Quote:
Originally Posted by UnderseaLcpl
Can't we? Why not? The inflation rate over the past 3 years says otherwise, as does the Index. It's not just about wages, it's about the total currency supply.
I figure you must know something I don't, because from where I'm standing it still looks like you've confused stimulatory Keynesian currency injection with combating deflation. If deflation was a problem, we'd see a reduction in the overall currency supply while GDP grew. What we have now is the opposite; a reduced GDP with a low growth rate and a rapidly expanding currency supply. Don't take my word for it, look at the the value of the USD against precious metals. Look at the insane state of the futures markets. Investors seem to know that they have a high inflation rate to beat if they're going to make any money, why don't you?
I'm not trying to be a jerk or anything, I'm just questioning your evaluation of the situation. It seems wrong to me. Then again, economics is your job while it's just kind of a hobby for me, so you may well know something I don't.
|
A few reasons why deflation is more of a fear than inflation. I'm not at work, so forgive me if I can't insert a bunch of nifty Bloomberg charts here:
A decreasing money supply multiplier (velocity or how often $1 is spent) as well as as a plateau in money supply growth :
tight credit availability
flat wage rates
commodity price decreases - check out the price of lumber since April, for example:
http://www.nahb.org/generic.aspx?genericContentID=527
a double dip housing recession - worst June on record for new home sales, months of supply on the market creeping back up:
restaurants are reeling -
Truck tonnage is rolling over. you work in railroads, you should be more aware than I am of the trends in cargo - I imagine you've seen declines lately :
hotel occupancy is having the worst year since the Great Depression
http://2.bp.blogspot.com/_pMscxxELHE...ancyJuly29.jpg
Check out the retailers comments in the Fed Beige Book reports - all of the anecdotal evidence bodes terrible for retail sales:
http://www.bloomberg.com/news/2010-0...vey-shows.html