Investment
Inflation/deflation
- permabear
- Jas_Jain
- Normxxx
- tigerwillow1
- permabear
- Jas_Jain
- tigerwillow1
- Jas_Jain
- tigerwillow1
- Jas_Jain
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» permabear - Hyperinflation by 2010- John Williams
http://www.shadowstats.com/article/292John Williams makes the case that hyperinflation is the outcome of the current situation because we don't have the gold standard that we had back in the 1930s, and we have a national debt today that we didn't have back in the 1930s. By contrast the Weimer republic was much more similar to today's U.S. circumstances. Thus the only way out for the government to cover its obligations will be through the printing press.
-- posted by permabear
» Jas_Jain - Where Is Deflation?
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Where Is Deflation?
"Acerbic George Department "What Deflation?"
I forgot to hand out the gold stars this week for consumers in America who are managing to keep the world's economic game of musical chairs going by sinking beyond their eyeballs in debt. Saving me a bottle of wine on a long-ago bet.
"The G.19 Consumer Debt Report out from the Fed (which they call Consumer Credit to make sounding in debt like it's good thing) shows that debt is going up at a rate over 7% per year.
"I haven't mentioned this to my deflationist pal Jas Jain because I don't want to ruin his weekend, but I have written down a note to myself to ask Jas "Where's that deflation?" when the Consumer Price Index figures come out next week. A "surprising" increase (to economic idiots) is my bet, and that ought to relaunch metals like gold and silver. We can't have gold and silver dropping and oil rising to this extent without a great chance at a straddle play....
"Meantime, here's economics unbundled for you: Debt's going up and that means INFLATION. As Jas is so fond of saying "It's the Debt, stupid!" That part he's got right, even if I may get my crack-up boom before the incipient deflation to come this winter...."
http://www.urbansurvival.com/week.htm
The consumer credit is rising at a faster rate but far more important, and larger, mortgage debt is not growing as it was. The Total Household Debt is growing at a much lower rate that was the case during 2007.
On the subject of inflation/deflation I have two Georges to contend with. Let me quote Richard Bernstein of ML, "There is lot of impatience about time lags in the economy." I was early in my estimation of when the recession would begin, but now there is no doubt that the economy is in recession. Inflation rate peaks 4-6 months into a recession and that means it is peaking during 2008Q2. The drop in inflation rate from the current rate of 4% to 0% should take nine months, plus or minus three months. Therefore, the latest target date for outright deflation that I have is 2009H1 as opposed to my earlier target date of 2008Q4.
It is easier to predict what will happen but lot harder to pinpoint the when it will happen. The YoY CPI rate will not cross the 17-year range of 1-5% (3%, average for the past 20 years, plus or minus 2%) on the upside.
Jas
-- posted by Jas_Jain
» tigerwillow1 - Government holds down inflation - NOT
In response to The Numbers Racket posted by Normxxx:
The US Treasury just increased the annual account fee for Legacy Treasure Direct from $25 to $100 per year. They explain that it's the first increase since 1994. This works out to an annualized increase of 10.4%. Any bets if this is included in the CPI?
Way to go government. Set a good example!
-- posted by tigerwillow1
» permabear - The Numbers Racket
In response to The Numbers Racket posted by Normxxx:
The numbers the government has been putting out lately have really looked almost ridiculous. How the markets can rally so decisively on numbers that really look rigged repeatedly amazes me. Listening to Bob Brinker crow once again over government numbers that support his bullish views almost make me puke.
Just a few recent examples.
Jobs: The birth/death model is used to estimate additional jobs that can't be counted by the models used. In the last report they added something like 262,000 jobs using the birth/death model. I believe it was the most ever added using this method. While the jobs number showed 20,000 lost jobs, if the birth/death model wasn't used, the number of lost jobs would have been well north of 200,000 jobs. How might the stock market have done on a day of 200,000 job losses?
Inflation: The recent CPI report last week showed a rate of .2 percent total and .1 percent core. They use seasonal adjustments to adjust the numbers based on the time of year. In the last month when food and energy prices were going through the roof, they actually showed a decline in gas prices. Hello? Did anyone on Suite 101 pay less for gas last month? And then when the focus of the media and the stock market is on the low core rate of around 2 percent a year, are these people living in the real world. Changes made to the CPI in 1983 and 1998 both adjusted down the rate that the government would show. Using preadjusted numbers inflation would be running upwards of 10 percent.
