Category: Deflation
The analysis published under this category are as follows.
Friday, March 24, 2023
U.S. Money Supply Deflates 2% Annually (What That Means) / Economics / Deflation
By: EWI
The debt bomb implodes: Expect recession and deflation;
Many pundits have expressed worry about the ramifications of global debt -- and rightly so. As the Wall Street Journal noted toward the end of 2022:
The world has amassed $290 trillion of debt and it's getting more expensive to pay for it.
In the U.S. alone, the cost of servicing the national debt is expected to skyrocket over the next decade (Fox News, Feb. 27):
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Tuesday, August 31, 2021
The Great Deflation of 2022 / Economics / Deflation
By: Michael_Pento
It is not very surprising to me that nearly every talking head on Wall Street is convinced inflation has now become a permanent feature in the U.S. economy. This is because most mainstream economists have no clue what is the progenitor of inflation. They have been inculcated to believe inflation is the result of a wage-price spiral caused by a low rate of unemployment.
In truth, inflation is all about the destruction of confidence in a fiat currency’s purchasing power. And there is no better way to do that than for the government to massively increase the supply of money and place it directly into the hands of its citizenry. That is exactly what occurred in the wake of the global COVID-19 pandemic. The U.S. government handed out the equivalent of $50,000 to every American family in various forms of loans, grants, stimulus checks, enhanced unemployment, tax rebates, and debt forbearance measures. In other words, helicopter money and Modern Monetary Theory (MMT) were deployed—and in a big way. The result was the largest increase of inflation in 40 years.
Sunday, May 02, 2021
Inflation or Deflation? (Not a silly question…) / Economics / Deflation
By: EWI
Dear reader,
The question in the subject line of this email is not an idle one.
It has everything to do with how you should position your portfolio for in the months -- and maybe even years -- ahead.
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Saturday, April 24, 2021
No Fear Of Inflation; Threat Of Deflation / Economics / Deflation
By: Kelsey_Williams
The Fed wants to have their cake and eat it too, but the cake is stale. Jerome Powell’s remarks in testimony before the Senate recently provoked considerable attention.
Responses, interpretation, and analysis by observers were many and varied. Unfortunately, no one learned anything different from what they thought they knew before Powell’s testimony.
The Fed is well aware of the problem. It is systemic in nature and goes far beyond corporate due diligence, bank liquidity, and the safety of your broker.
Most everyone else (with the exception of Janet Yellen, Ben Bernanke, and Alan Greenspan) thinks they understand the problem, but their limited understanding doesn’t allow for the subtleties of Fed Chair behavior.
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Friday, March 19, 2021
What the "Sudden, Dramatic" Surge in Googling "Inflation" Tells You / Economics / Deflation
By: EWI
It likely "typifies the end of an old economic trend and the beginning of a new one"
In the news, you hear that the big monetary fear these days is the prospect for a jump in inflation.
Here are some headlines since the start of the year:
- Inflation Is Coming. That Might Even Be a Problem. (Bloomberg, Jan. 13)
- Inflation concerns put Biden, Fed on defensive (TheHill.com, Feb. 23)
- Stocks tumble as Powell signals inflation is ahead (CNN Business, March 5)
Wednesday, June 03, 2020
Deflation: Why the "Japanification" of the U.S. Looms Large / Economics / Deflation
By: EWI
The U.S. faces the prospect of a Japan-like deflation.
Let's begin with a brief review of Japan.
Here's a chart and commentary from the 2020 edition of Robert Prechter's Conquer the Crash:
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Saturday, April 25, 2020
Deflationary Psychology Versus the Fed: Here’s the Likely Winner / Economics / Deflation
By: EWI
Weeks before the February top in the DJIA, the January Elliott Wave Theorist (Elliott Wave International President Robert Prechter's monthly publication about financial markets and social trends since 1979) said:
Most economists believe the Fed can prevent financial crises and depressions. [EWI's analysts] disagree. Socionomic theory proposes that naturally fluctuating waves of social mood regulate financial optimism and the economy. They are unconscious and cannot be managed. [emphasis added]
In case you're unfamiliar with socionomic theory, socionomics is the study of how society's changes in mood motivate social actions in realms that include the economy, political preferences, financial markets, actions of peace and war, and the fads and fashions of popular culture. Robert Prechter began formulating socionomic theory in 1976.
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Wednesday, March 18, 2020
The Chartology of Coronavirus Deflationary Event / Stock-Markets / Deflation
By: Rambus_Chartology
The great debate on whether we’re going to see inflation or deflation has been answered in spades. For years some of the greatest minds of our time have discussed this issue in great detail with each side giving probable reasons as to why we’ll see either inflation or deflation. Both sides can make great points to their arguments but in the end only one side will win the battle that has been raging on for years. While the fundamentalist argue their points I’m going to show you from a Chartology perspective the true story of what is taking place in this great debate.
In this Weekend Report we’ll look at some short, intermediate and long term charts for the US dollar and some commodities indexes to paint a picture of what millions of investors, from around the world are actually doing with their money. These investors leave their mark on a chart that show up as short term battles to longer term wars that can last for years. These battles and wars create chart patterns that define the winner and looser of each encounter.
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Tuesday, April 16, 2019
Even the President is Terrified of the Dreaded “D” Word Deflation / Economics / Deflation
By: Graham_Summers
The following tweet tells you everything you need to know about the state of the US financial system today…
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Friday, November 23, 2018
There is evidence that deflationary forces are already taking hold in America / Economics / Deflation
By: EWI
By Murray Gunn
When I was writing technical analysis reports for the customers of a major global bank, I received some interesting feedback from one of the bank's relationship managers. The customers liked the reports, she said, but it would be good if I made them less "technical." Making technical analysis reports less technical, hmmm. (To be fair, it is actually good advice because striking a balance between technical details and readability is an art.) Sometimes, though, an explanation of a concept cannot help but delve into some detail. So please bear with me on this one.
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Monday, May 21, 2018
What Does These Signs Mean for Stock s & Real Estate? / Stock-Markets / Deflation
By: Harry_Dent
We’ve been waiting years for our fixed income trade of a decade…Our target’s at the top of the long-term Treasury Bond Channel near 3% on current 10-year yields. And recently, we advised our Boom & Bust subscribers to buy long-term Treasurys at around 2.99% on the 10-year.
Now we’re thinking it could get better… much better.
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Monday, April 09, 2018
The Mother of All Deflations / Economics / Deflation
By: Raul_I_Meijer
Longtime and dear friend of the Automatic Earth, professor Steve Keen, wrote an article recently that everyone should read (that goes for everything Steve writes). It’s hard to select highlights, but I’ll give it a try. Steve explains where our housing markets went off the rails, what (short-sighted) interests politicians have in subverting them, and, something rarely addressed, why housing markets are unlike any other markets (the turnover of existing properties is financed with newly created money)
He then suggests some measures that might counter this subversion, with a twang of It’s a Wonderful Life nostalgia thrown in. That nostalgia, which will be seen by many as outdated and a grave mistake in these ‘modern times’, instead makes a lot of sense. We might even say it’s the only way to get back on our feet. It resides in the idea that money-circulating building societies, rather than money-creating banks should be in charge of the housing market.
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Wednesday, December 06, 2017
An "Unprestigious" Preview of Debt Deflation / Economics / Deflation
By: EWI
An "Unprestigious" Preview of Debt Deflation
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Wednesday, October 18, 2017
Deflation Basics Series: The Quantity Theory of Money / Economics / Deflation
By: EWI
Here's our challenge.
In order to be aware of the investment pitfalls and opportunities that deflation can bring, we must first understand the basic elements of why it occurs. So our challenge is to try and make monetary economics, a subject that most people would find duller than watching paint dry on a wall, understandable and, dare I say it, fun! It's a big ask but we like a test, and so here is the first in our Deflation Basics Series -- The Quantity Theory of Money.
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Saturday, September 09, 2017
Deflation and the Markets; are deflationary forces here to stay / Economics / Deflation
By: Sol_Palha
Machines are worshipped because they are beautiful and valued because they confer power; they are hated because they are hideous and loathed because they impose slavery. Bertrand Russell
Manufacturing output continues to improve, even though the number of manufacturing jobs in the U.S. continues to decline and this trend will not stop. While some Jobs have gone overseas, the new trend suggests that automation has eliminated and will continue to eliminate a plethora of jobs. As this trend is in the early phase, the momentum will continue to build in the years to come.
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Tuesday, August 01, 2017
The Fed’s Monetary Tantrum Will Push The Economy Into Outright Deflation / Interest-Rates / Deflation
By: John_Mauldin
It is increasingly evident that the US economy is not taking off like some predicted after the election.
President Trump and the Republicans haven’t passed any of the fiscal stimulus measures we hoped to see. Banks and energy companies have got some regulatory relief, and that helps. But it’s a far cry from the sweeping healthcare reform, tax cuts, and infrastructure spending we were promised.
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Thursday, June 22, 2017
The Deflation Application / Economics / Deflation
By: Charles_Sizemore
Once in a while I see a financial news headline so obviously ridiculous, I feel I should look at the writer with pity in my eyes and pat them on the head, the way you might comfort a child that just dropped his ice cream cone on the floor.“Inflation is Right Around the Corner, Yellen Insists.”
Of course it is…
In defense of the columnist who wrote the story, these weren’t necessarily his views. He was simply relaying the Fed Chair’s comments from Wednesday.
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Monday, December 19, 2016
A KEYNESIAN CHALLENGE: Prove Deflation is Bad For ME! / Economics / Deflation
By: Gordon_T_Long
'Mish' Shedlock and Gordon T Long discuss a number of outstanding issues in 2016 that will become Themes in 2017.
Economic Challenge to Keynesian's
Mish is quite emphatic that:
"Of all the widely believed but patently false economic beliefs is the absurd notion that falling consumer prices are bad for the economy and something must be done about them. The BIS did a study and found routine deflation was not any problem at all.
“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the BIS study.
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Tuesday, July 19, 2016
Deleveraging in Motion - Believe It or Not, Our Money Velocity Sucks! / Economics / Deflation
By: Harry_Dent
Dr. Lacy Hunt has been featured more than any outside speaker at our IES conferences. Why? Because he’s the only classical economist I fully admire and he is a successful bond investment manager in the real world that understands the trend towards deflation, despite unprecedented money-printing.I love the gold bugs for being realistic and honest about the debt and financial asset bubble we’re in, especially when most mainstream economists and analysts are blind to it.
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Sunday, July 03, 2016
Deflation Is Blowing In On An Eastern Trade Wind / Economics / Deflation
By: Raul_I_Meijer
Brexit is nowhere near the biggest challenge to western economies. And not just because it has devolved into a two-bit theater piece. Though we should not forget the value of that development: it lays bare the real Albion and the power hunger of its supposed leaders. From xenophobia and racism on the streets, to back-stabbing in dimly lit smoky backrooms, there’s not a states(wo)man in sight, and none will be forthcoming. Only sell-outs need apply.
The only person with an ounce of integrity left is Jeremy Corbyn, but his Labour party is dead, which is why he must fight off an entire horde of zombies. Unless Corbyn leaves labour and starts Podemos UK, he’s gone too. The current infighting on both the left and right means there is a unique window for something new, but Brits love what they think are their traditions, plus Corbyn has been Labour all his life, and he just won’t see it.
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Saturday, May 28, 2016
Deflation Is A Direct Result Of Our Attempts To Create Inflation Through Easy Money! / Economics / Deflation
By: Gordon_T_Long
John Rubino of DollarCollapse.com and FRA Co-founder, Gordon T. Long discuss the effects of the rise in eCommerce along with the rise of technology and the consequences we are facing from flawed perceptions of financial authorities.
John Rubino is author of Clean Money: Picking Winners in the Green Tech Boom (Wiley, December 2008), co-author, with GoldMoney’s James Turk, of The Collapse of the Dollar and How to Profit From It (Doubleday, January 2008), and author of How to Profit from the Coming Real Estate Bust (Rodale, 2003). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a currency trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He now writes for CFA Magazine and edits DollarCollapse.com and GreenStockInvesting.com.
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Thursday, May 19, 2016
Unintended Consequences, Part 1: Easy Money = Overcapacity = Deflation / Economics / Deflation
By: John_Rubino
Somewhere back in the depths of time the world got the idea that easy money — that is, low interest rates and high levels of government spending — would produce sustainable growth with modest but positive inflation. And for a while it seemed to work.
But that was an illusion. What actually happened was textbook, long-term, surreally-vast misallocation of capital in which individuals, companies and governments were fooled into thinking that adding new factories, stores and infrastructure at a rate several times that of population growth would somehow work out for the best.
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Saturday, April 23, 2016
Mish's Sure Fire Proposal to End Japanese Deflation / Economics / Deflation
By: Mike_Shedlock
It's rather amusing that Japan cannot destroy its currency even though it has tried, and tried and tried.
Abenomics has been a huge failure. Keynesian "solutions" of all sorts have failed to rid Japan of the alleged scourge of deflation.
Some think handing out free money is the obvious solution, but what if people don't spend it?
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Tuesday, February 23, 2016
The Central Banks Are Pushing the World Towards Deflation / Economics / Deflation
By: Chris_Vermeulen
With the entire world struggling to ward off global deflation, it is prudent to understand why the current actions by the Central Banks are not heading in the correct direction. The massive amount of Quantitative Easing by the Central Banks, globally, have not been converted into inflation as was earlier anticipated. This article will shed light on various aspects leading to deflation.
Monday, December 07, 2015
What Deflation Quacks Like / Economics / Deflation
By: Raul_I_Meijer
As yet another day of headlines shows, see the links and details in today’s Debt Rattle at the Automatic Earth, deflation is visible everywhere, from a 98% drop in EM debt issuance to junk bonds reporting the first loss since 2008 to corporate bonds downgrades to plummeting cattle prices in Kansas to China’s falling demand for iron ore and a whole list of other commodities.
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Thursday, November 19, 2015
Has Deflation Been Ddefeated? / Stock-Markets / Deflation
By: Clif_Droke
The last 15 years have been among the most turbulent on record. Since the year 2000, America has experienced two recessions (including a near depression), two stock market crashes, numerous selling panics, two terrorist attacks, and one of the slowest economic recoveries on record.
Just when it appears there might be some light at the end of the tunnel and the consumer is getting his confidence back, the threat of global deflation has appeared and has given them reason to remain cautious. This time around the threat of deflation is coming from overseas, specifically from China.
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Friday, November 13, 2015
Deflation and the Devaluation Derby - A Closer Look at All Those New U.S. Jobs / Economics / Deflation
By: EWI
U.S. labor force participation rate is at its lowest level in 38 years
Editor's note: You'll find a text version of the story below the video.
I was in the café of a bookstore recently and overheard a young man tell his friend, "It's hard to get a job these days, even with a degree."
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Friday, October 30, 2015
Europe in Deflation: Got (cheap) Milk? / Economics / Deflation
By: EWI
Why falling food prices are not a boon for Europe's economy
In the early 1990s, two simple words from a genius ad campaign radically transformed the way the U.S. consumer saw it: "Got Milk?"
Suddenly, the narrative changed from an obligatory drink you had to finish as a kid, along with eating your vegetables -- into a sexy, funny, and above all desirable treat for all ages.
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Wednesday, October 28, 2015
U.S. Economy On the Precipice of Deflation / Economics / Deflation
By: EWI
Weakest economic recovery in seven decades gets weaker
Most people extrapolate present trends into the future. But yesterday's trend can look like day vs. night when tomorrow arrives.
Almost no one expected deflation when the December 2007 Elliott Wave Theorist said:
Inflation has raged, but deflation is next.
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Tuesday, October 27, 2015
Zero Percent Inflation…What’s Next? / Economics / Deflation
By: Harry_Dent
During World War II, the Fed bought its own bonds to keep interest rates low and demand high enough to finance the war effort.
Back then, the Fed’s efforts did what you’d expect: they caused a modest level of inflation.
So you’d expect the unprecedented stimulus of today to create substantially higher inflation. In fact, with the greatest money printing in history, it wouldn’t be unreasonable to fear hyperinflation.
Monday, October 26, 2015
The Global Depression and Deflation Is Currently Underway! / Economics / Deflation
By: Chris_Vermeulen
"The clear and present danger is, instead, that Europe will turn Japanese: that it will slip inexorably into deflation, that by the time the central bankers finally decide to loosen up it will be too late." Paul Krugman, "The Euro: Beware of What you Wish for", Fortune (1998)
Most central bank policy makers, investors, and analysts around the world today are gripped by the worry of declining growth rates, dwindling international commodity prices, high unemployment, and other macroeconomic figures.
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Saturday, October 24, 2015
Currency Devaluation's Dangerous Role in Deflation / Currencies / Deflation
By: EWI
The following article on currency devaluation's role in deflation is from Elliott Wave International, the world's largest financial forecasting firm. EWI has just released a new report, Deflation and the Devaluation Derby, to help investors prepare now for the deflationary threat they see around the corner. Click here to read the new report >>
China's economy is slowing. Its stock market began to crash back in July. And the volatility rocking financial markets has been widely linked to the recent yuan devaluations by China's central bank.
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Thursday, October 22, 2015
Everything’s Deflating And Nobody Seems To Notice / Economics / Deflation
By: Raul_I_Meijer
Whenever we at the Automatic Earth explain, as we must have done at least a hundred times in our existence, that, and why, we refuse to define inflation and deflation as rising or falling prices (only), we always get a lot of comments and reactions implying that people either don’t understand why, or they think it’s silly to use a definition that nobody else seems to use.
-More or less- recent events, though, show us once more why we’re right to insist on inflation being defined in terms of the interaction of money-plus-credit supply with money velocity (aka spending). We’re right because the price rises/falls we see today are but a delayed, lagging, consequence of what deflation truly is, they are not deflation itself. Deflation itself has long begun, but because of confusing -if not conflicting- definitions, hardly a soul recognizes it for what it is.
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Friday, October 02, 2015
Deflation: It's Been a Stealth Move / Economics / Deflation
By: EWI
Elliott Wave International's European Financial Forecast Editor discusses deflation
In this new interview, Elliott Wave International's Brian Whitmer explains the indirect connection between Europe's volatility and deflation. Find out how Brian's advising his subscribers prepare for deflation.
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Tuesday, September 22, 2015
The Great Deflation Will Destroy All Bubbles – These Too / Stock-Markets / Deflation
By: Harry_Dent
It’s not enough that jobs are less stable, or that the ones we’re adding are increasingly more part-time…
It’s not enough that rapidly growing student loan costs are plaguing more young echo boomers and millennials…
It’s not enough that the high costs of education are increasing the inequality gap and making upward mobility impossible…
Monday, August 17, 2015
The Psychological Driver of Deflation and the Collapse of the Trust Horizon / Economics / Deflation
By: Nicole_Foss
The collective mood shifts rapidly from optimism and greed to pessimism and fear as the bubble bursts, and as it does so, the financial system moves from expansion to contraction. Financial contraction involves the breaking of promises right left and centre, with credit instruments drastically revalued downwards in the process. As the promises that back them cease to be credible, value disappears extremely rapidly. This is deflation and the elimination of excess claims to underlying real wealth.
Thursday, August 06, 2015
Deflation, Debt and Gravity / Economics / Deflation
By: Raul_I_Meijer
Far too many people have already used lines like “We Are All Greeks Now” for the words to hold on to much if any meaning by now. But it’s still a very accurate description of what awaits us all. Just not for the same reasons most who used it, did.
No, I don’t really want to talk about Greece again. I want to talk about where you live. And about how similar the two will be not too long from now. How Greece is holding up a lesson and a big red flashing warning sign for all of us.
Greece is the mold upon which all of our futures will be based. Quite literally. Greece is a test tube baby rat.
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Friday, July 10, 2015
China: What Deflation Looks Like / Stock-Markets / Deflation
By: EWI
Why the 32% slide in the Shanghai Composite is more than just a "hiccup"
The Shanghai Composite fell another 8% at the open on Wednesday (July 8). Trading was soon halted by the authorities. (But for a different reason that the trading halt on the NYSE the same day.)
From its all-time high on June 12, China's main stock index is down 32%. Using the word "crash" is becoming appropriate.
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Thursday, June 11, 2015
The Fed's Gift of Free Money: Return to Sender / Economics / Deflation
By: EWI
The real reason consumers aren't spending is not a matter of monetary policy; it's a matter of psychology
On June 2, the postman rang once -- and, boy, did he ring.
That day, the Wall Street Journal published a strongly worded letter titled, "Grand Central: A Letter to Stingy American Consumers," which included these notable passages:
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Thursday, May 28, 2015
World War D—Deflation - Secular Bear Markets Analysis / Stock-Markets / Deflation
By: John_Mauldin
Everywhere I go I’m asked, “Will there be inflation or deflation? Are we in a bull or bear market? Is the bond bull market over and will interest rates rise?”
The flippant answer to all those questions is “Yes.” And that can be the correct answer as well, but it depends on what your time frame is and what tools you use to measure the markets and inflation. One of the newer members of the Mauldin Economics team is Jawad Mian, who writes a powerful global macro letter from his base in Dubai. He has been making the case for the “end of the deflation trade” (or more properly the return of a reflationary period) and the knock-on effects that would cause. Longtime readers know that I am in the secular deflation camp and ask me why there’s such a seeming difference my views and Jawad’s.
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Friday, May 15, 2015
Hyper-Deflationary Death Race 2000 / Economics / Deflation
By: Dr_Jeff_Lewis
It is quite fascinating that the ultimate case for continued equity and bond price growth comes from the unspoken assumption that we will get another round or rounds of QE.
This open assumption is that things are so good that we are about to move into perpetual growth mode as the recovery breaks away into the growth.
