue. Who believes we are headed for a deflationary cycle and why?
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by a period of inflation, but it is a way off.
Camelot
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
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This is why things are so confusing. We see massive creation of money that doesn't show up in the economy because of the massive amount of money destruction done by the creators of derivatives and now being hid by the banking system/government alliance who are hoping to fleece the taxpayers enough to begin making a payoff for their failed bets at the same time that they are hoping to buy enough time for the economy to recover enough to generate earnings which may not happen because of the draconian measures being planned and higher taxes that will be required to stave off collapse of bloated governments and compulsive governmental overspending.
Basically, we are looking at a time when promises are routinely being broken by those who make the rules, and that leads to a lack of trust in those institutions. Private money is not being lured back into the market that is seen as rigged. Mortgage defaults are not being cured by another relaxation in lending standards. Balance sheets are not being cured by convenient changes in accounting standards that were designed to give an accurate view of the viability of corporations or other organizations that *were* bound by the FASB's (old) rules of finance, i.e., common sense.
The old rules were not wrong - they were simply violated and the violators are now in charge of the asylum. There is no way that a system can sustain itself by violating things like common sense, addition, subtraction, laws of physics, laws of chemistry, and ethics.
It's that simple. You can't eat gold. Nor can you eat stock certificates, bank notes, or debt agreements. But, if I had to pick one of those, it would be gold - hands down.
In terms of the OP's question - I would expect horrendous volatility, which to me means both inflation and/or deflation in unpredictable ways, maybe simultaneously in different markets -such as a deflation in housing prices while experiencing a bad inflation in commodity prices and high interest rates at the same time.
In other words, I expect living to get more expensive and money to become more scarce. I'm hoping for the opposite, but I really don't know what to expect first. I'm just waiting for the other shoe to drop. I hope it never does.
I knew it would happen.
There's a 3rd ingredient to the mix. That is, PM's are a hedge against a lack of confidence in said currencies/govt's. We could have inflation or deflation and have loss of confidence in the currency. As far as what mix occurs and when, that remains to be seen. As Jmksi52 has said, expect varying degrees of asset deflation/destruction and asset inflation/price appreciation in the coming months/years. PM's were not a hedge against moderate inflation during the 1980's and 1990's because there was strong confidence in the US dollar, USEconomy, and US Govt. While there certainly was major league asset inflation occuring in stocks and bonds (while commodities were crushed), that was because our inflation was essentially exported overseas (cheap foreign labor and goods). Had the US not been able to export its inflation for 20 yrs, it would have certainly shown up in spades in the prices of our goods and services. Look at how much the cost of education, health care, lawyers, homes, stocks/bonds, etc. appreciated during those 20 yrs.....because there was no effective substitute for them from overseas....nor could they be manufactured overseas. That is where the majority of price inflation went. It didn't appreciably go towards food, PM's, oil, industrial metals, appliances, cars, etc. But since it is considered "good" by the establishment when stocks and homes appreciate at rapid rates, that is never mentioned as inflationary. Only when the prices of homes and stocks fall is anything mentioned (ie deflationary). The establishment makes its money by siphoning off its %share as assets are rising in price.
As far as inflation and deflation, we're experiencing both right now in varying degrees. We've probably not seen the peak in asset inflation or deflation at this time.
roadrunner
Then even more confusing, ...systemic deflation would result in a death spiral the way I understand it, in this fiat game we're playing. So, this is to be avoided at all costs, so 'print print print' is the Rx. And now that we don't actually 'print money' but just create electron-digit thingies, one wonders how 'hyperinflation' takes hold, what is the spark that sets it aflame ?
It seems to be all about psychology of the masses (personified 'market') and staying ahead of the psychology. Which I can't do to well from past experience. Do we really want J6P to come to his senses tomorrow? I don't think I do, just yet.....
So I hang out here and spend time getting educated/ watch the discussion back and forths, ... and get more prodding to DYODD.
edited to add: RR's post was not up when I was typing this. Feel like I owe RR and Cohodk admission price / tuition for their back and forths
Price inflation, normally brought about by money inflation, is an entirely different discussion and very possible in in a deflationary enviornment.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>I will let cohodk field the deflation portion of this program
I've stated for the last 2 years that deflation was more likely as there is too much global debt. Been right so far. Inflation will come when demand for debt exceeds debt destruction.
