Sightings of references to the term "deflation"

[FRED]

Re: "deflation" sightings

Finster 4, 3, 2, 1 ... Deflation!

[Finster]

Re: Sightings of references to the term "deflation"

i'd like this thread to be dedicated to observations of the word "deflation" in the writings of financial journalists, MSM, speeches of politicians, and so on. i would exclude well known deflationista's like mish. on these grounds i'm also leaving off kevin depew at minyanville, who's been writing about deflation for some time.

my goal is to see if my prediction of a "deflation scare" comes true. as the deflation meme spreads, we can expect commodities to bottom. when and if the word "deflation" is on the cover of time or newsweek, we'll know we've nailed the bottom.

fred, if you find this worthwhile, perhaps you'd make this a sticky.

for my first example, randall forsyth of barron's has begun mentioning deflation lately. today's example:

The Desperate Dash for Cash

By RANDALL W. FORSYTH

As deflation takes hold, debt is out and cash is king. That means everything but Treasuries is for sale.

Since, as Fred notes above, there's already a well-developed record with my views, I won't burden your thread with a lot of rehash. But in the category of outside references to deflation, the cover of this week's Barron's carried the leadline "Goodbye Inflation; Hello Deflation?", referring to a Michael Santoli Streetwise column. Santoli cites anecdotal evidence including a decline of 2.3 % in new car prices in the second quarter, reports of cuts in steel and telecom package prices of 5% & 30%, and declines in the prices of Maine lobsters of 25% & 20% over the past three months and one year.

To these I might add the ... uhm ... semi-significant aggregate price declines in the US real estate and global commodity and stock markets of several trillion dollars.

[Guest]

Re: Sightings of references to the term "deflation"

Since, as Fred notes above, there's already a well-developed record with my views.

Finster that sounds positively regal on your part. If I may suggest it, there is no need to take an "us against them" approach here on the reality of disinflationary / deflationary effects occurring in the FDI. Who is arguing that the FDI is indeed soaring? No-one. It would seem that hotly debating the reality of this one fact is senseless. Quite obviously if the FDI is soaring then some prices are concurrently dropping against it. Why should anyone even bother arguing this point as it's self evident?. This thread was started merely to record "deflation mention sightings", so my questions here are "off topic" (but since when have any Tulip threads ever remained rigorously on-topic anywhere though - that is part of the freewheeling charm of these pages).

Seems instead, the only thing worth discussing is what underpins the soaring FDI you've posted. I note you wish to insist upon a narrow focus on corollary questions exclusively to your own preference on the "4,3,2,1 ... Deflation" thread, as I got told off there yesterday for asking how the oil price could be described as "collapsing". Why not relax it a little and allow the corrolary topics to broaden that discussion and inform it further? The existence of a soaring FDI seems a moot point. The existence of genuinely falling prices in some segments, even many segments, is a moot point. It is the way of the markets to change drections periodically, while describing larger uni-directional trends, no?

The question your own thread does not touch on, which is possibly more substantive, is "what is underpinning this USD breakout which might convey significant staying power to this move" and "how can deflation take root in multi-year terms given the inevitability of Peak Cheap Oil which CIBC and even iTulip have amply acknowledged can provide a substantial inflationary floor under the producer price index, and the entire CRB index? I understand your underlying thesis there is that once the USD (the famous Finster unit of measure) decides to strengthen, then all is lost and the entire Peak Cheap Oil geological event is held in abeyance, like the waters of the Red Sea, parted by Moses? Well, you have your soaring dollar. Now prove that point - that the macro underpinnings for massive global inflation in this decade and the next are not in fact baked into the cake.

If instead you readily concede that this sharply rising USD in by definition an interlude to some yet larger macro events, then we are all fully in agreement and the soaring FDI is fully acknowledged as a quite real yet transitory phenomenon. All further disagreement is mooted.

