Skip to comments.There Are No – Financial – Black Swans
Posted on 06/27/2014 2:00:40 PM PDT by blam
June 27, 2014
Oh Japan, what are you doing, where are you going? As Japanese consumer prices rose 3.4% in May (and I do wish people would stop calling this inflation, it is not and never will be), consumer spending was down -8.9% That is from a year earlier, so it has nothing to do with the April 1 tax hike! Its an insane number when you think about it, and its the direct result of Abenomics tightening the thumb screws. With the population having seen their savings collapse, their wages move way down, and now rising prices for food and other basics. While the government and central bank are spending with unparalleled abandon, and pension funds are moving into riskier assets, away from government bonds, which have that same central bank as their only buyer left. Is it also going to purchase all the bonds the pensions funds will bring into the market? Frankly, how can it not?
As for the US, Lance Roberts at STA sums it up in just a few words:
The Great American Economic Growth Myth
the economic prosperity of the last 30 years has been a fantasy. While America, at least on the surface, was the envy of the world for its apparent success and prosperity, the underlying cancer of debt expansion and declining wages was eating away at the core. The only way to maintain the standard of living that Americans were told they deserved, was to utilize ever increasing levels of debt. The now deregulated financial institutions were only too happy to provide that credit as it was a financial windfall of mass proportions.
When credit creation can no longer be sustained, the process of clearing the excesses must be completed before the cycle can resume.
(Excerpt) Read more at marketoracle.co.uk ...
Black Swan = Commie Care.
I know of only 2 definitions of inflation, increases in prices or increases in money supply. This seems to imply yet a third, since prices in Japan are rising and the central bank is printing.
Anyone have an idea of what he means here? Is he including credit growth as part of the money supply inflation?
No matter what definition he uses, I think he is dead wrong on 'never will be' inflation, as hyperinflation is a political choice, and a reasonably popular one through history.