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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.
I'd have to agree with you on inflation not being a primary concern right now and that what is happening in certain segments (food, medical, education) are a result of supply and demand and sticky prices rather than a general rise in price levels (rise in money supply).
More people are shopping in markets now vs. eating at restaurants, while grain and wheat prices are slow to trickle down to the consumer level. Perhaps we'll see some nice profits in grocery and like chains in their coming quarterly reports.
Industrial production capacity is running around 60-70%, wage deflation, reduced consumption, and production surplus inventory should keep inflation astray for the near future.
The thing I'm a bit unsure about is whether all the money banks are sitting on are going to be funneled back into the US (multiplied) or if it is going to go towards investment/speculations on commodities, foreign currency, and other such "hot" markets (potentially causing an artificial demand on commodities like last year), or are they going to just sit on it ("reserves") to fill the gaps that continue to pop up as households, and businesses default.
I'd have to agree with you on inflation not being a primary concern right now and that what is happening in certain segments (food, medical, education) are a result of supply and demand and sticky prices rather than a general rise in price levels (rise in money supply).
More people are shopping in markets now vs. eating at restaurants, while grain and wheat prices are slow to trickle down to the consumer level. Perhaps we'll see some nice profits in grocery and like chains in their coming quarterly reports.
Industrial production capacity is running around 60-70%, wage deflation, reduced consumption, and production surplus inventory should keep inflation astray for the near future.
The thing I'm a bit unsure about is whether all the money banks are sitting on are going to be funneled back into the US (multiplied) or if it is going to go towards investment/speculations on commodities, foreign currency, and other such "hot" markets (potentially causing an artificial demand on commodities like last year), or are they going to just sit on it ("reserves") to fill the gaps that continue to pop up as households, and businesses default.
-chuck22b
Hi chuck22b,
Yep. Spam is flying off the shelves and people rush to the doctor before they lose their jobs. We have seen shift in demand.
Your other comment is also a big stagflation risk otherwise known as currency carry trade. Banks may loan money, just not to Americans. Those dollars will make there way back here and cause inflation but not much for jobs by comparison. Low interest rates are a bank tax cut. We have been spared stagflation because the US took down the rest of the world with it.
grynedd1 said, "Those dollars will make there way back here and cause inflation but not much for jobs by comparison."
Aha! You admit it, you've seen the beast and it is really walking the streets! LOL!
I understand the deflationary concepts people are discussing, but on the other hand I understand that the buck in my pocket is losing value with each tick of the clock's hand. Can you argue my buck is gaining value? Or might be soon?
Milk went from $3.99 to $4.29
(central Texas near Austin)
.
If Milk is that price in Texas, then the state is doing something weird. The price of Milk has dramatically declined recently, everywhere I've been lately you can get a gallon for around $2. I see specials for 2 gallons for $3~$3.50 all the time too.
I've noticed food prices getting noticeably cheaper over the last 6 months or so. Not so much in the list price, but in the sale price.
Just got 3 12 packs Pepsi, and a free bag of chips for $5.97
If Milk is that price in Texas, then the state is doing something weird. The price of Milk has dramatically declined recently, everywhere I've been lately you can get a gallon for around $2. I still specials for 2 gallons for $3~$3.50 all the time too.
I've noticed food prices getting noticeably cheaper over the last 6 months or so. Not so much in the list price, but in the sale price.
Just got 3 12 packs Pepsi, and a free bag of chips for $5.97
Today a gallon of Milk was on sale for $3.39..big sign too so everyone could see. Glad it came down in price..I have kids and that's not something I want to cut back on.
Here our Pepsi was 3/$10 (12 pack)..no free chips though.
grynedd1 said, "Those dollars will make there way back here and cause inflation but not much for jobs by comparison."
Aha! You admit it, you've seen the beast and it is really walking the streets! LOL!
I understand the deflationary concepts people are discussing, but on the other hand I understand that the buck in my pocket is losing value with each tick of the clock's hand. Can you argue my buck is gaining value? Or might be soon?
Hi POhdNcrzy,
There is risk down the road of inflation yes but thus far there has been no driver for it and it seems some people don't realized the best sheering of the sheep is during the deflationary process built into the system. Ultimately we will return to inflation but then that is how the system is designed. The Fed may feign helplessness in the face of inflation but I don't believe it. The Fed can crush inflation anytime it chooses.
Today a gallon of Milk was on sale for $3.39..big sign too so everyone could see. Glad it came down in price..I have kids and that's not something I want to cut back on.
Milk prices have been very odd lately..
In Ohio, our milk prices are 2 gallons for $3.89, or $1.99 a gallon, if I go 1 hour out to my PA home, its $3.89 a gallon..
Issue, PA regulates the price of milk, Ohio does not..
Milk prices have been very odd lately..
In Ohio, our milk prices are 2 gallons for $3.89, or $1.99 a gallon, if I go 1 hour out to my PA home, its $3.89 a gallon..
Issue, PA regulates the price of milk, Ohio does not..
Over in the Rural and Small Town forum there's a post about milk prices.
Seems the bottom is falling out and cheaper milk is coming in from Canada.
That would explain some of the price fluctuations.
Falling food prices, huge over-supplies in numerous goods, high unemployment, lack of credit. All of that speaks of inflation. I better buy gold tomorrow.
Well it looks like posters here on CD-F have various definitions of "inflation".
Some seem to view it narrowly as a carefully defined official government statistic.
Others such as myself are doing "back of the envelope" calculations and making "real world" observations.
This latter layman's approach is nonetheless not invalid or without merit.
I ask again: Can anyone argue that the dollar in my pocket is NOT decreasing in value with every tick of the clock?
Can you argue deflation will get so bad that my dollar will actually increase in value?
I don't think so folks.
Here is a salient article about inflation/deflation with respect to the housing bubble in the U.S.: Why Housing Is Not Coming Back
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