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Thursday, May 07, 2015
"Glinda the Good" Deflation Isn't Looking So... Good / Economics / Deflation
By: EWI
Cold weather, falling wages, bizarre fluke? The real reason consumers aren't spending is... defensive, deflationary psychology
Editor's note: You'll find the text version of the story below the video.
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Thursday, April 30, 2015
Why Deflation is Unlikely / Economics / Deflation
By: GoldMoney
Financial markets are becoming aware that the US economy is stalling, so investors increasingly take the view that with demand likely to stagnate or even fall, prices for goods and services will soften. This is already threatening to be the situation in a number of other advanced nations, with negative interest rates to combat it becoming commonplace. For this reason, gold and silver priced in dollars are expected by many traders to drift lower.Read full article... Read full article...
Saturday, March 28, 2015
Why We Need Deflation and Higher Interest Rates / Economics / Deflation
By: MISES
John P. Cochran writes: The Fed is seemingly slightly out of step with other central bankers as it recently hinted at possible future rate hikes in the official announcement following its March 20, 2015 meeting. But as many commentators have recognized, Janet Yellen, a strong proponent of Keynesian more-inflation-as-cure-for-unemployment policy, later downplayed the significance of the announcement. She was careful to indicate that rates would stay low for the near future and when (and if) rate increases begin, they will be measured. The Fed, like central bankers elsewhere, stays committed to a 2 percent inflation target as it continues a policy driven by a fear of deflation, a fear that is not supported by either good economic theory or economic history properly interpreted.
Friday, March 27, 2015
Deflation Watch: Key U.S. Economic Measures Turn South / Economics / Deflation
By: EWI
A developing deflationary trend hinders the economic "recovery"
Lots of media stories say the Federal Reserve is weighing signs of economic strength to see if the economy is ripe for higher interest rates.
In truth, economic weakness has appeared on various fronts.
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Sunday, March 22, 2015
Recent Economic Data Shows the Good Side of Deflation / Economics / Deflation
By: MISES
Edin Mujagic writes: The Fed, the ECB, and the Bank of England repeatedly tell us that deflation is extremely dangerous for an economy. Central bankers, most economists, and the media speak of deflation as one of the greatest disasters that can strike an economy.
It is stunning then, given the apparent importance of the subject — and the possible collateral damage of pro-inflation policies — that few seem to bother to ask the deeper, fundamental question: does the historical data show that deflation is actually a terrible thing? The data suggests that it is not. In fact, looking at recent GDP, inflation, and employment data, one could even say that a shot of deflation is what many economies need. Let us take a look at the recent real-life examples.
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Thursday, February 19, 2015
Here's What's Wrong with the 'Good' Deflation Argument / Economics / Deflation
By: EWI
Editor's note: This article was adapted, with permission, from the February issue of The Elliott Wave Financial Forecast, a publication of Elliott Wave International, the world's largest market forecasting firm. All data is as of Jan. 30, 2015. Click here to read the complete version of this article, including specific near-term forecasts, 100% free.
Deflation is a decline in the supply of money and credit relative to goods and services in an economy.
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Tuesday, February 10, 2015
The "Big Lie" About the U.S. Jobs Picture / Economics / Deflation
By: EWI
Some 30 million people are either out of work or severely underemployed
Editor's note: You'll find the text version of the story below the video.
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Sunday, February 08, 2015
Feel That? It's the Chill of Deflation / Interest-Rates / Deflation
By: DailyWealth
Chris Mayer writes: That chill in the air? This is what deflation feels like...
Right now, the 10-year U.S. Treasury pays just 1.8%... oil is $50 a barrel... commodity prices drift near to chilling lows... and the dollar is near multiyear highs. These are all deflationary trends.
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Monday, February 02, 2015
Potential For Deflation Is Becoming A Big Threat For 2015 / Economics / Deflation
By: Sy_Harding
The fears after 2001 were that the Fed’s easy money policies to pull the economy out of the 2001 recession, followed by even more easing, including the near-zero Fed Funds rate instituted after the 2008 financial meltdown, would result in runaway inflation.
Spiraling inflation was so sure to show up that gold, the historical hedge against inflation, surged up in a powerful 10-year bull market, rising from $250 an ounce in 2001 to $1,900 an ounce in 2011.
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Friday, January 30, 2015
U.S. Asset Price Deflation Coming Up? Food Prices Drop? CPI Negative? Credit Deflation? / Economics / Deflation
By: Mike_Shedlock
When inflation alarmists want to convince everyone the dollar is about to become worthless, they post this chart of the CPI.
Friday, January 23, 2015
Debt and Deflation: Three Financial Forecasts - There's More Than Falling Prices / Economics / Deflation
By: EWI
Editor's note: You'll find the text version of the story below the video. Join Elliott Wave International's free State of the U.S. Markets online conference to get prepared for the major moves in U.S. stocks, commodities, gold, USD and more for 2015 and beyond. Register now and get instant access to a free video presentation from market legend Robert Prechter and regular email updates with insights from our most recent publications and presentations from our key analysts.
Thursday, January 22, 2015
The Eurozone and the Beauty of Deflation / Economics / Deflation
By: GoldSilverWorlds
The Eurozone has been hovering around a 1% inflation rate, getting closer to zero during 2014, nothing close of the ambitious 2% benchmark set by central banks. Any small downward adjustment in the inflation rate will put it in the negative territory, allowing for prices to spiral downward. The West is genuinely fearful of deflation. Headlines in leading papers were very strong in reflecting this fear, describing deflation as “the world’s biggest economic problem”, or the “nightmare” that stalks Europe that will lead to its “descent” and collapse.
Wednesday, January 21, 2015
Deflation Bonanza! And the Fool's Mission to Stop It / Economics / Deflation
By: Mike_Shedlock
Of all the widely believed but patently false economic beliefs is the absurd notion that falling consumer prices are bad for the economy and something must be done about them.
The recent move in the Swiss franc puts a spotlight on the issue. For example, on Sunday, in Swiss Peg Removal: Did Anyone Win? I commented ...
One widely recognized "big loser" is the tourism industry. For sure, hotel prices in Switzerland rose as much as 40% overnight compared to prices elsewhere.Read full article... Read full article...But Swiss grocery shoppers buying food imports from France, Spain, and the rest of Europe benefit mightily.
Monday, January 12, 2015
Enjoy the Ride on the Inflation/Deflation Rollercoaster / Economics / Deflation
By: Michael_Pento
Politicians and central bankers are desperately trying to convince investors that the economy has returned to what they deem as a “pre-crisis normality”. But the truth is the global economy has never been in a more fragile condition. In an example of just how precarious the Fed-engineered asset bubbles have become, all of the 2014 U.S. equity market gains were wiped out by just a few really bad trading days in October.
Read full article... Read full article...
Monday, January 05, 2015
Weak CNY + Low Wages + Ultra Low Interest Rates = Deflationary Pressures 2015 / Economics / Deflation
By: Ashraf_Laidi
Deflation will be the dominating theme of 2015. Deflation occurs when prices of production factors (wages and interest rates) fall to the extent of limiting labour and capital from drawing higher prices. The culprit to these conditions is typically an excess supply of labour and capital to the extent that wages and interest rates weaken substantially until they draw sufficient demand to the point of stabilising their price.
Monday, December 15, 2014
Deflation or Inflation? / Economics / Deflation
By: Gary_Tanashian
At the prodding of an NFTRH subscriber who was combing through old issues, I went back and read NFTRH 7, from November of 2008 and was struck by how things have really not changed in the last 6 years of non-stop inflationary policy; they have intensified and gone global, but the mechanics have not changed.
The current inflation operation is failing world-wide, with the US holding out for now. As pertains to the gold and gold mining case mentioned in the article below (as we got hyper bullish in Q4 2008), things are moving much more slowly now. The current backdrop is a different animal than the 2008 deflationary impulse, but its potential is to much more wide-ranging and ultimately destructive.
Read full article... Read full article...
Thursday, December 11, 2014
Deflation Is Winning, and Central Banks are Running Scared / Economics / Deflation
By: Adam_Taggart
Remember in the early part of the last decade, long before he was appointed the Chairman of the Federal Reserve, Ben Bernanke penned an article that caught widespread public attention entitled, "Deflation: It Can't Happen Here" ?
Bernanke was referring to the deflationary pressures Japan had been dealing with for more than a decade. In the article, Bernanke laid out a game plan for how the Fed would respond if the US ever faced deflationary pressures. His miracle antidote for battling deflation? Printing money. Lots of it.
Read full article... Read full article...
Friday, December 05, 2014
Central Banks Battling Deflation at Any Cost / Economics / Deflation
By: John_Mauldin
Jared Dillian writes: When I was in junior high, my friend Scott had this Billy Crystal tape that we passed back and forth to each other. I still like Billy Crystal, but let’s just say he was truly hilarious when I was 13 back in 1987.
He had this routine about old codgers who used to tell you how hard life was in the old days.
“We had no air…” he’d say, in an old man voice. “No food. We ate wool coats and we were happy.”
Read full article... Read full article...
Wednesday, November 19, 2014
European Economies in Perpetual State of Shock, What's Scarier Than Deflation? / Economics / Deflation
By: EWI
As early as 2011, our analysis warned that Europe's deflation was coming -- here's why
For the economies of Europe, the past few months have felt like one long ice-bucket challenge that never ends: A perpetual state of shock induced by the bone-chilling fact that deflation
"...has become a reality in many European countries." (Oct. 24, New York Times)
At last count, eight European nations are now in outright deflation, including:
Read full article... Read full article...
Friday, November 14, 2014
Debt, Propaganda And Now Deflation / Economics / Deflation
By: Raul_I_Meijer
Looks I have to return to the deflation topic. I’m a bit hesitant about it, because the discussion always gets distorted by varying definitions and a whole bunch of semi-religious issues. The Automatic Earth has for many years said that an immense bout of deflation is inevitable because of global debt levels, and it’s all only gotten a lot worse since we first said that. Our governments and central banks have ‘fought’ deflation with more debt, and that was always the stupidest idea in human history. Or at least, most of us were stupid for believing it would work, or was even intended to.
Thursday, November 13, 2014
What Are The Odds in 2015: Inflation or Deflation? / Economics / Deflation
By: Submissions
TCE writes: Like other Central Banks, the U. S. Federal Reserve has “printed” copious quantities of money. Despite better GDP numbers and positive media commentary, much of the American economy continues to be lethargic. The Eurozone appears increasingly vulnerable to recession. Financial and geopolitical risks could derail economic growth. What are the long term trends that will shape the outcome?
Tuesday, November 11, 2014
Deflation Rearing its Ugly Head in Subtle and Not-So-Subtle Ways Around the Globe / Economics / Deflation
By: EWI
By Steve Hochberg and Pete Kendall
The following article was adapted with permission from the November 2014 issue of The Elliott Wave Financial Forecast, a publication from Elliott Wave International, the world's largest market forecasting firm. Follow this link for the complete article.
According to the latest figures, deflation is now perched on China's doorstep.
Read full article... Read full article...
Tuesday, November 11, 2014
Deflation Danger - The Last Argument of Central Banks / Economics / Deflation
By: John_Mauldin
For a central banker, deflation is one of the Four Horsemen of the Apocalypse: Death, Famine, Disease, and Deflation. (We will address later in this letter why War, in the form of a currency war, is not in a central banker’s Apocalypse mix.) It is helpful to understand that, before a person is allowed to join the staff or board of a central bank, he or she is taken into a back room and given DNA replacement therapy, inserting a gene that is viscerally opposed to deflation. Of course, in fairness, it must be noted that central bankers don’t like high inflation, either (although, looking around the world, we see that the definition of high inflation can vary). In the developed world, 2% inflation seems to be the common goal. You wouldn’t think that 2% a year is a significant change in the overall price structure, but the panic among economists that would ensue with a 2% price deflation would border on hysteria.
Saturday, November 08, 2014
When Deflation Comes Knocking at the Door / Currencies / Deflation
By: Alasdair_Macleod
There is little doubt that deflationary risks have increased in recent weeks, if only because the dollar has risen sharply against other currencies. Understanding what this risk actually is, as opposed to what the talking heads say it is, will be central to financial survival, particularly for those with an interest in precious metals.
The economic establishment associates deflation, or falling prices, with lack of demand. From this it follows that if it is allowed to continue, deflation will lead to business failures and ultimately bank insolvencies due to contraction of bank credit. Therefore, the reasoning goes, demand and consumer confidence must be stimulated to ensure this doesn't happen.
Read full article... Read full article...
Saturday, November 01, 2014
US Now Importing the World's Deflation / Economics / Deflation
By: John_Rubino
With US QE about to end, the rest of the world faced the prospect of another "taper tantrum" financial crisis, one that this time around could suck the world into a deflationary vortex. So it should come as no surprise that the end of QE was countered with a series of offsetting treats for the global financial markets:
• The US Fed promised to keep interest rates low for a really long time.
• The European Central Bank announced that in November it would start buying asset backed bonds, in effect beginning an open-ended, potentially huge debt monetization program of its own.
Read full article... Read full article...
Friday, October 31, 2014
The Deflation Boogeyman / Economics / Deflation
By: Frank_Hollenbeck
Here we go again. A plunge in oil prices has spurred a bevy of articles from the bought-and-paid-for media, as well as quasi-governmental agencies, alerting us of pending disaster if deflation were allowed to make an entrance, however briefly. Never mind that there is no theoretical or empirical evidence to justify this fear of deflation. (explanation here) According to the St. Louis Fed:
“While the idea of lower prices may sound attractive, deflation is a real concern for several reasons. Deflation discourages spending and investment because consumers, expecting prices to fall further, delay purchases, preferring instead to save and wait for even lower prices. Decreased spending, in turn, lowers company sales and profits, which eventually increases unemployment.”
Read full article... Read full article...
Saturday, October 25, 2014
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? / Economics / Deflation
By: Mike_Shedlock
There's some interesting discussion points in the UK-based Absolute Return Partners October 2014 Letter, by Niels C. Jensen, most of which I agree with, others not.
Japan-Style Deflation in Our Backyard?Read full article... Read full article...It is no secret that we have been long-standing believers in deflation being a more probable outcome of the 2008-09 crisis than high inflation. What has changed over the past six months is that the world has begun to move in different directions. Whereas rising unit labour costs in the U.S. make outright deflation in that country quite unlikely, the same cannot be said of the Eurozone.
Friday, October 17, 2014
America Flirts With Deflation / Economics / Deflation
By: Raul_I_Meijer
“When it becomes serious, you have to lie,” said brand-new EC head Jean-Claude Juncker back in May 2011. I’m thinking the last few days have been serious enough to warrant some real whoppers from Brussels. And beyond.
Yesterday, one hour after the S&P reached its low point, not only was it deemed necessary to bring out the Plunge Protection Team, Fed grey head Janet Yellen was trotted out as well to soothe the dark mood with rosy tales about the US economy.
Read full article... Read full article...
Tuesday, September 30, 2014
Europe Teetering the Ddge of a "Japan-style" Deflation / Economics / Deflation
By: EWI
The Continent is now teetering on the edge of a "Japan-style" deflation. Here's our take on it.
It's happened. The one economic comparison Europe has dreaded more than any other; the name that's akin to Lord Voldemort for investors has been uttered: "deflation."
And it's not just "deflation." You can still spin that term in a positive light if you get creative enough. Say, for example,
Read full article... Read full article...
Thursday, September 04, 2014
Turning Japanese / Economics / Deflation
By: Jonathan_Davis
A theme I have written of many times, during the last few years, is how we, in the West, may be #turningjapanese. What this refers to is Japan’s lost TWO decades between 1989 and 2012 when Japan had Deflation and a slow growing or mostly falling economy – in other words a generational Depression. During this period their stock market and their real estate valuations collapsed 80% each.
Friday, August 22, 2014
Deflation's Final Curtain Call - Part II / Economics / Deflation
By: Clif_Droke
As the 60-year cycle enters its final few weeks of descent, a few conclusions can be made. We can also make some projections as to what the foreseeable future might hold based on the upcoming bottom of this important economic cycle.
Since the 60-year cycle is the primary cycle governing inflation and deflation, it makes sense that its impact will be most strongly felt in the prices of inflation-sensitive commodities. Its force is also evident in wages, interest rates, and other factors which influence the general course of the economy. One of the biggest areas affected by the cycle is in earnings and income growth.
Read full article... Read full article...
Monday, August 11, 2014
Growth and Inflation In America: Why Deflation Is Going to Burst Through / Economics / Deflation
By: Jas_Jain
Inflation is a lagging indicator even over a short-term, lagging by 6-12 months with respect to the GDP growth rate when the cyclical turns take place. Long-term inflation pressure has a very long lag time of 6-10 years. In the advanced economies of Western Europe, Japan and the US, where consumption is a big part of the GDP, the biggest contributor to the long-term inflationary pressures is the long-term GDP growth, driven primarily by the end demand, with inflation lagging by several years as businesses adjust to the rapidly accelerating demand, or the rapidly decelerating demand. This is particularly the case with the consumption oriented US economy.
Tuesday, July 15, 2014
Knock, Knock. It's Deflation. Deflation Who? Video / Economics / Deflation
By: EWI
The Elliott Wave Financial Forecast warns that the contracting U.S. economy signals deflation ahead
In June, the U.S. government, revising its previous number, reported that the economy shrank by 2.9% in the first quarter of 2014.
The steep plunge caught the bulls by surprise.
Read full article... Read full article...
Wednesday, April 30, 2014
Europe and Deflation Paranoia / Economics / Deflation
By: Frank_Hollenbeck
There is a current incessant flow of articles warning us of the certain economic calamity if deflation is allowed to show its nose for even the briefest period of time. This ogre of deflation, we are told, must be defeated with the printing presses at all costs. Of course, the real objective of this fear mongering is to enable continued government theft through debasement. Every dollar printed is a government tax on cash balances.
Wednesday, April 30, 2014
The Death of Deflation / Economics / Deflation
By: Clif_Droke
If investors have learned nothing else from the events of the last five years, they’ve at least learned that fighting the Fed doesn’t pay.Indeed, the biggest lesson of all since 2009 is that monetary liquidity is the single biggest determinant of future stock prices. Given a loose enough monetary policy, stock prices will always respond by going higher.
Read full article... Read full article...
Thursday, April 03, 2014
Deflating the Deflation Myth / Economics / Deflation
By: MISES
Chris Casey writes: The fear of deflation serves as the theoretical justification of every inflationary action taken by the Federal Reserve and central banks around the world. It is why the Federal Reserve targets a price inflation rate of 2 percent, and not 0 percent. It is in large part why the Federal Reserve has more than quadrupled the money supply since August 2008. And it is, remarkably, a great myth, for there is nothing inherently dangerous or damaging about deflation.
Saturday, March 01, 2014
The Deadly Economic Undercurrent of Deflation / Stock-Markets / Deflation
By: Clif_Droke
Despite the overall positive state of U.S. equities and the improvements in the retail economy, the stealth enemy known as deflation is still lurking in the shadows.
Consider the following graph of real disposable income, courtesy of Zerohedge.com. This shows the true underlying state of the real economy and is a testament to the continued presence of deflation.
Read full article... Read full article...
Thursday, February 20, 2014
Deadly Deflation Myths / Economics / Deflation
By: Dan_Amerman
As will be demonstrated herein, using both historical and present-day events, key aspects of current deflationary theory can be characterized as the combination of 1) an absurdity; 2) a misunderstanding; and 3) an oversimplification; all working together to create 4) a serious danger for investors.
Few questions are of greater concern for investors than: "will it be inflation or deflation that will dominate the coming years?"
Read full article... Read full article...
Sunday, February 02, 2014
A Tale of Two Europes Deflation Video / Economics / Deflation
By: EWI
Today's post is a 7-minute video from European Financial Forecast Editor Brian Whitmer. Brian gave this presentation in London to The Society of Technical Analysts. This portion of "A Tale of Two Europes" is packed with myth-busting charts about government's inability to stop deflation, cheap credit's role in an economic recovery and more.
Friday, January 24, 2014
The End Game - Case for Deflation is Quietly Strengthening / Stock-Markets / Deflation
By: Jonathan_Davis
It is interesting that, nearly 5 years after the setting of the EMERGENCY interest (Base) rate of 0.5% we are still at 0.5% and our illustrious ‘capitalist’ government is borrowing £110 Billions per annum (to add to the admitted-to debt of £1100 Bns and the off balance sheet further liabilities of £4000 Bns). Carney, at the Bank of England, and Osborne, the Chancellor and Alexander, his puppy, tell us the recovery is locked in. And most believe them.
And yet we have an emergency interest rate and the govt is borrowing £110Bns pa. Locked in??? It is all about bailing out bankers, the hyper rich and the political establishment. This is not capitalism. It is socialism for the rich and powerful. And I very much doubt we will see capitalism again for at least a generation, if at all. This is step by step encroaching Marxism and surely everyone knows how that ends?
Read full article... Read full article...
Tuesday, January 21, 2014
The Deflation Menace Government Propaganda / Politics / Deflation
By: Peter_Schiff
Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble (which you can find more on in my latest newsletter). Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare. Instead they are warning about the horror that could result from falling prices, otherwise known as deflation. Get the kids into the basement Mom....they just marked down Cheerios!
Saturday, January 18, 2014
Demographic Cliff Great Deflation - Harry Dent on How to Prosper in the Coming Downturn / Economics / Deflation
By: The_Gold_Report
There's little happy talk in Harry Dent's new book, "The Demographic Cliff: How to Survive and Prosper During the Great Deflation of 2014–2019," yet the author sees incredible opportunities for the investors and businesses that see this crisis coming. The founder of Dent Research relies strongly on demographic statistics and trends to predict a crash starting in early 2014 and lasting into 2015 or 2016, which will make 2008 look like a mere tumble. In this interview with The Gold Report, he delves into the economic implications of Baby Boomers aging around the world, and discusses strategies for investors to protect themselves.