I see the possibility of another major currency becoming very weak against the US dollar. This again will be at the very least disinflationary.
Right now I see energy and basic commodity prices being too high for current demand. So either demand picks up--unlikely, or prices fall--likely.
Knowledge is the enemy of fear
I understand m3 at the moment is on a downward trend, in fact it was reported that the fewest amount of coins were produced last year since the early sixties.
the problem is and the reason for that is, nothing is being circulated. most money is being hoarded. by indivisuals, banks, business, etc.
so it becomes a trap.
It gets reported as lack of inflation or deflationary. But all the signs show the opposite, in things that must be bought, like food.
And for another example - I own a construction busniess & I have had 2 lumber increases this year as well as other materials.
For example in april I paid $11.33 for a sheet of 1/2" plywood. now, as of may 1st it went to $18.68!!
All things I deal with except labor is getting more expensive at a fairly dramatic rate. But the goverment says there is no inflation so it must be true!
If interest rates stay low we will actually see more inflation in the things we consume & need everyday, which may cause deflation in assets as people panic & have less to invest as the cost of daily living goes up.
The funny thing is , is that if interest rates go up it will probally better stimulate the economy as people will let go of more of the stashed cash. That includes the banks.
If you were a bank would you make long term loans right now when you could do better buying treasuries? which in turn keeps rates lower.
The other thing that needs to be looked at is, most production is below pre-bubble levels and 30 yr averages. Does it really make sence that this will be sustained? or go lower for any long period of time?
Or does it act like a future spring on oversold or under produced items?
there may be distractions and divertions along the way but we are only headed for inflation. all that other stuff is just a head fake.
Like a high tide it will raise all ships, including labor. but the incidious thing is, people wont be any richer, they will just be handling more money.
<< <i>
<< <i>I will let cohodk field the deflation portion of this program
I've stated for the last 2 years that deflation was more likely as there is too much global debt. Been right so far. Inflation will come when demand for debt exceeds debt destruction.
I see the possibility of another major currency becoming very weak against the US dollar. This again will be at the very least disinflationary.
Right now I see energy and basic commodity prices being too high for current demand. So either demand picks up--unlikely, or prices fall--likely. >>
///
Is that why gas is low considering oil in the gulf, summer driving season, mid-east flare? Two years ago this scenario would have brought $5+ gas.
Gee...what was the result???
<< <i>With the true definition of inflation being "an increase in the supply of money" I believe this chart clearly indicates the direction we are headed:
Price inflation, normally brought about by money inflation, is an entirely different discussion and very possible in in a deflationary enviornment. >>
The chart ia a measure of the expansion or contraction of wealth. It does not portend inflation or deflation in and of itself.
<< <i>
<< <i>With the true definition of inflation being "an increase in the supply of money" I believe this chart clearly indicates the direction we are headed:
Price inflation, normally brought about by money inflation, is an entirely different discussion and very possible in in a deflationary enviornment. >>
The chart ia a measure of the expansion or contraction of wealth. It does not portend inflation or deflation in and of itself. >>
Line in chart shows year to year rate of change in supply of money. Increase in money supply = inflation. Decrease in money supply = deflation. Chart clearly shows deflationary trend since 2008.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>I will let cohodk field the deflation portion of this program
I've stated for the last 2 years that deflation was more likely as there is too much global debt. Been right so far. Inflation will come when demand for debt exceeds debt destruction.
I see the possibility of another major currency becoming very weak against the US dollar. This again will be at the very least disinflationary.
Right now I see energy and basic commodity prices being too high for current demand. So either demand picks up--unlikely, or prices fall--likely. >>
Prices fall, revenues fall, debt (if available) rises (comparitively), currency fails.
How much was this sheet of plywood in 2006?
Playing with numbers can be fun. If something drops from 100 to 50 then comes back to 100, then it gets reported as a 100% increase. WOW!!! Look at that inflation!!! When in reality prices are the same as they were before.
The other thing that needs to be looked at is, most production is below pre-bubble levels and 30 yr averages. Does it really make sence that this will be sustained?
It absolutely makes sense. We had a massive demographic bubble over the past 30 years that demanded lots of goods. That bubble is now demanding less. It can and will be sustained until we have an acceleration in population growth rates.
Knowledge is the enemy of fear
<< <i>Has printing massive amounts of fiat currency been tried before????
