Thread: Deflation Watch

Alas, if we just quadrupled the stimulus - or something...

However, Bullitt, we at least have Krugman in our corner

For different reasons, of course...

The smartest minds in the business are dropping prices as they know what's really going on in the economy. Don't take the false signals from the gold bugs.

I think I'll make my wishlist now and then wait a while to buy.

Sony and Samsung now face the prospect of a ‘miserable’ Christmas amid an all-out price war. In fact, forecasts from the world’s four largest TV makers signal that the industry won’t capitalize on the biggest sales quarter of the year. Analysts predict price declines of as much as 25% in 2010.

Target, the second biggest retailer behind Wal-Mart, has said it’s going to lower prices on more than 1,000 toys. Wal-Mart has responded with its own discounts.

http://www.bloomberg.com/news/2010-1...war-looms.html

http://www.cnbc.com/id/40135092
Secret Walmart Survey Shows Inflation Already Here

So, is it short term high tech price drops versus staples inflation?

Warren, I read that link in CB's thread. What are prices year over year? CNBC never looks long term. Look.... If demand was there then this scenario below wouldn't be happening.

Dunkin Doughnuts a month ago offered a free coffee to anyone on Wed. with a coupon. Burger King countered this month by offering a free coffee on Friday during breakfast hours. McDonalds countered by offering a free coffee every day for the next two weeks. (Sorry, no time for finding links.)

Bump...

I know most of us do not believe we are in a period of deflation. Housing prices going up, cost of fuel going up, stock market booming... But...

The FED is now talking about taking the punch bowl away. And, we have inflation of a point and a half. And, we have over $5 Trillion more debt to service. And, Kalefornea is unexpectedly experiencing very low 'growth'. And, Blue Model state and city gubmints are being crushed by the promises of former politicians.

Finally, it is the FED that is buying the vast majority of our Federal debt.

Winter is coming

Originally Posted by Boghie

Bump...

I know most of us do not believe we are in a period of deflation. Housing prices going up, cost of fuel going up, stock market booming... But...

The FED is now talking about taking the punch bowl away. And, we have inflation of a point and a half. And, we have over $5 Trillion more debt to service. And, Kalefornea is unexpectedly experiencing very low 'growth'. And, Blue Model state and city gubmints are being crushed by the promises of former politicians.

Finally, it is the FED that is buying the vast majority of our Federal debt.

Winter is coming

talk is just talk, check out the M2 money supply stats, they keep going up. Meanwhile, revisited Boghie's inflationdata site, Current Inflation Rate: InflationData.com ; lower than we have been since Nov 09, as of April, future back to the past? Good job bringing the thread forward again, Boghie.

It's hard to try to believe something that is counterintuitive. Especially when the coffee can's size on the shelf keeps shrinking. And the grandma looking at shelf prices says aloud "prices keep going up" in an almost confused tone. But the trusted news sources, the government and the media celebrities, tell us inflation is low and government should be borrowing for investment now because interest rates are low. It's as hard as ever to be a dumb serf. My random thoughts, not from the linked story. Global Thermonuclear Devaluation | Zero Hedge

Originally Posted by Warrenlm

It's hard to try to believe something that is counterintuitive. Especially when the coffee can's size on the shelf keeps shrinking. And the grandma looking at shelf prices says aloud "prices keep going up" in an almost confused tone. But the trusted news sources, the government and the media celebrities, tell us inflation is low and government should be borrowing for investment now because interest rates are low. It's as hard as ever to be a dumb serf. My random thoughts, not from the linked story. Global Thermonuclear Devaluation | Zero Hedge

The FED will want to see a broader base of inflation before it starts tightening the money supply. Food, energy, education, and healthcare are sectors going through inflation. Other sectors, not so much. Especially labor. What about the price of borrowing.

The FED - and us - would rather be fighting inflation. They would constrict the money supply. Deflation is tougher. The only thought they have is to inflate. That is what is happening. The FED is inflating to normalize deflation. Hopefully, the FED will allow prices to drop slowly and in a measured pace rather than just whack the deflation in the head. I think they have been pretty successful.

Originally Posted by Boghie

The FED will want to see a broader base of inflation before it starts tightening the money supply. Food, energy, education, and healthcare are sectors going through inflation. Other sectors, not so much. Especially labor. What about the price of borrowing.

The FED - and us - would rather be fighting inflation. The only thought they have is to inflate. That is what is happening. The FED is inflating to normalize deflation. I think they have been pretty successful.

If you mean they've been successful at inflating prices of things people need-like food, water, place to rent/buy, then yes they've been successful. People on fixed lower income, or simply subsisting even tho working flat out, due to insufficient income, may not agree that the success is so great. Low-income disabled vet neighbor complained to me last year about water rates going up, becoming even more a stressor on an $800/month income. Family member barely making it commuting 60 miles one way each day, leaves home 5am, doesn't get home til 7. Old beater vehicle, barely enough cash and barter resources to trade down into a more efficient alternative beater to help with gas expenses. Stagflation-yes we can.

Good points. I'm not going to disagree about food prices going up.

I think food prices are up for two reasons. First, anyone with a trading account can buy oil or metals from the comfort of their own home. Second, companies have to pay out more for retirement benefits and healthcare than they did 10 years ago. The little guy always gets hit with the tab.

Ever seen a realtor tell you that right now is not the time to buy? Never. Not even during the entire 2008 crash. Instead, it's always the same headline with housing and cars- Now is the time to buy.

60 months at 0% for a Chevy Malibu. Borrow short, lend long, but somehow lending long at these rates is profitable to somebody.
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Originally Posted by alevin

If you mean they've been successful at inflating prices of things people need-like food, water, place to rent/buy, then yes they've been successful. People on fixed lower income, or simply subsisting even tho working flat out, due to insufficient income, may not agree that the success is so great. Low-income disabled vet neighbor complained to me last year about water rates going up, becoming even more a stressor on an $800/month income. Family member barely making it commuting 60 miles one way each day, leaves home 5am, doesn't get home til 7. Old beater vehicle, barely enough cash and barter resources to trade down into a more efficient alternative beater to help with gas expenses. Stagflation-yes we can.

Alevin,

Labor is NOT inflating. It is deflating. Most of us are going to see that for the first time over the next few months. Many (Most) in the private sector have felt that pain for a number of years.

Remember the wistful thinking during the whole NSPS thang. How, exactly, were the cost of living increases going to be implemented in NSPS. I was seen as going Full Retard in 2006 (I think) when asking the HRO types about what would happen in a deflationary environment. You DumbA$$, that can't happen - see housing and wages and...

Ah, the good old days...

But, Alevin, deflation (especially spiraling deflation - which is where we were headed in 2008) is orders of magnitude worse. Salaries would drop constantly. Unemployment would rise constantly. Production would fall constantly. And some Dear Leader would show us the way out.

Our inflation is minuscule - about 1.5% overall. The real problem is that inflation is taking hold where the folks you are mentioning get hit. However, one can make the claim that those sectors are inflating because of choices we dumba$$es made. We made choices that have costs. Certainly we made well informed choices.