Saturday, January 18, 2014
The Deflation Beast Unleashed and Is Here To Stay / Economics / Deflation
By: Raul_I_Meijer
The time has come. The Automatic Earth has been talking about the inevitability of deflation for years, but the concept only now goes mainstream. Which is a shame, because a lot could have been done to try and mitigate the damage it’s going to do.
Although it’s as inevitable as the laws of thermodynamics, the notion that record debts will always lead to record debt deflation is hardly discussed; you have Steve Keen, Mike Shedlock, and Nicole and yours truly here at The Automatic Earth, and that’s about it (I’m sure I miss one or two, apologies, but I can’t think of any). And although put together we have a reasonable readers base, blogs and websites are still no more than fringe sources compared to the main media where everyone lacks either the intelligence or the courage or both to even think about the notion, no matter how close its certainty may be to that of thermodynamics. They won’t have their world view disturbed by reality.
Read full article... Read full article...
Tuesday, January 07, 2014
Demographics, Stocks Bear Market, Global Recession And Deflation / Stock-Markets / Deflation
By: John_Hampson
Historically, demographic trends have correlated with secular bulls and bears in financial assets, economic growth/recession and inflation/deflation. Demographic forecasts are reliable because future trends were set in place with past swells and shrinkages in birth numbers. They would change if a country was subject to large scale death (war, pandemic, or similar) or the government henceforth adopted radical immigration policies. Demographics are particularly potent in countries that are relatively closed to migration, so understand that China has the smallest percentage of immigrants of any country (0.1% of the population), and Japan just 1.9% (compared to USA, UK and Germany all over 10%). My focus is on USA, China, Japan, Germany and UK, as collectively they make up 50% of world GDP. Know that whilst the European Union abolished barriers to movement within it, the demographics across all the member nations are uniformly poor.
Thursday, November 14, 2013
Deflation Is Coming (and It's Not What You Think) / Stock-Markets / Deflation
By: Money_Morning
Shah Gilani writes: Be careful out there.
The stock market rally that started in March 2009... The one that's taken us out of the Great Recession and to new highs... The rally that's driving sentiment indicators of people who benefit from rising financial assets directly, peripherally, or because they hope all boats rise with the market...
Read full article... Read full article...
Friday, October 25, 2013
Deflationary Forces Stymie the Fed's Economic Rescue Efforts / Economics / Deflation
By: EWI
See a stunning chart of the Federal Reserve's assets
The Federal Reserve's efforts to rescue the economy have been historically aggressive, starting with the initial round of quantitative easing in 2008 and continuing through 2013.
The central bank's assets have skyrocketed due to the Fed's bond purchases, which you can see clearly in this eye-opening report that Robert Prechter presented to the Market Technicians Association and his Elliott Wave Theorist subscribers.
Read full article... Read full article...
Wednesday, October 09, 2013
Mounting Risks of a Deflationary Market Crash / Stock-Markets / Deflation
By: EWI
Dear Investor,
So many financial markets; so little time to follow them. The one forecaster I know who will put it all in perspective is EWI's Robert Prechter. Read his reports and you will get a clear idea of what really drives the markets and the U.S. economy – and why the Fed is beating its head against the wall.
Read full article... Read full article...
Monday, September 30, 2013
Warning - Deflation Will Take the Most by Surprise / Economics / Deflation
By: EWI
Google searches offer an insightful glimpse into economic expectations
The last thing on the minds of most people is deflation. It's easy enough to determine that with a quick quiz -- and that quiz is found in the just-published Elliott Wave Theorist.
Read full article... Read full article...
Thursday, September 26, 2013
Robert Prechter Warns Deflation Will Take the Majority by Surprise / Economics / Deflation
By: EWI
Google searches offer an insightful glimpse into economic expectations
The last thing on the minds of most people is deflation. It's easy enough to determine that with a quick quiz -- and that quiz is found in the just-published Elliott Wave Theorist.
Read full article... Read full article...
Wednesday, September 11, 2013
The Rundown on Runaway Inflation / Economics / Deflation
By: EWI
Despite a dramatic increase in the Fed's balance sheet, the Producer and Consumer Price Indexes are subdued
Famed radio broadcaster Earl Nightingale, who was the voice of Sky King on the radio and later went on to become a motivational speaker, described what he believed to be the biggest sin a public speaker could commit.
Read full article... Read full article...
Sunday, July 21, 2013
Euro-zone Deflation Warning for U.S. / Economics / Deflation
By: EWI
History shows that the U.S. should pay attention to economies in Europe
The economy has been sluggish for five years. There's no shortage of chatter about "why," yet few observers mention deflation.
One exception is a hedge fund manager who spoke up at the recent Milken Institute Global Conference.
Read full article... Read full article...
Thursday, July 18, 2013
Deflation Warning: Money Manager Startles Global Conference / Economics / Deflation
By: EWI
History shows that the U.S. should pay attention to economies in Europe
The economy has been sluggish for five years. There's no shortage of chatter about "why," yet few observers mention deflation.
One exception is a hedge fund manager who spoke up at the recent Milken Institute Global Conference.
Read full article... Read full article...
Wednesday, July 03, 2013
Inflation’s Shot Across the Bow, Deflationary Pressure is Expected to Resurface / Stock-Markets / Deflation
By: Clif_Droke
On May 3, the bond market fired the proverbial “shot heard ‘round the world.” Treasury yields began a two-month climb to levels not seen in almost two years. Many analysts proclaimed the end of the 30+ year interest rate decline. The true significance in the yield rally isn’t that the long-wave deflationary trend in interest rates is over, however. Rather, it’s that the commencement of long-term inflation is within sight.Read full article... Read full article...
Thursday, June 27, 2013
What’s So Scary About Deflation? / Economics / Deflation
By: MISES
Frank Hollenbeck writes: When it comes to deflation, mainstream economics becomes not the science of common sense, but the science of nonsense. Most economists today are quick to say, “a little inflation is a good thing,” and they fear deflation. Of course, in their personal lives, these same economists hunt the newspapers for the latest sales.
Tuesday, June 25, 2013
Kress Cycle Market Deflation Pressure Increases / Stock-Markets / Deflation
By: Clif_Droke
To many observers, deflation was a thing of the past in the wake of the QE3. The Fed’s asset purchases, which drove down bond yields to record lows, were thought to have tamed the global deflationary problem once and for all. What they didn’t count on was the floodtide of deflation breaking through the dikes and barriers carefully constructed by the world’s central banks.The increasing deflationary pressure is most visible in Europe and Asia but will soon wash up on U.S. shores in the near future. A general deflationary trend is already visible in equity markets in several major countries, a consequence of the final descent of the 120-year Kress cycle. As that cycle approaches its final bottom in late 2014 we can expect to see an increase in some of the problems we’re just starting to see right now in the global economy.
Read full article... Read full article...
Tuesday, June 25, 2013
Deflation By Any Other Name Would Smell As Foul / Economics / Deflation
By: Raul_I_Meijer
Over the past two weeks or so, we've been seeing a very clear portrait of how sick our economies are. Not that you would know it from reading the press. The term deflation pops up only very cautiously. Could that be because people don't understand what's going on? Or are they simply afraid of the word? This is the real thing, guys. And it's going to hurt.
Money (actually: credit) has shifted out of emerging markets by the trillions. So where did it go? Not into bonds, stocks or precious metals. Money shifted out of there too, and also by the trillions. Money isn't going anywhere, it's going "poof". It's vanishing and will never be seen again.
Read full article... Read full article...
Monday, June 24, 2013
The Deflationist Error / Economics / Deflation
By: Alasdair_Macleod
Many people believe there is a significant risk that the Irving Fisher debt-deflation theory of great depressions is still an economic threat today. They overlook the fact that Fisher published his theory examining debt-deflation events under a gold standard, which does not apply today. Financial credit contractions therefore take a different appearance.
Read full article... Read full article...
Sunday, June 02, 2013
Deflation Smackdown: Bernanke’s Madcap Money Printing Fails to Boost Inflation / Economics / Deflation
By: Mike_Whitney
“Under a fiat money system, a government… should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.” Ben S. Bernanke, “Deflation: Making Sure It Doesn’t Happen Here”, November, 2002
The US economy is in a liquidity trap which means that the demand for credit is weak even though the Fed is increasing the monetary base (via the creation of reserves at the banks) and interest rates are at zero. This is a serious problem. When the private sector (businesses and consumers) reduces its borrowing, activity slows, output shrinks, unemployment rises, and the economy slips into recession. That hasn’t happened yet, mainly because government fiscal support and transfers have kept growth in the black. But there are signs that deflationary pressures are starting to build. The consumer price index (CPI) has dropped for two consecutive months, revolving credit is showing new signs of weakness, and deposits at banks still exceed loans by a significant margin. Add the $85 billion across-the-board budget cuts, (sequester) and the prospects for a second-half double-dip look quite good. Here’s a clip from an article in Reuters that helps to explain what’s going on:
Read full article... Read full article...
Sunday, June 02, 2013
Ponzi Central Bankers Gone Wild, Japan Exporting Deflation / Economics / Deflation
By: John_Mauldin
When Jonathan Tepper and I wrote Endgame some two years ago, the focus was on Europe, but we clearly detailed how Japan would be the true source of global volatility and instability in just a few years. “A Bug in Search of a Windshield” was the title of the chapter on Japan. This year, I wrote in my forecast issue that 2013 would be “The Year of the Windshield.” For the last two weeks we have focused on the problems facing Japan, and such is the importance of Japan to the world economy that this week we will once again turn to the Land of the Rising Sun. I will try to summarize the situation facing the Japanese. This is critical to understand, because they are determined to share their problems with the world, and we will have no choice but to deal with them. Japan is going to affect your economy and your investments, no matter where you live; Japan is that important.
Sunday, May 19, 2013
Let’s Export Our Deflation - All Japan, All the Time / Economics / Deflation
By: John_Mauldin
The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences, and silence by their authority the interested clamors and sophistry of speculating, shaving, and banking institutions. Till then we must be content to return, quo ad hoc, to the savage state, to recur to barter in the exchange of our property, for want of a stable, common measure of value, that now in use being less fixed than the beads and wampum of the Indian, and to deliver up our citizens, their property and their labor, passive victims to the swindling tricks of bankers and mountebankers. –Thomas Jefferson, in a letter to John Adams, 21 March 1819
Monday, May 06, 2013
The Case Against Economic Deflation / Economics / Deflation
By: Alasdair_Macleod
Regular readers will know I am in the inflation, possibly hyperinflation camp; but there are those that think the future is more likely to be deflationary. In the main this is the view of neoclassical economists, Keynesians and monetarists, who generally foresee a 1930s-style slump unless the economy is stimulated out of it.
Read full article... Read full article...
Tuesday, April 23, 2013
The Theory Of Deflation / Economics / Deflation
By: Andrew_McKillop
CLASSIC THEORIES
This holds that deficiency of aggregate demand leads to over-production and unemployment, further depressing demand, and deflating the economy. By aggregate demand, this means personal and business as well as State consumption spending, and aggregate investment expenditure.
Staying with classic theories, private investment is governed by the marginal efficiency of capital and the real rate of interest. Deflation will occur when investment declines, for three main reasons, which are low marginal efficiency of capital, low profitability of capital and high real rates of interest.
Read full article... Read full article...
Tuesday, April 16, 2013
Is Bernanke’s Worst Nightmare Just Around the Corner? / Economics / Deflation
By: Graham_Summers
First off I want to say that all of us here at Phoenix Capital Research are sending our prayers to the victims of the Boston Terror Attacks. We sincerely hope none of you, our readers, or your loved ones were injured or harmed by these events.
The markets today are snapping back from yesterday’s sharp drop. However, in the bigger picture we believe that Ben Bernanke must be terrified.
Read full article... Read full article...
Wednesday, April 10, 2013
Why Bernanke Can’t Stop Deflation / Economics / Deflation
By: Clif_Droke
While there are many risks to the current ultra loose money policy, consumer price inflation isn't one of them. Inflation remains persistently low despite the best efforts of central banks to increase it.
The Consumer Price Index (CPI) among the G7 economies was only 1.6%, year over year, during February. It was even lower at 1.4% excluding food and energy, according to economist Ed Yardeni. Meanwhile Producer Price Index (PPI) inflation rates are close to zero, Yardeni points out. In the euro zone, the CPI inflation rate is just 1.7%, and 1.4% excluding food and energy. Japan continues to experience deflation despite continuous efforts at reversing it through monetary easing.
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Tuesday, March 26, 2013
Entrenched Deflation Threatens Economic Recovery / Economics / Deflation
By: Andrew_McKillop
TWO VIEWS ONLY
There are basically only two possible views. One is that entrenched deflation happens when there is persistent falling demand for credit and declining rates of money ciculation in the economy, driving down prices for goods, services and credit. This is confronted and made worse by increasing physical supply (and supply capacity) of goods and services. Due to generalized over-borrowing in the recent "economic cycle", QE Everywhere cannot fill the gap caused by secular deleveraging. All developed economies are "pushing on a string" and the temporary wealth effect of housing price and stock market gains has gone or will evaporate. They will all repeat the Japanese experience in their own way.
Monday, March 11, 2013
Deflation Coming Soon / Economics / Deflation
By: Andrew_McKillop
HOW FAR CAN THE ECONOMY DEFLATE?
One predictable whine comes from longtime George Soros partner Jim Rogers, who says we are at a "peculiar time in world history". He decries the growing uncertainty, what he calls the recklessness, of "economic recovery action" by global central bankers, and the related action by government policy makers, as world finance markets enter "unchartered waters". These waters have a growing population of sharks, including distressed asset sharks. Their food base is abundant. Distressed assets, penny-on-the-dollar deals are abundant. They are not threatened by imminent reduction - let alone by global warming - bcause the global economy is deflating.
Tuesday, March 05, 2013
Dollar and Bonds, Why Deflation Wins! / Stock-Markets / Deflation
By: Robert_M_Williams
Yesterday I discussed the possibility that the US economy has slipped into a deflationary morass and I seemed to have touched a nerve. As a result I want to continue discussing the idea that deflation, not inflation, now has the upper hand in the US economy. We all know that the Fed has been easing since 2009, and it recently raised the bar to include US $85 billion/month in bond purchases. As a result the Fed balance sheet is now filled with US $3.078 trillion in assets of dubious quality. I maintain that little or none of that liquidity has filtered out into the real economy, you and I, and as proof I told you to look at this chart of the Velocity of Money:
Friday, March 01, 2013
Deflation is Far From Over - Key Economic Index Turns South / Economics / Deflation
By: EWI
The federal government defines the Producer Price Index (PPI) as "the average change over time in the selling prices received by domestic producers for their output."
With help from the Federal Reserve's massive inflationary policies, the PPI has climbed even as the economy began to fall in 2008-09.
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Saturday, February 16, 2013
Deflation Arrives In The Eurozone / Economics / Deflation
By: Raul_I_Meijer
Dave Fairtex: I've recently been exploring the statistical data warehouse provided by the ECB, and I was able to assemble the following chart, comprising MFI Loans (MFI = monetary financial institution) + Bonds (sovereign & corporate). It was good timing, because it shows that for the first time during this whole crisis, the eurozone has dropped into deflation.
Thursday, February 14, 2013
The Deflationary Spiral Bogey / Economics / Deflation
By: Robert_Blumen
What is deflation? According to dictionary.com, it is “a fall in the general price level or a contraction of credit and available money.”
Falling prices. That sounds good, especially if you have set some cash set aside and are thinking about a major purchase.
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Friday, February 08, 2013
Deflation Questions / Economics / Deflation
By: Jeff_Berwick
Robert Blumen writes: What is deflation?
According to dictionary.com, it is “a fall in the general price level or a contraction of credit and available money”.
Falling prices. That sounds good, especially if you have set some cash set aside and are thinking about a major purchase.
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Friday, January 18, 2013
The Secret Word: Deflation - And the Next Five Years of Financial Turmoil / Economics / Deflation
By: EWI
The following is a sample from Elliott Wave International's new 40-page report, The State of the Global Markets - 2013 Edition: The Most Important Investment Report
You'll Read This Year. This article was originally published in Robert Prechter's July 2012 Elliott Wave Theorist.
In the first five months of 2012, there were 20 times as many Google searches on "inflation" as there were on "deflation." This is down from a ratio of 50 times in June 2008. If any theme has been overdone over the past six years, it is the theme of inevitable inflation if not hyperinflation.
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Thursday, December 20, 2012
Economic Signs That Deflation is Far From Over / Economics / Deflation
By: EWI
The federal government defines the Producer Price Index (PPI) as "the average change over time in the selling prices received by domestic producers for their output."
With help from the Federal Reserve's massive inflationary policies, the PPI has climbed even as the economy began to fall in 2008-09.
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Friday, November 30, 2012
In 1929, Deflation Started in Europe Before Overtaking the U.S. / Economics / Deflation
By: EWI
What Happens in Europe Will Not Stay in Europe
More than 1,500 years after the fact, scholars still debate the causes of the Roman Empire's fall.
What historians do agree on is that the crumbling empire's final days were marked by economic contraction, a struggle to fund Rome's routine affairs and excessive debt.
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Sunday, November 11, 2012
Obama, Romney And The Deflation Fireball / Economics / Deflation
By: Andrew_McKillop
OBAMECONOMICS, MORMONOMICS: SAME THING
US voters rallied to the lesser of two evils or two Also Rans, and voted Obama. His economic style, the house style of all OECD country governors and far beyond, was attacked by the leading Mormon business writer and Romney supporter, Howard Ruff, as "Obameconomics". Who won in the election however had no importance - or hold on what happens next, as financial and commodity market operators have already signalled, in their own easy-to-deny way. Oil prices and European equities in a widening number of "most exposed" countries went on weakening, as the Obama victory news came in, with several indexes now at six-week lows, as Fitch Ratings and leading commentators again warned the US could re-enter open and frank recession if it fails to "manage" the so-called fiscal cliff and if China slows more, the UK economy turn further downward, French industrial production and business confidence shrinks further, and German industrial output continues to weaken.
Wednesday, November 07, 2012
Why Bernanke Can't Stop The Kress Cycle Deflation Tsunami / Economics / Deflation
By: Clif_Droke
A question that many are asking right now is what impact the Fed's latest monetary policy action will have on the projected deflationary scenario for 2013-14. Specifically, market participants are wondering if the Fed's monetary policy action will prevent deflation from running its course.
Wednesday, October 24, 2012
Japan Is Not A Good Example Of How Deflation Typically Plays Out / Economics / Deflation
By: Nicole_Foss
Japan is not a good example of how deflation typically plays out. As Ilargi points out, they were an exporting powerhouse exporting into the biggest consumption boom the world has ever seen. They also had a very large pile of money to burn through building their four lane highways from nowhere to nowhere, since they were the world's largest creditor when their bubble burst in 1989. This is clearly not our situation.
Thursday, October 18, 2012
Bernanke's QE3 Bubble - the Coming Economic Deflationary Crash / Economics / Deflation
By: EWI
Why monetarist theory is flawed
Federal Reserve Chairman Ben Bernanke really means it this time.
He will rescue the economy.
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Saturday, October 13, 2012
The Good, Bad and Ugly of Deflation / Economics / Deflation
By: John_Mauldin
Inflation in the U.S. has historically been a wartime phenomenon, including not only shooting wars but also the Cold War and the War on Poverty. That's when the federal government vastly overspends its income on top of a robust private economy—obviously not the case today when government stimulus isn't even offsetting private sector weakness. Deflation reigns in peacetime, and I think it is again, with the end of the Iraq engagement and as the unwinding of Afghanistan expenditures further reduce military spending.
Sunday, September 16, 2012
Understanding Deflation, Pro Football Defense, Downside Pressure on Prices Has Only Begun / Economics / Deflation
By: EWI
You've heard (and probably used) the phrase, "I'd rather watch the game on television."
It's what a sports fan says if he doesn't want to face traffic jams, inadequate parking, overpriced tickets, noisy crowds, and possibly a poor view of the game.
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Tuesday, September 11, 2012
A Decade of Volatility: Demographics, Debt, and Deflation / Economics / Deflation
By: John_Mauldin
Harry Dent gave a speech I listened to a while back, and I got him to transcribe it for this week's Outside the Box. One thing about Harry is, you are never left wondering what he thinks about a topic. He sees inevitable demography-caused deflation in our future and makes some very intriguing arguments that deserve pondering.
At the end is a link to another report and a way to subscribe to his letter, if you are interested in more of his perspective. But first, I suggest you read this straightforward, informative presentation. There is also a link to the actual video of him speaking, should you prefer that.
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Friday, August 03, 2012
Deflationists' Wrong in Both Theory and Historical Fact / Economics / Deflation
By: Gary_North
An inflationist is someone who believes that price inflation is the result of two things: (1) monetary inflation and (2) central bank policy.
A deflationist is someone who believes that deflation is inevitable, despite (1) monetary inflation and (2) central bank policy.
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Tuesday, June 26, 2012
The Black Hole of Deflation / Economics / Deflation
By: Julian_DW_Phillips
The Global Picture and Where We Are Now
For the last few years we've watched as the Credit Crunch morphed into the Sovereign Debt crisis in Europe, which may re-cross the Atlantic to hit the U.S. Treasury market. During that time, we have watched a series of patch-up jobs on the crisis that have only succeeded in prolonging the crisis without any real structural remedies. We've also watched how central bankers have seen the 'buck' passed to them, when their role is strictly in support of government action that should have led the way. Central bankers are running out of tools to tackle the task they should never have been asked to tackle alone.