Gee...what was the result??? >>
Printing money to combat deflation is much different than printing money due to inflation.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>With the true definition of inflation being "an increase in the supply of money" I believe this chart clearly indicates the direction we are headed:
Price inflation, normally brought about by money inflation, is an entirely different discussion and very possible in in a deflationary enviornment. >>
The chart ia a measure of the expansion or contraction of wealth. It does not portend inflation or deflation in and of itself. >>
Line in chart shows year to year rate of change in supply of money. Increase in money supply = inflation. Decrease in money supply = deflation. Chart clearly shows deflationary trend since 2008. >>
Your premise is false. Credit, wealth, etc., are not inherently inflationary. Only fiat money that circulates in excess of real GDP (not some # provided by your govt) is inflationary. A better but not perfect measure today is M-1. Ten years ago, M-0 would have been the yardstick.
<< <i>How much was this sheet of plywood in 2006? >>
I dont see how you can use 2006 - the peak of the building boom as the bench mark for pricing.
prior to that boom this product ran between $8 - $10 which it also was prior to january.
so you saying now that the spike is now the real price?
<< <i>It absolutely makes sense. We had a massive demographic bubble over the past 30 years that demanded lots of goods. That bubble is now demanding less. It can and will be sustained until we have an acceleration in population growth rates. >>
we will see about that, the census will be out soon.
I dont think the population has shrank.
We are in a paused position right now because people are unsure.
The rally in the markets from march 2009 until april was all done on low volume, again people are unsure & scared. money went to the mattress or bonds.
No one is really "investing" and why should they. The safe things are paying crap & People right now relize they are better off paying off debt.
just because thats where we are now does not mean that is where we are going a year from now or even six months.
money is out there in a holding pattern...waiting.
Yes there are a lot of people out there hurting, but you wont read stories about the ones that are not. Because it wont sell.
<< <i>
<< <i>
<< <i>
<< <i>With the true definition of inflation being "an increase in the supply of money" I believe this chart clearly indicates the direction we are headed:
Price inflation, normally brought about by money inflation, is an entirely different discussion and very possible in in a deflationary enviornment. >>
The chart ia a measure of the expansion or contraction of wealth. It does not portend inflation or deflation in and of itself. >>
Line in chart shows year to year rate of change in supply of money. Increase in money supply = inflation. Decrease in money supply = deflation. Chart clearly shows deflationary trend since 2008. >>
Your premise is false. Credit, wealth, etc., are not inherently inflationary. Only fiat money that circulates in excess of real GDP (not some # provided by your govt) is inflationary. A better but not perfect measure today is M-1. Ten years ago, M-0 would have been the yardstick. >>
Money is money, whether it is in the bank or in your wallet or owed on a credit card. A decrease in the supply of money is deflation by its very definition. Chart speaks for itself.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
We will no doubt see deflation and inflation in terms of how most people define it...
So I think the question should be where we think long term employment is headed and how the FED thinks "full employment" should be defined. Price stability can and will be managed... whether we like it or not.
jmho
Only if one believes that the true money supply is measured by M3. I think you'll find that most monetary authorities, economists, and analysts don't look at M3 as a measure of actual money supply. The FED thought so little of it that they stopped reporting it back in 2006. M3 is certainly a measure of something....just not the true money supply. If M1 were still calculated as it was prior to 1994, it would be 65% higher today than it was in 2008. But with those tweaks it's only about 10-15% higher.
Your premise is false. Credit, wealth, etc., are not inherently inflationary. Only fiat money that circulates in excess of real GDP (not some # provided by your govt) is inflationary. A better but not perfect measure today is M-1. Ten years ago, M-0 would have been the yardstick.
Credit that has no bounds (ie 2003-2008) is certainly inflationary just as $1 QUAD in derivatives was also inflationary. If one is looking at the broadest measure of what total credit/debt/money is then one would have to include M3, credit, debt, and all derivatives into the equation....ie an M4 or M5. The fact is that otc derivatives (considered as cash assets on corporate balance sheets) are now the largest "monetary substitute" out there today. Today debt/credit is considered money by banks and corporations, even though it's anything but actual money. Even those guys don't know what real money is anymore. They play in a Monopoly world with Monopoly money.
Money is money, whether it is in the bank or in your wallet or owed on a credit card. A decrease in the supply of money is deflation by its very definition. Chart speaks for itself.
