Posted on 12/27/2014 5:36:48 AM PST by Kaslin
Could we be entering into a golden period where inflation is not only not an issue, but prices are falling in so many key areas of day to day life that it amplifies income even though wages aren't rising?
The short answer is yes, and it's what the Fed has been working toward for years. The other question is has this reward been worth the risk?
That answer remains to be seen. Critics, including myself, frown upon the way money printing makes the dollar weak and eventually leads to major inflation. But, today the dollar is strong and prices are in free fall. It's not just crude, but things like apparel and used cars. Only electricity, which the White House warned would necessarily move higher as a consequence of killing the coal industry, is still edging higher. And while plenty of homemakers will point to things like higher beef prices, it's hard to deny cheap gas and other things aren't having an impact.
Last month, consumers spent money faster than they earned it and dipped into savings to make it happen. Blind confidence? Certainly its disturbing, but it's what the architects of money printing have been seeking.
I'm only going to remind everyone there is a threat of deflation even as the dynamics of oil and gasoline used has changed from the past. We aren't going to base any investments on it because I'm not sure it's different this time, but right now it looks different.
Right now, we're basing investment strategy on this window in time a burgeoning golden period that needs one key ingredient of higher wages to move into the next level. Maybe we dodge deflation and later in 2015, the worry is too much money is chasing too few goods. In such a scenario, it feels real good and lots of money can be made in the market. For those that think Fed policy got the market to this level- wait until it goes into overdrive and the S&P is trading at a PE of 23 or more.
So, we ride the wave for now and into 2015.
For example, H Clinton meeting with Russian negotiators with a big red button that was supposed to represent.....a reset in relations. They laughed and ridiculed her for what they perceived to be a sophomoric stunt and gross ineptitude.
Negotiations with Iran, they've played us like a cheap fiddle. We believe lavishing Iranian negotiators with U.S. appeasement, relaxing of sanctions they will see us as kinder, gentler and lean in on the table and whisper a conciliatory tone and begin falling in line.
These countries are our enemy. They see America as belligerent, domineering on the world stage and they want nothing more, nothing less than to see America fall fro world dominance.
We think they think like we do......that's what will be our greatest disadvantage moving into 2015.
Buckle your seatbelt, 2015 will prove to be a bumpy year at home and abroad.
Food is a major factor in my family’s budget too. Every food item’s price is soaring. Helps negate the break on gasoline.
My 14 year old son, with Christmas money burning a hole in his pocket, bought 1 pair of jeans yesterday for $50. He told me they had jeans that cost a lot more than that.
Keep telling my Better Half if one of us would stop eating, we could save some money. Better Half has challenged me to ‘go first’
Looking at incomes, they have decreased the past few years. So even if some prices have dropped, and the key ones have risen such as food, families and individuals have less money to spend. So at best, everything remains on the same level.
The problem is that economists live in the make believe worlds of their various economic models. Perhaps the best place to put all these economists would be in a little stretch of area in Florida referred to as “Fantasy Land”.
Yup.
Falling prices destroy sales. Why should I buy today any item whose price is dropping (if not a necessity) when it will be chearper tomorrow?
Which destroys an economy and all business, and is a downward spiral that feeds itself and gov cannot stop.
That’s why governments fear it far more than inflation.
The computer hardware industry has been in a deflationary spiral since 1980. People still buy pc’s and other devices knowing that in a a year or two a newer better cheaper one will be on the market. So falling prices don’t always hurt sales.
Maybe not so directly with computer hardware.
Commodities like OIL and GAS are a different story.
I have a 16 gallon fuel tank. How long can I “hold out” for lower gas prices. A day?
Will you need to replace the computer in a day or two?
When your tires are bald, the washer wont wash and your clothes thread bare you are going to by new tires, a Maytag and clothes regardless of their price 2 months from now.
You go buy this things in your fantasy need world so you can CLAIM that your "jacked around" POV makes sense.
Deflation is not a bad thing.
He must not have kids in college or have health care insurance. Or eat very much.
Not if its a modest deflation.
It’s actually a transfer of wealth from the Government to the Middle Class. The opposite of inflation.
And the reduction in energy prices is due to technology, not monetary policy.
They are trying to take credit for something they had nothing to do with and use it to justify more inflation.
The short answer is yes, and it’s what the Fed has been working toward for years.
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Oh please. The Fed along with the federal government has been using statistics to commit fraud. What’s the price of ground beef again?
A good, well made suit can be had for the price of a one ounce gold coin.
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I have a tough time finding stores that will take gold as payment. Exact change is a hassle unless it’s converted to dollars.
And the reduction in energy prices is due to technology, not monetary policy.
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Plus oil prices were being held artificially high. How else can the quick decrease in prices be explained? It’s not like the technology showed up all of a sudden.
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