GDP: Bulls have been crowing that we haven't seen any recession because the GDP has come in at a positive .6 percent for the past two quarters. If inflation was calculated at the true rate instead of the phony 2 percent rate used by the government, we would have already seen two quarters of negative GDP growth, showing that we'd officially be in recession today. How anyone can say with a straight face that we're not in recession when we've had four straight negative job numbers (even as rigged as they already are), along with contracting industrial production, ISM, consumer confidence at 26 year lows and a housing market in depression, is beyond me.
-- posted by permabear
» Jas_Jain - Inflationists Please Note: “My Wife & I Can Have Pizza & Coke Di
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Inflationists Please Note: "My Wife & I Can Have Pizza & Coke Dinner For $2.36"
That was e-mail on Faux Business News. The guy said that he bought ten frozen pizzas for $10 and cans of Coke for 18c each. I can attest to the 18c price for a can of Coke. I personally prefer Costco pizza that feeds 4-6 people for $10.79. So the price of "Costco pizza and coke dinner" for two is more like $5. How much was it 25 years ago?
My contention is that restaurants are affected by almost all inflationary costs, including agricultural and dairy products, labor, and transportation. In every part of California I have lived, the restaurant prices are not up as much as the CPI. Amazingly, you can get better and cheaper Indian food in Silly.con Valley today than in 1980-81 when the first Indian restaurant opened.
In my case, my cost of living, excluding the age-related sickness care insurance premium, IS LOWER in nominal dollars today than in 1980-81. I consume a huge amount of written material, especially, history and classic books. Watching tennis in HD on a large flat screen TV beats going to the stadium. My current car is the cheapest and lowest repair cost car I have had since 1980.
CPI more than reflects the cost of living. Only kooks think that CPI understates the actual cost of living in the US. It may be off in a given year, or two, but then more than compensates year or two later. For example, restaurants increase prices once in few years and not every year or every two years.
Jas
-- posted by Jas_Jain
» tigerwillow1 - Inflationists Please Note: “My Wife & I Can Have Pizza & Coke Di
In response to Inflationists Please Note: “My Wife & I Can Have Pizza & Coke Di posted by Jas_Jain:
Price of DirecTV Total Choice, no locals:
Pricing as of March each year.
1999 - 29.99
2000 - 31.99
2001 - 31.99
2002 - 31.99
2003 - 33.99
2004 - 36.99
2005 - 38.99
2006 - 41.99
2007 - 44.99
2008 - 47.99
Annualized increase compounded over 9 years: 5.36%
Unadjusted CPI-U March 1999: 165.0
Unadjusted CPU-I March 2008: 213.5
Annualized increase compounded over 9 years: 2.9%
-- posted by tigerwillow1
» Jas_Jain - Re: Inflationists Please Note...
In response to Inflationists Please Note: “My Wife & I Can Have Pizza & Coke Di posted by tigerwillow1:
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I have DirecTV. The number of channels, especially, all the HD channels, is worth more than the increase in monthly fee. For example, The Tennis Channel in HD alone is worth $20 a month to me (it is included in my package for no extra charge). The point I am making is you get lot more for the fee. Just look at the sports programming. I was never able to watch as many volleyball matches before. The college women's volleyball season this year was absolutely fantastic, especially the matches between the top 8 (lot of CA teams). I would have paid PPV had it not been free in my monthly fee.
You are getting lot more for your extra money. At least I am.
Jas
-- posted by Jas_Jain
» tigerwillow1 - Re: Inflationists Please Note...
In response to Re: Inflationists Please Note... posted by Jas_Jain:
I am getting absolutely nothing for the DirecTV price increase. It the exact same package through the 9 years, and high definition adds even more to the price. They've added a few junk channels that I don't care about, while decreasing the bandwidth allocated to the mainstream channels. If hedonics were applied here they would work to lower the value because the "digital quality" has been reduced.
-- posted by tigerwillow1
» Jas_Jain - Re: Inflationists Please Note...
In response to Re: Inflationists Please Note... posted by tigerwillow1:
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OK, you have 6% annual inflation for what you get and I have less than 0% inflation for what I get and enjoy. It averages out to less than the over all CPI increase.
My friend who had DISH replaced it with an antenna and he even gets local channels in HD when they have an HD broadcast. I watched the Superbowl at his house in his home theatre and it was fantastic, the best Superbowl viewing I have had.
The quality and choices of my TV viewing has gone up 400% with little extra cost. My latest TV is at least 5 times better than my old TV.
It is all about making right choices. I know how and my cost of living is less than in 1980-81. Different strokes for different folks. I know the value of money and how to get the best bang for my buck. Born-and-bred American dopes that I personally know make bad choices and then complain.
Jas
-- posted by Jas_Jain
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