That chart does show that M3 has been decreasing. But M2 has generally been increasing over the past couple of years. M1 and M0 have also been increasing the past 2 years. If you consider M1 as a better alternative to M3 as a true money supply then it should be noted that M1 has been fudged since 1994. If M1 were still calculated the way it was in prior years (ie before sweep account changes), then it's current value would be about 65% higher and closer to $3 TRILLION (ie close to doubling since 2008). In that same time period M0 has more than doubled from around $800 BILL to $2.1 TRILL. As illogical as it sounds, the FED has reported M0 > M1 since 4th qtr 2008. This has distorted the true rise in money supply (M1) that is not being picked up by the masses. Also not reported in any of the M0-M3 changes, are the addition of $1.2 TRILL on the FED's balance sheet, $1 TRILL added to the FED's foreign custodial fund, hundreds of billions in TARP, currency swaps with no effective time limits, and other types of slush. The money supply figures don't account for all the back door money flows that have been going on for the past 3 years. The banks and politicians now have new ways of stuffing money all over the world w/o upsetting the M1, M2, M3 apple carts. Only M0 has hinted at the fact that something is wrong.
Is that why gas is low considering oil in the gulf, summer driving season, mid-east flare? Two years ago this scenario would have brought $5+ gas.
The govt has done oil "swaps" in the past from our national reserves. All they have to do is to conduct a large % swap of WTIC for Brent crude and then see the WTIC methodically dumped into the market to depress it's price....while the levels in the national reserves remain seemingly unchanged (ie no breakdown given between WTIC vs. Brent). Once the price is where they want it, the swap can be slowly undone to restore the original % of WTIC. It's possible that this was done in the summer of 2008 to knock down the price of WTIC as it approached $147/bbl.
In the end though, downward spiraling business conditions can lead to hyperinflation without any signs of increased production/demand. The sudden and near instantaneous loss of confidence in a currency is the only true path to hyperinflation. It does not occur when business conditions are good. It occurs when people as a group realize that their fiat isn't going to cut in anymore.
Confidence in money supply lags the volume increases
roadrunner
<< <i>
<< <i>How much was this sheet of plywood in 2006? >>
I dont see how you can use 2006 - the peak of the building boom as the bench mark for pricing.
prior to that boom this product ran between $8 - $10 which it also was prior to january.
so you saying now that the spike is now the real price?
<< <i>It absolutely makes sense. We had a massive demographic bubble over the past 30 years that demanded lots of goods. That bubble is now demanding less. It can and will be sustained until we have an acceleration in population growth rates. >>
we will see about that, the census will be out soon.
I dont think the population has shrank.
We are in a paused position right now because people are unsure.
The rally in the markets from march 2009 until april was all done on low volume, again people are unsure & scared. money went to the mattress or bonds.
No one is really "investing" and why should they. The safe things are paying crap & People right now relize they are better off paying off debt.
just because thats where we are now does not mean that is where we are going a year from now or even six months.
money is out there in a holding pattern...waiting.
Yes there are a lot of people out there hurting, but you wont read stories about the ones that are not. Because it wont sell. >>
If prices are the same now as 3 years ago, then where is the inflation?
The population is growing---thank GOD. We would be in a world of hurt, think Russia, Japan, if not. Im not saying the pop is not growing, but the excessive demand placed on the economy by a huge spike in population is receeding. During the baby boom, we had about the same number of births as we do today. The difference is that the total population is twice as much. Can you see that we have now entered a period of stable population growth? There is no shock. Shock is what creates imbalance and inflationary pressure due to production constraints.
There is a difference growing and accelerated growing. Think of driving a car. When you go from 0 to 60 you are accelerating. When you get to 60 you let off on the gas and maintain that speed. You are still moving forward, but not accelerating.
Knowledge is the enemy of fear
- Jim Puplava, FinancialSenseOnline, July 24, 2009
Worse Than a Depression
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Prices are dropping with crap we really don't need such as large screen TV's, new computers and other non-essentials.
On the other hand, Food, Education, Health Costs and Taxes are on the Rise. Where's the "deflation" here?
(Actually, I understand the true meaning of inflation and deflation has nothing to do with 'prices').
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
But it's really not going to matter much what the inflation rate really is when confidence is lost in the dollar. Declining business conditions and a loss of confidence in fiat can lead to rapid devaluations that are not explainable by inflation rates.
roadrunner
Foxconn: Production Line Workers In China Get 30% Pay Rise
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Personally I prefer preparation to Preparation H.
