Even with the printing presses running at full speed, and very minimal interest rates on money put out at interest, the world is suffering from a spate of DEFLATION, too few dollars chasing too many goods and services, goods and services which are just piling up in inventory at businesses which must soon either discount heavily, or close their doors. Even if they do close their doors, and the inventory is sold at a vast discount, it remains unsold to the ultimate consumer because of not just stagnant demand, but no demand at all.
The velocity of transfers of money has fallen a good deal, the pie is SHRINKING.
...services, goods and services which are just piling up in inventory at businesses which must soon either discount heavily, or close their doors. Even if they do close their doors, and the inventory is sold at a vast discount, it remains unsold to the ultimate consumer because of not just stagnant demand, but no demand at all.
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Agreed. And yet, how often is the positive economic report based on “climbing inventories”? That measures expectations and the negative report is always preceded by *unexpected*.
Nothing works. Nothing makes sense. Mandated taxes are reported as *growth in consumer spending*.
One quibble: how can one have an *inventory* of services? Services=time. Each service provider has so much time available vs.so many clients. The only way services can be *stockpiled* as *inventory* is when the number of clients declines versus the providers’ available time to deliver them. When that happens, fees must be cut. Therefore, an increased inventory of services equals less economic activity due to a declining market.
Quite. Posted my #20 before I got to yours, but looks like big trouble ahead.
Remember, deflation is also a function of the NUMBER of consumers in the market, not just the number of dollars chasing goods - which is unprecedented since Weimar.
If there are no buyers, it doesn’t matter how many dollars there are, and that’s where this policy of QE starts to high-center. They are driving out growth at the same time they are flooding the market with cheap dollars.