Posted on 12/24/2023 7:55:50 AM PST by millenial4freedom
Deflation is too few dollars chasing too many goods.
With a printed, fiat dollar, and a government that can issue unlimited debt, deflation is only a short-term phenomenon.
Fed.gov @$34 Trillion debt simply can not exist with deflation
Americans, particularly Wall Street, knows this and has learned - as soon as deflation hits - BUY, because its in everyone’s interest to reflate ASAP.
My great-uncle grew up dirt poor. He always told the story about how there were never any Christmas gifts, except one year, when he got an orange, which was his greatest Christmas memory. His mom died early, so siblings got spread around relatives homes. Joined the Army at 17 to get away and get 3 meals a day. Was sent to Philippines in 1940, captured by Japs, Bataan death march, POW in China, etc...
Took absolutely nothing for granted. Saved every scrap. Cleaning out his little ranch house needed 2 construction dumpsters.
PPI is pointing to deflation. CPI is already close to 0% when you calculate rent in real time instead of delayed 15 months like owners equiv rent does (opposite effect in 2021 and 2022 when inflation was massively understated). Money supply is pointing to deflation.
I see the same numbers you do.
Imho they are the “transitory” ones.
Inflation is the monster taking a little time out—getting ready to go on a feeding frenzy.
“Wallace ordered the slaughter of pigs to alleviate “overproduction”
Wallace was just a socialist.
A true Communist would have ordered the slaughter of farmers to alleviate “overproduction”.
Early and mid-stage PPI lead PPI. PPI leads CPI. Early and mid-stage PPI went parabolic in late 2020 and early/mid 2021, and it was obviously that was going to get into inflation, and it did. Early and mid-stage PPI are both down quite a bit (earlier moreso) and M2 is down 4% over the last year. Owners equiv rent is holding up inflation indexes but when this year’s flat to slightly negative rents show up in the index in a year, plus the recent drop in wholesale auto prices show up in retail, it’s not hard to imagine a scenario where deflation is a real risk.
A day of reckoning is coming for the horrendous fiscal and monetary policies since the 1960’s when LBJ decided to fight a war in Vietnam and a war on poverty at home.
Kicking the can down the road means the point at which we bite the bullet is going to be extremely painful. Best to start the process now by having the Fed stop stetting interest rates and let the market determine them.
(Took absolutely nothing for granted. Saved every scrap.)
It’s definitely what one does when the bottom falls out.
Many will find that out as the Democrats continue to destroy everything.
Yep, they will find out what "Build Back Better" really means.
Uh, no.
Luskin is talking about deflation.
And he knows the difference between deflation and disinflation.
“where deflation is a real risk”
I view deflation as a positive—would love to see it.
Exactly
For retirees largely in fixed income, deflation is good. For the rest, the economic impact of deflation is very bad. 0-2% inflation is ideal overall. Personally, I see the fed cutting rates next year but continuing QT unless deflation risk really accelerates.
“For retirees largely in fixed income, deflation is good.”
Yup—you got it.
Let us deflate our way back to 2020—then we can talk....
Really they just need six hundred, three score and six on their foreheads.
It would be rather apropos... given their absurd and blind devotion
You do that, and the economy will collapse. The losses incurred by the shutdowns were real. We papered over them with printing money to keep it afloat. Pull back the money supply by 30% to get inflation back to 2020 and you'd see 15-20% unemployment.
My father was similar.
Grew up on a farm east of Buffalo.
They were okay because at least they had food.
Told about seeing bread lines in the city
All he got for Christmas one year was a Monkey on a String.Served in MacArthurs Army Air Corp. Saw action on New Guinea and Luzon.
Came home on a hospital ship.
He never threw anything away. You may need that some day.
Merry Christmas
We both know the Federal Reserve and .gov would start inflating like crazy people to prevent even the slightest hint of recession—especially in a presidential election year—that is why deflation cannot last long.
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