Your link to this site made my entire week's freeping worth while. Thanks!
Posted on 10/20/2009 8:36:34 AM PDT by blam
PPI: Freezing ("Below Zero" Deflation Alert)
y Karl Denninger
October 20,2009
But I thought Bennie And The Feds programs were working?
The Producer Price Index for Finished Goods declined 0.6 percent in September, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed a 1.7-percent rise in August and a 0.9-percent decline in July. In September, at the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 0.2 percent and the crude goods index fell 2.1 percent. On an unadjusted basis, from September 2008 to September 2009, prices for finished goods fell 4.8 percent, the tenth consecutive month of year-over-year declines. (See table A.)
Eek.
Intermediate prices rose but crude goods prices declined. This shows "profit push" inflation being attempted by producers, but it's not working, as the finished goods numbers show. Ex-food-and-energy the number was also negative, down 0.1%.
Food was down 0.1% after rising at 0.5% last month, but the trend is clearly still negative. Energy, after spiking huge in August (up 8%) and generally being strong on balance all year (coming off the insane price spike in oil LAST year), was down 2.4% last month.
[snip]
(Excerpt) Read more at market-ticker.denninger.net ...
“Profit push”
Interesting phrase. It can’t work with me because I am no longer consumer oriented. I buy only what I need, and I can get stone ground oatmeal at $.49 a lb. It lasts me a LONG time for breakfasts. That’s just one example.
We even cancelled comcast. I leech off the next door businesses highly controlled, but free, wi-fi (Google image search is forced to Strict).
I even moved across the street from my corporate headquarters so I walk to work every day.
This is all in preparation for my move to “Robroy’s gulch” in central Kentucky next year. There I have my own beef and the ability to be 100% self sufficient. There is even an artesian well on my acreage.
The consensus view is that inflation is so bad that it will end life as we know it but that deflation is worse. This announcement of near zero price changes will probably be seen as worse than the others put together.
Not only such consensus is absent, but there is not a person who thinks that. There is instead a common belief that inflation will kick in in the future as a result of our fiscal and monetary policies. At the moment, as in any contraction, people are concerned with deflation.
There can be no deflation because the money supply is rising. Any price drops are just a result of the market trying to clear unsold goods in the face of low consumer demand — nothing more and nothing to fear.
Inflation is already showing itself in the prices of stocks, gold and energy commodities. This makes sense because the Fed’s new money entered the economy through the banks which are choosing to invest it rather than lend it.
As the sellers of the stocks and commodities gradually receive this new money, they, in turn, will spend it on other items whose prices will begin to rise. Voila — there’s your inflation.
plot those numbers on a graph and they’d look like the vitals chart on a patient about to receive Last Rites....
Excellent analysis. The trillions are leaking into the stock market. I’ve been watching the market for a year, and the volatility is gone. Bad news hits and the market finishes up 20. Good news hits and the market finishes down 40.
I’ve been sounding nuts to my broker and others about my theory that there’s been something like dampers in the market, or a tank of money above the market that keeps the level in the market about the same.
As the tank above the market fills with more porkulous and bail-out trillions, the level in the lower tank rises as well, which explains why there’s zero consumer spending and a 4K bump in the Dow.
Hey don't get me wrong --this isn't a bad thing, it's human nature. These same humans are actually doing a pretty good job. It's just that they're not very happy while they're doing well.
Your link to this site made my entire week's freeping worth while. Thanks!
No, I attempted to contradict what you said. You spoke of the present inflation, whereas people speak of future infltion.
"bulk of what we're getting on these threads is people don't care about anything accept that we're doomed."
Sorry if I didn't make it clear, but I was not talking of people on these thread but of financial prognosticators.
I do not know what makes people happy.
I personally prefer to face reality as it is. If the laws of economic point to future inflation, I have to acknowledge that and prepare if I can. This has nothing to do with happiness. Am I unhappy about a rain coming tomorrow? No, I don't think of it in these terms; just take an umprella when I go outside.
Exactly. While some of us happily grasp reality, you apparently see happiness and reality as being mutually exclusive --like a lot of people here.
Not at all; just different and not necessarily related. In fact, scientists are supposed to suppress emotions. I am neither happy nor unhappy about the Second Law of Thermodynamics. It is what it is and has nothing to do with my happiness. The same applies to many social and economic issues.
Ah, good. Your "I personally prefer to face reality" seemed to say that you thought 'happy' meant not "facing reality as it is" but it was not as it seemed.
Phrases like 'fool's paradise' or 'sadder but wiser' are a crock. Happiness (as in 'pursuit of happiness') is a state of mind and not a feeling. Scientists that I've worked with become more and more happy the clearer their vision of reality becomes. When I see a big number in my bank balance, I'm not happy until I've rechecked it a few times. Even if it means the correct number is less.
Not everyone sees it that way; many make a career out of misery and victim-hood. They tend to vote for higher taxes on the happily successful to bail out the unhappy failures --but that route never makes anyone better off.
Very well said, and I completely agree. You are a careful observer of human nature.
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