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Saturday, June 09, 2012
Debt Deflation, Corporate Efficiency and Stock Prices / Stock-Markets / Deflation
By: David_Knox_Barker
It all started out great in 1949. The global economy had finished deleveraging from the great depression. The austerity of the long wave cycle winter season had burned off the results of earlier decades of debt buildup, overproduction, and economic excess. Bad debt had failed and been written off. The global long wave cycle of boom and bust had ended. On a 20-year compounded annual rate of return inflation adjusted stock prices bottomed in 1949. A broad global economic spring season had begun in earnest.
Tuesday, June 05, 2012
Europe's Financial Fiasco: Migrating to the United States? / Economics / Deflation
By: EWI
Few Americans realize that the Great Depression started in Europe.
Now as then, the global economy is fragile.
The economy is clearly vulnerable to a debilitating wave of debt deflation. The threat is approaching quickly from an important source: Europe. The same sequence of events occurred in 1929, when deflation started overseas before lapping onto U.S. shores. In Germany, for instance, real GDP fell 1% in 1929 after growing 8.2% in 1927 and 2.8% in 1928. Other economic indicators peaked as early as 1927. At the time, economically-weak Germany was the equivalent of today's so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain).
Financial Forecast , January 2012
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Wednesday, April 25, 2012
Deflation Possible, This isn’t 2008! / Commodities / Deflation
By: UnpuncturedCycle
There has been so much talk lately about the coming high inflation due to excessive printing of fiat currency, that I think it’s necessary to explore the topic. There is no doubt that the US, Europe, Japan and now China are all creating fiat currency at a rate never before in modern history. We also have had the lessons of excessive printing during Germany’s Weimar Republic drilled into our heads since the crib. Therefore we naturally assume that excessive printing in today’s world will produce the same result. When it comes to the US it is worth remembering that there are significant differences. In the first place the US dollar has been the world’s reserve currency for seven decades, and in the second place the excessive printing is nothing new in the United States.
Wednesday, April 04, 2012
Economic Depression and Deflation / Economics / Deflation
By: EWI
Has the United States met that precondition?
Well, consider that total credit market debt as a percent of U.S. gross domestic product was
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Saturday, March 24, 2012
What All Major Economic Depressions Have in Common / Economics / Deflation
By: EWI
Has the United States met that precondition?
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Monday, January 09, 2012
Understanding Deflation, How DEEP Will Cuts in Government Services Go? / Economics / Deflation
By: EWI
"Localities have chopped 535,000 positions since September 2008..." USA Today (10/18)
Cuts in government services became conspicuous after the 2007-2009 financial crisis.
The first edition of Robert Prechter's Conquer the Crash saw this coming, even though the book published nearly a decade ago:
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Monday, October 17, 2011
Bursting of the Debt Bubble, Evaporation of Wealth on a Vast Scale / Economics / Deflation
By: EWI
The bursting of the "debt bubble" which started in 2008 is far from over. It's the financial story of our age and it's happening before our eyes. The full scope is hard to keep up with because it's unfolding at various levels. The top level is the sovereign debt crisis:
Sunday, October 09, 2011
The Paradox of Deflation Facing Global Investors / Economics / Deflation
By: David_Knox_Barker
The primary purpose for markets is to allow buyers and sellers to reach a deal, strike a price. Anything that distorts this purpose, leads the world inexorably toward crisis and chaos. Free markets best determine prices based on how many sellers there are of goods, services and assets and how much they have available to sell, and of course how many buyers there are and how much those buyers want to buy and are willing to pay. Truly free markets balance supply and demand. The economic calculation problem means governments cannot determine accurately how to intervene.
Friday, October 07, 2011
Can Global Economic Stimulus Stop Deflation? / Stock-Markets / Deflation
By: Clif_Droke
The year 2011 has been a strange and unusual one on many counts. If anything, 2011 can be characterized as the first year since the credit crisis started in which deflation wasn't actively opposed by central bankers and financial regulators.
In some cases, fiscal policy has been designed seemingly to assist the deflationary trend. In just the past few months, for instance, we've seen the abrupt end of the Federal Reserve's attempt at bolstering asset prices, the dramatic increase in margin requirements for several key commodities, talk of increasing taxes and regulatory burdens on businesses and other pro-deflationary measures. It's enough to make you wonder if perhaps the regulators actually want to introduce a certain level of deflation into the economy and financial markets.
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Monday, October 03, 2011
Why The Inflationists PROBABLY Have It Wrong, For Now / Economics / Deflation
By: David_Haas
Many people are trying – with increasing desperation – to discern the future and plan correctly for the economic environment we’re most likely to find ourselves experiencing.
My continued bets have been that deflation will prevail, at least in the early years of the great collapse, and nothing has yet occurred that changes my view.
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Wednesday, September 21, 2011
Deflation, What You Can do to Survive the Economic Depression / Economics / Deflation
By: EWI
Governments across the world have adopted "Quantitative Easing" aka "Printing Money" to fight against Deflation that was threatening to push global economies into a downward deflationary spiral towards a prolonged period of economic depression. The question now is will printing money coupled with ZERO interest rates work ?
Money printing in the first instance takes the form of governments instructing their respective central banks to buy government bonds in an effort to artificially drive longer term interest rates lower and fund huge budget deficits and therefore artificially stimulate economic activity.
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Tuesday, September 20, 2011
Bursting of the Debt Bubble, Evaporation of Wealth on a Vast Scale / Economics / Deflation
By: EWI
The bursting of the "debt bubble" which started in 2008 is far from over. It's the financial story of our age and it's happening before our eyes. The full scope is hard to keep up with because it's unfolding at various levels. The top level is the sovereign debt crisis:
Wednesday, September 07, 2011
Bernanke's Waterloo; Deflationary Collapse or Inflationary Disaster? / Economics / Deflation
By: Mike_Shedlock
The September Contrary Investor It's A Long Hard Road is an exceptional marriage of debt-deflation concepts, long-wave K-Cycles, credit cycles, and Austrian economic thinking. Here is a lengthy snip of several key points with permission.
Read full article... Read full article...If there has been one consistent theme since day one at CI, it has been our perhaps near myopic focus and focal point highlight of importance that is the macro credit cycle. Does this play into long wave and perhaps Kondratieff cycle or Austrian economics type of thinking? Call it what you will, but elements of all of these schools of thought very much overlap. Right to the point, we believe THE key thematic construct to keep in mind as a macro cycle decision making overlay and character point dead ahead is the now more than apparent collision of the generational long wave credit cycle with the current short term business cycle of the moment. Without trying to reach for melodrama, this is the first time a multi-decade long wave credit cycle has collided with the short-term business cycle since the late 1920’s/early 1930’s.
Friday, August 19, 2011
Record Bond Market, Debt Deleveraging Deflation / Economics / Deflation
By: DK_Matai
Deflation is probably the last thing on anyone's mind. As a result of the latest financial markets plunge, gold has surpassed a new record of $1,820 per troy ounce. We all recognise gold as a hedge against inflation. In parallel, the government bond yields of a number of major countries including the US, UK, Germany, Sweden and Switzerland are at or near record lows since the Second World War, which means that their prices are at an all time high. For example, the bond yield on 10-year US treasuries fell to a record low below 2% today during intra-day trading. What is the significance of this record bond market?
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Friday, August 12, 2011
U.S. Back in Deflation; Inflation Scare Ends; Hyperinflationists Wrong Twice Over / Economics / Deflation
By: Mike_Shedlock
Hyperinflationits have now blown it twice. First, they insisted hyperinflation would happen before deflation. They were wrong. Then, during the QE2 inspired equities and commodities ramp, they said the same thing. They were wrong again.
Prior to the Great Financial Crisis I had a bet with "Heli-Ben", a staunch hyperinflationist who insisted we would hyperinflation before deflation. I won the bet but have not yet received my prize, a "crying towel" from "Heli-Ben".
Friday, July 22, 2011
Who's Afraid of Deflation? / Economics / Deflation
By: Philipp_Bagus
When it comes to deflation, even Austrian economists disagree. In contrast to those who favor a 100 percent–reserve system and the effect such a system would have on prices, Austrian defenders of a fractional-reserve, free-banking (FRFB) system still seem to harbor a fear of price deflation.[1] Examples of this group include Steven Horwitz, George Selgin, and Lawrence H. White, who support a banking system or monetary policy that stabilizes nominal income (MV).[2] Broadly speaking, they favor an increase in the money supply if the demand to hold money (i.e., hoarding) increases. Without a corresponding increase in the money supply, an increase in the demand to hold money would cause a general fall in prices (i.e., price deflation).
Thursday, July 14, 2011
The Long Wave Deflation Big Picture / Stock-Markets / Deflation
By: Clif_Droke
David Knox Barker is one of the leading authorities on the economic long wave, otherwise known as the Kondratieff Wave (a.k.a. "K Wave"). Barker has had an impressive career both as a financial market writer and long wave analyst, as well as being an entrepreneur in the emerging field of nanotechnology.
Back in the late 1980s and '90s, Barker was known for his insightful and accurate views on the U.S. economy and financial markets via his K Wave Report newsletter. Today he shares his views on the global financial market and economic outlook through his Long Wave Dynamics Letter.
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Monday, June 27, 2011
Deflation by Dictatorship / Economics / Deflation
By: Clif_Droke
There are two major considerations for the nation's economic and financial health as we enter the second half of 2011. Each can be addressed in the form of a question: 1.) Will the Federal Reserve embark on a third attempt at stimulating economic recovery through money printing; and 2.) Has the cyclical bull market that began in March 2009 peaked, and further, what will happen to the financial market once the 6-year cycle peaks in October? We'll attempt to answer both of these questions in the following commentary.
Wednesday, June 08, 2011
Deflationary Depression in America: The Double Dip Economic Recession / Economics / Deflation
By: Bob_Chapman
Wall Street seems to believe the waning recovery in the economy is only temporary and that further recovery is on the way. Such thinking can get you in serious trouble, unless QE3, or its equivalent, is on the way. It is on the way, as we pointed out 13 months ago. The economy cannot live and survive without it otherwise we could be looking at a minus 5% GDP for openers. Incidentally, there are those that believe that unemployment already is as bad as it was during the “Great Depression” years of thep930s. They may be correct, but we believe it was much higher than today’s 22.4% level. If government hadn’t created food stamps, Medicaid, extended unemployment benefits and other benefits, perhaps we could be close to 1930’s levels.
Tuesday, May 10, 2011
U.S. Housing Market Adjusted CPI, Gold, and Deflation Theory / Housing-Market / Deflation
By: Mike_Shedlock
I am a firm believer that housing prices belong in the CPI. I have discussed this at length before, and in light of reported inflation (as measured by prices but certainly not credit), it's time to take another look at a CPI adjusted for housing prices.
Here are a couple of chart from my friend "TC" that show the relation between the CPI, a Case-Shiller adjusted CPI, and the Fed Funds Rate. For more on the rationale behind the following charts please see What's the Real CPI?
Saturday, April 23, 2011
The Deflation Threat is Still Alive, Here's Why / Economics / Deflation
By: EWI
"Every excess causes a defect; every defect an excess. Every sweet hath its sour...The waves of the sea do not more speedily seek a level from their loftiest tossing, than the varieties of condition tend to equalize themselves."
This quote comes from Ralph Waldo Emerson's essay, "Compensation." He opens the essay with a poem which includes these two lines:
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Tuesday, April 19, 2011
Is Deflation Still a Threat, the Deflation Survival Guide" Gives the Answer / Economics / Deflation
By: EWI
"Every excess causes a defect; every defect an excess. Every sweet hath its sour...The waves of the sea do not more speedily seek a level from their loftiest tossing, than the varieties of condition tend to equalize themselves."
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Monday, March 21, 2011
Why Deflation Will Torpedo the Economic Recovery / Economics / Deflation
By: Clif_Droke
The rising price of food and fuel is garnering more and more attention in the economic news headlines. There’s a good reason for this since a continued increase in the oil price could easily upset the economic recovery and send the U.S. economy tumbling back into recession. It could also have an adverse impact on the financial market and not surprisingly, analysts are already beginning to draw parallels between today’s stock market and the one of 2008, which was hurt by (among other things) a record high oil price.Read full article... Read full article...
Tuesday, March 01, 2011
Deflation Confusion: Money Is Not Credit / Economics / Deflation
By: Robert_Blumen
The end is near. The end, that is, of the current monetary system. But inflation or deflation? Dow 1,000 or wheelbarrow money? While the arguments on the deflation side are not entirely without merit, they rely on conceptual errors that result in exaggerating the magnitude of a possible deflation.
Tuesday, February 01, 2011
Japan Learns to Live with Deflation, If Only Analysts Could Figure Out How / Economics / Deflation
By: Mike_Shedlock
In Japan, wages are lower, but so are prices for goods and services, even food. Japan's companies are devising ways to profit from deflation, says Bloomberg writer Aki Ito in Japan Learns to Live with Deflation.
Saturday, January 29, 2011
U.S. Bond Markets Deflation Whispers / Interest-Rates / Deflation
By: Brian_Bloom
In an inflationary environment, the longer dated yields should be in a bull trend relative to the shorter dated yields – because the time value of money rises in periods of inflation. Conversely, when there is deflation then money in the future is worth less than cash in the hand. Therefore the ratio should fall if deflation is being anticipated.
Wednesday, January 19, 2011
The Politics of Deflation / Economics / Deflation
By: Vijay_Boyapati
The reason that political establishments have always been biased against monetary deflation[1] can be found in the manner in which wealth transfer occurs under inflationary and deflationary environments.
During an inflationary credit expansion, wealth is transferred from the public in general to the earliest recipients of the newly created credit money. In practice, the earliest recipients are interest groups with the strongest political connections to the state and, in particular, the state institutions that control monetary policy (i.e., the Federal Reserve in the United States). Importantly, the wealth transfer that takes place during an inflation is hidden and largely unrecognized by the majority of the population. The population is unaware that the supply of money is increasing and the attendant rise in prices, ostensibly beneficial to business, initially
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Friday, January 14, 2011
No Such Thing as Cost-Push Inflation; Demographics and the "Demand for Money" / Economics / Deflation
By: Mike_Shedlock
In China's Foreign Exchange Reserves Jump by Record $199 Billion; Cost Push Inflation from China? Don't Count On It! I stated ....
Strangely, nearly everyone insists inflation is roaring in the US instead of where it is roaring, China and India. The alleged proof of US inflation is a series of widely circulated charts of various commodity prices even though there has been little-to-no passthrough on any consumer prices except gasoline, and home prices are once again falling like a rock.Read full article... Read full article...
Wednesday, January 05, 2011
Deflation Ahead / Economics / Deflation
By: Brian_Bloom
Recently, I had the privilege of watching the YouTube video below of a lecture given in Australia by Professor Niall Ferguson
In my view, except for the fact that Professor Ferguson did not even make a passing reference to the critical importance of energy in the economic stew, I think he absolutely nailed the current economic situation. He was looking at the world economy from the perspective of long term history – which I believe is most appropriate at this point in time. He is unequivocally of the view that the probabilities favour deflation. For various reasons, I agree with him.
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Sunday, December 12, 2010
Mike Shedlock Deflation Proponents Rebuttal of John WIlliams Hyperinflation Call / Economics / Deflation
By: Mike_Shedlock
Those looking for Sunday entertainment can pull out the popcorn and watch this video of John Williams calling for the "Great Hyperinflationary Great Depression", coming your way soon.
Monday, November 22, 2010
After Reflation Comes Hyper-Deflation, a Different Kind of Deflation / Economics / Deflation
By: Clif_Droke
There’s a wealth of wisdom to be found in ancient Chinese proverbs. Not uncommonly one can find answers to the most complex problems today by reading the simple yet elegant epigrams found in any collection of ancient sayings.
One of the themes that runs like a thread in any book of Chinese proverbs is the honor the Chinese confer to the elderly. One such proverb advises anyone who is considering a new venture to “consult at least there older people before proceeding, then you will succeed.” Another one puts it much more succinctly: “The elderly: a national treasure.”
Monday, November 22, 2010
Mike Shedlock's Vacuous Deflation Market Calls Busted / Economics / Deflation
By: Robert_Murphy
Over the last two years, I have gotten perhaps dozens of requests to "deal with" the deflationist approach of Mike "Mish" Shedlock. On his popular financial blog, Mish has been repeatedly patting himself on the back for correctly calling all the major trends in contrast to those economists (like Gary North and I) who naively think Bernanke has the power to raise prices if he so chooses.
Saturday, November 20, 2010
The Sputtering U.S. Economy, Deflation Exactly Where is it? / Economics / Deflation
By: John_Mauldin
The Sputtering Economy
Old and Outmoded
We Have Deflation Exactly Where?
O Deflation, Where is Thy Sting?
The CPI was out this week, and it showed a continued drop in inflation. There were those who immediately pointed out that this vindicated the Fed's move to QE2. We have to get ahead of this deflation thing, don't we? Well, maybe, depending on how you measure inflation/deflation. This week we look deep into the BLS website on inflation to see just exactly what it is we are measuring, and then take a walk down Nostalgia Lane. But first we look at what I think we can call The Sputtering Economy, because that will tie into our inflation discussion.
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Tuesday, November 16, 2010
The Age of Debt Deleveraging Deflation, Decade of Slow Economic Growth / Economics / Deflation
By: John_Mauldin
Before we get into this week’s outstanding Outside the Box, I want to comment on QE2 and the efforts by some Republican economists to urge legislators to get involved to stop it (see the front page of Monday’s Wall Street Journal). That pushes my comfort zone a little too much.
First, I am not a fan of QE2. Never have been. If it had been my call, I would have punted and told the guys in the Capital that the ball was in their court to get their fiscal house in order, because that is the main source of the problem. But Bernanke and the Fed felt they had to “do something,” to demonstrate they got the seriousness of the situation. If the only policy tool you have left is the hammer of printing money, then the world looks like a nail.
Wednesday, November 10, 2010
Why QE2 INCREASES the Risk of Deflation / Economics / Deflation
By: Submissions
Tim
Waring writes:
Markets lapped it up!
QE2 was met with rapture by commodity and stock markets as traders and investors continue the easy money ride of a sinking dollar. The effect on the real economy is unknown but common sense rather than models suggests this extra $600billion is a mistake.
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Tuesday, November 09, 2010
Deflation is Still a Problem Despite Fed Money Printing QE2 / Economics / Deflation
By: Mike_Whitney
Deflation is not a problem because the Fed can always create inflation by printing more money.
Wrong.
While it's true that the Fed can print as much money as it chooses, adding to the money stock does not decrease deflation or increase inflation. It merely adds to the reserves the banks have at their disposal to lend out to businesses and consumers. Here's how British economist John Maynard Keynes summed it up:
Sunday, October 24, 2010
Should You Be Worried About Deflation? / Economics / Deflation
By: Mike_Stathis
Last month, I followed up on a discussion I began in over a year ago as to why hyperinflation would be a very unlikely scenario in the U.S.
In summary, this devastating scenario is a virtual impossibility despite the printing frenzy by the Fed because the banks have held onto most of this newly printed currency, keeping it out of the hands of consumers. (1) I discussed this fact over a year ago when I first debunked the deflation myth. (2)
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Wednesday, October 13, 2010
Fed Deflation Concerns Trump Inflation Worries / Economics / Deflation
By: Bob_Browne
Sluggish job data released in the United States last week will once again highlight the U.S. Federal Reserve’s primary policy concern: an economic retreat back into a recession followed by years of deflation. We have never been in the double-dip camp, but we have no doubt about the Fed’s priorities, and neither does the global investment community. The president of the Federal Reserve Bank of New York, William Dudley, made it clear that the near-term risk of deflation trumped any long-term concerns about inflation. In fact, the market is now reasonably assuming the Fed is once again committed to asset inflation as a way to re-energize the real economy. The result has been a scramble for risky assets, and “The Bernanke Put” is already joining the popular market lexicon.
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Thursday, October 07, 2010
Quantitative Easing Inflation Expectation Noise / Economics / Deflation
By: Mike_Shedlock
Scott Grannis on Seeking Alpha has written a pair of interesting articles regarding inflation expectations and Quantitative Easing. Grannis thinks that Quantitative Easing is working. I don't, but that debate depends on the definition of "work".
Thursday, October 07, 2010
U.S. Economy Entering Critical Deflation Phase / Economics / Deflation
By: EWI
As the biggest credit bubble in history continues to shrink, consumer prices have stayed flat over the past several months, meaning there is no sign of inflation to come, despite growing commitments from the U.S. government.
Tuesday, October 05, 2010
Bernanke vs. Kondratieff: Round QE2 vs Global Long Wave Deflation / Economics / Deflation
By: David_Knox_Barker
In Round QE1 2007-2009 of the unfolding global financial crisis, Federal Reserve Chairman Bernanke fought a remarkable round. It was the global financial and economic heavyweight fight of his life. Bernanke’s effort temporarily prevented a global deflationary debt and economic demand collapse in the unfolding Kondratieff winter season. It remains to be seen whether QE1 and the trillions it will cost U.S. taxpayers will change the ultimate outcome. The fight is still very much on, with the opponents briefly taking a breather in their respective corners. The bell is now ringing. Round QE2 has begun.
Saturday, September 25, 2010
Deflation Hits Small Businesses, No One Wants Obama's $30 Billion / Economics / Deflation
By: Mike_Shedlock
When government passes out the money normally people are lined up, in advance, with both hands out. When that does not happen, it's because the offer smells like a rotten fish.
Friday, September 24, 2010
Raining on the Inflation Parade / Economics / Deflation
By: Seth_Barani
The major components of the dollar index are Euro, Yen and Pound. If Euro and Pound are expected to struggle from sovereign debt crises and Yen to be kept weak by BOJ intervention, why will dollar index fall? Predictions of a weak $DXY (under 70) seem to be built on shaky grounds. The present formula to calculate the dollar index is a very poor representation of dollar's purchasing power, since it does not take into account prices of asset-vehicles beyond a few forex currencies some of which are also manipulated by central banks. It is our belief that dollar index does not show the true nature of inflation/deflation.
