I'd like to point out that house prices are going down. Commercial real estate is already looking extremely shaky and will likely crater early next year with prices so low as to be almost unbelievable.
Some heavy manufactured goods have also gone down in price, like steel.
It is looking like there are price increases in some segments of the economy and price decreases in others. It's looking more like supply and demand are affecting prices more than deflation at the moment.
Bottom line, the currently volatile market is having a greater effect than the central bank currency manipulations.
The fact remains, inflation is driving COL through the roof. You can jimmy carter it all you want.
If the money supply really is increasing then yes it's inflation.
If the money supply is not increasing then no we do not have inflation, we have supply not catching up to demand.
Or how about this, the economy is shrinking faster than the money supply. That would look like inflation though only by default.
AP
We have the federal government spending trillions... and printing even more from thin air.
As for home prices dropping... that is greatly exajurated because the volume of homes being sold has dropped through the floor.
You can pout about steel all you want. Gold is up. Everything but energy is up.
And while I keep hearing that housing prices are down... somehow I can't find anything to buy.
I have the money. I want to buy land and or a bigger house... yet they ain't out there.
And when I investigate building one... I find that it would be more expensive than it would've been to build one 2 years ago.
'Splain that captain Deflation.
I am not taking any sides yet, this is over my head.
Why does the guy on the radio who is trying to get me to buy gold say that gold has to double to over $2000 per oz. to reach its old high adjusted for inflation?
OT warning.
Nate, you'll be pleased to hear that this weekend we purchased a gun for our boys.
Or maybe you'll be disappointed that it was only a BB gun.
He's talking about purchasing power Giraffe.
If you sold a 1oz gold coin at the previous all time high what could be purchased with it, would cost 2000 of today's dollars.
That's how much the dollar has been devalued.
Dear God... at 11 we had shotguns and .22s. Jeb's first bb gun arrived when he was 5.
Yeah, I thought so.
Still, . . . baby steps?
Yes, but that is not the point. Gold may have hit an all time high in price, but it is still down 50% in value, if that makes any sense.
And your soda pop anecdote is a poor example. The ingredients in a bottle of pop cost pennies, the bottle probably costs more.
I think the reason the price goes up is so coke can show it's shareholders that sales are growing. It is about branding power more than anything. I drink Mt. Dew or Pepsi, and I'll pay more to drink what I like, and I bet you will to. They raise that price because they can.
I guess my point is, I don't think inflation is the driving force behind soda price increases.
Yes, Jamsco, I bought my first .22 with my own money when I was 12. Like an ijit I gave it to my brother, but my he said I can get it back.
We had a family BB gun. I don't think we got that till after I already had a .22.
I am sure I was scarred by that. Probably the reason I enjoy turning cute little animals and birds into the red mist now is because I didn't get it out of my system when I was little.
All I'm saying is that I see both deflation and inflation along with some pretty extreme market flucuations all happening at the same time.
I'm not a beating a drum here, for either side. I am merely stating why I don't buy completely into the inflationsit camp. Nor do I buy completely into the deflationist camp. There are a lot of forces acting on our economy and some of them counterbalance one another, to our benefit in that it helps preserve order. But it could all crash tommorrow.
To be clear I see the dollar crashing in the near future along with most of the financial sector declaring bankruptcy. This is just straight line extrapolation and even that could be wrong in magnitude or timing.
Exactly what will happen in our future is not knowable except by God.
'Splain that captain Deflation.
Nate | Homepage | 10.08.09 - 10:19 am | #
They saw you coming. When you pull up in your escalade and talk about needing a bigger house with a 4 car garage, they do all they can to stiffle a grin. They plan to make up for previous loses with you. Don't be astonished whenthe completion time drags on way past what was promised.
I am not really sure how the deflation and inflation are cancelling each other out, but it seems to be happening. Since our money supply is now debt based instead of metal based, the mere printing of money alone may not be enough to cause inflation. Deposits in the bank that are not being loaned do not actually become part of the money supply, so we don't see inflation. But we do see the contraction of the economy arising from failed businesses and lower employment.
Why no loans? Business borrowers are waiting to see how bad Congress is going to F*** them before they add any more debt. Homeowners (those 30% who have mortgages) are having more trouble refinancing since their equity ratios have evaporated. If they walk away, they are in no position to buy again, so they become renters. Even consumer loans are down because most people are fearing some kind of economic collapse and possible unemployment, so they are buying less and paying off credit cards.
Further, all those toxic loans the banks are stuck with aren't worth the paper they are printed on. Their previous valuations (a calculated part of the money supply) was wiped away, taking money supply with it. x2 for derivatives.
Net effect is less debt = a defacto shrinking of the money supply, even though the printing presses (and electronic transfers) are going non-stop.
"Gold may have hit an all time high in price, but it is still down 50% in value, if that makes any sense. "
**sigh**
You're to smart to not get this.
Ok.. if gold is 50% down in purchasing power since 1983... why does it cost more dollars to buy the same 1 oz gold coin?
And why... is gold NOT at its all time high in OTHER currencies?
The answer is...
The dollar has been devalued more than gold has since the last all time high.
Inflation.