I knew it would happen.
<< <i>What The Deflationist Campers Forgot To Put In Their Backpacks >>
Good luck on your coming inflation. When the prices rise, who is going to pay? Are we all gonna get a wage hike? Cool.
Knowledge is the enemy of fear
<< <i>
<< <i>What The Deflationist Campers Forgot To Put In Their Backpacks >>
Good luck on your coming inflation. When the prices rise, who is going to pay? Are we all gonna get a wage hike? Cool.
Inflationary depression. Just a matter of time bro. The chickens will come home to roost. For starters, increased costs by new laws and regulations (health care, possible cap and trade) to businesses will be passed on to the consumer. Been to the grocery store lately?
Who's gonna pay? Everyone. You will spend the same amount of money, you will just get less for it. You will learn to live with less.
It has already started:
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I knew it would happen.
<< <i>I cannot argue with cohodk about deflation because he is smarter than me. He is wrong, however.
That I doubt.
But I will mention one little tidbit of fact. In the last 110 years (thats all my charts go back), the DOW has only traded at more than 3x book value twice. The first ime was 1929--ugh. The second time has been for the last 17 years!!! For almost all of history, the stock market has traded in a rough range of about 1.5-2x book value. Wanna guess the book value today? Go ahead, you wont even be close. 2250. So what happens if the DOW again trades at 2x book. If we assume BV doesnt change much---unlikely as there still may be further writedowns, then we could be looking at sub-5000 DOW. What a massive deflationary force this would be. Huge!!!
Imagine if the DOW traded at the same valuation as during the Depression---I dont even want to tell you that number.
Could the DOW and Gold hit 1:1? Very possibly, but it wont be inflation pushing gold higher.
As I read the chart above--the blue regression line is trending down. Thats not an increase in prices. In fact, it looks like there was a floor put under price declines that was broken, the increase has just rallied back up to the line--now resistance--and heading lower. That chart could actually be reinforcing my opinion.
And yes, Ive been to the grocery store. Milk is less than 1/2 where it was a year ago. Eggs are 40% lower. Veggies are cheap. My wife just bought chicken breast (bone in) for 99c a pound. She got 40 pounds. I guess my problem is that I dont shop at Whole Food Mart. Im not good enough for that store anyway.
Knowledge is the enemy of fear
<< <i>
<< <i>I cannot argue with cohodk about deflation because he is smarter than me. He is wrong, however.
That I doubt.
But I will mention one little tidbit of fact. In the last 110 years (thats all my charts go back), the DOW has only traded at more than 3x book value twice. The first ime was 1929--ugh. The second time has been for the last 17 years!!! For almost all of history, the stock market has traded in a rough range of about 1.5-2x book value. Wanna guess the book value today? Go ahead, you wont even be close. 2250. So what happens if the DOW again trades at 2x book. If we assume BV doesnt change much---unlikely as there still may be further writedowns, then we could be looking at sub-5000 DOW. What a massive deflationary force this would be. Huge!!!
Imagine if the DOW traded at the same valuation as during the Depression---I dont even want to tell you that number.
Could the DOW and Gold hit 1:1? Very possibly, but it wont be inflation pushing gold higher.
As I read the chart above--the blue regression line is trending down. Thats not an increase in prices. In fact, it looks like there was a floor put under price declines that was broken, the increase has just rallied back up to the line--now resistance--and heading lower. That chart could actually be reinforcing my opinion.
And yes, Ive been to the grocery store. Milk is less than 1/2 where it was a year ago. Eggs are 40% lower. Veggies are cheap. My wife just bought chicken breast (bone in) for 99c a pound. She got 40 pounds. I guess my problem is that I dont shop at Whole Food Mart. Im not good enough for that store anyway.
He is very wrong, but so are a lot of very smart economists.
Blue line in chart shows a drop from 3.5% inflation to 2% inflation over past 11 years, yes a decline. However the current inflation rate of +2% (if you believe government figures) is still inflation not deflation.
Using the Feds old CPI calculation method, inflation is currently at 9.22%. They keep changing their method of calculating for two reasons:
1. To paint a rosier picture of how bad inflation is.
2. Annual increases to a lot of the benefits they pay out (social security/federal pensions) are tied to the CPI (the lower the CPI number, the less increase in monthly payouts).