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Friday, September 24, 2010
Deflation Reality or Urban Myth? / Economics / Deflation
By: Puru_Saxena
BIG PICTURE: The inflation/deflation debate is now the ‘topic du jour’ and although we have discussed this issue in the past, we want to throw more light on this very important subject.
Today, many prominent economists (Nouriel Roubini, David Rosenberg and Paul Krugman) and fund managers (Bill Gross and Jeremy Grantham) are forecasting deflation and according to these folks, a deflationary contraction is now ‘baked in the cake’. In fact, these deflationists are extremely worried about the ongoing private-sector debt-deleveraging in the developed world and they are also concerned about the lack of aggregate demand in the industrialised nations. Bearing in mind these two factors, these prominent people believe that deflation is now almost guaranteed and inflation is out of the question.
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Thursday, September 23, 2010
Deflation Trend That's Become Too Obvious To Ignore / Economics / Deflation
By: EWI
As the biggest credit bubble in history continues to shrink, consumer prices have stayed flat over the past several months, meaning there is no sign of inflation to come, despite growing commitments from the U.S. government.
So what's keeping inflation at bay, given all the stimulus money promised? The answer: Deflation -- an overwhelming urge for consumers to liquidate their assets for cash. And this new economic phase is finally becoming too obvious to ignore, as explained in recent commentary from the world's largest technical analysis firm.
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Wednesday, September 22, 2010
New 90-page Deflation eBook from Robert Prechter Available Now / Economics / Deflation
By: EWI
As the biggest credit bubble in history continues to shrink, consumer prices have stayed flat over the past several months, meaning there is ZERO sign of inflation in the economy -- despite growing commitments from the U.S. government.
So what's keeping inflation at bay, given all the stimulus money promised? The answer: Deflation -- an overwhelming urge for consumers to liquidate their assets for cash.
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Tuesday, September 07, 2010
What Bernanke Doesn’t Understand About Debt Deflation and the Economy, Back to the Future / Economics / Deflation
By: John_Mauldin
This week's Outside the Box is an incendiary blog written by Steve Keen on debt deflation and GDP growth. I am not certain as to his math (is he double counting debt and consumer spending?) but he does illustrate very well the problem of a deleveraging recession, which I have been writing about for a long time. This is just a different type of recession we are in. So rather than fret over the absolute certainty of the math, read this for an understanding of the nature of the problems we face. He has the direction right, I think, which is the important part for us to grasp.
Wednesday, August 25, 2010
Inflation versus Deflation Debate Part2 / Economics / Deflation
By: Fred_Sheehan
Inflation versus deflation discussions are the rule for columnists, economists and BubbleTV. This false distinction is potentially harmful for investors and shoppers who think they must decide between the two, then act. Inflation and deflation act contemporaneously. The relative movement of what is inflating and what is deflating (e.g., common stocks vs. gas, bonds vs. bread) influences, and possibly changes, the way we live.
Monday, August 16, 2010
Deflation, the First Step is to Understand It / Economics / Deflation
By: EWI
"Fed's Bullard Raises Specter of Japanese-Style Deflation," read a July 29 Washington Post headline.
When the St. Louis Fed Chief speaks, people listen. Now that deflation -- something that EWI's president Robert Prechter has been warning about for several years -- is making mainstream news headlines, is it too late to prepare?
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Thursday, August 12, 2010
Japanese Style Deflation Fear Strikes Global Bond Markets / Interest-Rates / Deflation
By: Gary_Dorsch
The US-economy has not experienced sustained deflation since the Great Depression of the 1930’s, when consumer prices fell 10% between 1929 and 1933. But Japan has been battling falling prices since 1995, – triggered by the bursting of the Nikkei-225 equity bubble, and a unrelenting slide in land prices. Central bankers and macro-economists from all corners of the earth have been studying Japan’s descent from its giddy economic prosperity in the 1980’s, and into the deflation trap in the 1990’s, that Tokyo’s financial warlords have still been unable to remedy.
Thursday, August 12, 2010
Is Deflation Really Bad for the Economy? / Economics / Deflation
By: Frank_Shostak
On Friday, July 30, the St. Louis Federal Reserve Bank president, James Bullard, speaking on CNBC television, said that the Fed must weigh medium-term inflation risks against near-term deflation risks. For most economists and commentators, a general fall in prices, which they label deflation, is a terrible thing. They hold that a fall in prices generates expectations for a further decline in prices. As a result of this, consumers postpone their buying of goods at present because they expect to buy these goods at lower prices in the future. Consequently, this weakens the overall flow of spending, and that in turn weakens the economy.
Tuesday, August 10, 2010
In Defense of Deflation / Economics / Deflation
By: Douglas_French
The Obama stimulus and bailouts haven't decreased unemployment rates or bankruptcy filings while home prices and home sales have fallen and can't get up. PIMCO's Bill Gross told Bloomberg this can all be fixed with nearly zero interest rates and additional debt to stimulate the animal spirits of investors and entrepreneurs. The federal-funds rate has been pegged at 0 to .25% since December 16, 2008, and Uncle Sam's debt is $13.3 trillion and counting. If this hasn't goosed the animal spirits, what will?
Saturday, August 07, 2010
Inflation is Yesterday’s War / Economics / Deflation
By: Andrew_Butter
Generals are trained to fight yesterday’s wars. They sent cavalry to the trenches in the First World War, they built the Maginot Line for the Second World War, and more recently they used “pinpoint” strategic bombing to fight home-grown insurgents in Afghanistan and to blow up civilians and civilian infrastructure, to no discernable effect outside of increasing the number and the resolve of the insurgents.
Friday, August 06, 2010
Will Quantitative Easing Spur Inflation? Job Creation? Credit Expansion? Do Anything? / Economics / Deflation
By: Mike_Shedlock
St. Louis Fed James Bullard's proposal to start "quantitative easing" is creating a stir. Chris Ciovacco at Ciovacco Capital Management (and many others) propose the Fed can and will use quantitative easing to induce inflation. I disagree.
Tuesday, August 03, 2010
Stranguflation: Deflation and Inflation Where it Hurts America Most / Economics / Deflation
By: Janet_Tavakoli
The U.S. is suffering from high unemployment combined with too much consumer debt in a weak economy. Current stock market exuberance reflects earnings increases at selective companies that benefited from sputtering stimulus programs. In late 2007 through the fall of 2008, our economy had an appendix attack, and Congress issued potent addictive painkillers instead of fixing our problems.
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Tuesday, August 03, 2010
Debunking the Mainstream Economists Deflation Myths / Economics / Deflation
By: Puru_Saxena
BIG PICTURE – Many prominent economists define deflation as a decline in the general price level within an economy. To make matters worse, these academics use the establishment’s highly manipulated inflation data as their yardstick. Therefore, when the heavily massaged Consumer Price Index (CPI) and Producer Price Index (PPI) show a moderate increase, these folks celebrate the ‘perfect scenario’ of moderate inflation and when the CPI and PPI contract, they worry about deflation. Unfortunately, the vast majority of people blindly follow the views of the mainstream economists. Consequently, they end up making costly mistakes with their capital.
Friday, July 30, 2010
Robert Prechter's Deflationary Bear Market On the Slope of Hope / Stock-Markets / Deflation
By: EWI
Almost everybody who follows financial markets has heard about climbing the "wall of worry": the time when prices head up bullishly, but no one quite believes in the rally, so there's more worry about a fall than a rise.
What's the opposite condition in the market?
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Friday, July 30, 2010
Should China Dump U.S. Dollars, Treasury Bonds for Commodities? Can Global Trade Collapse? / Economics / Deflation
By: Mike_Shedlock
Every time there is a little blip by China in its purchasing or holding of US treasuries, hyperinflationists come out of the woodwork ranting about the "Nuclear Option" of China dumping treasuries en masse.
Such fears are extremely overblown for several reasons.
Friday, July 30, 2010
Why is deflation and depression inevitable in debt based monetary system like ours? / Economics / Deflation
By: Mansoor_H_Khan
Money is civilization’s most liquid asset. An asset is something of value. Most liquid means that this is the asset most employees want to get paid in and this is the asset most vendors demand for payment. For United States of America most employees demand payment in U.S. dollars and most vendors price their products in U.S. dollars and demand payment in U.S. dollars.Read full article... Read full article...
Thursday, July 29, 2010
Investing for Deflation Part 2: More Reader Questions / / Deflation
By: JD_Rosendahl
As many of my readers know, I’ve been running a deflationary investment model for my parents since 2003. Please see: How I Saved My Parents a Small Fortune! And the Advice I've Been Giving Them!
And in that strategy we have a definitive goal of moving money outside of the financial system. A few weeks ago I wrote: Investing for Deflation: Reader Asks the Question of the Decade. That blog generated a lot of very good questions for deflation investing better answered in a follow up blog. Here they are with my answers:
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Wednesday, July 28, 2010
Don't Lose Sleep over Deflation / Economics / Deflation
By: Michael_Pento
After hearing the dire warnings of deflation that have become the standard talking points of most economists, American investors may be reaching for a bottle of Prozac. I believe that their anxiety is misplaced. Unfortunately, modern economists don't understand what deflation is or why, in reality, we have much more to fear from inflation.
Monday, July 26, 2010
The Deflationary Cycle Full Monty, Eight Risks That Will Cause Deflation / Economics / Deflation
By: JD_Rosendahl
In the past couple years I have written quite a few blogs. One of my personal favorites has to be: Mustard Seeds for Deflation: The Deflationary Cycle Full Monty. This was my somewhat complete case for a deflationary spiral written in August 2009.Read full article... Read full article...
Monday, July 26, 2010
Money Supply Divergence TMS1 vs. TMS2 vs. M2, What does it Mean? / Interest-Rates / Deflation
By: Mike_Shedlock
Inquiring minds are once again digging deep into money supply questions. They are intrigued by the fact that money supply measures M2 and TMS1 are plunging towards zero, while TMS2 is still sporting a hefty 10+% year-over-year growth.
TMS stands for "True Money Supply". The suffix (1 or 2) stands for alternate measures, one including savings accounts and the other not. M2 is a widely used Fed aggregate for money.
Saturday, July 24, 2010
Elements of Deflation and the Super-Trend Puzzle / Economics / Deflation
By: John_Mauldin
Some Thoughts on Deflation
The Super-Trend Puzzle
The Elements of Deflation
The debate over whether we are in for inflation or deflation was alive and well at the Agora Symposium in Vancouver this this week. It seems that not everyone is ready to join the deflation-first, then-inflation camp I am currently resident in. So in this week's letter we look at some of the causes of deflation, the elements of deflation, if you will, and see if they are in ascendancy. For equity investors, this is an important question because, historically, periods of deflation have not been kind to stock markets. Let's come at this week's letter from the side, and see if we can sneak up on some answers.
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Friday, July 23, 2010
Credit Deflation Lands in Britain / Interest-Rates / Deflation
By: Adrian_Ash
Credit deflation just hit the UK for the first time on post-war records...
HMMMM...This looks telling.
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Thursday, July 15, 2010
The Fed is Steering U.S. Economy into Deflation / Economics / Deflation
By: Mike_Whitney
The Fed is steering the economy into deflation. It's a political calculation that will keep unemployment high, increase excess capacity, and deepen the recession. C.P.I. continues to fall, bank lending is down 4 percent year-over-year, housing prices are slipping, business investment is off, and consumer credit continues to shrink. On Wednesday, the Commerce Dept reported that retail sales fell 0.5 percent, more than analysts expected. This is the second drop in retail purchases in the last two months signaling weakness in consumer demand.
Thursday, July 15, 2010
Using Gold and Silver Stocks to Survive Debt Deleveraging Deflation / Commodities / Deflation
By: The_Gold_Report
Newsletter Writer Michael Berry, PhD, is one of the most respected economic strategists in America and a frequent to contributor to The Gold Report. On this occasion, Michael's son, Chris, joins the discussion and shows he's clearly a chip off the Berry block. Among other things, the Berrys discuss the growing fears of deflation as well as several promising junior gold plays in Colombia and the Yukon. It's all part of their "three legs of the survival stool" approach to investing that you will learn about in this exclusive interview with The Gold Report.
Tuesday, July 13, 2010
Are We Trending Towards Deflation or in It? / Economics / Deflation
By: Mike_Shedlock
Paul Krugman is worried we are Trending Toward Deflation.
Read full article... Read full article...Inflation has been falling, but how close are we to deflation? I found myself wondering that after observing John Makin’s combusting coiffure, his prediction that we might see deflation this year.
Monday, July 12, 2010
Deflation becomes the Dominant Economic Trend / Economics / Deflation
By: Clif_Droke
One of the abiding fears since the government stimulus effort began in earnest last year has been the fear that runaway inflation will once again rear its ugly head. Legions of market commentators have predicted the return of inflation in spite of the deflationary environment we find ourselves in. Can we reasonably expect a return of inflation in the foreseeable future? The Kress Cycles say “No!” and tell us to expect just the opposite, namely a deflationary trend. This has certainly been the dominant economic trend since the credit crisis of 2008 and, in some areas, even before then.
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Saturday, July 10, 2010
Did Retail Sales Rise or Did Tax Rates Go Up? / Economics / Deflation
By: Mike_Shedlock
In response to Following Yesterday's Hype of Fastest Growth in 4 Years, June Retail Sales a "Mixed Bag" a couple of people challenged me on retail sales figures, notably a statement that state sales tax collections were still down.
Let's take a quick look at data from a few key states followed by a closer look under the hood as to what is really happening and why.
Friday, July 09, 2010
Economic Downward Deflationary Spiral: The Next Big Wave of Deflation is Upon Us / Economics / Deflation
By: Global_Research
Michael Schmidt writes: It looks like the next big wave of deflation is upon us. Looking at some key fundamentals, we see the labor market is again shredding jobs (652,000 in June), the money supply is contracting at levels not seen since the Great Depression and the US Federal Governments finances are in complete disaster.
Tuesday, July 06, 2010
20 Questions with Robert Prechter: Devaluation Won't Work / Economics / Deflation
By: EWI
The following article is an excerpt from Elliott Wave International’s free report, 20 Questions With Deflationist Robert Prechter. It has been adapted from Prechter’s June 19 appearance on Jim Puplava’s Financial Sense Newshour.
Tuesday, July 06, 2010
Debt Deflation, A Long Economic Winter Ahead / Economics / Deflation
By: Prof_Rodrigue_Trembl
"A State divided into a small number of rich and a large number of poor will always develop a government manipulated by the rich to protect the amenities represented by their property.": Harold Laski (1893-1950), British political theorist, 1930
“Money becomes evil not when it is used to buy goods but when it is used to buy power... economic inequalities become evil when they are translated into political inequalities.” Samuel Huntington (1927-2008), political scientist
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Wednesday, June 30, 2010
20 Questions with Robert Prechter: Signs Point to Deflation / Economics / Deflation
By: EWI
The following article is an excerpt from Elliott Wave International’s free report, 20 Questions With Deflationist Robert Prechter. It has been adapted from Prechter’s June 19 appearance on Jim Puplava’s Financial Sense Newshour. To read the entire conversation, access the 20-page report here.
Tuesday, June 29, 2010
Robert Prechter Answers 20 Tough Questions About Deflation / Economics / Deflation
By: EWI
Free Download: Elliott Wave International have just released a brand-new interview given by Robert Prechter. A devoted inflationist asks the leading proponent of deflation tough questions about fiat currency, gold, the Fed, the Great Depression, financial bubbles, government intervention and how to protect your money -- and even profit -- in today's environment. Learn more below or access the 20-page report now.
Saturday, June 26, 2010
US Money Supply Plunges At 1930's Pace And Housing Index Dives / Economics / Deflation
By: Sol_Palha
"Advice is what we ask for when we already know the answer but wish we didn't." ~ Erica Jong
The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history. The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.
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Thursday, June 24, 2010
Trichet Says No Deflation or Economic Stagnation in Europe / Economics / Deflation
By: Mike_Shedlock
A sure sign that something is either on the way if not already happening is denial by a central banker of the risks. With that idea in place, this headline speaks for itself: ECB's Trichet says austerity plans don't risk stagnation
Monday, June 14, 2010
Deflation Scare Dead Ahead / Economics / Deflation
By: Captain_Hook
According to John Williams of shadowstats.com, although the Employment Report to be released this Friday will appear robust on the surface, May payrolls could contract net of the temporary census boost, setting up a buy the rumor sell the news trade in the stock market. So this, combined with positive seasonality and the fact stocks are technically oversold on a short-term basis suggests gains should be expected into Friday, or Monday at the latest, however afterwards a resumption of the downtrend established over the past few weeks should return, potentially yielding significantly lower prices. Heaven knows the fundamentals support such a view, and have for some time, but now we also have bearish speculators exhausted as evidenced in falling US index open interest put / call ratios, where the bureaucracy’s price managers are unable to squeeze our faulty and fraudulent stock markets higher anymore.
Sunday, June 13, 2010
Is Deflation in the United States Possible? / Economics / Deflation
By: Frank_Shostak
According to some analysts, a sharp decline in major commodity-price indexes has raised the specter of deflation. The Journal of Commerce's index (JCOM) fell by 8.5% in May from April while the Commodity Research Bureau's index (CRB) fell by 8.2% during that period. Also the growth momentum of these indexes plunged in May. The yearly rate of growth of the JCOM index fell to 47.9% from 77% in April, while the yearly rate of growth of the CRB index plunged to 0.7% from 24.9%.
Friday, June 11, 2010
How to Survive Deflation, Important Warnings From Robert Prechter / Economics / Deflation
By: EWI
Telegraph.go.uk, May 26: "US money supply plunges at 1930s pace... The M3 money supply in the U.S. is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history."
Saturday, June 05, 2010
Deflation Comes to Europe / Economics / Deflation
By: Hans_Wagner
Many economists regard deflation as more dangerous than inflation, as it encourages consumers to delay purchases as they wait for a lower price tomorrow. When consumers put off buying in anticipation of lower prices it creates a downward spiral of lower demand followed by lower production.
Tuesday, June 01, 2010
U.S. Housing, Real Estate, Credit Bubble Deflation, 5 More Years of Financial Hell / Housing-Market / Deflation
By: Steve_Moyer
"...and it is in such twilight that we must be aware of change in the air, however slight, lest we become unwitting victims of the darkness." ~William Orville Douglas
First of all, please allow me to apologize for the infrequency of my Safehaven posts, as obviously I have become a fellow more inclined to write at market turns than one who chimes in on an ongoing basis. I appreciate to no end the number of emails I receive requesting updates, but my fingers are in a few more pies now (including the penning of a second screenplay with writing partner Tim Wells and the pursuit of my investment advisory representative license).
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Friday, May 14, 2010
Signs of Economic Deflation You Might Not be Able to See Clearly / Economics / Deflation
By: EWI
Signs of Deflation You Might Not be Able to See Clearly
The following market analysis is courtesy of Bob Prechter's Elliott Wave International. Elliott Wave International is currently offering Bob's recent Elliott Wave Theorist, free.
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Friday, April 30, 2010
Robert Prechter Points Out The Many Signs Of Deflation / Economics / Deflation
By: EWI
Everywhere you look, the mainstream financial experts are pinning on their "WIN 2" buttons in a show of solidarity against what they see as the number one threat to the U.S. economy: Whip Inflation Now.
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Thursday, April 15, 2010
U.S. Economy Drifting Towards Deflation / Economics / Deflation
By: Bob_Chapman
Those of you 60 years old and older will spend the next 25 years struggling to survive one of the worst depressions in history or doing whatever you can to support your children and grandchildren.
Friday, April 09, 2010
Market Myths Exposed: Inflation Is Not A Threat, Deflation Is / Economics / Deflation
By: EWI
Our free eBook reveals the 10 most common financial misconceptions
Nico Isaac writes: Most people are confident they can recognize a myth when they hear one: Wearing a hat causes baldness; eating a bunch of carrots gives you perfect vision; 'light' cigarettes are better for your health than the regular kind.
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Wednesday, March 31, 2010
You Still Believe The Fed Can Stop Deflation? / Economics / Deflation
By: EWI
Recent history proves that the Fed's "control" is just an illusion. March 31, 2010
Think back to the fall of 2007. The deflationary "liquidity crunch" that over the next year-and-a-half cuts the DJIA in half, decimates commodities, real estate and world markets is only starting. Almost no one believes that the crash is coming -- to a large degree, because everyone is convinced that the U.S. Federal Reserve Bank, with Ben Bernanke at the helm, will never allow deflation to happen: It can just print money!
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Monday, March 22, 2010
Inflation Bond Issuance Hits Record $200 Billion ahead of Deflation / Economics / Deflation
By: Mike_Shedlock
Concerns about global inflation are once again picking up. Please consider the Financial Times article Inflation-linked issuance to hit record $200bn
Friday, March 12, 2010
Municipal Deflation, Consequences of the Greatest Speculation / Economics / Deflation
By: Fred_Sheehan
"The financial difficulties of local governments in consequence both of the inflation and deflation of real estate values demonstrates strikingly the unwisdom of a revenue system concentrated so heavily upon real estate...." -Herbert D. Simpson, Meeting of the American Economic Association, 1933
Tuesday, March 09, 2010
The European Union Debt Deflation Trap / Economics / Deflation
By: John_Mauldin
"The underlying principle flows from the financial balance approach: the domestic private sector and the government sector cannot both deleverage at the same time unless a trade surplus can be achieved and sustained. Yet the whole world cannot run a trade surplus. More specific to the current predicament, we remain hard pressed to identify which nations or regions of the remainder of the world are prepared to become consistently larger net importers of Europe's tradable products. Countries currently running large trade surpluses view these as hard won and well deserved gains.
Friday, February 26, 2010
To Survive Economic Deflation, First Understand It / Economics / Deflation
By: EWI
Surviving Deflation: First, Understand It
Deflation is more than just "falling prices."
