Posted on 03/11/2013 8:22:24 AM PDT by blam
I remember blog posts from the day that nothing could stop the stock market run. Transition years later and you hear comments like the 4th quarter -.1% GDP drop was the best negative drop ever. It has since been revised upwards to +.1%.
There is lots of cash sloshing around in various areas. People with crappy credit and no savings can buy homes and cars at relatively low interest rates. It got tight for a while, but it is back to SNAFU. If the s**t goes sour, the FED will buy the bad paper..
Deflation is over. Housing bottomed and liquidity is increasing.
Jim Rogers misses yet another call.
I can sort of see the argument for both - inflation and deflation.
Inflation - printing presses working 24/7 and a government that would make a drunken sailor blush.
Deflation - why do interest rates keep going down and banks anxious to sign people up for loans that have rates that would have been unthinkable in all of our lifetimes? If the case for runaway inflation was so solid, it seems like everyone would want to take out a loan that could be paid back with monopoly money and no one would want to make such a loan. Yet that is obviously not the case.
I guess one day we’ll know how this movie turns out.
We just *had* 6 years of deflation. Housing. Employment. Stocks. Salaries.
Now, after all of that time and deflation, we have a recovery. Stocks up. Employment up. Liquidity up.
Jim Rogers has gotten economics backwards both times...6 years ago and now today.
I get that and you may well be right.
However.
The banks are still lining up to lend you money at what - 3.6%?
http://www.zillow.com/mortgage-rates/
Admittedly the rates have nudged up just a bit. But still - if the inflationary case is so iron-clad then this is not rational behavior on the part of the lenders.
Like I said - you may well be right - I certainly wouldn’t bet against it. But it does seem odd that people are advertising to give you money hoping for a 3.6% annual return on those dollars.
It seems the debate is one or the other. That is not how things work.
We will have and are having inflation of essentials. There will be deflations of non essentials. Money is looking for a place to land right now.
We will have and are having inflation of essentials. There will be deflations of non essentials. Money is looking for a place to land right now.
One thin I liked about Elizabeth Warren was her speech about real inflation and how people were being crushed by it, even though it “technically” didn’t exist. ONe of the areas of inflation that is absolutely killing people is the increase in taxes.
I am not using the word inflation according to its correct definition (increase in money supply) but rather as a description of people’s money getting them less stuff.
My point ,and I think yours, is that very few of these articles point out we will have BOTH inflation and deflation, and that distracts us from the whole truth. But once that is admitted, there is no solution to present except the “invisible hand” mentioned in the Wealth of Nations.
Minor inflation is normal. Leave it to the Internet to speculate that minor inflation means hyper-inflation.
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