Those who believe in an inflationary outcome are 'nutters'

[ST]

Re: Those who believe in an inflationary outcome are 'nutters'

This is why people are calling those claiming cost inflation is happening to retail prices "nutters". The whole grocery store is on sale - as is every product/service in the country - and your candy company has raised the price of an impulse purchase therefore we have inflation?!

Nope, I've noticed it with many food products - reduction in sizes. And my experience conforms with the data trend:

The guys who don't see it, are looking at rate of changes - missing the forest for the trees. The sales you are referring to are a temporary effect which EJ has described in detail ad naseum.

[Verdred]

Re: Those who believe in an inflationary outcome are 'nutters'

Nope, I've noticed it with many food products - reduction in sizes. And my experience conforms with the data trend:

The guys who don't see it, are looking at rate of changes - missing the forest for the trees. The sales you are referring to are a temporary effect which EJ has described in detail ad naseum.

I still think the "sad cat chart" was better.

[Chomsky]

Re: Those who believe in an inflationary outcome are 'nutters'

Debt is not being repaid. New money only matters if the quantity of existing money being destroyed is smaller.
If you believe the economy is going to take off again and everything will be fine inflation will go off the charts. If this does not occur and we have a slow, grinding slog or further deterioration the extra money is not inflationary.
Inflation is simply not occurring at present. As someone who has money to protect I get richer every week by leaving it in the bank at 0%. Every week I can purchase more goods and services with the same amount of $$$. This is the very definition of deflation.

Uh, you might want to check this. The dollar is getting weaker and weaker.

[c1ue]

Re: Those who believe in an inflationary outcome are 'nutters'

Every week I can purchase more goods and services with the same amount of $$$. This is the very definition of deflation.

Please provide examples.

I do see prices of certain things falling down - like New York Steaks, but there have been articles noting that this is actually due to downshifts in consumer purchases as opposed to a general deflation.

The specific example was the price of chicken wings vs. chicken breasts.

Certain other services are absolutely seeing price falls as well: massages, salon treatments, clowns, etc.

But again it is unclear if this is due to downshifts or something else. Certainly SuperCuts prices have been steadily increasing...

[shiny!]

Re: Those who believe in an inflationary outcome are 'nutters'

I still think the "sad cat chart" was better.

Me too. This mess is so depressing, ya gotta love the LOLcats!

http://icanhascheezburger.com/

I go there every day. Keeps me semi-sane.

[ST]

Re: Those who believe in an inflationary outcome are 'nutters'

Debt is not being repaid. New money only matters if the quantity of existing money being destroyed is smaller.
If you believe the economy is going to take off again and everything will be fine inflation will go off the charts. If this does not occur and we have a slow, grinding slog or further deterioration the extra money is not inflationary.
Inflation is simply not occurring at present.

If you care about the instantaneous only or the present then watch CNBC and buy stocks. Who cares what is happening today or tomorrow? It's the overall trend, now a decade old that you have to look at.

Sigh, how many times do we have to explain the mechanics of stagflation? If you are married to the belief that:

roaring economy=inflation
vs.
stagnant economy=deflation
and/or you believe at all times
inflation=credit

then you might as well listen to the deflationistas, i.e. Mish who have been wrong for 10 years, and right for only 4 months - far worse a record than a stopped clock, yet has a huge following of morons who don't care to look at his record.

My suggestion is that you read everything that EJ has ever written and exam his logic and track record, then argue the points here.

[lurker]

Re: Those who believe in an inflationary outcome are 'nutters'

I picked up some Starburst candy yesterday - I was freaking shocked at the reduction in size of the pieces. Oh yeah, same price alright just a whole lot less candy. I guess I am a nutter for thinking this is stealth inflation.

Are you sure it's not just that your last pack of Starburst seemed a lot bigger because you were a kid when you bought them last ?

I've done that. I swear Curly Wurlies were twice as long when I was a kid. They seem to have improved the formula so that the chocolate doesn't just fall off onto the floor, though, so it's not all bad.

Before you badmouth Britain too much they still rule the world of candy bars IMO (and the opinion of my daughter !)

[charliebrown]

Re: Those who believe in an inflationary outcome are 'nutters'

hmmm drive by a gas station lately :-)
What was the price of oil last recession $30??

Just wait until the low dollar, raises the prices of all the stuff at wal-mart.
Oh and by the way the price of oil is in nearly every product we buy.
The manufactures can flex a little and eat som profit, but eventually they have to raise prices or go out of business.