I noted with some mild irritation yesterday on your own thread, how when someone introduces such concerns, which are "not your chosen or favored themes" as corollaries to your own deflation topic, that you chose to adopt the "regal" stance wherein tabled ideas are "subject to your approval as relevant". Such a response is not conducive to a broad, deep or freewheeling discussion. Why do you take it personally when people disagree with your theses and put forward any arguments to question your own, which are something more than softball disagreements? Don't you wish to have your assertions travel through a process of validation by being challenged? I don't take it personally when people wish to debunk my positions. Instead I relish it.

I cite as an example of the ideal here, someone like Jtabeb, who signs off on many of his posts with (I paraphrase) "harsh debunkers are cordially welcomed to respond". This stance is admirable to me. It represents the very best spirit at iTulip, and I endorse it. It is open, curious, inquiring, cordial, and admirably self confident. Why don't you do the same, and take a less affronted approach to those who flatly disagree with some of your positions? Relax. Disagreement is entirely among friends. You are a senior commentator here, that's beyond question. I have tremendous respect for you. But it does not mean you need to take a regal tone wherein you "brook no disagreement". When you are seen to accept even strong disagreement with equanimity this can win tremendous respect.

[Finster]

Re: Sightings of references to the term "deflation"

The question your own thread does not touch on, which is possibly more substantive, is "what is underpinning this USD breakout which might convey significant staying power to this move" and "how can deflation take root in multi-year terms given the inevitability of Peak Cheap Oil which CIBC and even iTulip have amply acknowledged can provide a substantial inflationary floor under the producer price index, and the entire CRB index? I understand your underlying thesis there is that once the USD (the famous Finster unit of measure) decides to strengthen, then all is lost and the entire Peak Cheap Oil geological event is held in abeyance, like the waters of the Red Sea, parted by Moses? Well, you have your soaring dollar. Now prove that point - that the macro underpinnings for massive global inflation in this decade and the next are not in fact baked into the cake.

The question of how much staying power is noted, but not answered. Only guessed at. I wish I knew, Lukester. As for what's underpinning the move, I think the analogy to a balloon holds well. Deflation is a reaction to inflation, a tendency to restore equilibrium. The banking system creates money by lending it. This creates debt. Debt eventually needs to be repaid. It's inherently unstable.

Of course, you have inflationary forces at work, too. The government and the banks want inflation and have powerful tools to make it happen. As inflation grows, the deflationary restoring force does, too, requiring sequentially lower interest rates to induce further borrowing. Eventually people are all borrowed up, that tactic loses potency, and progressively more drastic measures are considered. It's a tug-o-war ... one side gains ground, then the other ...

[Guest]

Re: Sightings of references to the term "deflation"

Thanks for your direct response. Now while I have you in an (provisionally) accomodative mood [ ], please answer this question (then I will apologize to JK for diverting his thread's topic, and desist from any futher off-topic interruption here).

How is it possible that 90% of the move up in the petroleum price since 1999 is "pure inflation" as you insist, when such massive real purchasing power has accrued in a mere 5 years to the oil exporting nations? How does a 40% decline in the USD against a basket of currencies square up with a 900% recent rise in oil's nominal price? Can you explain (in very simple, readily understandable terms) how there is no real increase in oil's value during this time period (the unit of account shrank) as you assert, and yet that same USD unit of account has accumulated in such a vast pile that some of these nations with a population of maybe 20 million and no national exports or industry other than petroleum have accumulated real purchasing power such that they today have the ability to buy a half dozen companys in the DOW outright?

I posed this question to you many times but you've never answered it. If this question turns out to reveal that the real purchasing power of the oil price today has indeed risen hugely, then all discussion of the soaring FDI being substantively capable of inducing deflation for long today is a moot point, as the approaching Peak Cheap Oil is an irrevocable geological event which no Central Bank can outmanoeuver. It's not an irrelevant point to nail down to the floor, once and for all.

