The oil price drop is not inflationary. It will cause other prices to rise but that is not in itself inflation. There is a lot of inflation in the system but most of that monopoly money has gone into the stock market. Some prices rising while other prices fall is absolutely NOT inflation, unless, of course you got your economics education from a Keynesian survey course on the way to getting your MBA.
When the stock market bubble bursts then all prices outside of that will rise rapidly as the inflation that is already extant flows out of the NASDAQ and NYSE into the general economy where we actually buy stuff like food and clothes.
Agreed.
When you survey the World, you can clearly see that virtually every major economy is fighting DEFLATION !!!!
They are fighting this with the ONLY tool they have which is with INFLATION by printing money.
The "Race to the Bottom" is still in play but it's not working.
There are two types of "Inflation", one is from excessive economic growth and the other from excessive amounts of money.
There's only one type of "DEFLATION" and it's a bitch. It's a cycle of less that when it takes hold is a negative feedback loop.
No amount of money, regardless of what Keynes says, can fix this. The only thing the FED can do is try and buy sometime.
