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What I think is that Wall Street books are increasing every quarter after quarter but I live in the real world. I am a self made entrepreneur for 18 years, gone through 3 recessions and you get a feel for consumer confidence. You look around and see the places that are making it and for how long. Slowly watching the decay of the middle class.
Yeah maybe we can fluff this economy for another year or so, but soon something has to give, possible high inflation, possible depression long term, or what the thread is asking about which is deflation that some people mention. Product sizes are shrinking year after year in order to keep up with the dollar shrinkage.
Your feel for consumer confidence is not as reliable as a real economic indicator, like consumer spending. Your feel for consumer confidence depends completely on 1) whatever industry you are in, 2) your geographic location, and 3) your own personal idiosyncrasies.
The fed is easing up on the gas pedal and economic growth is continuing, and modest inflation is continuing. Your reference to "product sizes" makes no sense without a description of the products you are talking about. The shrinking of electronics is a result of technological innovation, and is a good thing, for example. The dollar "shrinking," if you mean that it is decreasing in value relative to other currencies, is a sign of inflation, which is beneficial, if it is modest.
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Originally Posted by thatguydownsouth
I think what theyre getting at is the fact that Wall Streets revenue figures no longer benefit the middle class. The bulk of equity is owned by such a small % of people now that any increase in sales never flows down to us. If we owned the bulk of the shares in corporation then yes, we would feel this economic growth, but we don't. Look at average pay adjusted for inflation compared to stock performance, youll quickly see that economic strength has nothing to do with Americans' quality of living. This is the reason we're seeing such a disconnect between the news telling us the economy is prospering and the reality that its getting harder and harder for us to pay our bills.
I believe Lowexpectations was referring to consumer spending data, which is not Wall St. revenue, but the amount of money Americans are spending. It is up, and is a sign that people are comfortable spending more.
Income inequality is an issue--one that is decades old. It is not, in and of itself, connected to quality of living. If goods and services become cheaper, then even an inflation-adjusted decrease in income can lead to a higher quality of life. There is also the potential for technological change to increase quality of life in ways not directly connected to inflation-adjusted income or income inequality.
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Originally Posted by Northern Maine Land Man
People are withdrawing savings to buy food, fuel and toys. At the same time they are behind in home, car and credit card payments. Bank reserves are down to the point that many banks cannot issue new home loans. They simply don't have the reserves.
Toy's? Yes. Hubby says, "Hey look at this. We can buy this $225,000 airplane for only $95,000. Let's buy it." Mom says, "Oh good. We can visit the grandchildren more often" and they simply take the $95,000 out of savings. It was only getting less than 1% anyway.
I predict that the Dow and gold will cross again at $4,200. Again? Yes, they crossed most recently during the Jimmy Carter deflation when home mortgages were at 18% and inflation was at 12%. Ronald Reagan called the total of those two numbers the "misery index". The only reason we do not have galloping deflation in the economy already is that the Goldman Sachs gang in the Fed printed $7,000,000,000,000 out of nothing. That is the gorilla in the corner and nobody in the world wants to wake him up. The elders of this world know what is coming.
Bank reserves are rising steadily. The data suggest that banks are quite willing to make loans, but that households have been reluctant to take on new loans.
I believe your prediction for the Dow and gold is, well, absurd. Inflation is down around 1.5%. The base for mortgage interest is in the 4% range. The Fed has its foot on the pedal because it is the central bank, and its function is to manage the monetary system with its eye on inflation and employment goals.
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Originally Posted by blisterpeanuts
I think inflation is a lot more likely than deflation. The national debt is so high that the only way to deal with it is to inflate the currency which makes the debt seem cheaper. When we're all making $1 trillion a year, a $20 trillion national debt doesn't sound so high!
In fact, I agree with some economists who say we should put the dollar back on the gold standard. Our currency was more stable, and booms/recessions more mild, when the dollar was pegged to gold. Of course, the Great Depression happened on the gold standard, but that could happen under any circumstances, when uncontrolled stock speculation and uncontrolled lending happens. From 1939 until 1971, the United States enjoyed unparalleled growth and prosperity, admittedly fueled by wartime economies and lack of competition following WWII but we've never had comparable stability in our currency since that time.
Booms and busts were not more mild under the gold standard. The Great Depression is a sign of that. A floating currency allows a response to those booms and busts--braking when growth overheats and accelerating when growth slows or retracts. Currency stability is not a virtue in and of itself. Per arguments based on Mundell-Fleming, you can pick two: 1) fixed exchange rate, 2) free capital flows, or 3) monetary independence. All told, especially given the importance of the United States as an economic and political actor, choosing fixed exchange rate is probably a waste.
