Severe deflation? What deflation?

Ignoramus17646 · 2008-12-19T00:44:03+00:00

So, everyone is talking about "deflation" now. Apparently, over thelast two or three months, the CPI index has fallen by some percent permonth.``The cost of living dropped 1.7 percent last month (November), morethan economists had forecast, a Labor Department report showed inWashington.''So all the talking heads are now talking about "deflation".But let's look a little further.``Excluding food and energy, so-called core prices were unchanged froma month earlier.''We are coming off a huge price crash for commodities such as oil andsteel, with crude prices dropping by some three times. Stock marketand housing also experienced a price crash. And that left core pricesunchanged. What this means is that the Fed's money printing machine is pumping somuch money that even these huge asset shocks did not decrease the coreCPI. The supposed "deflation" is a simple reflection of a crash of thecommodity bubble.WHat does it mean going forward?1) Commodities do not have much room to fall further2) The money printing will continue unabated, as it should with "zeroto quarter percent" Fed target rate.3) Fewer goods are to be produced due to continuing economicrecession.So, more money, chasing fewer goods, without the cushion of thecontinuing commodity price declines, is going to mean that we'llexperience inflation.It may take a while for the talking heads to catch up.Inflation may be the best way out of this, which I am not fullyconvinced is correct, but in any case, I think that it is coming in abig way.In broader terms, this is a continuation of the process of "imaginarywealth" disappearing from us. Due to borrowing, and its effects thatwere not apparent, we thought that we were wealthy, whereas in factthe wealth was in part based on continued borrowing. The correction of this imaginary wealth was that first house prices fell,then stocks, and now the value of the currency.I liken this with being on an ice floe when ice is breaking and youhave to jump from one floe to another.

Dec 19, 2008 74 Replies

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john 17 years ago

They should regulate the buying of contracts to end users which would hopefully end the speculation and the driving of the cost of contracts through the ceiling. Selling contracts would stablize the price. When you get both buying and selling by speculator the price is driven up by the speculators " cornering the market" .

John

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Ed Huntress 17 years ago

I heard of that place, in recent years. I think it came up in an article five or so years ago about Chinese restaurants and their tendency to use...interesting and illegal sources of meats.

No, that one escaped me. The one I remember best, and I think it was the trigger for the article I mentioned above, was a Chinese restaurant around Somerville, on Rt. 22 or nearby, that was collecting road-killed deer. There were a lot of them in the neighborhood.

I think the lesson is, don't eat meat on a stick in Chinese restaurants.

-- Ed Huntress

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Mark Rand 17 years ago

Either torque them up well or change the regulations...

I'm trying to save the world here, not meet the bloody regulations :-)

Mark Rand RTFM

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john 17 years ago

If it tastes good, don't ask what it is.

John

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Michael A. Terrell 17 years ago

Then you are willing to let them stack the new version 25 high, next to your house?

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Michael A. Terrell 17 years ago

If it tastes good, you are in the wrong restaurant.

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Larry Jaques 17 years ago

On Fri, 26 Dec 2008 12:21:55 -0800, the infamous Gunner Asch scrawled the following:

Hell, the gov't should have bought all those for use by Katrina victims.

So, where can you buy 20-footer for a dirt-cheap price, including delivery to zip 97526? they want $4,000 for a professionally refurbished (aka: newly spray-painted) one here in GP. Feh!

-- We should take care not to make the intellect our god; it has, of course, powerful muscles, but no personality. -- Albert Einstein

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