As far as using the DJIA as any type of economic indicator, fuget aboutit. High speed computerized flash trading and interference by big traders on behalf of the government have taken away any value in using it as an indicator. You will see the DJIA rise with inflation, So expect stock prices to rise, but don't expect to make money with the rise because the hidden tax of inflation will eat you up. As far as gold and the DJIA ever meeting 1:1 again, not likely for many years as the DJIA will skyrocket along with gold.
Grocery price drops are due to WalMart's attempt to put the others out of business by selling at a loss for now. WalMart's competitors are being forced to reduce price to stay in business. Once Walmart has shut down the competition you will see some real inflation in food prices. WalMart should be boycotted by everey American. Be best to send her back to the store for another 40 lbs of chicken while you can still afford it.
The chart posted above shows a recent dip into deflation and here is one man's advice on how to profit from the transition from that deflation into the upcoming hyperinflation.
Opportunity in the Deflation to Hyperinflation Transition
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
cohodk, that got my heartrate up. That's for the Dow? Are you sure about that number? If it's real, that does give cause for concern. What have they done, thrown out any of the traditional stock valuation methods? I assume that the rest of the stock market shows something similar even if not as dramatic.
That number really does not make sense under any circumstances. Note to self - incorporate, go public, asap.
I knew it would happen.
<< <i>Spent over $700 last month at Publix. Don't remember ( don't want to remember ) how much we spent at whole foods. >>
Wow, that number alone is twice what I spend for a family of 3 in a month and maybe a few bucks more for when the kids come home.
But not to lock the thread, Walmart has been very instrumental in keep prices lower. Good for them.
I guess I dont know how to read charts.
Comrade jmski, I have always talked about using valuation measures other than PE ratios. And yes, that info scares the bejeezes out of me as well. There may be other things to consider, such as we are now more of a services economy than a manufacturing economy. Services usually trade at a higher multiple of BV than manufacturing. And GM was sporting a -(negative) BV. I'll have to compare the composition of the DOW today to that of 1990, 1980, ect. Remind me and let you know my findings.
I do find it interesting that the DOW bottomed at about 6500 last March. Book value at the time was 3300. Almost exactly 2x.
Knowledge is the enemy of fear
Camelot
<< <i>Walmarts fault, heck I always thought it was Bush's.
But not to lock the thread, Walmart has been very instrumental in keep prices lower. Good for them.
I guess I dont know how to read charts.
You miss the point on Walmart. It's the reason they have low prices, even at a loss in some cases: to eliminate the competition. Competition is what keeps prices low indefinitely. Walmart's plan is to keep them low temporarily until they have wiped out food chains and mom and pops. At that time you will be glad you have 40 lbs of chicken in the freezer. You should be more concerned about the long term affect of Wally's low prices, unless of course only today matters to you.
Today's chart reading lesson:
Blue line points downward but is still at 2% inflation. That means we are not into deflation. The only reason it points downward is because chart starts with a peak of 6.29% inflation in 1991 and has to include a temporary bout of deflation in 2009. If not for those two extremes, blue line would pretty much be horizontal at a constant 3% inflation, right where the Fed likes to see it.
Black line indicates we have left 2009's temporary period of deflation and are now back into our economy's "normal state" of inflation. Inflation is not an accident. It is the planned result of manipulating economic stimuli such as money supply, interest rates and government spending. Inflation is good for government business for reasons previously posted. Your government fears deflation and will work harder to prevent it than they would runaway inflation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
market share and destroy competition by Walmart and the out sourcing of manufacturing
which is eliminating millions of high paying quality jobs in the USA.No good jobs, no money, high debt
no spending.
Camelot
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
with the devil. The loss of a self sufficient manufacturing base
is an essential part of our National defense. In case of a major
war, we must be able to manufacture all of the electronics and
implements of war. Majority ownership of American corporations by
foreign owners is potentially dangerous especially as to the loss of
technology knowledge. The World is filled with enemies, potential
enemies and emerging enemies. Are we so innocent that we do not
recognize that wars over fuel, essential minerals, sea lanes, food and
potable water are not a part of the future of this Nation. What is today
thought to be paranoid, will in the future become prudent and necessary.
Camelot
For the record I haven't bought anything at Walmart or Sam's club in twenty years. Not from an idealogy stand point but from the fact I just don't like their stores or the experience.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Don't confuse an excuse for reality. Slave labor max profits.