Robert Prechter explains why.
The following article is an excerpt from Elliott Wave International's free Club EWI resource, "The Guide to Understanding Deflation. Robert Prechter's Most Important Writings on Deflation."
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Thursday, February 18, 2010
Robert Prechter Warns of Many Signs Of Deflation / Economics / Deflation
By: EWI
Bob Prechter Points Out The Many Signs Of Deflation Yes, You Heard Us Right
By Nico Isaac
Everywhere you look, the mainstream financial experts are pinning on their "WIN 2" buttons in a show of solidarity against what they see as the number one threat to the U.S. economy: Whip Inflation Now.
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Friday, February 05, 2010
Inflation Not the Cause of Every Price Increase / Economics / Deflation
By: Chris_Galakoutis
Costs continue to go up for the goods and services that Americans consume on a daily basis. While today we can all buy stocks, real estate and fill up our gas tanks with fewer dollars than in 2007 and early 2008, the costs of other items continue to go up. For instance, I just received a bill from the CT Secretary of State for the fee I pay every year for my LLC. The fee has doubled. Inflationists point to this type of thing and argue that this is a sign of inflation.
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Wednesday, January 27, 2010
Bernanke's Burn Notice, Why Now? Research Reveals Insight Into Fed Chairman's Popularity / Politics / Deflation
By: EWI
Like a spy who gets a burn notice, Federal Reserve Chairman Ben Bernanke has suddenly lost his support.
Bernanke has gone from being Time magazine's Man of the Year in 2009 to … what? A Fed chairman embroiled in a controversial reconfirmation process before U.S. Congress. Why the sudden turnaround in his fortunes?
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Thursday, January 21, 2010
UK Hits Worst Deflation on Record / Economics / Deflation
By: Adrian_Ash
Not enough money exists for the UK to repay its private-sector debts at the moment. Where-oh-where might the cash come from...?
WELL AT LEAST we now know the Bank of England isn't front-running its personal accounts or pension scheme with inside information.
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Thursday, January 14, 2010
Deflationists Predicting Price Deflation Are Not Economists, They Are Journalists / Economics / Deflation
By: Gary_North
In Part 1, I replied to the issues raised by John Exter a generation ago:
Read full article... Read full article...1. The coming rush for liquidity
2. Gold as the most liquid asset
3. Currency and T-bills will do almost as well as gold
4. Gold as money, despite a commission
5. Asset prices influence consumer prices
Monday, January 11, 2010
The Deflationists Myth of Japan / Economics / Deflation
By: Gary_North
In my previous report in this series, I contrasted the monetary views of the Austrian School of economics with the standard views of Keynesian and Chicago School economists. Despite their deep-seated differences, all of them oppose the views of the handful of forecasters who predict inevitable price deflation. I wrote:
Sunday, January 10, 2010
Consumer Credit Drops Record $17.5 Billion; Steepest Declines Since WWII / Economics / Deflation
By: Mike_Shedlock
While monetarist clowns focus on so-called excess reserves and the huge surge in inflation that is supposed to bring (See Fictional Reserve Lending And The Myth Of Excess Reserves) I am watching the biggest plunge in consumer credit since WWII.
Saturday, January 09, 2010
Why Deflation is Not Ahead / Economics / Deflation
By: Gary_North
There is a debate going on within pro-gold circles: inflation or deflation. The deflationists predict that price deflation is inevitable and imminent. The inflationists insist that mass inflation is inevitable, but maybe not imminent.
Deflationists rarely speak of mass deflation, let alone hyperdeflation. Just deflation. They do not say by what percent prices will fall each year or for how many years.
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Tuesday, December 22, 2009
Fed Fictional Reserve Lending And The Myth Of Excess Reserves / Economics / Deflation
By: Mike_Shedlock
In A Case for the Inflation Camp Robert P. Murphy asks When Will the Inflation Genie Get Out of the Bottle? Murphy's concern is over "excess reserves".
Tuesday, December 15, 2009
Deflation or Inflation, Which Lurks Around the Corner? / Economics / Deflation
By: Jeff_Clark
In the short term, a catastrophic deflation is quite possible. But in the long term, extremely high levels of inflation are now inevitable. The situation is very serious. Gold is the best hedge against both of these things. The better part of your financial assets should be in gold, augmented by well-thought-out speculations. Doug Casey, November, 2009.
Wednesday, December 09, 2009
Debt Deleveraging Is a Necessary Consequence of Deflation / Economics / Deflation
By: Chris_Galakoutis
A blinding affliction can be seen with the gold bugs. Make reference to a strong dollar and falling gold, and you must be a supporter of the central banks, as well as the powerful families with cross-border tentacles that stand behind them. In our case, nothing could be further from the truth. We must put politics and other biases aside if we are to understand the big picture, in order to avoid, and not be ruined by, what’s around the corner.
Read full article... Read full article...
Wednesday, December 02, 2009
Can Bank of Japan Overcome Deflation? / Economics / Deflation
By: Money_Morning
Jason Simpkins writes: The Bank of Japan (BOJ) yesterday (Tuesday) took steps to preserve a fragile economic recovery by pumping more short-term funds into the nation’s banking system. However, many analysts are worried that the central bank didn’t do enough to put a ceiling on the yen, and prop up its ailing corporate sector.
Thursday, November 26, 2009
Mike Shedlock, a Deflationist Lashing Out at Nouveau Inflationists? / Economics / Deflation
By: Nadeem_Walayat
I recently wrote an article as part of a series on my new inflationary scenario and outlook for the world economies and markets (Deflationists Are WRONG, Prepare for the INFLATION Mega-Trend ), which drew the attention of Mike Shedlock who quotes and responded to the following text -
Sunday, November 22, 2009
Deflation Returns To Japan, Government Spending Black Hole Madness In U.S. / Economics / Deflation
By: Mike_Shedlock
Japan has been hopping in and out of deflation for decades. Japan is back in deflation once again. The Wall Street Journal is reporting Deflation's Return Weighs on Japan
Thursday, October 29, 2009
Does a Fall in Bank Credit Lead to Deflation? / Economics / Deflation
By: Frank_Shostak
US credit is undergoing a major contraction. In the week ending October 14, US commercial-bank lending stood at $5,686.8 billion: a fall of 6.6% from the end of January.[1] Year on year, loans fell by 7% in October after declining by 5.8% in September. On the same basis of comparison, in October last year, loans increased by 6.6%.
Thursday, October 15, 2009
U.S. CPI Deflation for 7th Consecutive Month / Economics / Deflation
By: Mike_Shedlock
Bloomberg is reporting Consumer Prices in U.S. Increased at Slower Pace
Wednesday, October 14, 2009
Robert Prechter's Conquer the Crash New 2009 Second Edition, Survive Deflation / Stock-Markets / Deflation
By: EWI
Today's financial and economic tribulations were a long time in the making. Many people ask, "Why didn't someone see it coming?"
But a New York Times best selling book did see it coming. More than 100,000 people read it in time to protect their wealth.
Read full article... Read full article...
Tuesday, October 13, 2009
Ponzi Finance Deflationary Debt Deleveraging Downward Spiral Continues / Economics / Deflation
By: John_Mauldin
I look forward at the beginning of every quarter to receiving the Quarterly Outlook from Hoisington Investment Management. They have been prominent proponents of the view that deflation is the problem, stemming from a variety of factors, and write about their views in a very clear and concise manner. This quarter's letter is no exception, where they once again delve into the history books to bring up fresh and relevant lessons for today. This is a must read piece.
Monday, October 12, 2009
Stock Market Ignoring Deflation, One Hand Clapping Theory Analysed / Stock-Markets / Deflation
By: Mike_Shedlock
Numerous people have asked me to comment on Chris Martenson's article The Sound of One Hand Clapping - What Deflationists May Be Missing.
Monday, October 05, 2009
Deflation Threat? What Deflation Threat? / Economics / Deflation
By: Mike_Shedlock
The deflation "recognition phase" has finally arrived. Kroger foods, Costco, and Walmart are blaming deflation for a drop in earnings. Moreover, many high profile names are discussing deflation, something most thought could never happen.
Monday, October 05, 2009
Housing Rents Deflationary Impact on CPI Inflation Data / Economics / Deflation
By: Mike_Shedlock
In Bill Gross Bets On Deflation I posted some links on falling rent prices courtesy of Lansler on Real Estate. Here is a recap.
Sunday, October 04, 2009
On the Edge With Max Keiser, Risk of Deflationary Economic Collapse / Economics / Deflation
By: Mike_Shedlock
Janet Tavakoli is On The Edge With Max Keiser. Tavakoli says the Risk of deflationary collapse greater now than in 2007.
Sunday, October 04, 2009
U.S. Real Deflation of -5.1% on Case Shiller CPI / Economics / Deflation
By: Mike_Shedlock
Case-Shiller CPI is formulated by substituting the Case-Shiller housing index for Owner's Equivalent Rent in the CPI. For a complete description of the reasons and methodology, please see What's the Real CPI?
Read full article... Read full article...
Friday, October 02, 2009
We Are Certainly in a Deflationary Economic State / Economics / Deflation
By: Mike_Shedlock
Fueled by overcapacity, shrinking credit, reduced corporate spending and falling consumer demand, Deflation is taking root in global economies.
Wednesday, September 30, 2009
Deflation, What You Can do to Survive the Economic Depression / Economics / Deflation
By: EWI
Governments across the world have adopted "Quantitative Easing" aka "Printing Money" to fight against Deflation that was threatening to push global economies into a downward deflationary spiral towards a prolonged period of economic depression. The question now is will printing money coupled with ZERO interest rates work ?
Wednesday, September 30, 2009
PIMCO's Bill Gross Bets On Deflation and U.S. Treasury Bonds / Interest-Rates / Deflation
By: Mike_Shedlock
PIMCO's Bill Gross has a switch of heart. He has gone from hating treasuries to liking them. Please consider Pimco’s Gross Buys Treasuries Amid Deflation Concern.
Read full article... Read full article...
Tuesday, September 29, 2009
Myths of Deflation Causing Inflation by Means of Currency Devaluation / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide.
Thursday, September 24, 2009
United States Following Japans Deflation Footsteps / Economics / Deflation
By: Mike_Shedlock
The US is following the footsteps of Japan. It is now undeniable. Please consider the following chart.
Japanese GDE from the 1989 peak to Present
US GDP 1999 peak to Present
Saturday, September 19, 2009
Outrageous Artificial Deflation and the FDIC Black Hole / Economics / Deflation
By: John_Mauldin
Elements of Deflation, Part 3
Outrageous! - Artificial Deflation!
If You Are in a Hole, Stop Digging!
The Hole in the FDIC
How Can Just Four Stocks Be 40% of the NYSE Volume?
This week we continue to look at what powers the forces of deflation. As I continue to stress, getting the fundamental question answered correctly is the most important issue we face going forward. And the problem is that we cannot use the usual historical comparisons. This week we look at one more factor: bank lending. I give you a sneak preview of what will be an explosive report from Institutional Risk Analytics about the problems in the banking sector. Are you ready for the FDIC to be down as much as $400 billion? This should be an interesting, if sobering, letter.
Read full article... Read full article...
Friday, September 18, 2009
Deflation and Bankers Mix Like Oil and Water / Economics / Deflation
By: Adam_Brochert
Why is deflation bad? If one can manage to keep one's job and one has some savings, deflation is the greatest thing since sliced bread. Stuffing cash under the mattress is actually profitable during a true deflation, as the prices of most goods fall during deflation. Why exactly then is deflation bad?
Read full article... Read full article...
Sunday, September 13, 2009
Deflation, Falling Velocity of Money Ensures Printing Presses Will Keep Running / Economics / Deflation
By: John_Mauldin
Elements of Deflation, Part 2
The Velocity Factor
Y=MV
Sir, I Have Not Yet Begun to Print
There Are No Good Choices
Just as water is formed by the basic elements hydrogen and oxygen, deflation has its own fundamental components. Last week we started exploring those elements, and this week we continue. I feel that the most fundamental of decisions we face in building investment portfolios is correctly deciding whether we are faced with inflation or deflation in our future. (And I tell you later on when to worry about inflation.) Most investments behave quite differently depending on whether we are in a deflationary or inflationary environment. Get this answer wrong and it could rise up to bite you.
Read full article... Read full article...
Tuesday, September 01, 2009
Deflation Is A ***** / Economics / Deflation
By: Mike_Shedlock
The latest Thought's From The Frontline by John Mauldin is a gem. It is about the crisis in Spain through the eyes of Variant Perception.
Monday, August 31, 2009
The Case for Deflation / Economics / Deflation
By: Washingtons_Blog
As Absolute Return Partners wrote in its July newsletter:
The most important investment decision you will have to make this year and possibly for years to come is whether to structure your portfolio for deflation or inflation.
Read full article... Read full article...
Saturday, August 29, 2009
Uncomfortable Choices in a Deflationary High Deficits Economic Environment / Economics / Deflation
By: John_Mauldin
An Uncomfortable Choice
What Were We Thinking?
Frugality is the New Normal
And Then We Face the Real Problem
The Teenagers Are in Control
Choose Wisely
We have arrived at this particular economic moment in time by the choices we have made, which now leave us with choices in our future that will be neither easy, convenient, nor comfortable. Sometimes there are just no good choices, only less-bad ones. In this week's letter we look at what some of those choices might be, and ponder their possible consequences. Are we headed for a double-dip recession? Read on.
Thursday, August 27, 2009
Jaguar Inflation, An Explanation of the Deflationary Consequences of Government Intervention / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide.
Thursday, August 27, 2009
The Process of Creative Distruction of Corporations / Economics / Deflation
By: Mike_Shedlock
Van Hoisington and Lacy Hunt have figured out what few others have, that excessive debt and falling asset prices have conspired to render the best efforts of the Fed impotent.
Thursday, August 20, 2009
Deflation Denial In Spite Of Overwhelming Evidence / Economics / Deflation
By: Mike_Shedlock
In response to Misguided Worries About Inflation I received an email from "GR" telling me "The deflation metaphor is not playing out. Every month the things I consume go up in price."
He pointed numerous price increases, including gasoline, up a nickel in a week.
Sunday, August 16, 2009
Deflation Relative to What? / Economics / Deflation
By: Adam_Brochert
As the deflation versus inflation debate rages on, both sides present reasonable arguments that sound plausible. I am in the camp that believes stocks, commodities, corporate bonds and real estate have much further to fall. Now falling prices are not the same thing as deflation, but they are a visible symptom. To be honest, I am a pragmatist. I am not as concerned about getting my exact definitions right as I am understanding what to do with my savings.
Wednesday, August 12, 2009
Social Security Safety Nets Mask Deflationary Economic Depression / Economics / Deflation
By: Mike_Shedlock
In a recent video Robert Prechter says the Dollar's Hit a "Major Bottom" and that a deflationary depression is coming.
Saturday, August 01, 2009
Europe Hit by Deflation as Prices Fall Most in 13 Years / Economics / Deflation
By: Mike_Shedlock
Troubles in Europe continue to mount even as stock markets everywhere are pricing in a strong recovery. Please consider European Prices Fall 0.6%; Jobless at Decade High.
Read full article... Read full article...
Saturday, August 01, 2009
Why Deflation … Not Inflation … Remains the Problem / Economics / Deflation
By: Money_and_Markets
Bryan Rich writes: Currency values are highly influenced by interest rates … a key driver in determining the flow of global capital.
For example, if you lived in Japan for the past decade, you would have experienced a decade of near-zero interest rates. Therefore, you might have shopped outside your home country for a better return on your money.
Read full article... Read full article...
Wednesday, July 22, 2009
When Deflation Isn’t Deflation / Economics / Deflation
By: Joshua_Burnett
The most common argument I run into when I tell people that hyperinflation is looming on the horizon revolves around the current “deflationary” period. People have a hard time seeing the U.S. turning into the next Zimbabwe when we’re supposedly not experiencing any inflation at all, let alone hyperinflation. The problem lies not in the fact that we’re actually experiencing deflation and that we’ll face a fundamental, 180 degree reversal in direction in the next few years; the issue is actually found in an institutional misunderstanding of macro economics and the role it plays in defining deflation.
Friday, July 17, 2009
NO Chance of Inflation on Near Horizon / Economics / Deflation
By: The_Gold_Report
Unlike many of his colleagues in the world of investment analysis, Discovery Investing pioneer Dr. Michael Berry doesn't expect inflation to enter the economy for two or three years, after considerably more deleveraging takes place and real recovery begins. In this exclusive interview, he tells The Gold Report this is a great time for contrarians to do some bargain hunting. (7/17/09).
Wednesday, July 15, 2009
Exposing the Myths of Deflation and Recession / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide.
Tuesday, July 14, 2009
Debt Deflation the Reason Why Government Economic Stimulus is Doomed to Fail / Economics / Deflation
By: John_Mauldin
There is a reason I call this column Outside the Box. I try to get material that forces us to think outside our normal comfort zones and challenges our common assumptions. I have made the comment more than once that is it unusual for two major bubbles to burst and for the conversation to be all about rising inflation and not a serious problem with deflation.
As Niels Jensen pointed out last week, the most important question that an investor can ask is whether we are in for deflation or inflation. And this week we read a well reasoned piece on deflation. This is one of the more important essays I have sent out. You need to set aside some time to absorb this one.
Read full article... Read full article...
Monday, July 13, 2009
Mike Shedlock, Mish Should Ditch His Deflation Fears / Economics / Deflation
By: MISES
Robert P. Murphy writes: We who are advocates of sound, free-market money need to get our story straight. Are we predicting hyperinflation or massive deflation? Personally, I am much more worried about the former problem. Using a recent article by Mish, I hope to show that no one has made a convincing case for falling prices.
Saturday, July 11, 2009
The Deflation Survival Guide, 60 page ebook Download Now for Free / Economics / Deflation
By: EWI
Our friends at Elliott Wave International put together an expansive Deflation Survival Guide. The free 60-page eBook is packed with Robert Prechter's most important teachings and warnings about deflation. This is one of the most valuable resources EWI has ever offered at no cost. Learn more below or download it now – for free.
Monday, July 06, 2009
Inflation or Deflation, Make Sure You Get This One Right / Economics / Deflation
By: John_Mauldin
There are those who sweat over every decision, worrying about how it will affect their lives and investments. Then there is the school of thought that we should focus on the big decisions. I am of the latter school.
85% of investment returns are a result of asset class allocations and only 15% come from actually picking investment within the asset class. Getting the big picture right is critical. In this week's Outside the Box we look at a very well written essay about the biggest of all question in front of us today. Do we face deflation or inflation?
Read full article... Read full article...
Friday, July 03, 2009
Negative Global Interest Rates, Sweden Cuts Deposit Rate to NEGATIVE .25% / Interest-Rates / Deflation
By: Mike_Shedlock
There has been a lot of ludicrous recommendations recently to combat deflation by making deposit rates negative. I did not think any central bank would be dumb enough to try it. I thought wrong.
Thursday, July 02, 2009
DEFLATION Video Antidote to the Mainstream Inflation Consensus / News_Letter / Deflation
By: NewsLetter
This FREE 20 minute chart-packed video presentation aims to challenge the mainstream consensus on inflation.
Monday, June 29, 2009
U.S. Jump in Savings Rates Means Debt Deflation in America / Economics / Deflation
By: Global_Research
Michael Hudson writes: Happy-face media reporting of economic news is providing the usual upbeat spin on Friday’s debt-deflation statistics. The Commerce Department’s National Income and Product Accounts (NIPA) for May show that U.S. “savings” are now absorbing 6.9 percent of income.
Sunday, June 28, 2009
The Possibility of Credit Collapse Deflation / Economics / Deflation
By: LewRockwell
David Calderwood writes: Recently there's been a spate of articles about the inflation/deflation debate.
According to the dominant view, the inflation the U.S. has experienced these past 75-plus years will inevitably continue and very likely accelerate as the managers running the Fed and U.S. Treasury attempt to deal with a monstrous overhanging debt bubble by cheapening the dollars with which repayment is made.
Read full article... Read full article...
Saturday, June 27, 2009
Embrace Deflation - It's The Cure, Not The Problem / Economics / Deflation
By: Mike_Shedlock
Concern over Japanese deflation is increasing. Please consider Japan Succumbs to Deflation as Consumer Prices Fall Record 1.1%.
Monday, June 22, 2009
The Big Inflationist Scare / Economics / Deflation
By: Mike_Shedlock
Inquiring minds are reading Pushing on a String by Gary North.
Gary always writes an interesting column. Indeed, there is too much to excerpt that I suggest reading it. Gary has many of his facts correct, yet still manages to come to the wrong conclusion.
Sunday, June 21, 2009
Inflation or Deflation, Which is More Likely? / Economics / Deflation
By: Brian_Bloom
“Hyperinflation” in the USA is a concept which has been freely bandied about in recent weeks, and a friend – who lives in Switzerland – recently queried this analyst’s view that deflation is the more likely eventual outcome for the world economy as a whole. In the conversation which ensued, what finally emerged was that communication on the subject is fraught with definitional issues.
Saturday, June 20, 2009
Economic Deflation: How to Survive the Deflationary Depression / News_Letter / Deflation
By: NewsLetter
Governments across the world have adopted "Quantitative Easing" aka "Printing Money" to fight against Deflation that was threatening to push global economies into a downward deflationary spiral towards a prolonged period of economic depression. The question now is will printing money coupled with ZERO interest rates work ?
Friday, June 19, 2009
Economic Deflation hard Evidence from Flow of Funds Report / Economics / Deflation
By: Mike_Shedlock
I am not sure if this was his intent, but recent analysis of the Flow of Funds Report by Martin Weiss eloquently makes the case for deflation.