[jk]

Re: Sightings of references to the term "deflation"

could you guys please move your interminable discussion to an appropriate thread? lukester, could you please stop inserting the same points over and over into every thread? [finster's post #18 was on topic, your post #19 was not.] i'd like to have a thread devoted to the simple-minded pursuit of "deflation" sightings in the media.

[Finster]

Re: Sightings of references to the term "deflation"

Thanks for your direct response. Now while I have you in an (provisionally) accomodative mood [ ], please answer this question (then I will apologize to JK for diverting his thread's topic, and desist from any futher off-topic interruption here).

How is it possible that 90% of the move up in the petroleum price since 1999 is "pure inflation" as you insist, when such massive real purchasing power has accrued in a mere 5 years to the oil exporting nations? How does a 40% decline in the USD against a basket of currencies square up with a 900% recent rise in oil's nominal price? Can you explain (in very simple, readily understandable terms) how there is no real increase in oil's value during this time period (the unit of account shrank) as you assert, and yet that same USD unit of account has accumulated in such a vast pile that some of these nations with a population of maybe 20 million and no national exports or industry other than petroleum have accumulated real purchasing power such that they today have the ability to buy a half dozen companys in the DOW outright?

I posed this question to you many times but you've never answered it. If this question turns out to reveal that the real purchasing power of the oil price today has indeed risen hugely, then all discussion of the soaring FDI being substantively capable of inducing deflation for long today is a moot point, as the approaching Peak Cheap Oil is an irrevocable geological event which no Central Bank can outmanoeuver. It's not an irrelevant point to nail down to the floor, once and for all.

Reply posted in Peak Oil - Past, Present, and Future

[Guest]

Re: Sightings of references to the term "deflation"

JK - With utmost respect, what you overlook all too conveniently, is that

A) people post off topic things everywhere on these pages and you are only now suddenly becoming punctilious about it,

B) I've excused myself to you expressly beforehand, and requested your momentary indulgence just long enough to (finally) obtain a straight answer,

C) the only reason the question I posed has been "interminable" as you so disingenuously put it, is because Finster never has answered it. Now would you care to acknowledge that, or is it my question itself which seems specious to you?

D) If he were to definitively rebut this simple question with a devastating clarification, we'd (includes you) finally know for sure that indeed the entire rise in the price of oil was an inflationary illusion, which would indeed be a very large insight to inform the core of all discussions on these pages (you must not percieve that, eh?)

E) If we were to ascertain instead that the real oil price had risen massively you, JK, would be sudeenly equipped with an invaluable piece of actionable information, which is something you seem to alsways express great curiosity about otherwise.

Instead you put much more weight apparently upon academic discussions such as the "sighting of deflation reports". This is about as urgent in terms of providing actionable underpinnings to investments as might be stamp collecting. What earthly use will that collection of sightings provide to your investment strategy in this highly volatile, dangerous environment?

What will it advance in the way of knowledge as to whether you should hold or fold your inflation hedge investments by turning into a"deflation sightings" collector instead?

Conversely, were you here to finally understand that the REAL petroleum price had indeed risen massively in the past decade, you'd instantly have obtained a robust marker as to the future direction of inflation due to the oil price moving independently of fiat money. Isnt' that the core subject we all pretend to discuss here, what lies at the heart of inflation?

I really don't approve of your disingenuous objection. Answer the simple question yourself then please - to give Finster some "cover" on an awkward and dfficult call - if you are so confident you have a firm handle on it?

And if you cannot answer the dead-simple question, in as simple terms as the question itself was posed, in any ordinary debate, the conclusion would be that the entire thesis that the oil price is an inflationary chimera has just flunked a simple question and answer test!

Go ahead, sweep it under the rug and resume your discussion of "stamp collecting" instead. With respect, you seem to be in a decidedly academic mood these days JK.

What part of "genuinely curious about [ oil determines inflation VS. inflation determines oil ] " do you not choose to countenance on this academic thread topic of yours, eh? Is Finster some sort of sacred deity you feel a noble urge to shelter from genuinely tough questions?