I know the truth some can't handle the truth!
<< <i>
<< <i>Walmarts fault, heck I always thought it was Bush's.
But not to lock the thread, Walmart has been very instrumental in keep prices lower. Good for them.
I guess I dont know how to read charts.
You miss the point on Walmart. It's the reason they have low prices, even at a loss in some cases: to eliminate the competition. Competition is what keeps prices low indefinitely. Walmart's plan is to keep them low temporarily until they have wiped out food chains and mom and pops. At that time you will be glad you have 40 lbs of chicken in the freezer. You should be more concerned about the long term affect of Wally's low prices, unless of course only today matters to you.
Today's chart reading lesson:
Blue line points downward but is still at 2% inflation. That means we are not into deflation. The only reason it points downward is because chart starts with a peak of 6.29% inflation in 1991 and has to include a temporary bout of deflation in 2009. If not for those two extremes, blue line would pretty much be horizontal at a constant 3% inflation, right where the Fed likes to see it.
Black line indicates we have left 2009's temporary period of deflation and are now back into our economy's "normal state" of inflation. Inflation is not an accident. It is the planned result of manipulating economic stimuli such as money supply, interest rates and government spending. Inflation is good for government business for reasons previously posted. Your government fears deflation and will work harder to prevent it than they would runaway inflation. >>
I mostly agree with you, except about Walmart. There is no "grand plan" to wipe out everyone, create a monopoly, then sock it to the poor sheeple.
Inflation is good--in moderation--and is a cornerstone of a fiat currency policy. Your chart does not show any increase in inflation rates. In fact it shows the rate of inflation has been falling for the past 20 years. The FED, especially Bernanke, is very afraid of deflation. So the concern is now with trillions of dollars of stimulus they have only managed 2% inflation. Whats it gonna take? $10 Trillion, $20 Trillion. Too bad there is that debt out there that could blow up and destroy all the FED's efforts.
I hear everyone complain about high prices. If your income does not increase will you continue to buy as much? And will your lack of consumption lead to further job losses, lower tax receipts and negative growth? THE BEST CURE FOR HIGH PRICES IS HIGH PRICES---bring it on!!!
Knowledge is the enemy of fear
I tend to pay the little extra to keep Mom and Pop in business because I know that when they are gone I will pay a lot more at the only place left in town.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Technically it has been "currency" inflation that has been pushing gold higher since 2001. And now that the rest of the world's currencies also play a role in gold's price, we can see the price rise in US Dollars even when the dollar is rising. Gold is now essentially a world currency. Gold's price would never have come back from $255/oz if the world's currencies had remained at 2001 levels. Obviously they didn't. The weakening of fiat currencies around the world is still pushing on gold to go higher.
The consumer has been groomed to believe that inflation = rising prices. But technically, US inflation is based on how many dollars are out there, and whether the dollar is strengthening or weakening. The dollar has been on a general downtrend since 1985. And the cheapening of the dollar is one of the reasons gold has advanced. But we aren't the only fiat currency in town, hence not the only input to the world price of gold. And trying to determine currency inflation based on grocery store prices can lead to problems. The entire agricultural industry is heavily subsidized and distorted. Most of what we eat today is based on highly processed corn and corn by-products. And because of the abundance of corn we can make a lot of processed foods that bear little biological and chemical resemblence to the original whole foods we used to eat. Go out and try to buy real food such as organic, grass fed beef, real fresh organic veggies, milk w/o hormones & pesticides produced by cows eating real range grasses, etc. You will quicky find that the prices of real food, like our grandparents ate as kids and young adults is far higher than the highly processed corn based "feed" that now makes up most of the typical American diet. That same corn also supplies a host of chemicals, emulsifiers, stabilizers, fats, fuels, etc. Our hollowed out food chain bears a striking resemblence to our hollowed our currencies....no substance....just f(i)at. It's also uncanny that about the same time we came off the gold standard, came the biggest push towards cheaper processed foods. The American consumer doesn't like rising food prices...so the govt has found ways to give them what they want....it just ain't food anymore....lol. What it all comes down to is things of enduring substance that have true tangible value (including real and healthy foods) really never come down in price unless distorted by govt intervention. And usually those interventions are only temporary. Quality costs in all things. And in a world of cheapening fiat currencies, quality continues to rise in price no matter what currently published and "hollowed out" CPI(U) indexes may say.
roadrunner