In New, Hard Evidence of Continuing Debt Collapse! Martin Weiss Writes ...
Wednesday, June 17, 2009
U.S. Deflation CPI Drops 1.3% in Past Year, Biggest Drop in 59 Years; Where To From Here? / Economics / Deflation
By: Mike_Shedlock
MarketWatch is reporting Consumer prices inch 0.1% higher in May.
U.S. consumer prices increased a seasonally adjusted 0.1% in May as falling food prices largely offset higher gasoline prices, the Labor Department reported Wednesday.
Read full article... Read full article...
Tuesday, June 09, 2009
Is U.S. Heading for Zimbabwe Style Hyperinflation or Deflation? / Economics / Deflation
By: Mike_Whitney
The Republicans are convinced that hyperinflation is just around the corner, but don't believe it. The real enemy is deflation, which is why Fed chief Bernanke has taken such extraordinary steps to pump liquidity into the system. The economy is flat on its back and hemorrhaging a half a million jobs per month. The housing market is crashing, retail sales are in a funk, manufacturing is down, exports are falling, and consumers have started saving for the first time in decades. There's excess capacity everywhere and aggregate demand has dropped off a cliff. If it wasn't for the Fed's monetary stimulus and myriad lending facilities, the economy would be stretched out on a marble slab right now. So, where's the inflation? Here's Paul Krugman with part of the answer:
Saturday, May 23, 2009
Deflation Hits Direct Mail Industry / Economics / Deflation
By: Mike_Shedlock
On May 1, 2009 the US Postal Service issued a Notice of Market-Dominant Price Adjustment.
Read full article... Read full article...
Wednesday, May 20, 2009
UK CPI Inflation +2.4%, RPI Deflation -1.2% Hits Forecast Target / Economics / Deflation
By: Nadeem_Walayat
UK RPI Inflation data of minus 1.2% for April 09 represents severe deflation in the official data. Whilst the Governments preferred CPI inflation measure has recorded a smaller decline to 2.3% which still stubbornly puts it above the Bank of England's target rate of 2%. RPI deflation is not surprising given the panic interest rate cuts from 5% at the beginning of October 2008 to just 0.5% by the last cut of March 2009, these cuts in interest rates coupled with quantitative easing aka "money printing" to drive down long-term interest rates and hence mortgage rates is resulting in real deflation for those with large mortgages of as much as minus 5%, therefore this is providing for mini 'temporary' cash flow boom for those mortgage holders that have secure employment during the recession and therefore contributing to the summer bounce in house prices.
Friday, May 15, 2009
Wholesale Prices Deflation, Largest 12-Month Decline Since 1950 / Economics / Deflation
By: Mike_Shedlock
Inquiring minds are investigating the Producer Price Indexes For April 2009.
Wednesday, April 22, 2009
Deflation Returns to the U.K. / Economics / Deflation
By: Mike_Shedlock
Inquiring minds are reading Deflation returns to Britain for first time since 1960.
Deflation returned to Britain for the first time in nearly five decades last month as prices measured by the retail price index (RPI) were lower than the same time a year ago.
Read full article... Read full article...
Wednesday, April 22, 2009
Deflation Continues, Will the United States Become Another Japan? / Economics / Deflation
By: Money_and_Markets
Nilus Mattive writes: Clearly, deflation remains the biggest near-term threat to the U.S. economy.At the consumer level, prices pulled back 0.1 percent during the month of March. That was mainly driven by declining energy prices, and in spite of the biggest jump in tobacco prices in at least 10 years. (The government initiated a large tax hike on smokes during April.)
Tuesday, April 21, 2009
Surging Money Supply, They Call This Deflation? / Economics / Deflation
By: Adrian_Ash
So money-supply growth of 18% plus consumer prices inflation half-as-great again as the official target now equals deflation. Right...?
OH HORRORS! "Deflation hits UK economy for first time since 1960," screams The Telegraph. "UK falls into deflation for first time in 50 years," wails The Times.
Tuesday, April 21, 2009
Deflation Alarm Bells Ringing Across Europe / Economics / Deflation
By: Mike_Shedlock
The New York Times is reporting Spain’s Falling Prices Fuel Deflation Fears in Europe.
Read full article... Read full article...Faced with plunging orders, merchants across this recession-wracked country are starting to do something that many of them have never done: cut retail prices.
Thursday, April 16, 2009
Economic Deflation Goes Global / Economics / Deflation
By: Mike_Shedlock
Deflation properly defined is a net decrease in the money supply and credit, with credit being marked to market. Deflation by that measure went global long ago.This post however, is in reference to sustained price drops widely (and incorrectly) referred to as deflation.
Read full article... Read full article...
Wednesday, April 08, 2009
Bernanke Making Sure Deflation Does Not Happen Scorecard / Economics / Deflation
By: Mike_Shedlock
In case no one is keeping track, Bernanke has now fired every bullet from his 2002 “ helicopter drop ” speech Deflation: Making Sure "It" Doesn't Happen Here .Read full article... Read full article...
Sunday, March 15, 2009
The Deflation Myth / Economics / Deflation
By: Mike_Stathis
This is another myth I want to clear up. For some strange reason, economists, and those who actually give credence to what they say seem to think that a single period eighty years ago set a precedent cast in stone for what to expect from this depression. As a result, the masters of propaganda continue to insist that you cannot have a depression without deflation. Apparently, these “experts” have never heard of data points. You cannot expect to make credible conclusions based on one period. You need several periods at minimum in order to transpose similar conclusions. Read full article... Read full article...
Friday, March 06, 2009
Housing Market House Price Deflation / Housing-Market / Deflation
By: Adrian_Ash
"Any house bought for 'No Money Down' should become a no money home, a free gift to the debtor. How's that for putting a floor under prices...?"
REMEMBER the great hope for Hope Now...?
Read full article... Read full article...
Thursday, February 26, 2009
How Business can cope with Contraction during Economic Depression / Economics / Deflation
By: EWI
This article is part of a series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide. Read full article... Read full article...
Thursday, February 26, 2009
Economic Deflation Special: 10 Things You Should or Should Not Do / News_Letter / Deflation
By: NewsLetter
February 10th , 2009 Issue #10 Vol. 3Whilst today's headlines have been grabbed by Barack Obama's U.S. Economic Stimulus package of $800 billion, which is part of a global collective total of approximate $2 trillion of stimulus spending that has been committed for during the next 1 to 2 years. However the fact of the matter is that this does not even come close to countering the REAL Deflationary impact of the $30 trillion across the board loss of value of assets from real estate, to stocks to commodities.
Read full article... Read full article...
Thursday, February 26, 2009
Deflation: How to Survive the Deflationary Depression / Economics / Deflation
By: EWI
Governments across the world are increasingly adopting "Quantative Easing" aka "Printing Money" to fight against Deflation that is threatening to push global economies into a downward deflationary spiral towards a prolonged period of economic depression. The question is will printing money coupled with ZERO interest rates work ?Read full article... Read full article...
Sunday, February 22, 2009
Deflation - What You Should and Should Not Do / Economics / Deflation
By: EWI
Whilst recent headlines have been grabbed by Barack Obama's $800 billion Economic Stimulus package which is part of a global collective total of approximate $2 trillion of stimulus spending that has been committed for during the next 1 to 2 years. However the fact of the matter is that this does not even come close to countering the REAL Deflationary impact of the $30 trillion across the board loss of value of assets from real estate to stocks to commodities. Read full article... Read full article...
Thursday, February 19, 2009
"The Last Bastion Against Deflation: The Federal Government / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide. Read full article... Read full article...
Thursday, February 19, 2009
Jaguar Inflation - A Layman's Explanation of Government Intervention / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide. Read full article... Read full article...
Wednesday, February 18, 2009
Understanding the Difference Between Deflation and Hyperinflation: Deflationists Rebuttal / Economics / Deflation
By: Eric_deCarbonnel
1) The euro is going to crash against the dollar because European bank losses dwarf those in the US This bit of logic proves that deflationists (those predicting deflation in the US) don't understand deflation. Whether or not European bank losses dwarf those in the US, it is the euro that will rally against the dollar. Why? Because the euro zone, unlike the US, is about to experience real, honest-to-god deflation. Ironically, Deflation is staring deflationists in the face, and they are too blind to see it.
Read full article... Read full article...
Tuesday, February 17, 2009
Why Deflation is Better for the Economy than Inflation / Economics / Deflation
By: Oxbury_Research
Between a Rock and a Hard Place - There was something about the article I wrote last week for Bourbon & Bayonets that touched a nerve with a lot of people. There wasn't a lot of middle-ground; readers loved it, hated it, or were annoyed with me for complaining without proposing a solution. I'm glad I was able to stir the pot and get something controversial enough on paper to bring out the passion on both sides of the arguments. This article isn't written to further my points and persuade those who disagreed with me. Instead I want to purpose what I see to be the best potential solution to a very difficult problem. I agree with the readers who took issue with my empty complaints. Today's article is written for those who see the problems, but wonder what choices or alternatives we have to current policy. Read full article... Read full article...
Tuesday, February 10, 2009
Ten Things You Should and Should Not Do During Deflation / Economics / Deflation
By: EWI
Whilst today's headlines have been grabbed by Barack Obama's U.S. Economic Stimulus package of $800 billion, which is part of a global collective total of approximate $2 trillion of stimulus spending that has been committed for during the next 1 to 2 years. However the fact of the matter is that this does not even come close to countering the REAL Deflationary impact of the $30 trillion across the board loss of value of assets from real estate, to stocks to commodities. Read full article... Read full article...
Tuesday, February 10, 2009
Is the World Finally Ready to Accept the Deflationary Scenario? / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival Guide now .
The following article was adapted from Robert Prechter's 2002 New York Times, Wall Street Journal and Amazon best-seller, Conquer the Crash – You Can Survive and Prosper in a Deflationary Depression .
Read full article... Read full article...
Saturday, February 07, 2009
The Deflation Survival Guide / News_Letter / Deflation
By: NewsLetter
February 3rd , 2009 Issue #7 Vol. 3Our friends at Elliott Wave International have just put together an expansive NEW Deflation Survival Guide . The free 60-page eBook is packed with Robert Prechter's most important teachings and warnings about deflation. This is one of the most valuable resources EWI has ever offered at no cost. Learn more below or download it now – for free .
Read full article... Read full article...
Friday, February 06, 2009
Jaguar Inflation - A Layman's Explanation of Government Intervention / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide. Read full article... Read full article...
Thursday, February 05, 2009
Exposing Three Myths of Deflation and Recession / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide. Read full article... Read full article...
Wednesday, February 04, 2009
Real Interest Rates Soar as Case Shiller CPI Crashes to Minus 5% / Economics / Deflation
By: Mike_Shedlock
The following chart shows the effect if one substitutes the Case-Shiller housing index for Owners' Equivalent Rent in the CPI.
Case-Shiller-CPI (CS-CPI) vs. CPI-U
Read full article... Read full article...
Wednesday, February 04, 2009
Exposing Three Myths of Deflation and Recession / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival eBook , part of Prechter's NEW Deflation Survival Guide. Read full article... Read full article...
Wednesday, February 04, 2009
The Economic Deflation Survival Guide / Economics / Deflation
By: Nadeem_Walayat
Our friends at Elliott Wave International have just put together an expansive NEW Deflation Survival Guide . The free 60-page eBook is packed with Robert Prechter's most important teachings and warnings about deflation. This is one of the most valuable resources EWI has ever offered at no cost. Learn more below or download it now – for free . Read full article... Read full article...
Monday, February 02, 2009
Is the World Finally Ready to Accept the Deflationary Scenario? / Economics / Deflation
By: EWI
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world's foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter's FREE 60-page Deflation Survival Guide now . Read full article... Read full article...
Sunday, January 25, 2009
Real Deflation Spells Economic Doom / Economics / Deflation
By: Prieur_du_Plessis
Asha Bangalore (Northern Trust): Home building activity posts new low “Starts of new homes fell 15.5% in December to an annual rate of 550,000. The annual average of new homes started in 2008 is 902,000, the lowest on record. Starts of new single-family homes dropped 13.5% to an annual rate of 398,000, the lowest on record.
Read full article... Read full article...
Sunday, January 11, 2009
The Cycle of Economic Deflation During 2009 / Economics / Deflation
By: Prieur_du_Plessis
Bloomberg: Nouriel Roubini - worst is still ahead of US “The global financial system in 2008 experienced its worst crisis since the Great Depression of the 1930s. Major financial institutions went bust. Others were bought up on the cheap or survived only after major bailouts. Global stock markets fell by more than 50% from their 2007 peaks. Interest-rate spreads spiked. A severe liquidity and credit crunch appeared. Many emerging-market economies on the verge of a crisis had to ask for help from the International Monetary Fund.
Read full article... Read full article...
Monday, January 05, 2009
Fed's Supports "Experimental Approaches" to Prevent Deflation / Economics / Deflation
By: Mike_Shedlock
Nearly everyone is hopping on the Keynesian bandwagon as the urge to try something, anything, to halt this economic slide is simply overpowering.Please consider Fed's Yellen Supports ‘Substantial' Economic Stimulus . The U.S. economy faces a “serious risk” of stagnating for an extended period of time and “it's worth pulling out all the stops” on fiscal stimulus, said Federal Reserve Bank of San Francisco President Janet Yellen.
Read full article... Read full article...
Tuesday, December 23, 2008
Deflation Depression II as $10 Trillion Wealth Destroyed / Economics / Deflation
By: John_Mauldin
Have you done your Christmas shopping yet? Research shows that more of us are putting it off in expectations of better prices. In other words deflationary expectations! The prices I have seen while out shopping the past few weeks are simply amazing. I have to admit to have made a few purchases for some items that I was not planning to buy just yet because prices were off by 60% or more. A few days ago a friend came in sporting a new black cashmere sweater top with jeweled embroidery and quite fancy. She said she got it at Saks. But the real story is that when she walked into Saks looking for a present for her kids they handed her a coupon with a 30% off any one item from whatever price it was already marked down. That top? At one point it was almost $500. She bought it for $75. Read full article... Read full article...
Monday, December 22, 2008
Fiscal Insanity Virus, the Irrational Fear of Deflation / Politics / Deflation
By: Mike_Shedlock
Warning: A dangerous new virus, FIV, is rapidly spreading the globe.
This part 1 of a very long post. The symptoms of the disease are complex. Part 1 addresses the symptoms of the disease and part 2 continues with more symptoms and a discussion about preventative measures and cures. Scientists have dubbed the disease, FIV, the Fiscal Insanity Virus.
Read full article... Read full article...
Sunday, December 21, 2008
Governments Powerless in the face of Price Deflation and Debt Collapse / Economics / Deflation
By: Money_and_Markets
Martin here with a quick update and big picture overview.
Deflation is now striking with unprecedented power and speed: Last week, OPEC announced its biggest production cut in history … and STILL oil prices collapsed, extending their largest decline of all time.
Read full article... Read full article...
Thursday, December 18, 2008
Deflation Crash 2009- How to Protect Your Investments / Stock-Markets / Deflation
By: EWI
Editor's Note: The following article is adapted from Robert Prechter's best-selling book, Conquer the Crash – You Can Survive and Prosper in a Deflationary Depression . In addition to this article, visit Elliott Wave International to download the free 15-page report about how to protect yourself, you wealth and your family in this environment. It contains details about what you should do with your pension plan, valuable tips for business owners, insights on handling loans and debt and important warnings against trusting the government to protect you. Read full article... Read full article...
Tuesday, December 16, 2008
Deflation and the Destruction of America's Wealth / Economics / Deflation
By: Money_and_Markets
Martin Weiss writes: The deflation we've been warning you about is here, and it's striking hard. Last week, the Fed released a report that sent chills down the spine of economists all over the world, revealing a sweeping destruction of wealth in America.
Just in the third quarter alone, U.S. households lost $647 billion in real estate; $922 billion in stocks; $523 billion in mutual funds; $653 billion in life insurance and pension fund reserves; plus $128 billion in private business interests.
Read full article... Read full article...
Monday, December 15, 2008
Deflation 2009 as Central Bank Credit Creation Loses to Derivatives Deleveraging / Economics / Deflation
By: John_Mauldin
This week I am really delighted to be able to give you a condensed version of Gary Shilling's latest INSIGHT newsletter for your Outside the Box. Each month I really look forward to getting Gary's latest thoughts on the economy and investing. Last year in his forecast issue he suggested 13 investment ideas, all of which were profitable by the end of the year. It is not unusual for Gary to give us over 75 charts and tables in his monthly letters along with his commentary, which makes his thinking unusually clear and accessible.Read full article... Read full article...
Sunday, December 14, 2008
How to Prepare for the Deflationary Market Crash / Economics / Deflation
By: EWI
Editor's Note: The following article is adapted from Robert Prechter's best-selling book, Conquer the Crash – You Can Survive and Prosper in a Deflationary Depression . In addition to this article, visit Elliott Wave International to download the free 15-page report about how to protect yourself, you wealth and your family in this environment. It contains details about what you should do with your pension plan, valuable tips for business owners, insights on handling loans and debt and important warnings against trusting the government to protect you. Read full article... Read full article...
Thursday, December 11, 2008
Forget Inflation Instead Focus on How Long Deflation Will Last / Economics / Deflation
By: Mike_Shedlock
Humpty Dumpty On Inflation - There is an excellent article by Axel Merk on Market Oracle called Monetizing the Debt . The article discusses the Fed's growing balance sheet and whether or not it represents inflation. The aspect that I want to highlight is in regards to bank lending. Here are a couple of charts from the article along with commentary by Merk.
Read full article... Read full article...
Wednesday, December 10, 2008
Inflation or Deflation? / Economics / Deflation
By: EWI
Explanation of the Price Effects of Inflation and Deflation - The U.S. Labor Department reported a 1 percent drop in the consumer price index for October 2008. The drop marked the largest decline in 61 years, and it was the first decline in that measure in nearly a quarter of a century. The 1 percent drop was twice as large as many mainstream analysts had forecast. Such a large decline in consumer prices is forcing U.S. policymakers to rethink the possibility of deflation in America. For more on deflation, we turn to Robert Prechter, the man who literally wrote a book on how to survive it. Read full article... Read full article...
Thursday, December 04, 2008
50 Ways To Beat Deflation / Economics / Deflation
By: Mike_Shedlock
With thanks to "Stonewall" for posting this as a comment, it's time for a little sing along with a Paul Simon Song called50 Ways To Beat Deflation
Read full article... Read full article...
Wednesday, December 03, 2008
Impact of Deflation and Death of the Economic Decoupling Theory / Economics / Deflation
By: Chris_Galakoutis
In the panic following the 1929 stock market crash, bank runs led to bank balance sheet contractions and bank failures, which led to money supply contraction and by definition, deflation. “Trust” had become a fleeting ideal in the early 1930's, and the suspension of the gold standard during WWI was a fresh memory. Americans of that era learned rather quickly that the maintenance of wealth in tangible form was preferable to paper wealth, so as bank runs became more pronounced, they rushed into and hoarded gold, since a growing distrust of banks meant an equal distrust of paper money. Read full article... Read full article...
Sunday, November 30, 2008
U.S. Fed Fighting Deflationary Credit Contraction / Economics / Deflation
By: Mick_Phoenix
Welcome to the Weekly report. There is much talk these days about the inflationary bias of the US Federal Reserve, the rationale being all that money being pumped into banks, brokers (RIP), insurance, car makers and so on (monetary inflation) will eventually flood into the economy and cause prices to rise as too much cash seeks too little supply of goods and services (price inflation). Read full article... Read full article...
Friday, November 28, 2008
Bernanke's Deflationary Tactics and The Risk of Collateral Damage / Economics / Deflation
By: Brady_Willett
After General Bernanke Destroys The Deflationary Threat -
“…we will not stand down until we have achieved our goals of repairing and reforming our financial system, and thereby restoring prosperity to our economy.” Ben Bernanke. Read full article... Read full article...
Thursday, November 20, 2008
Keynesian Economics- Revenge of the Barbarous Relic / Economics / Deflation
By: Kurt_Kasun
Marc Faber's latest report written on November 1 was titled “Why Market Interventions by Governments worsen Economic and Financial Conditions!” I might have called it "Vengeance of the Barbarous Relic". John Maynard Keynes granted gold with this pejorative, giving license to governments to intervene, print, and distort to their heart's content. In the long run we are all dead...right? Wrong! The long run is now and the chickens are coming home to roost. Read full article... Read full article...
Tuesday, November 18, 2008
UK Tax Cuts and Free Money in Japan / Politics / Deflation
By: Mike_Shedlock
The Times Online is reporting Ministers admit that tax rises will follow Gordon Brown's tax cuts . Tax rises are set to follow next week's tax cuts, ministers admitted yesterday as Gordon Brown raised the spectre of deflation in Britain for the first time.
David Cameron predicted a tax-raising “bombshell” after Lord Mandelson, the Business Secretary, spoke of the need for “structural adjustments later on” and Mr Brown himself accepted that the Pre-Budget Report (PBR) stimulus would be “temporary”. Read full article... Read full article...
Thursday, November 13, 2008
Combating Credit Based Derivatives Deflation / Interest-Rates / Deflation
By: Mick_Phoenix
Welcome to An Occasional Letter. This week we pick up from the end of this article as we begin the process of peering into the future to assemble the next stage of the scenario I have followed over the past 6+ years.
However before we start I have recently had numerous e-mails asking to join my mailing list. I thank those people for their interest but I no longer run a mailing list since converting to a subscription only website. If you would like to know more, visit An Occasional Letter for details.
Tuesday, November 11, 2008
Corporate Industrial Bond Yields Strongly Support Economic Deflation Thesis / Interest-Rates / Deflation
By: Mike_Shedlock
As one might expect in a credit crunch, default risk is rising. One measure of that risk is corporate bond yields. Let's take a look and see how various grades of bonds are performing. Read full article... Read full article...
