Oh yes it does! Deflation in Japan is troublesome, in the U.S. it would be disastrous.
sky high inflation coming?
- Thread starter zdreg
- Start date
I dont know but if i did express an opinion on this it would be limited and biased on
previous reactions to hawkish language or policy. (Mistakes, quickly corrected)
I am always amazed and frankly puzzled how todays markets dampen/tamp down /absorb/assimilate the same catalyst which when first released is "surprising".
Taper, Russia, sequester, revenues, oil (now), retail, employment , -GDP and so on.
ZIRP for another year,QE4 tapering smoothly, little inflationary pressure.
Market maintenance is job 1 for monetary and fiscal policy makers. Can a mild recession be denied/assimilated without volatility. Why not ? As frustrating as this is you must give them credit for supporting the big money managers willing to press their bets and make shitloads of money.
IMO it will be my fears of multiple -10% days that will end this thing leaving most on the bread lines but i know this is also wrong.
Yes, the BIS has published a few relatively hawkish papers on inflation recently...
"disastrous" because of the undisciplined masses on food stamps and living in public housing?
This is exactly the situation. They've painted themselves into a corner.
They have to either step in the wet paint or blow a hole in the wall to move the economy forward.
Inflation is here, its been here since the prop up of the stock market...
Prices have surged and not only that, but look very closely at the amount of product you get in your box of cereal, your container of yogurt or your plastic juice box.....
You are paying more and getting a lot less but most consumers are too stupid to realize it...
Bubble ben bernanke thank you for creating the next bubble and yellen keep it up because once this market reaches it peak there will be nothing left to "fix" it.
Inflation is already out of control
Prices have surged and not only that, but look very closely at the amount of product you get in your box of cereal, your container of yogurt or your plastic juice box.....
You are paying more and getting a lot less but most consumers are too stupid to realize it...
Bubble ben bernanke thank you for creating the next bubble and yellen keep it up because once this market reaches it peak there will be nothing left to "fix" it.
Inflation is already out of control
No there isn't.
We know well the usual consequences of anything more than mild deflation.
Deflation not only increases the value of money, but it increases the value of debt as well. In Japan more of the governments debt is held internally than is the case in the United States. Furthermore, in Japan , government debt held as an asset is more widely distributed among the general population than is the case in the U.S. Even though the majority of U.S. government debt is held internally, there is a significant amount of U.S. debt held by foreign interests.
The obvious consequence of deflation is that dollars borrowed are repaid with dollars having more buying power (real value) than the dollars borrowed. This increases the real value and real interest rate of the debt. [I'm intentionally ignoring increased credit risk that attends severe deflations.]
Obviously, the U.S. currency will lose its status as the World's reserve currency. But when is the question one can only guess at. Presently the world is awash in U.S. dollars. If I were a foreign central bank I wouldn't be enthusiastic about the possibility of a sudden and precipitous decrease in the demand for dollars. Could a slow, engineered loss of reserve status over several decades be accommodated without intolerable economic upheaval? I would think so.
It is interesting to note that during the recent financial crisis equity and real estate prices collapsed enough to cause a deflation in these sectors with consequent fallout in other sectors. Inflation in the overall economy hovered briefly about zero (the danger zone). Through the quick action and skill of our central bankers, the threat of a significant deflation was headed off, and a gradual recovery in the real estate sector was engineered.
Look, this can't last. Consumer discretionary stocks are already taking a hit.
Note the hit this start-up took recently: http://www.bloomberg.com/news/2014-...-bankruptcy-after-shutting-cupcake-shops.html
No one is saying WHY sales have dropped.
That's the key: sales are dropping because of less discretionary income for consumers...i.e. WAGES ARE NOT INCREASING WITH INFLATION.