Posted on 05/31/2013 10:45:34 AM PDT by blam
ACHUTHAN: 'The Explanation Is Simple: Recession Kills Inflation'
Sam Ro
May 31, 2013, 1:20 PM
Lakshman Achuthan, the head of the Economic Cycle Research Institute (ECRI), continues to be convinced that the U.S. went into a recession in mid-2012.
He writes his latest commentary in the wake of today's disappointing personal income and spending report.
"Despite surging prices for homes and equities, consumer spending is contracting," writes Achuthan. "Quite simply, the wealth effect is rendered moot by languishing incomes.
"No wonder yoy U.S. imports growth has also plunged into negative territory. In the past, this has happened only during U.S. recessions."
He also thinks all this explains why inflation measures continue to come in lower than expected.
"Some are surprised that inflation has failed to take off despite massive amounts of quantitative easing," he writes. "The explanation is simple: recession kills inflation."
Read it at BusinessCycle.com.
(Excerpt) Read more at businessinsider.com ...
I wish recession effects were reflected in ammunition prices.
Who tabulates all of those economic numbers? The beurocracy that puts their thumb on the scales in the IRS, EPA, and Deptartments of Justice, Education, etc.
I don’t believe anything from them. My own eyes and experience are more reliable.
Middle and upper middle class continually gettingnsqueezed by higher taxes, tighter regulation, H1B visas driving down skilled wages, higher food and energy costs as result of Fed’s ongoing bailout of NY banksters, and continuing unemployment that is being masked by falsified government statistics.
All of this is intentional. Obama’s political problem is that the poor and the very rich are pro-socialism, but the middle and upper-middle classes are conservative. His solution: Get rid of the middle and upper-middle classes.
So if the analysis is correct, look for the following things to happen.
1) Democrats lose the White House and control of the Senate in the next couple of cycles.
2) Republicans immediately start untangling the mess and instituting free market economic reforms.
3) The economy comes roaring back
4) Pent-up inflationary pressures burst out like water through a collapsing dike
5)The country falls into a Weimar Republic period of hyperinflationary panic
6) Since they are the ones in power voters blame the GOP
7) Some populist charlatan comes along with a promise to punish the people responsible (most likely bankers) and thus begins the Great Dictatorship.
But perhaps that is the goal of our handlers?
Sometimes the business cycle has three phases following a severe recession, the recovery phase, the expansion phase, and the inflation phase. Velocity of M1 is still decreasing, so we are probably still in the recovery phase. The declining velocity is causing a decrease in aggregate demand which is offsetting the increase in demand caused by the inflation of the money supply. The rate of increase in prices is hampered by the lesser increase in demand due to the offset.
Reading the comments on these financial posts tells one why very few are successful at investing.
I was always taught that inflation was caused by too many dollars chasing too few goods and that is definitely the case with ammo.
You can have inflation without an increase in prices, because prices are determined in the market by people buying or declining to buy. If business costs go up and businesses can't increase prices, they go out of business. But there's no price increase.
I hate this, when the high-powered types writing about the economy don't even know the simplest concepts, like what inflation really is. Once you understand what inflation is, you can't be fooled and you have a better understanding of the economy than the "high-powered". Learn it, love it, live it.
I'm sure you saw how the California legislature is wanting to force people to buy a $50 dollar license to purchase ammo. I apologize for not being on topic with this thread but it's been on my mind how there seems to be an insidious effort to restrict availability. The rise in price is the result of socialist market manipulation not increased demand with suppliers unable to keep up. IMO it's much more nefarious.
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