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Originally Posted by Lowexpectations
The bump would have certainly been more than 10% so you can continue to attempt to minimize the realistic possibilities. If your wages have stagnated has your skill set? I don't often find people who keep improving their skill set in a stagnated scenario. Don't drop the silver spoon excuse as it's just that an excuse
Well, we are at all-time highs in the stock market (though adjusted for time, the gains have not necessarily been great). If you converted a lot of cash into stocks during the depths, when the DOW hung around 7000, you have almost certainly done very well with that money. Money that has been held in investment accounts longer have probably gained, but the annualized increases don't look so great because of the huge losses likely incurred during the crash.
The Fed would do anything to create even a whiff of inflation, but sadly, for them, the consumer is having none of it.
Inflation would allow the Government to reduce their massive indebtedness with less valuable dollars. Every attempt thus far, generally in the form of zero cost money, has been unsuccessful .
Slowly we are approaching a turn in the road. Even with interest rates at zero, there is no demand for money. As commodity prices have fallen--especially gasoline over the past few weeks, it remains to be seen whether that will induce the consumer to spend more. By all appearance, they are happy where they are.
Deflation is a nasty problem which lurks on the horizon. Only time will tell whether it becomes a serious problem, but all indications thus far are that, as Bernanke told us before leaving office, "deflation is at least as serious an issue as is inflation." He knew of what he spoke, I believe.
The Fed would do anything to create even a whiff of inflation, but sadly, for them, the consumer is having none of it.
Inflation would allow the Government to reduce their massive indebtedness with less valuable dollars. Every attempt thus far, generally in the form of zero cost money, has been unsuccessful .
Slowly we are approaching a turn in the road. Even with interest rates at zero, there is no demand for money. As commodity prices have fallen--especially gasoline over the past few weeks, it remains to be seen whether that will induce the consumer to spend more. By all appearance, they are happy where they are.
Deflation is a nasty problem which lurks on the horizon. Only time will tell whether it becomes a serious problem, but all indications thus far are that, as Bernanke told us before leaving office, "deflation is at least as serious an issue as is inflation." He knew of what he spoke, I believe.
I agree Ted, some of those in the forum for some reason are not paying attention or solely looking at the falsely inflated market.
Your reference to "product sizes" makes no sense without a description of the products you are talking about.
Come on, you must be kidding. Everything in the supermarkets, Costco and alike have shrunken over the last 3 years. Dial soap bottle shrunk at least 3 oz. Breyers ice cream went to fake ice cream and made the containers smaller, now referred to as non dairy dessert.
I have been working with Middle class clients in 3 industries over 17 years both national and International and I prefer to look around in my fantasy land, then read the nationalized news or listen to how well the corrupt markets are doing with big box.
Just wait until the boomers retire. The hint is to look at Japan. The only saving grace is that the United States is better off than the other developed countries in both demographics and birth replacement.
I agree Ted, some of those in the forum for some reason are not paying attention or solely looking at the falsely inflated market.
Your reference to "product sizes" makes no sense without a description of the products you are talking about.
Come on, you must be kidding. Everything in the supermarkets, Costco and alike have shrunken over the last 3 years. Dial soap bottle shrunk at least 3 oz. Breyers ice cream went to fake ice cream and made the containers smaller, now referred to as non dairy dessert.
I have been working with Middle class clients in 3 industries over 17 years both national and International and I prefer to look around in my fantasy land, then read the nationalized news or listen to how well the corrupt markets are doing with big box.
Middle class clients in 3 industries is meaningless. It could mean you have a gas station. It could mean you are a gardener. It could mean you are a tax accountant. If you don't want to share. In any event, it is unlikely that your business gives you much insight into actual macroeconomic trends.
Your product size argument is purely anecdotal, and fails to recognize that consumer spending is up. In fact, when it comes to food, decreased product size would likely be the response to food price inflation. Food price inflation is both a national and global trend that has to do with increased demand (from rising global wages and population) and decreased supply (from tough droughts in major ag production regions). That is not "false inflation," but a marketing strategy for dealing with real inflation (as opposed to increasing prices outright).
Further, given America's problem with obesity, decreased food product sizes is not necessarily a bad thing.
I think inflation is a lot more likely than deflation. The national debt is so high that the only way to deal with it is to inflate the currency which makes the debt seem cheaper. When we're all making $1 trillion a year, a $20 trillion national debt doesn't sound so high!
Inflation is not more likely. Printing money does not cause inflation.
Inflation is caused by inelastic demand. You can print all the money you want.. if demand for oil dips.. the price of everything else on the planet is coming down with it.