And another thing: When I post a thread I never feel like I "own" it. I find the expression of possessiveness about "owning as thread" here a bit brittle and frankly it speaks of weak responses.

Methinks this is merely an expression of weakness about having to simply acknowledge there is one exceedingly simple question Finster has found extraordinarily challenging to the core of his assertions.

After many months, the lack of a simple answer on that question might raise at least a perfunctory a "curiosity flag" no? Yet when I raise it here, and it could have been dispatched in an instant with a supremely simple one line response, you seem suddenly to have found more urgency with data gathering that is more akin to stamp collecting?

And regarding that disingenuous "off-topic" concern? For goodness sake JK, I've seen you ramble on about all sorts of things other than the appropriate thread topic on hundreds of threads you reply to. Yes or no? This sudden objection on your part, right at the threshhold of obtaining a straight answer on a long unanswered question about what lies at inflation's core is plain old fashioned BS.

You are at your best when you are a good deal more straightforward than this. Ever heard the expression "Methinks the lady doth protest too much"? iIt was a really, really simple qurestion. The way you dispatch idiots like me who post such specious nonsense is by offering the really, really simple reply. Jeez, that simple and devastating reply seems to have gotten thoroughly gummed up in someone's keyboard, eh?

could you guys please move your interminable discussion to an appropriate thread? lukester, could you please stop inserting the same points over and over into every thread? [finster's post #18 was on topic, your post #19 was not.] i'd like to have a thread devoted to the simple-minded pursuit of "deflation" sightings in the media.

[Guest]

Re: Sightings of references to the term "deflation"

No Finster. Not good to prevaricate. Give me the devastatingly simple synopsis here in two lines. I am not a "go fetch it" monkey for you to prevaricate with here, as I've read that thread from top to toe and found only very long and convoluted "explanations" Give it to us here in two lines.

If your theses are so elegantly simple, explain this simple concept in two lines here.

[Guest]

Re: Sightings of references to the term "deflation"

Finster I must take it that one or two of your assertions are piffle, as you don't care to answer them in the simplest way, at every opportunity.

The affectation of disdainful silence does not communicate much of import, so much as it communicates helplessness. You have a grand unifying theory of the monetary aspect of all commodities. I have asked, at various occasions during the past year, that you clarify a simple point - if the rise of the entire CRB index is all a mirage caused by a shrinking USD unit of account, why are those who sell these commodities reaping such apparently vast real and incremented purchasing power? You have opaquely pointed to "dissertations", or better yet and more vaguely, to entire threads, leaving it up to your interlocutor to "divine" where in that thicket of convoluted arguments you intended them to locate your presumably concise, pithy answer.

When asked, "yes, but what is the short, simple version", you are mute, and you have remained artfully mute through multiple previous opportunities to clarify this same point. That's OK actually, it is your prerogative not to reply. But don't then go around reiterating your grand unifying thesis of the monetarily derived illusion of rising commodity prices. You are not prepared to reply to simple questions validating it, with simple clear answers, so please then desist from propounding the theory, as you cannot clearly explain it's holes and large contradictions. I don't put the questions forward contentiously at all. What I don't react to quite as graciously however, is the glib, dismissive silence with which such simple and pertinent questions are greeted.

[jk]

Re: Sightings of references to the term "deflation"

lukester, i have in the past credited you for your persistence in pressing the issue of peak oil here, so that finally it became officially acknowledged, albeit with the addition of the word cheap. but you have become foolishly relentless. the issue between you and finster around the price of oil is identical to the issue between fred/ej and finster around the issue of deflation. it is a matter of different time scales in my opinion. but whatever it is, by my writing this reply, i have given up on this thread being about sightings of deflation. when i next spot the word, i shall start another thread, and i hope you will do me the courtesy of respecting its defined subject.

