Why no inflation?

Because no one in the US uses food or energy.

Seriously, have you checked the packaging of foodstuffs in the supermarket? You're getting more air in the boxes and bags. It's their way of "hiding" the inflation, but it's a pretty piss-poor one.

The only way you'd miss it is if you never had to buy anything at the market (like, you eat all the time in a free cafeteria). Maybe politicians and Bernanke do that.
 
Nazzdack and AntiTrust have the right idea, as Morganist knows. The key issue in monetary inflation, rather than mere price behavior, its the price of assets. In order for asset inflation to take hold private credit must be expanding in the aggregate... because the actual dyanamic at work in monetary inflation is the flow of capital from financial assets and money into tangible assets, and credit expansion multiplies and accelerates the flow which, along with increasing leverage, creates tangible asset inflaiton. For this dynamic to work in a way that increases the price of tangible assets private credit must expand, this is also described as increased velocity. Right now, private credit is still contracting and it has been contracting for two years. This is called deleveraging, and it is a deflationary dynamic as capital flows from tangible assets into money and money money substitutes (especially where currency money is seen as 'insecure').

The driver of deleveraging is lack of demand for new credit at the same time existing debt is being written off, written down or being paid off, or refinanced for lower interest. It is not caused by uwillingness of banks to lend in the aggregate...it is caused by private actors being unwilling to borrow and take risk, or being unable to borrow because of already declining collateral asset values that constrain required coverage.

An monetary action to increase money supply will not result in infaltion where the private sector is deleveraging...in such economies the increase in the money supply remains trapped in the government banking system as excess reserves. Where the U.S. currency is the world's reserve currency, however, the increase in U.S. money supply which does not cause U.S. inflation, can cause inflation elsewhere in the world through carry trade movement into markets where credit is expanding. That is why Brazil, Thailand, China, etc. are so concerned about inflows of dollars into their already expanding economies. That excess money which is not demanded here, does accelerate expansion of debt over there, where no doubt much of expansion will be misallocated.
 
Quote from LeeD:

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http://www.shadowstats.com/alternate_data/inflation-charts
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Good link, thanks. See how the money supply curve dropped below zero:

http://www.shadowstats.com/alternate_data/money-supply-charts
 
Quote from Random.Capital:

Stagnant incomes. Spend more money on A, means spend less money on B. Inflation on essentials, deflation on extras.
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Exactly.
There is no upward pressure on wages.
Tons of excess capacity.
 
The government changed their definition of "inflation" and the metrics they used to calculate it, which is why we don't see inflation in the government statistics. Somehow, in the last 10 years gas has gone from $1.20 to $3, and it never figures into inflation statistics. Now food prices are going up to the point where manufacturers are shrinking their packaging and charging the same price.

Yet, Bernanke is still worried about "deflation". It's insanity at its finest.

All the government cares about is keeping the banks well funded and rich. They don't care about regular people like you and me and the fact that their policies, such as debasing the dollar, is making life more and more expensive for us. As long as the money supply is low, that's all they care about. They honestly couldn't give a rat's ass that gas hits $4/gallon. It's infuriating.

They even fudge their calculations by substituting lower cost items in their metrics. For example, if the price of beef gets too high, they will substitute chicken or pork because their argument is that real consumers will stop buying beef and start buying cheaper meats. But then, of course, they're not measuring the inflation of goods at all.

It's exactly what they did with unemployment numbers as well. If you used the same measure of unemployment as during the Great Depression, we would have about 20% unemployment. However, the government conveniently removes those workers that have "given up looking for work".

All the corrupt Fed officials in their ivory towers care about is their precious "money supply", and don't care about the cost of commodities, or the fact that there are food riots around the world. At some point, there's going to be a tipping point in terms of the prices we pay and things will snowball really quickly in terms of price and we will be screwed.
 
Quote from jedwards:

The government changed their definition of "inflation" and the metrics they used to calculate it, which is why we don't see inflation in the government statistics. Somehow, in the last 10 years gas has gone from $1.20 to $3, and it never figures into inflation statistics. Now food prices are going up to the point where manufacturers are shrinking their packaging and charging the same price.

Yet, Bernanke is still worried about "deflation". It's insanity at its finest.

All the government cares about is keeping the banks well funded and rich. They don't care about regular people like you and me and the fact that their policies, such as debasing the dollar, is making life more and more expensive for us. As long as the money supply is low, that's all they care about. They honestly couldn't give a rat's ass that gas hits $4/gallon. It's infuriating.

They even fudge their calculations by substituting lower cost items in their metrics. For example, if the price of beef gets too high, they will substitute chicken or pork because their argument is that real consumers will stop buying beef and start buying cheaper meats. But then, of course, they're not measuring the inflation of goods at all.

It's exactly what they did with unemployment numbers as well. If you used the same measure of unemployment as during the Great Depression, we would have about 20% unemployment. However, the government conveniently removes those workers that have "given up looking for work".