As for your "they charge more because they can" arguement... that's absolutely assinine because in a deflationary period no one has money... so obviously they CAN'T charge more.
Plus.. you don't see the quantity swapping if they truely can simply charge more. The price stays the same because 99 cents is all people will pay... they just give you less product.
By the by... the real answer to the question of the radio guy's claim is simple:
he's wrong.
Gold's purchasing power at the all time high back then is the exact same as it is now and always has been.
A 1 oz gold coin will by you a fine custom tailered suit.
Always has.
Always will.
Hale
There is definately a struggle going on. We're only debating which force is winning.
A 1 oz gold coin will by you a fine custom tailered suit.
Sure, but there is some fluctuation up and down.
Or are you trying to say that $850 would buy you less that $1000 today?
So the gist of it is we're fucked.
I already knew that.
I'm just surprised you're looking to buy, Nate. I would think the housing market has a lot more falling to do.
Correction:
Or are you trying to say that $850 [in 1980] would buy you less than $1000 today?
You are right Nate. Vox had a graph a few months ago showing the price of a barrel of oil versus the dollar and versus gold. The gold line was virtually horizontal over the last fifty years whereas the dollar line showed a line going sharply vertical in the last couple of decades.
Nate, the inflation/deflation conflict is like a man versus a big rubber band. The only way the man (inflation) can win is by stretching the band until it breaks, otherwise it will just snap back. If it breaks we'll have massive, perhaps hyper, inflation.
We'll see if Bernanke has the balls to snap that rubber band. Cause regardless of what you think, right now he's just stretching it.
Ben,
I've never argued that deflation doesn't happen or that it doesn't invariably follow inflation.
In fact that's part of my point.
I have been predicting consistantly that the terror TPTB have about deflation, will cause them to shit the bed and take literally any measure at all availabe to avert it... no matter how insane.
I absolutely agree its a man pushing on a rubber band.
The difference is I believe the man is insane and believes the band will never really break.
I'm not saying there will not be a deflationary collapse. My point is that its dishonest to call any collapse "deflationary" because ALL collapses are caused by inflation. The "deflationary collapse" is just the fall back to the norm from the alien artificial heights.
I understand that. I just believe that, unless Bernanke et al go even more radical with their policies, there won't be any medium to long-term inflation. It will all be very short-term, like in 2007. Any moment now, and certainly in the next few months, I expect deflation to take hold again.
Nate if your really looking to buy,
there is a farm for sale in southwest Iowa near where I grew up,
with a large home, private air strip, about 1500 acres, last I heard it was still for sale,
my brother is looking for a landlord to buy the farm then rent it to him,
here's the link,
Carbon IA farm
maybe this one is more to your liking
Mt. Ayr farm
Every sign in the world signals a real estate collapse and you're suprised I'm talking about buying?
One doesn't up and buy a farm or large house over night.
its a process that takes time boys.
So while I am not buying tomarrow... I absolutely want to be ready to buy once the collapse truely hits.
Dig?
Bond villain-like lairs take time. If one doesn't plan ahead one might end of with ill tempered sea bass rather than sharks.
we are back on the moon this morning! 2 landings both right on target.
If you call an inorganic object hitting the moon at high velocity 'landing on the moon' then I don't want to ride in a plane with you.
or a car.
Just stay away from me actually.
8 grand per acre? Wow. We thought $4500 was asinine. I realize there's a difference between an Iowa farm and a South Dakota farm.
Its amazing that the same people that claim to have driven cars all over the moon now expect us to be impressed because they managed to drop a chunk of metal in a predicted location on it.
This ain't progress dude. This is further evidence that they never went there.
"So while I am not buying tomarrow... I absolutely want to be ready to buy once the collapse truely hits."
I thought you were leaving the country? Still, I agree completely. I've been trying to convince my parents to sell before things get worse. They're old, and it will be a long time before things get better...
Athor, perhaps when Jeff says "we" he's saying he's a inorganic object? Even in that case though, you would be advised to stay away from him...
That's it. I'm gonna start stockpiling liquor before the prices go up any more.
Hard drink might be a great barter item in the coming Obamalypse...or for medicinal purposes.
A toast: To the jug-eared turd in chief, Barack Obama. The man who gave this baptist an excuse to stuff the pantry with booze.
Brother Nate ,
75 acres adjoining the Natchez Trace Parkway. Has timber, already surveyed.
Property has barn,catch pen and other structures in place. 3750/ac. OWNER IS READY TO DEAL, NOW.
Let me know, i'll e-mail you the # .
The man who gave this baptist an excuse to stuff the pantry with booze.
PORCUS | 10.10.09 - 5:27 pm | #
I thought that was a must. Yes, i'm a Baptist.
Never went to the moon?
"Proof! Probe photos of Apollo landing sites reveal to doubters that man DID walk on the Moon"
http://www.dailymail.co.uk/
scien...l#ixzz0TacdKjDv
These photos were faked, too.
/prediction
RE: deflation
Must be a localized phenomenon, as Colorado announced they are lowering the statewide minimum wage because of a decrease in the Denver-Boulder-Greeley Consumer Price Index.
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