Thursday, November 06, 2008
Global Interest Rate Cuts ECB .50% BOE 1.5% Equals Deflation / Interest-Rates / Deflation
By: Mike_Shedlock
The Bank of England cut rates by 1.5% in a larger than expected move, The Swiss National Bank by 50 basis points in an emergency action when it was not even meeting, and the European Central Bank cut rates as expected by 50 basis points earlier today. Read full article... Read full article...
Thursday, November 06, 2008
The Economic Deflation Debate: Why this time is different / Economics / Deflation
By: John_Lee
It's fascinating to study and observe the distribution of wealth. History has shown great nations and companies that rose to the top from nothing and subsequently fell to nothing.Read full article... Read full article...
Wednesday, October 29, 2008
Economic Deflation in Gold Terms and the U.S. Dollar Collapse / Economics / Deflation
By: Eric_deCarbonnel
We have finally gotten to the point where most investors and the media understand the severity of the credit crisis and are expecting deflation. It is a good start, but unfortunately, it still isn't quite right. Deflation will be in terms of gold, like in 1929
Read full article... Read full article...
Sunday, October 26, 2008
Contraction of the Whole Financial and Economic System / Economics / Deflation
By: Mike_Whitney
"The great inter-war slumps were not acts of God or of blind forces. They were the sure and certain result of the concentration of too much economic power in the hands of too few men (who) felt no responsibility to the nation." From the 1945 UK Labour manifesto Let Us Face The Future
There are signs that the credit crunch is easing. Interbank lending in dollars has fallen for a ninth straight day. The various indicators of stress in the market--Libor, the TED spread, and the Libor-OIS spread--are all gradually returning to normal, but the damage to the broader economy has been substantial.
Read full article... Read full article...
Tuesday, October 21, 2008
The Paradox of Deleveraging Vs Something for Nothing Economics / Economics / Deflation
By: Mike_Shedlock
Earlier today, in Keynesian Claptrap From PIMCO I spoke of the ridiculousness of the paradox of thrift . Here two more articles worth your time reading that rebut the seemingly never ending Keynesian Claptrap coming from the likes of Bernanke, Paulson, PIMCO, Roubini, and Krugman. I make the above statement with one reservation. Nouriel Roubini has called this economic disaster as well as anyone. I commend him for many brilliant calls. However I simply cannot sit back and say nothing about the barrage of bad economic thinking in regards to the solution to this crisis coming from everyone in the group above.
Read full article... Read full article...
Thursday, October 09, 2008
Primary Preconditions for Deflation and Economic Depression / Economics / Deflation
By: EWI
The following was adapted from Bob Prechter's New York Times and Amazon best seller, Conquer the Crash – You Can Survive and Prosper in a Deflationary Depression .
Deflation requires a precondition: a major societal buildup in the extension of credit (and its flip side, the assumption of debt).
Read full article... Read full article...
Thursday, October 02, 2008
Real Estate / Credit Bubble Deflation Foresight / Housing-Market / Deflation
By: Steve_Moyer
"And what a bunch of numbskulls - Greenspan, Paulson and Bernanke! Every word they've said so far has been financial poison. "Greenspan relaxed about house prices..." reported the Financial Times in 2005. "Most negatives in housing are probably behind us..." said the same sage in October 2006. "We believe the effect of the troubles in the subprime sector...will be likely limited..." said Bernanke in March 2007. It's "not a serious problem...I think it's going to be largely contained," added Paulson in April 2007. Read full article... Read full article...
Friday, September 05, 2008
US Treasury Bull Market Continues as Risks of Deflationary Crash Grow / Interest-Rates / Deflation
By: Mike_Shedlock
The US Treasury Bull market is still intact after 27 years. 30 Year Long Bond 1990-Present
Read full article... Read full article...
Monday, August 11, 2008
Economic Deflation is Not Coming, Deflation is Here! / Economics / Deflation
By: Mike_Shedlock
David, Rosenberg, Merrill Lynch's chief North American economist, says the US Remains Firmly In Recession . Merrill Lynch's David Rosenberg, the first economist from a major bank to declare a US recession was underway back in early January, argues that recent unemployment figures show yet more evidence that the US economy is a deep recession. My Comment : I could not possibly agree more.
Read full article... Read full article...
Monday, July 14, 2008
Price Inflation and Asset Deflation, the Reversal of 25 Years of Booming Markets / Stock-Markets / Deflation
By: Adrian_Ash
AFTER TWENTY-FIVE YEARS of booming asset markets, it's getting hard to keep hold of your money, let alone grow it.
Inflation is destroying fixed-income bonds. Stocks have tipped into a bear market, down more than one-fifth worldwide. Real estate suffers both over-supply and an historic shortage (too many units vs. no mortgage finance). And this is clearly no time to launch a business relying on discretionary spending, consumer debt or prompt payment.
Read full article... Read full article...
Wednesday, July 09, 2008
Soaring Unemployment, Collapsing Credit From Stagflation to Deflation / Economics / Deflation
By: Mike_Shedlock
I recently received an Email from "RS", a long time member of the hyperinflation is coming crowd now but now sees things in a different light. Let's tune in and see what "RS" has to say.
Mish, I was a true believer in the "hyperinflation is coming" theory for quite some time. However, I have since changed my mind. Here's why: I own a computer business and I used to pay techs $15-20/hr. I now have people willing to work for $8-$10/hr. While the nice guy inside is saying “pay people well” the businessman is saying “market conditions demand paying people what the market will support.”
Tuesday, July 08, 2008
Bursting Bubbles Mean Inflation to Give Way to Deflation / Economics / Deflation
By: John_Mauldin
There is a reason I call this column Outside the Box. I try to get material that forces us to think outside our normal comfort zones and challenges our common assumptions. And this week's letter does just that. I have made the comment more than once that is it unusual for two major bubbles to burst and for the conversation and our experience to be rising inflation and not a serious problem with deflation.
Van Hoisington and Dr. Lacy Hunt give us a seminar on why it will be deflation that will ultimately be the problem and not the current inflation we are dealing with today. This week's letter requires you to think, but it will be worth the effort. Remember our lesson from Economics 101. If you raise the supply of something, in normal markets the price goes down. And if you increase the price, suppliers will respond by producing more.
Read full article... Read full article...
Wednesday, July 02, 2008
The Deadly Economic Force of Debt Deflation / Economics / Deflation
By: Dr_William_R_Swagell
Crunch Time for Debt - “Consumer boom shows US out of the woods... Despite the jump in energy prices and the related collapse in measures of consumer confidence, retail sales rose by 1.1 per cent on the month, the strongest gain since November...If there were going to be a US recession in response to the credit crisis, it would have started by now. So let me stick my neck out and say without qualification the US is out of the woods.” Anatole Kaletsky , The Times June 18th 2008.
Thank Heaven for the resilient US consumer, soldiering on stoically under an enormous burden of debt.
Read full article... Read full article...
Monday, June 30, 2008
Worst June for the Dow Jones Since 1930s Deflationary Depression / Stock-Markets / Deflation
By: Paul_J_Nolte
With but one day left of trading to the half-way point of the year, it is becoming more clear that this will not be an ordinary year. Unless today's market rallies something fierce, this will be the worst June for the averages since the Depression. On a less ominous note, the Fed met last week and decided that inflation was more an issue for the economy than growth, however left rates unchanged and likely spurred the latest round of selling. In what could be deemed a rush to call out their brethren, brokerage firms downgraded each other citing additional capital needs in the months ahead. If that weren't enough, oil prices continued their drive higher, altering many 4th of July vacation plans (on a 3-day weekend no less).Read full article... Read full article...
Monday, June 30, 2008
Deflationary Debt Deleveraging Hurricanes to Hit US and UK / Economics / Deflation
By: Mike_Shedlock
Congratulations (of sorts) go to the UK as British household debt is highest in history . British households are now more indebted than those of any other major country in recorded history, it has emerged.
Families in the UK now owe a record 173pc of their incomes in debts, official figures have shown. The ratio of debt to income is higher than any other country in the Group of Seven leading industrialised economies, and is sharply higher than the 129pc of incomes it was five years ago.
Read full article... Read full article...
Friday, June 27, 2008
Peak Credit Has Arrived- Forget Inflation We are in Deflation / Economics / Deflation
By: Mike_Shedlock
The Marlin Company 14th Annual Attitudes in the American Workplace Poll reports the following results on June 24. More than one third (41%) of US workers are cutting back on utilities, nearly half have reduced food purchases (48.5%) and a large percentage are buying less clothing.
The national survey of US workers, conducted May 12-14, 2008, also found that younger workers (between the ages of 18 to 29) are being hit the hardest by the economy and are the most desperate about their economic future. More than one third (34.3%) of young American workers say their financial situation has caused them to “feel hopelessness or despair about their economic future.” That compares with 28.8% of workers age 30 to 49, 23.5% of workers 50-64 and 17.9% of workers 65 or older.
Read full article... Read full article...
Tuesday, June 24, 2008
Game Over- No Housing Market Rebound Whilst Debt Deflation Continues / Housing-Market / Deflation
By: Mike_Whitney
Interview with Michael Hudson
Mike Whitney : Fed chairman Bernanke has been on a spree lately, delivering three speeches in the last two weeks. Every chance he gets, he talks tough about the strong dollar and "holding the line" against inflation. Treasury Secretary Henry Paulson even said that "intervention" in the currency markets was still an option. Is all of this jawboning just saber rattling to keep the dollar from plummeting, or is there a chance that Bernanke actually will raise rates at the Fed's August meeting?
Read full article... Read full article...
Tuesday, June 03, 2008
US Economy in Deflationary Death Spiral / Economics / Deflation
By: Mike_Whitney
Look around. The evidence of a withering economy is everywhere. In "good times" consumers shun the canned meat aisle altogether, but no more. Today, Spam sales are soaring; grocery stores can't keep it on the shelves. Everyone is looking for cheaper ways to feed their families. The Labor Dept. assures us that core-inflation is only 4 per cent, but everybody knows it's load of malarkey. Food prices are going through the roof. White bread is up 13 percent, bacon is up 7 percent and peanut butter is up 9 percent. Inflation is rampant and there's no end in sight. The dollar is closing in on the peso and working people are struggling just to get by. The bottom line is that more and more people in "the richest country on earth" are now surviving on processed pig-meat. That says it all. Read full article... Read full article...
Sunday, May 25, 2008
The Easy Money Path to Deflation / Economics / Deflation
By: Mick_Phoenix
Welcome to the Weekly Report. Due to family illness, this week's letter will be shorter than usual but all the more powerful. This week we re-visit the scenario used for the Occasional Letter series as another milestone is passed.
The Scenario: bubble, easy money, inflation in fiat money supply, inflation in commodities and hard assets, inflation, fear of inflation, rising rates, YC inverting, flattening, rising and inverting again, tightening, withdrawal of liquidity, corrections, crashes, talk of stagflation, FEAR, withdrawal of speculative funds, further corrections and crashes, demand collapse.....Deflation.
Thursday, April 24, 2008
How Japan May Cause the Failure of Current Federal Reserve Policy / Economics / Deflation
By: Mick_Phoenix
Starve the Rich to Feed the Poor - Having written 2 in-depth articles about the rationale behind the Federal Reserve and US Govt plans to bail out the financial system some readers of the last couple of Occasional Letters may well have wondered if I was about to change my outlook. This article should put paid to any such thoughts. Read full article... Read full article...
Wednesday, April 09, 2008
The Future Actions of The Federal Reserve AND US Govt Are Known / Economics / Deflation
By: Mick_Phoenix
An interpretation of The Deflation Bias and Committing to Being Irresponsible by G B Eggertsson
Introduction - This is going to be a long letter. It will attempt to explain the rational behind the current and future US Federal Reserve intentions from the point of view of Central Bank thinking. Firstly, you will need a coffee, a comfortable chair and an open mind.
Read full article... Read full article...
Wednesday, January 16, 2008
The Increasing Cycle of Decreasing Demand Hits Financial Markets and Real Estate / Economics / Deflation
By: Darryl_R_Schoon
The Economy & The Fat Kid
Credit-based economies constantly need to expand in order to service constantly increasing levels of debt. Central banks adjust the flow of credit to maintain the balance between economic expansion and economic contraction.
Then one day, a fat kid shows up at the playground. While everyone knows it's a private playground and admittance is strictly controlled, no one knows where the fat kid came from or how he got in. Nonetheless, the fat kid's there.
Read full article... Read full article...
Sunday, January 13, 2008
Gold Strength During US Bi-Inflationary Depression / Commodities / Deflation
By: Alex_Wallenwein
Watch gold prices continue to rise, even accelerate, as the US economy goes into recession, then depression, while inflationary and deflationary forces will battle each other like two vultures fighting over which one gets to devour the juicier part of the carcass.
Since this scenario utterly defies conventional wisdom, the most obvious question that arises is: “how?” How can inflation and deflation happen at the same time? How can the money supply both shrink and increase, how can prices both rise and fall at the same time?It can, because each condition will occur in different segments of the economy. Let's first take a look at the current situation as it presents itself:Read full article... Read full article...
Friday, January 11, 2008
Deflation Economic Time-bomb As US Moves Towards Recession / Economics / Deflation
By: Mike_Whitney
"Is there anyone who still does not understand that talk of 'inflation' by officialdom is just a red herring intended to distract us from the far more dangerous dragon of deflation?" Mike Shedlock; Mish's Global Economic Trend Analysis
We are to about see how much George Bush really believes the “supply side” mumbo-jumbo he's been spouting for the last 7 years. Last week's Labor Department report confirmed that unemployment is on the rise (5%) and that corrective action will be required to avoid a long and painful recession. There's a good chance that the Chameleon in Chief will jettison his “trickle down” doctrine for more conventional Keynesian remedies like slashing interest rates, government programs, and tax relief to middle and low income people.
Read full article... Read full article...
Tuesday, August 21, 2007
Forget Peak Oil, Peak Net Worth is the Real Danger! / Stock-Markets / Deflation
By: Brady_Willett
Is the proverbial 'Peak' in Consumer Borrowing upon us?
With the 1990s stock market mania about to go bust, it was easy to conclude that the U.S. economy would see an entrenched recession. After all, the bubble was arguably larger than any before, and - thanks to easy investing via the internet and the proliferation of 401Ks, mutual funds, etc. - the fallout in stock prices was going to impact an unprecedented proportion of the population directly.
Read full article... Read full article...
Saturday, August 18, 2007
Real Estate and Asset Deflation : Death of the "Sure-Thing" / Housing-Market / Deflation
By: Steve_Moyer
" The only unchangeable certainty is that nothing is certain or unchangeable ." ~ John F. Kennedy
I have two sons in college and therefore work for a living, so I'm not one of those pundits able to crank out daily or weekly market updates. Then again, the credit implosion/liquidity crisis/asset deflation scenario is so assured at this point, I feel obligated to weigh in a bit more frequently.
Read full article... Read full article...
Friday, August 10, 2007
Real Estate and Asset Deflation : The Ballgame is Over / Economics / Deflation
By: Steve_Moyer
When those of us at www.PonderThis.net started writing about "the coming asset deflation" in May of 2005, my, my, did our mailboxes fill up with, "Boy, are you ever wrong. The Fed will make sure these bubbles go on forever, stupid!" emails. Still, we had our small, rather quaint following of "fans."
And a motley group we were indeed!
As we developed our argument and saw our stuff get increasingly picked up by financial websites around the world, our "real estate deflation/credit contraction/liquidity crunch will sink all boats" theme took hold and the overwhelming majority of respondents began moving into our camp. Now we receive a stream of emails from readers demanding an update, wanting to know where things will go from here, and/or trumpeting their decisions to get out of (name almost any asset class) while the gettin' was good. Most now think that asset deflation has taken hold. In two years' time, the worm has certainly turned.
That's probably because, um, for the record -- we were right.
Read full article... Read full article...
Thursday, June 28, 2007
Asset Deflation : Metals and Real Estate Closer to Comatose / Housing-Market / Deflation
By: Steve_Moyer
"We have become ninety-nine percent money mad. The method of living at home modestly and within our income, laying a little by systematically for the proverbial rainy day which is due to come, can almost be listed among the lost arts." ~ George Washington CarverRead full article... Read full article...
Monday, June 25, 2007
Fear of the Future, Japanese Deflation 18 Years On / Economics / Deflation
By: Adrian_Ash
"...If depression is short-hand for fear of the future, then here's a glimpse of what lies beyond today's bubble in credit, debt and financial confidence..."
YOU COULD KNOW less than even the British government about trading gold and foreign currencies for profit, but you'd still have to reckon the money of this mystery country a "buy":
Its jobless rate just hit a 9-year low of 3.8%, and there's plenty more growth to come. The ratio of jobs to jobseekers rose yet again last month.
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Monday, June 11, 2007
Deflation is No Mystery Except to Most Economists / Economics / Deflation
By: Gerard_Jackson
That the great body of economists think that a fall in general prices is deflationary by definition and a clear indicator of an impending recession tells us how much this phenomenon is misunderstood. On the basis of this understanding central banks have implemented price stabilisation policies which in themselves carry the seeds of future recessions. The situation is so bad in the economics profession that I am inclined to go so far as to suggest that only a handful of economists actually know what deflation really means. (Classical economists had no such difficulty).Read full article... Read full article...
Thursday, May 31, 2007
Inflation Or Deflation - Which One Is Worse? Which One Lies Ahead? / Economics / Deflation
By: Submissions
Surely inflation is our greater enemy, isn't it? Rising prices are bad for the economy. Falling prices are a good thing, aren't they?
Inflation and deflation are due more to mindset than anything else. Let me explain.
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Tuesday, May 29, 2007
Real Estate and Asset Deflation: You Assume, You Lose / Housing-Market / Deflation
By: Steve_Moyer
"Begin challenging your own assumptions. Your assumptions are your windows to the world. Scrub them off every once in a while or the light won't come in." ~ Alan Alda
Just to prove that every village has its idiots, an article in the San Francisco Chronicle's Sunday Real Estate section last week featured an assortment of irresponsible "mortgage consultants" and "financial strategists" speaking enthusiastically about the idea of borrowing against the equity in your home in order to invest in the stock market (or wherever else you might want to take a chance on achieving an investment return higher than the interest rate you would pay on a home loan).
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Thursday, April 05, 2007
Asset Price Deflation: The New Rules of Real Estate / Housing-Market / Deflation
By: Steve_Moyer
"Three Rules of Work: Out of clutter, find simplicity; from discord, find harmony; in the middle of difficulty lies opportunity." ~ Albert Einstein
I mentioned a couple of weeks ago that our next piece would cover the "new rules of real estate," as post-bubble asset deflation indicators dominate the landscape. Meanwhile, our latest article generated more than 300 emails in a week's time -- our greatest response ever -- and was picked up by websites in the United Kingdom, Germany, Italy, China, Canada, Mexico, and even Cuba .
Obviously we have come to an inflection point on the investment curve and are edging ever-closer to the "point of recognition" as it pertains to real estate. And real estate is key, because in my opinion its collapse will take down all asset classes for some time. Ergo, we humbly offer real estate's new rules:
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Monday, April 02, 2007
The Dynamics of Deflation - The Golden Thorn in the Flesh - Part 1 / Economics / Deflation
By: Professor_Emeritus
Soldiers throwing away ammunition before combat - The guessing game among gold market analysts is still on: will central banks resume gold dumping or won't they, as the price of gold takes another shot at $700? In arguing the case pro and con, virtually all analysts miss one important point. Central bank sales of gold against the backdrop of deflation looming in the horizon is akin to soldiers throwing away ammunition just before combat. They should be doing the exact opposite. Soldiers should replenish their supply of ammunition. Central banks should reinforce their balance sheets by purchasing gold (as indeed several important ones, including those of China and Russia, are on record of doing).
This is the only way to keep the powder dry. In a deflation it may be necessary to inject massive amounts of new credit into the system, but the only way to make the national currency more plentiful without weakening it (let alone destroying it) is through gold purchases. They are by far the most effective weapon of a central bank to combat deflation. Are we to assume that our central bankers are dummies who do not know this piece of elementary truth?
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Saturday, March 31, 2007
A Random Walk Down The Path of Asset Price Deflation / Economics / Deflation
By: Steve_Moyer
One of the nice things about our series of Safehaven articles on Asset Deflation is that we have been on such a tiny island compared to the "All Markets Will Continue To Rise Forever and Ever Amen Because It Is Our Birthright And The Fed Will Surely Guarantee It" set, our small legion of open-minded and perceptive readers write in with increasing frequency and say things like, "Yo, Steve, isn't it time for another deflation update?"Read full article... Read full article...
Thursday, March 29, 2007
Asset Deflation : The Death of Real Estate / Economics / Deflation
By: Steve_Moyer
"I had a stick of CareFree gum, but it didn't work. I felt pretty good while I was blowing that bubble, but as soon as the gum lost its flavor, I was back to pondering my mortality." ~ Mitch Hedberg
I sell investment real estate in the San Francisco Bay Area. Have been for 25 years. It's a nice business. I've enjoyed it, and I value my clients.
My pappy's a realtor. My grandpappy was a realtor. My uncle's a realtor; so is my brother. Heck, some of my best friends are realtors (and it takes a big man to admit that).
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Saturday, January 01, 2005
Asset Deflation Crashes Through the Window / Economics / Deflation
By: Steve_Moyer
Sometimes you have to pay the piper, and we're going to have to pay the piper for a while. That's the way it is." ~ Frank Hamblen
The jig is up, my friends. The elephant that is asset deflation has slowly crashed through the big bay window straight onto our living room carpet and the no-fun part of speculative excess and leveraging (not to mention reckless borrowing and spending) has more than begun.
If you refuse to heed our advice, you will pay for it. Dearly.
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