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Why There's No Real Inflation - Yet
TMO - Money Morning ^
| 1-30-2013
| Martin Hutchinson
Posted on 01/30/2013 11:35:47 AM PST by blam
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To: blam
Since politicians hate periods of liquidation, they could encourage the same behavior here, in which case growth will continue at current sluggish rates until the Federal deficit becomes so great that nobody will buy U.S. Treasuries. Again, without a Treasury market, there will be an economic collapse. At that point, you're likely to get all the inflation you want - it's basically what happened in the German Weimar Republic in 1923.
Lots of folks have stopped buying our Treasuries - the 'solution'? We buy them. It's getting nutty...
41
posted on
01/30/2013 7:13:54 PM PST
by
GOPJ
( Revelation can be more perilous than Revolution. Vladimir Nabokov)
To: 11th Commandment; palmer; marron
"To say there is no inflation is to ignore the commodity markets."
BTTT!
Double-digit commodity inflation. The only things that haven't inflated much in price are goods manufactured overseas. So not much overall "consumer" inflation (as measured by official CPI), but plenty of "producer" inflation.
Companies getting their margins hammered by commodity inflation move to protect their margins. They cut costs anywhere they can, and that mostly means cutting payrolls and R&D budgets. These companies don't hire, don't innovate, and eventually close due to margin compression. Supply-shock happens when PPI outstrips CPI. Some people use the expression "stagflation", but I like "supply-shock" better, as it can happen even during periods of relatively low inflation (that is if you trust the numbers coming out of the BLS). Manufacturing firms are especially vulnerable, since their consumption of commodity is much higher as a percentage of overall expenses.
Anytime that red line sits higher than the blue one, it's bad news for goods producers (and the employment market).
42
posted on
01/30/2013 9:52:08 PM PST
by
CowboyJay
(Lowest Common Denominator 2012 - because liberty and prosperity were overrated)
To: Jet Jaguar
Good comments. Thanks for the ping.
43
posted on
01/31/2013 4:37:16 AM PST
by
Track9
(hey Kalid.. kalid.. bang you're dead)
To: CowboyJay
Very informative reply so thank you. I read an article a while back on actual inflation vs. core inflation. The reason for only measuring core inflation is that food and energy is seen as volatile and the theory is the two will normalize over time. I analogize it to EBITDA vs. Actual cash flow over time- eventually they will equal out. However, a study was done and found that actual inflation over time was 5% higher than core inflation. At first glance, this did not seem significant to me given the 10 year period, but apparently to much smarter statisticians this was a significant variance.
44
posted on
01/31/2013 5:33:09 AM PST
by
11th Commandment
(http://www.thirty-thousand.org/)
To: Trod Upon
If they issued the mandatory gold buyout order, would you comply? Didnt think so. Nor will your neighbors or anyone else with a brain. The only two people who know I own gold are my wife and myself and, at this point in time, neither one of us work for the government.
46
posted on
02/06/2013 11:04:53 AM PST
by
RebelTex
(Soli Deo Gloria, "To God alone the glory")
47
posted on
02/06/2013 11:29:40 AM PST
by
RebelTex
(Soli Deo Gloria, "To God alone the glory")
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