All the corrupt Fed officials in their ivory towers care about is their precious "money supply", and don't care about the cost of commodities, or the fact that there are food riots around the world. At some point, there's going to be a tipping point in terms of the prices we pay and things will snowball really quickly in terms of price and we will be screwed.
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the increase in commodities lately is from speculation in those assets.

the classical definition of inflation looks something like this.
money supply expands without an increase in goods and services. Leads to more money chasing the same amount of goods However for this to happen wages would have to increase to be able to chase those goods up.

What were seeing now is rising commodity prices and stagnant or lower wages.Money in the consumption economy is deflating while the money in speculative economy is increasing thanks to 13trillion worth of loans by the fed.So while the difference may seem trivial to most it's important to distinguish between the two. The current situation cannot lead to hyperinflation or even be sustainable for very long. Wages must increase or prices will crash. The theory that other nation's wages have increased to overcome american wage stagnation, forgets to realize that Americans consume 80% of the worlds goods which can't be absorbed in such a short time span that encapsulates the move in commodities. Not all inflations are created equal. My view is that inflation is often misused as a blanket term for any price increase or money expansion, but we could have either one or both without inflation in the classical sense.
 
Quote from antitrust:

the increase in commodities lately is from speculation in those assets.

So while the difference may seem trivial to most it's important to distinguish between the two. The current situation cannot lead to hyperinflation or even be sustainable for very long. Wages must increase or prices will crash. The theory that other nation's wages have increased to overcome American wage stagnation, forgets to realize that Americans consume 80% of the worlds goods which can't be absorbed in such a short time span that encapsulates the move in commodities. Not all inflations are created equal. My view is that inflation is often misused as a blanket term for any price increase or money expansion, but we could have either one or both without inflation in the classical sense.
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+1
Excellent point.
The only thing that I will add is that some of the commodity inflation that we are seeing is the result of supply disruptions.
 
Quote from antitrust:

the increase in commodities lately is from speculation in those assets.

the classical definition of inflation looks something like this.
money supply expands without an increase in goods and services. Leads to more money chasing the same amount of goods However for this to happen wages would have to increase to be able to chase those goods up.

What were seeing now is rising commodity prices and stagnant or lower wages.Money in the consumption economy is deflating while the money in speculative economy is increasing thanks to 13trillion worth of loans by the fed.So while the difference may seem trivial to most it's important to distinguish between the two. The current situation cannot lead to hyperinflation or even be sustainable for very long. Wages must increase or prices will crash. The theory that other nation's wages have increased to overcome american wage stagnation, forgets to realize that Americans consume 80% of the worlds goods which can't be absorbed in such a short time span that encapsulates the move in commodities. Not all inflations are created equal. My view is that inflation is often misused as a blanket term for any price increase or money expansion, but we could have either one or both without inflation in the classical sense.
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Basically I agree with your analysis, as I've often argued that there has been far too much speculative money chasing commodities creating numerous bubbles and crashes in recent years. I felt that the move in crude oil a few years back was a case study in a self reinforcing feedback loop. The nonsensical arguments that I'd have to read about why oil at $125+ was the new reality never ceased to amaze me. People seemed to forget crude oil was trading at $10bbl in 1998. So in 6-7 years, the value went up 12-15x fold. Bullshit.

The main issue isn't that commodity prices eventually find a realistic value based on end user supply and demand, it's the simply fact that IN THE INTERIM it causes major strains on consumers, businesses etc that are forced to absorb the price increases caused by all of the speculation. It was bad enough going thru this shit 3-4 years ago, but to go thru it all again just a short time later is utterly ridiculous.

If oil isn't just a complete speculative vehicle at this point, how else are we to explain the $10 to $147 back to $38 back to $91.
 
Quote from denner:

Basically I agree with your analysis, as I've often argued that there has been far too much speculative money chasing commodities creating numerous bubbles and crashes in recent years. I felt that the move in crude oil a few years back was a case study in a self reinforcing feedback loop. The nonsensical arguments that I'd have to read about why oil at $125+ was the new reality never ceased to amaze me. People seemed to forget crude oil was trading at $10bbl in 1998. So in 6-7 years, the value went up 12-15x fold. Bullshit.

The main issue isn't that commodity prices eventually find a realistic value based on end user supply and demand, it's the simply fact that IN THE INTERIM it causes major strains on consumers, businesses etc that are forced to absorb the price increases caused by all of the speculation. It was bad enough going thru this shit 3-4 years ago, but to go thru it all again just a short time later is utterly ridiculous.

If oil isn't just a complete speculative vehicle at this point, how else are we to explain the $10 to $147 back to $38 back to $91.
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I agree, it reminds me of a feudal system were all economic surplus ( the value someone produces beyond a meager existence ) goes to the land owning nobility simply by their using force to maintain there legal claim on all land and in turn all wealth produced
 
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