Deflation
So, has anybody else been watching this? I have, for reasons I can't get into. Realize that we just had an interest rate hike in this environment. I'm see real deflationary pressures here. May want to hold on to your hats.
SOURCE URL: http://www.bls.gov/news.release/cpi.nr0.htm
the energy industry is in massive deflation...result will be layoffs...bankruptcy...in oil producing countries, civil unrest and possible collapse of those govts...war...gets bad from there...
1) as debt increases
2) as interest rates rise
3) as deflation makes the value of the base debt rise
As I'm sure others will point out, deflation is primarily a concern in a fiat currency environment - especially one as heavily manipulated as the one here in the US (courtesy of the Fed).
There is no need to "manage" it and there never has been. The free market does it. Too bad the fed (et al) destroyed it.
Never happen. They are going to regulate/tax us into a collapse.
The economy is doing one of my favorite Fred Sanford things - clutching its chest, staggering back and declaring, "HERE I COME ELIZABETH! IT'S THE BIG ONE!" All because of too many years of excess regulation, taxation and debt. The chickens may be coming home to roost.
Just wonder when it will have dramatic effects on our currency and our banks.
Is there such a thing as a small bank not vested in derivatives and won't take your deposits under barny/frank???
Inflation on the other hand is good for debtors. Look what happens to home buyers with 30 year mortgages. If they do not pay it off early, the payments at the end of the 30 years are chump change compared to the initial payments. e.g. in 1955 in a case I am familiar with, a 30 year home mortgage had a payment of $65 per month when a working man was making about that per week. By the final payment in 1985, inflation had boosted his pay to around $650 per week.
Deflation is great for savers, but really tough on debtors, and our govmt has gone out of its way to make most people debtors.
so I am a tad skeptical of this report ... it's the government,
anyway. . if we take their word for it, we're doing great! -- j
p.s. my hat is welded on, since I'm going bald.
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Abaco, I think I understand your post, but please, in the simplest possible terms, relate you conclusions and how you came by them and what it all means in one paragraph. Please?
While it will reduce the incomes of governments all over the world, it will not reduce the debt.
Deflation also has a tendency to make money worthless as its based on and printed towards an inflationary environment. Deflation means that all that money out there is now more than it was before and augments the problem of over printing. To much money, more readily available than goods and services equals a collapse in the monetary system.
For those that have assets like land, gold, silver food and little or no debt the deflation economy will be a welcome thing to see come about. Everyone else, not so much so.
So according to my Iowa relatives more land went into production throughout the Midwest. Corn and Wheat primarily but hay is another major product. A lot of corn is sold south of the border and used for cattle feed, tortillas and turkey feed which in turn feed their ham production. All prices went up .and in no small amounts.
So increased land production meant increased jobs but the employee also paid higher food prices and were part of the depression part one. Who got the most of the money? Agricorps and the fuel corporations. so more 'donations' to politicians....
Here's the catch. The Ogalala sp? and other underground basins of water never having come close to being refilled now have to supply even more water.....one useless fuel produced to buy votes at a financial subsideized cost and needing one gallon of fossil fuel to produce one gallon of ethanol impacted the world, the environment and along with the housing scam created the crisis of 2008.
Deflation caused by increased production and he SW Texas new oil fields is just part of that but fuel is still double what it was at 2000. Along comes the baby boomer retirement and all of sudden no money to pay social security coming in amounts less than needed but no money. answer run the printing presses some more....inflation, devaluation, debt repudiation not counting that in COLA and unecessary over production in grains to feed a useless commodity to buy votes is in your face not put off to future generations. it's in YOUR face....