Inflation on the Way Out (bankrupt, wholesale, union, real estate)

[Waterlily]

WASHINGTON – Wholesale prices in October experienced the biggest one-month drop on records that go back more than 60 years, illustrating the impact falling energy prices and fears of a prolonged recession can have on inflation.

Wholesale prices dropped by a record 2.8 percent last month.

Read the rest of it here. Wholesale prices plunge, easing inflation concerns - Yahoo! News (http://news.yahoo.com/s/ap/20081118/ap_on_bi_go_ec_fi/economy;_ylt=AqSGjkAN9iE_jPpBJw3mxLSyBhIF - broken link)

I am hoping prices will go back to normal for most things now. I filled my car up with gas with a $20.

[GregW]

I can only hope deflation wrings the excess out of the economy instead of allowing the inflation that covered the profiteering. I will not be harmed if my house decreases in value because I do not intend to sell it. It was never a financial asset, it was and is a home and thus an expense. We need major price drops to bankrupt the speculators and drop prices to a sustainable level.

[tallrick]

The money masters are fighting deflation with all they can. The currency will inflate and that's a fact. My hope is that enough people convert their currency to hard assets and then wait out the mess. I love the idea that local governments are hurting and will have to lay off people. Getting rid of powerful monopoly unions is another bonus. Hopefully the economic crisis finally clamps down on real estate speculation and buries it for good. The fundamentals are agriculture, mining and manufacturing. Build on these and the rest will fall in place. Low home values are a benefit because they free up income from workers to invest or spend instead of burning it on mortgage interest and property taxes. The lower home prices go the better the economy will be. Falling energy prices are like an economic stimulus package. Instead of investing in residential or retail real estate that capital should go to new energy production.

[The CMR]

The deflationary period we are in right now will only last a year or two and then you will see hyperinflation.

US officials are opening the floodgates, creating dollars at an astounding rate. See the Monetary Base chart at http://research.stlouisfed.org/fred2/series/BASE. The Monetary Base is the most high velocity money, the high-powered stuff that feeds through to the other measures of money supply and, eventually, causes prices to rise in the economy.

Once the US gives up trying to protect the dollar they will dump it into the world economy and inflation will rear its ugly head again.

Do not be fooled by what you read in the Main Stream Media since it is filled with lots of smoke n mirrors.

[hindsight2020]

What he ^^^^^said. You haven't even seen the impact that 700B will do once the circulation comes full circle. Gas prices are not a complete indicator of your full inflation cost. We still live under a very inflated currency, look at home prices, auto prices, savings rates......deflation, yeah right!

[Stratford, Ct. Resident]

Originally Posted by tallrick

Low home values are a benefit because they free up income from workers to invest or spend instead of burning it on mortgage interest and property taxes.

I'll agree that reduced home values are beneficial to your investing/spending part of the equation, but it has no effect on taxes. If tax revenue declines, it still has to come from somewhere and you're never going to escape that.

[GregW]

Tallrick - We need more and more powerful unions if we are ever going to force the business managers to ever pay us our fair share. Unions should have positions on the corporate boards to be informed of the business plans and expectations. If the government provides money it also should be on the boards. Business must not longer be allowed to be managed in secret. All deals must be public, open and honest.

If businessmen want secrecy they can be sole proprietors and put their fortunes where their mouths are.

The economy needs a massive deflation in prices of homes, commodities and equity stocks before it will straighten out. Wages, except executive salaries and bonuses, should remain the same to transfer purchasing power to the buyers.

[baystater]

[quote]

Originally Posted by GregW

Tallrick - We need more and more powerful unions if we are ever going to force the business managers to ever pay us our fair share. Unions should have positions on the corporate boards to be informed of the business plans and expectations.

Be careful GW (no pun intend) Unions can be very good for the common worker...yes that's for sure. I'm for workers rights......but look a the UAW. Really they are not better than any other lobbyist group. Are they really looking out for the common worker? Or are the higher up's in the union trying to hold on to as much of their power as they can? I'd say they're do both, but more so on the latter. Unions are good and they should exist but we must temper that with the knowledge that power intoxicates. And for a time I would say that some of the unions became too powerful for their own good...to the point of destroying some businesses and themselves.

If the government provides money it also should be on the boards. Business must not longer be allowed to be managed in secret. All deals must be public, open and honest.

If businessmen want secrecy they can be sole proprietors and put their fortunes where their mouths are.

Very much agreed. Our money our rules.

The economy needs a massive deflation in prices of homes,

I actually very happy that homes are losing value left and right. I was very concerned for a time that younger people would never be able to afford a home again......at least not without going into major hock. This just should not happen in a country with as many open spaces as America has. Granted if you want to live in NYC or San. Fran. then you have to be willing to pay to play. But overall a home in my opinion should be a affordable price for most people (2 x or 3x income I think is fair.)

commodities and equity stocks before it will straighten out. Wages,

Stock and commodities are always tough to judge for inflation deflation. That because the prices are so liquid and for the most part emotions rule those markets. I mean, yes, things are heading down...for now. But that can change and change rather quickly. I personally think Oil will probably be turning around soon enough because there is a finite supply and for now we and pretty much the rest of the world is addicted to the stuff.

except executive salaries and bonuses, should remain the same to transfer purchasing power to the buyers.

Well....again it's tough. Basically these guys (or their lawyers) tell the market what they think they are worth and the market decides whether they agree with it or not. Look these executives are trying to squeeze as much as they can out of the market as can. And I think that is fair. I think most of us try to get the most out of a deal/situation as possible when we can. So I really can blame them for that.
Look I honestly don't think a lot of CEO and the like are going to get any bonuses this year and perhaps take a pay cut as well. And perhaps companies that accept money from the government (AIG) should/can be leaned not not to pay bonuses and perhaps cut pay. But for the others well the shareholder can decide what happens to their pay and bonuses.

[tallrick]

I distrust organized and estabilshed unions backed by legislation. In today's economy it is cheaper to relocate where unions are not an issue and continue manufacturing. My experience with unions has been that they are corrupt and suck money from workers while doing nothing. I believe that the only way to improve working conditions if by setting and enforcing standards through the marketplace backed up by constitutional legislation. Any group of workers should be free to form a union and not be fired. But business owners should be to terminate employment at any time if there is no contract with an employee. Also the union presence makes it difficult to terminate or demote unproductive employees. If the Government got out of our way employees who are unsatisfied with their salaries could start new competing businesses and overtake the greedy former employers. The Government would have to purge itself of special interests and concentrate on keeping the market open and as free as possible. That cannot happen with our current lowlife system.

[paperhouse]

Originally Posted by The CMR

The deflationary period we are in right now will only last a year or two and then you will see hyperinflation.

US officials are opening the floodgates, creating dollars at an astounding rate. See the Monetary Base chart at http://research.stlouisfed.org/fred2/series/BASE. The Monetary Base is the most high velocity money, the high-powered stuff that feeds through to the other measures of money supply and, eventually, causes prices to rise in the economy.

Once the US gives up trying to protect the dollar they will dump it into the world economy and inflation will rear its ugly head again.

Do not be fooled by what you read in the Main Stream Media since it is filled with lots of smoke n mirrors.

I expect to see a lot of companies going bankrupt in 2 years. Big ones. And the government won't have the political will to intervene. The Fed will have to start writing these loses off thereby eliminating all this extra money they've been injecting. That's the only way they will be able to protect the dollar. It won't be pretty.