[Guest]

Re: Sightings of references to the term "deflation"

This is rubbish JK. You want "your" thread back? Absolutely Sir. Your wish is my command. You've just given a grateful Finster yet another out from having to scare up a well thought out and robust reply to a simple and core question. It seems when you want to, you are every bit as capable of turning the good ole' boy's blind eye to the flim flam with the best of them. In case you profess puzzlement as to what I'm getting at, Finster has floated some ambitious theories. But you seem to regard any plebe that questions them as an insufferable bother, notwithstanding the questions were never graced with a plausible answer. And JK, I shall be keeping a beady eye out for your straying "off topic" on future posts, as I understand this is now a zealous concern of yours? Wouldn't you have felt far more comfortable having the leeway to occasionally go off topic here and there yourself in the future, as has been your own long practice until now? ;) BTW, I notice none of the questions I put to you were deemed to even merit a reply. You are learning Finster's high handed stile quite well! Beware of talking down to your fellow posters here JK. It is "unbecoming" to intelligent and productive discourse.

And by the way, what on god's earth does any of this have to do with Peak Oil? Do you reduce inquiries about complexity down into sound bites perhaps?

___________________

LUKESTER: [ 09-13-08 ]

"But Finster, if the CRB rise is nothing but an inflationary illusion according to you, due to the shrinkage of the USD unit of account, how is it that all the commodity exporters have gained so much raw real purchasing power?"

___________________

FINSTER: [ 09-13-08 ]

"Uhm, no Comment. Or, I don't have time for this (mishianism). Or it's off topic."

___________________

JK: [ 09-13-08 ]

"Uhm, quit hijacking my thread with specious questions. Or, I don't have time for this (mishianism). Anyway it's off topic."

___________________

JIM ROGERS [ 09-13-08 ]

"I intend to sell all my holdings in the dollar in the current rally.... As the dollar situation is likely to get worse, it will also have a positive effect on commodity prices, which are mostly dollar-denominated. But the commodity's price will go up no matter where the dollar is. A weak dollar only adds to the rise in prices and is not the major factor."

[friendly_jacek]

Re: Sightings of references to the term "deflation"

If we can please return to the topic!
Looks like deflation is not well represented in news as per the Google trend search:






Inflation concerns are much higher and just peaked:






To me, this could be a contrarian sign that we can have a lot of deflation ahead. Maybe the Faber's call of $80 crude and $600 gold is not that far off?

[Guest]

Re: Sightings of references to the term "deflation"

Contrarianism eh? Does this pile look like it's got plenty of room to grow? How much of that pile shrinking would it take to reverse "deflation" here in the US? Maybe 5%? If any of that ugly USD sludge gets repatriated it's hardly going to be making US deflation look like a safely investable trend. "Synthetic dollar short" is supposed to be a trend with some legs on it? Compared to the likelihood that 5%-10% of this accumulated sludge gets liquidated in the next two or three years? I wonder where the "synthetic dollar short" will be in three years. Take your pick. If you are a US resident (10% of that sludge repatriating sooner or later) the choices are even more clear-cut.

SIX TRILLION US DOLLAR RESERVES -- 2008.jpg

[Finster]

Re: Sightings of references to the term "deflation"

No Finster. Not good to prevaricate. Give me the devastatingly simple synopsis here in two lines. I am not a "go fetch it" monkey for you to prevaricate with here, as I've read that thread from top to toe and found only very long and convoluted "explanations" Give it to us here in two lines…

Finster I must take it that one or two of your assertions are piffle, as you don't care to answer them in the simplest way, at every opportunity…

This is rubbish JK. You want "your" thread back? Absolutely Sir. Your wish is my command. You've just given a grateful Finster yet another out from having to scare up a well thought out and robust reply to a simple and core question…

Lukester. Out of respect for the topical integrity of this thread, I posted my reply in another one. I even provided you with a link. Just the kind of simple succinct answer you demanded, too. Now if this reflected ‘piffle’ and ‘prevarication’, then after I took the trouble to write it, what are we to make of your refusal to read it, your pretense that it doesn't even exist, your posting extended diatribe against my posting style, in preference to getting your answer via a mere click of the mouse?

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