CPI drops so inflation no longer a concern...NOT (loans, 2009, wholesale)

[POhdNcrzy]

U.S. Economy: Consumer Prices, Industrial Output Drop (Update1) - Bloomberg.com


This is today's news. This is an official smoke-screen coming down now and proclaiming that "There is no inflation threat looming".

BALDERDASH.

Listen folks, we are about to discover that you can have deflation and also bad inflation concurrently as well.

I was in the store today and yoghurt is way up in price. Pepsi Cola=way up in price.

I bought some aluminum replacement parts for my bike (new chain, new cassette)= WAY up in price.


CUT THE BS. WE ARE GONNA SEE PUNISHING INFLATION HERE IN THE US.

Peter Schiff is exactly right. The US gov/central bank are gonna pay for all this bailout stuff with more dollars, not more taxes.

[chet everett]

Price increase DOES NOT EQUAL inflation.

MONEY SUPPLY is a measure of inflation.

Monetary inflation - Wikipedia, the free encyclopedia

[HappyTexan]

If you look at the numbers CPI is up for food, services and medical. Transportation and energy are down big time and that's what made the low number.

These basic items continue to go up each month.

[tallrick]

I wonder how they will say there is no inflation when oil becomes expensive again. They just make this inflation data do whatever they want.

[gwynedd1]

Anecdotes don't cut it for me. In the mid-west I don't see price increases at all.

Grocery inflation likely to ease in 2009 - Chicago Tribune

Corn prices have fallen dramatically since summer, and wheat and soybeans have plummeted from historic highs too.

Meanwhile, the price of fuel, the potion that helps turn commodities into foods and allows those foods to be ferried to grocery stores, has fallen off a cliff.

So why is grocery inflation hovering at levels not seen in almost 20 years—and will it finally ease in 2009?

Spikes in commodity costs can take six months to work their way from the farm to store shelves, economists said. That means food inflation should retreat in 2009, but not necessarily back to the levels consumers were used to seeing, agricultural economists said.

Food Prices In Wisconsin Drop Slightly In 2009 - Money News Story - WISC Madison

MADISON, Wis. -- Wisconsin's retail food prices have dipped more than 3 percent in 2009.The Wisconsin Farm Bureau conducts a quarterly survey of the average cost of 20 basic food items.For the first quarter of this year its total came out to $55.85. That's $2 less than the total in the fourth quarter of last year.Prices for dairy products were down significantly. A pound of butter is about 8 percent cheaper and a pound of mild cheddar cheese about 5 percent less.

I have also noticed nut prices like almonds and walnuts dropping and that comes from California.


Money is loaned into existence. People and many businesses cannot borrow, thus people calling for inflation back at the start of October were completely wrong.


I adjusted my expectations in March after the Fed announced they will be buying Treasuries which will slow down or perhaps halt deflation. However with no real estate debt entering the economy and shrinking revolving credit, the Fed is the only source of new money. So I went from deflation to looking at roughly flat. The bank bailouts were circular money and nothing more than fixing bank balance sheets for bank accounting rules.


If capital is diverted from the US and the world economy starts up without the US, then we will see a nasty stagflationary environment with oil prices going back up and alt energy eating up the biomass competing with food. Those inflationary fundamentals exist but only if the current financial strangled hold is lifted and the rate of capital deterioration allows pricing power.

[Icy Tea]

They'll get us one way or another. Either tax your money and take it away or make your money worth less.

[LSU Tiger Z71]

Originally Posted by chet everett

Price increase DOES NOT EQUAL inflation.

MONEY SUPPLY is a measure of inflation.

Monetary inflation - Wikipedia, the free encyclopedia

Quoted for truth.

To add, I haven't noticed any price increases really. I think its about the same or actually- better? Is it just me?

[HappyTexan]

Well next time you are in the supermarket take a look at that 1lb can of coffee. It's no longer 1lb but costs the same. It's now only 13oz.

Soda (brand name) was 4/$10 and is now 3/$10 when on sale.
Gatorade went from $.98 to $1.18
Milk went from $3.99 to $4.29
Dog food (pedigree) went from $.89 to $1.18
Lettuce went from $.98 to $1.28
(central Texas near Austin)

This is what I know offhand from food shopping every week.

[texdav]

Actually we have the same old problem facing the nation plus massive debt by government once we get the current crisis. That is why so many are saving because we have been lucky not to face 13% inflation like in the 70's recession. Many are getting their finances in order just in case; while others either can't or are trusting to luck just like those that trusted in home appreciation never ending.

[gwynedd1]

I still don't believe in anecdotes.


Mish's Global Economic Trend Analysis: Deflation Has Gone Global


We are sitting at 65% capacity.

Germany has wholesale price drops of 8%.

Wholesale prices in Germany dropped 8.0 percent in March compared with the same month last year, the biggest year-on-year decline since January 1987, the German Federal Statistical Office said Wednesday.

...

Prices of grain, seeds and feed declined 42.6 percent in the past 12 months.

Back at the start of 4th quarter 2008 I asked those seeing inflation to give me a model for inflation. All they saw was headlines about trillions with no explanation of the facility. Banks loan money into existence and they are sitting on masses of excess "reserves". There is no collateral , business plan, house, or credit worthiness to support new loans to stop deflation. For 6 months the gods in charge did nothing to stop it. In March of 2009 the Fed began to purchase treasuries and mortgages and finally started to introduce money into the system. It was easy to see the effects of doing nothing but cleanse bank balance sheets.

Now we will see how much refinancing and low mortgages rates can fill the gap. This for me is a more difficult call since doing nothing in the environment of 4th quarter 2008 meant absolutely no new money in the system and was like fish in a barrel. However this point began in March. I doubt its enough to do more than flatten it out.