The climate for business in the u.s. is erroding. If you had a several mil in the bank would you open up a manufacturing plant? Greens are getting more restrictive, the gvt is going to have to bite more taxes. What is healthcare going to look like? all big unknowns. Until the dust settles i think i would feel more comfortable with my money parked, until the business climate stablizes.

[GRG55]

Re: Those who believe in an inflationary outcome are 'nutters'

hmmm drive by a gas station lately :-)
What was the price of oil last recession $30??

Actually USA spot prices fell below $20/bbl for several months at the bottom of the last recession.

[Fiat Currency]

Re: Those who believe in an inflationary outcome are 'nutters'

If you had a several mil in the bank would you open up a manufacturing plant?

Yes - but not in the USA. I'm opening up 4 right now. I think it's wise to remember that the USA is not the entire global market.

[thisguy]

Re: Those who believe in an inflationary outcome are 'nutters'

....according to Adam Posen of the UK's monetary policy committee, anyhow.

A speech full of the usual self-serving central bank rhetoric, and very little mention of the true cause of the crisis.

http://www.bankofengland.co.uk/publi.../speech408.pdf



[/left]

Sure why not - I mean just about every central banker has been right on top of the situation!

Errr...

By the way Paul Tudor Jones, a macro investing legend, has joined David Einhorn and John Paulson (of shorting subprime fame) in the gold trade as he explains eloquently in his investor letter. Basically some of the top minds in the world agree, central bankers have gone wild.

http://www.fundmymutualfund.com/2009...-investor.html

[charliebrown]

Re: Those who believe in an inflationary outcome are 'nutters'

I see you are in canada. Are the plants you're opening in Canada?
How is the business climate in Canada? As unknown as it is here?
Health care spiraling out of control, Envrio-nuts truning the screws,
OSHA clamping down. Government ready to grab more of your profits?

[Fiat Currency]

Re: Those who believe in an inflationary outcome are 'nutters'

I see you are in canada. Are the plants you're opening in Canada?

One is ... but it will mostly serve a non-North American market. The other 3 are in emerging economies.

How is the business climate in Canada? As unknown as it is here?

Tough question. Many unknowns for sure. I can't speak for all of Canada (darn ;)) but I suspect it depends what sectors you are in. Canada's trade however, is heavily tied to the US - so we're definitely in this together. My read on it is ... Ontario & Quebec's manufacturing base is eroding. Most commodity businesses are doing OK for now, but will need to focus on more value-add. Oil & Gas seems to be picking up - but I would defer to GRG55 or somebody else - as we don't do much in this sector. Forestry hurting still. Agriculture seems mixed depending if you're doing livestock or crops. There are many "gifted oligopolies" in Canada. Banks, Telcos, Cablecos, Utilities etc. Most of those will be fine - as the consumer's choices are limited.

Health care spiraling out of control

Always. It's seems neither system (US/Canada) is perfect. I might cause a maelstrom - but I think we're in slightly better shape here.

Envrio-nuts truning the screws

Always - but we have a business that operates in this area and does well.

OSHA clamping down.

Always. Just another Gov't sponsored tax and necessary evil.

Government ready to grab more of your profits?

Always. But this is the area where we really shine. We don't let them. That would take way too long to explain.

How about Illinois ... what are you seeing ?

[GRG55]

Re: Those who believe in an inflationary outcome are 'nutters'

...Tough question. Many unknowns for sure. I can't speak for all of Canada (darn ;)) but I suspect it depends what sectors you are in. Canada's trade however, is heavily tied to the US - so we're definitely in this together. My read on it is ... Ontario & Quebec's manufacturing base is eroding. Most commodity businesses are doing OK for now, but will need to focus on more value-add. Oil & Gas seems to be picking up - but I would defer to GRG55 or somebody else - as we don't do much in this sector. Forestry hurting still. Agriculture seems mixed depending if you're doing livestock or crops. There are many "gifted oligopolies" in Canada. Banks, Telcos, Cablecos, Utilities etc. Most of those will be fine - as the consumer's choices are limited...

Resource sector margins are getting squeezed by the rising Canadian dollar [commodities sold in US$, labour and other operating costs in Canuck bucks] and the petroleum sector is subjected to more public consultation scrutiny before an investment can be made, as well as being a prime target in the climate change debate.

Consequently investment in the sector was falling long before the price of oil and gas spiked last year, and production - other than oil sands - is still falling steadily.