Posted on 01/30/2015 6:32:21 AM PST by Olog-hai
The eurozone experienced negative inflation for the second month in a row, according to a flash estimate published today (30 January) by Eurostat, the European Union’s statistical office.
Inflation is expected to be at −0.6%, with consumer prices falling further than economists had forecast.
The fall represents the biggest decline in prices in the history of the euro. […]
The drop was driven by the fall in energy prices (−8.9%, compared with −6.3% in December). […]
The deflationary spiral comes as Mario Draghi, the president of the European Central Bank (ECB), is trying to tackle deflation with a policy of quantitative easing. …
(Excerpt) Read more at europeanvoice.com ...
Interest rates on savings in Europe are negative. There’s deflation, while the rich keep getting richer and more powerful. Coincidence?
Deflation is when putting your cash under the mattress is a winning strategy.
There are no coincidences there.
I don’t follow the methodology the EU uses for computing inflation. My assumption, until shown otherwise, is that the EU resorts to similar voodoo math in the manner that the US does re employment, inflation & GDP.
Yep...although I predict the Euro will once again be 1 to 1 with the USD, like it should have always been. Once Greece quits pretending to care about their debt its all over.
Nothing hinges on Greece in the eurozone.
Ok, but a deflation rate of -.6% is an inflation rate of +.6%. I suspect this is a deflation rate of .6%. (8
Yes. I did not bother correcting the headline.
The problem is, we have deflation in very little areas, and inflation in others. Food prices in the US have certainly not deflated. Neither has the price for health insurance, automobiles, clothing, phone service, or college tuition.
Deflation is horrible for the overall economy, in that workers lose jobs and some people are afraid to spend money. But there are reasons the banksters, corrupt "investors", and government love inflation. It is a hidden tax on the citizenry.
Stagflation
Price deflation, in and of itself, is not harmful. It is the cause of the deflation that matters.
Price deflation caused by improvements in technology that allow more efficient production (i.e., computers over the last couple decades) is beneficial to both consumers and producers.
It is the deflation caused by government tinkering with the currency -- as is the case in Europe -- that is harmful and leads to the effects you describe.
...negative inflation for the second month in a row...with consumer prices falling further than economists had forecast... the biggest decline in prices in the history of the euro... driven by the fall in energy prices (-8.9%, compared with -6.3% in December)... as Mario Draghi, the president of the European Central Bank (ECB), is trying to tackle deflation with a policy of quantitative easing.Micromanagement isn't a good approach, either for keeping house (testify!) or cross-country banking.
Keynes taught us that “you cannot push on a string” and sometimes the string of monetary policy does nothing.
One would think that tax cuts would be the more effective solution.
Deflation and Inflation are price changes across the board in an economy and not correlated with a decline in the price of computers or tvs or an increase in the price of oil or food.
Those categories are monetary phenomenon provoked by government monetary policy not a reflection of supply/demand conditions in the economy or its parts.
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