Inflaton?

[Jay]

Re: Inflaton?

The danger is not inflation or deflation. The trouble is with stagflation, (business stagnation accompanied by inflation). The rate-of-change in real growth will fall at the end of the year but the rate-of-change in inflation does not (all of which depends on the FED not changing course).

I'm pretty sure stagflation is what the Fed is hoping for if they have to choose of the three. And they do have to choose as is the nature of a debt deflation, but just may not want to admit it yet to themselves. With stagnation, stagflation, biflation or whatever you want to call it, at least the powers that be have a good shot at still holding their cards and assets. The chances they lose control are much greater in the deflation spiral scenario and especially in the high inflation (with the outside shot of hyperinflation) scenario. Its tough to pay for drones when the money is no good.

[rjwjr]

Re: Inflaton?

You still need demand to be higher than supply, right? That's the part I'm having trouble with. People who less money to spend tend to buy less, right? I just don't see demand and supply equaling out for a while.

Ever heard of stagflation? Stagnant/recessionary economy (little demand) with rising prices. My understanding is that it's less about supply and demand and much more about the amount of money in circulation. My further understanding is that the amount of money in circulation is HUGE...unprecedented.

[aaron]

Re: Inflaton?

I just had a fantasy. Next year/decade, well into our deflation spiral, I will be able to fill up my tank with $0.99 gas, buy lunch for 3 bucks, and go see a movie for 5 dollars. After that, I will get twice as many groceries to fill my new, half-price Mercedes.

Yeah right.

Hyperinflation with $100/gallon gas is equally as silly.

When the Chinese start dumping their dollars we will start to see serious inflation. In fact, it can be argued that this has already begun. Witness the recent rise in commodity prices. If the U.S. exported anything the Chinese wanted to buy, you can bet those things would be skyrocketing in price too. The CPI is a lie. Stuff NOT from China is more expensive now than it was last year. My haircut cost more, my groceries cost more, and gas is $3/gallon. My taxes have gone up. My kids summer camp costs more. My utilities rates have ALL gone up. My insurance has gone up too.

I cannot fathom deflation. It just does not jive with my life (or history).

[rjwjr]

Re: Inflaton?

impossible. that's not how inflation works. give me one example of a country where energy prices went up but prices deflated in the economy. asset prices, sure. but not commodity prices.

Amen. In our manufacturing business, when oil rose to $147/bbl last year, we had prices skyrocket on ALL materials. It takes lots of energy to produce real goods and it takes lots of energy to ship materials around the world (both incoming raw materials and outgoing finished goods). Then there are petroleum based materials, like extruded vinyls and molded plastics, that get a double whammy.

I can tell you from recent experience, as goes oil, so goes prices for most goods.

[rjwjr]

Re: Inflaton?

I just had a fantasy. Next year/decade, well into our deflation spiral, I will be able to fill up my tank with $0.99 gas, buy lunch for 3 bucks, and go see a movie for 5 dollars. After that, I will get twice as many groceries to fill my new, half-price Mercedes.

Psychologically, we yanks should simply move to Paris or London for a year, then upon our return, we'll be sooooo grateful for $3 gas and the Dollar Value Menu and $9 movie tickets and free market health care and on and on and on.

[cjppjc]

Re: Inflaton?

Psychologically, we yanks should simply move to Paris or London for a year, then upon our return, we'll be sooooo grateful for $3 gas and the Dollar Value Menu and $9 movie tickets and free market health care and on and on and on.

$9.00. Try $12.50

[fliped42]

Re: Inflaton?

I just had a fantasy. Next year/decade, well into our deflation spiral, I will be able to fill up my tank with $0.99 gas, buy lunch for 3 bucks, and go see a movie for 5 dollars. After that, I will get twice as many groceries to fill my new, half-price Mercedes.

Yeah right.

Hyperinflation with $100/gallon gas is equally as silly.

When the Chinese start dumping their dollars we will start to see serious inflation. In fact, it can be argued that this has already begun. Witness the recent rise in commodity prices. If the U.S. exported anything the Chinese wanted to buy, you can bet those things would be skyrocketing in price too. The CPI is a lie. Stuff NOT from China is more expensive now than it was last year. My haircut cost more, my groceries cost more, and gas is $3/gallon. My taxes have gone up. My kids summer camp costs more. My utilities rates have ALL gone up. My insurance has gone up too.

I cannot fathom deflation. It just does not jive with my life (or history).

We export jobs and manufacturing know how to China. That has a great value to them.

[rjwjr]

Re: Inflaton?

$9.00. Try $12.50

Freakin' New Jersey. It's still $9 here in small town Florida.