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Originally Posted by blisterpeanuts
In fact, I agree with some economists who say we should put the dollar back on the gold standard. Our currency was more stable, and booms/recessions more mild, when the dollar was pegged to gold. Of course, the Great Depression happened on the gold standard, but that could happen under any circumstances, when uncontrolled stock speculation and uncontrolled lending happens. From 1939 until 1971, the United States enjoyed unparalleled growth and prosperity, admittedly fueled by wartime economies and lack of competition following WWII but we've never had comparable stability in our currency since that time.
The are right-wing idiots trying to sell gold, which is a horrible investment. Gold standard is inferior to fiat currency.
Actually to dollar is doing very well against other currencies and inflation has been modest
It's rising because there's a discrepancy between the actions of the central banks. QE is almost over and plans are to raise the Fed Funds rate. Other central banks have loosened their monetary policy in relation to the Fed.
In 2008-2010, the US Federal Reserve was printing money and keeping the overnight funding rate at 0% while the other central banks were raising interest rates in response to Fed-induced inflation.
The situation is now reversing. The Bank of Japan does 2x the asset purchases needed to finance the government's fiscal deficits. The ECB just annnounced a trillion euro asset purchase program after lowering interest rates below zero.
Inflation is always measured in the local currency. Inflation will be more tame here, but much higher abroad.
Middle class clients in 3 industries is meaningless. It could mean you have a gas station. It could mean you are a gardener. It could mean you are a tax accountant. If you don't want to share. In any event, it is unlikely that your business gives you much insight into actual macroeconomic trends.
Your product size argument is purely anecdotal, and fails to recognize that consumer spending is up. In fact, when it comes to food, decreased product size would likely be the response to food price inflation. Food price inflation is both a national and global trend that has to do with increased demand (from rising global wages and population) and decreased supply (from tough droughts in major ag production regions). That is not "false inflation," but a marketing strategy for dealing with real inflation (as opposed to increasing prices outright).
Further, given America's problem with obesity, decreased food product sizes is not necessarily a bad thing.
OK, that makes sense somewhat, although while decreased product sizes may help obesity, they certainly didn't lower the pricing. Yes in certain cities where populations are shifting due to job loss, tax increases, or language changes in their home cities would you agree that increased demand is purely for the essentials? Middle class folks that I know, while some do better than others, really limit the amount of weekend getaways, excessive driving or dining out far less often than they did a decade ago. In fact many have far less to spend on enjoyment and have adjusted to living smaller.
Aren't we experiencing one of the highest unemployment rates ever right now? Again not speaking of the fake numbers set forth by the news, I am speaking real numbers of people unemployed, not collecting unemployment.
Aren't we experiencing one of the highest unemployment rates ever right now? Again not speaking of the fake numbers set forth by the news, I am speaking real numbers of people unemployed, not collecting unemployment.
The "real number" of people unemployed was never included in unemployment rates.
OK, that makes sense somewhat, although while decreased product sizes may help obesity, they certainly didn't lower the pricing. Yes in certain cities where populations are shifting due to job loss, tax increases, or language changes in their home cities would you agree that increased demand is purely for the essentials? Middle class folks that I know, while some do better than others, really limit the amount of weekend getaways, excessive driving or dining out far less often than they did a decade ago. In fact many have far less to spend on enjoyment and have adjusted to living smaller.
Aren't we experiencing one of the highest unemployment rates ever right now? Again not speaking of the fake numbers set forth by the news, I am speaking real numbers of people unemployed, not collecting unemployment.
I'm not sure I can agree that increased demand is purely for the essentials. It depends on how expansively you define essentials. I would call them food, water, shelter.
Some people certainly are downsizing, and I think there are a few reasons for that:
1) Some people bought bigger than they needed in an era of easy credit.
2) A lot of boomers' kids no longer live at home, so a 3-5 bedroom residence seems an unnecessary extravagance (or even a hassle).
3) Lower living costs provide more discretionary spending money.
People are buying more efficient cars:
1) To save on fuel.
2) Because of incentives for more efficient cars.
If middle class people where you live are cutting back at this point--late 2014, then you are probably living in one of the areas most dependent on housing for its economy that has not recovered as well as other parts of the country. Florida, Nevada, Arizona, Illinois, Michigan--these states have been particularly slow to recover.
As for jobs, unemployment has fallen back under 6%, which is a significant milestone, and it has been steadily falling for years. U-6 unemployment, a broader measure of underemployment and unemployment, is also steadily falling (unemployment is also typically a trailing indicator, so you expect to see unemployment fall after you see, for example, the stock market rise.
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