Prices, Inflation/Deflation, Interest Rates & The Fed

The hyperinflationary nightmare continue on unabated. This week alone I had to load a wheel barrow with cash and push it all the way to the store to get a single loaf of bread. I don't know how much longer we can take this in America.

Oh wait, just kidding. Hope you all prepared for deflation.


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cosine

Robin
The hyperinflationary nightmare continue on unabated. This week alone I had to load a wheel barrow with cash and push it all the way to the store to get a single loaf of bread. I don't know how much longer we can take this in America.

Oh wait, just kidding. Hope you all prepared for deflation.
Perhaps a more interesting/productive conversation would be to fully define inflation and deflation. And shrinkflation and stagflation.

I tend to think of inflation as specifically "currency inflation". Meaning, if you have the same quantity of goods/services/houses/salaries/wages/etc, but you have money printing, then prices should rise somewhere, or in multiple places.

Currency deflation would then be the opposite; if we had a stable population and zero printing, then eventually some amount of dollars leave circulation, so prices may actually decrease; people will simply want or need each dollar more.

But, when we consider global supply chain shortages, computer chips, cars, lumber, other raw materials, then that suggests it is a non-currency style of deflation. I don't know what the term would be for that.

Also, if we have people leaving the labor force, simultaneously with job automation, growing populations, aging populations... I don't know what that is really called, or how all these factors interact.

The simplest expression that I did hear was a comment on a youtube vid arguing for deflation; "Money-printing during a deflationary cycle. Nuts." That simply makes me wonder how to play my cards, what will become worth more, what will become worth less.
 

MRAll134

Pelican
Also, if we have people leaving the labor force, simultaneously with job automation, growing populations, aging populations... I don't know what that is really called, or how all these factors interact.
You are partially describing stagflation here. A definition of stagflation: stagflation is characterized by slow economic growth and relatively high unemployment—or economic stagnation—which is at the same time accompanied by rising prices (i.e. inflation).
 
Perhaps a more interesting/productive conversation would be to fully define inflation and deflation. And shrinkflation and stagflation.

I tend to think of inflation as specifically "currency inflation". Meaning, if you have the same quantity of goods/services/houses/salaries/wages/etc, but you have money printing, then prices should rise somewhere, or in multiple places.
If we had a fixed money supply, there would be deflation, in EVERY sector, not just technology. It is most visible in technology because no amount of money printing can overcome that sectors deflation. Every other sector is deflationary, but not relative to fiat currency debasement. Technology has made EVERYTHING cheaper to produce. Automation has made it cheaper to produce everything from beef to cars.

There is no stopping technology or automation…less people need to be employed full time, and as time goes on, even less. If we didn’t have central banks, and had real money, everything would be much cheaper, people would make less income, but would also need to work far less. Our economy would be efficient, people would buy less junk, we would have far less waste and a much lower impact on the environment. If everything that you buy was cheaper in the future, you would wait to buy things and only buy what you needed. Instead, most things become more expensive, and people buy much more than they need, knowing they will be able to buy less in the future.

Computing power doubles every 2 years, and gets half as expensive. That is exponential growth and there is no stopping it. Take a standard sheet of paper, 0.1mm thick, and fold it in half. Then fold it again and again. It doubles in thickness with each fold. If you could fold it 50 times…Its thickness would be 113 million km— from the earth to the sun. Like it or not, AI and digital technology is going to automate exponentially more jobs in the coming years, and governments around the world just don’t understand what is happening, and don‘t know why they can’t generate inflation except in asset prices. They are stuck in a Keynesian framework that says inflation will stimulate jobs and growth, but it’s just misallocating capital.

The first country to achieve a general AI will have the equivalent of the nuclear monopoly that the United States enjoyed in the early 1950s. Then that AI will double in capability at some interval, and be self programming. The changes that follow will be beyond imagination, so that’s as far as I can speculate.
 
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Blade Runner

Ostrich
Orthodox
The simplest expression that I did hear was a comment on a youtube vid arguing for deflation; "Money-printing during a deflationary cycle. Nuts."
And why is it nuts? The productive capacity of a nation that is shrinking, the status quo of the world with supply chains that are shrinking (relative to the previous state), and massive printing equals only 1 thing - stagflation.

Your urging to define terms is the biggest single issue going. I've been telling people for over a year that "disinflation" is NOT deflation. I'm consistently amazed how hard that is for people to understand, and not stupid people either. But obviously people who don't want to be clear and honest over ideological.
 

Blade Runner

Ostrich
Orthodox
The first country to achieve a general AI will have the equivalent of the nuclear monopoly that the United States enjoyed in the early 1950s. Then that AI will double in capability at some interval, and be self programming. The changes that follow will be beyond imagination, so that’s as far as I can speculate.
There is no such thing as AI in the way that the religion of futurism suggests that it can exist.

What is really going on is indeed related to increases that can be made in robotics and overall, yes, obviating human existence as far as labor goes - at least to a great degree. The changes are being directed by very evil and/or malleable people, under the guidance of demonic forces. That's why the general idea of depopulation has been around so long, and why the tech elite speak the way they do, and why they don't care about the health or well being of (many) other people. Like all of the aims of the tech elite, most are not achievable, as the devil or demons always throw their useless idiots under the bus, in the end. It's a scary story, but it has a proper end. Unlike the evil forces believe, we can't live forever, in this world. But we live eternally elsewhere, which is also why these times are so important on a human level - that is, what humans are meant to be.
 

Blade Runner

Ostrich
Orthodox
Can you explain a bit what you mean by this? Also, I like charts, so those are good. :)
Apparently it is a hard topic to understand, :laughter:

Check out the definition of the words. Then understand that everyone uses the word deflation (which is possible in a sector, such as certain tech, as noted above) but inflation is what has been occurring for all of our lifetime, not anything near deflation. In fact, it's so much inflation that it has even offset the technological deflation that should naturally occur, which shows that it's relatively larger inflation than even considered by the "deflation" camp, which constantly misuses the term. I find it very annoying because in large part, it's actually brainless and stupid, and very obviously so.
 

Max Roscoe

Pelican
Orthodox Inquirer
This new society we have created with so many "service jobs" really no longer works under the old model of "you do a job and you earn a wage for doing it". There is simply not the demand for 8 billion jobs to be done any more. Just look at what was always the most important job in any society -- farming and agriculture. Farmers are now working with a fraction of the labor force they once were.

America is a young country, and at the time it was founded, a majority of Americans were farmers.
Today it's something like 5%.
When half the people are growing food, it makes sense that you pay them for the food they produce.

When farming no longer becomes an activity that a significant number of people do, and just comes down to "what legal entity holds title to this land and owns the capital equipment of the tractors and robots that cultivate this food, and who owns the subscription license to Monsanto for the annual crop germination" then it becomes a much different prospect. You have to believe in some extremely Jewish economic theory to still think all that money should go to one corporation that doesn't even farm and pays undocumented workers slave wages to do the physical labor that cannot be automated.

Of course, Judeo Christian free market theory will tell you that yes, whoever owns and operates the farming enterprises in the year 2030 (when you, by the way, will own nothing and love it), deserve all the money. All the money that was previously spread out among 60 or 70% of the population will then go to probably 3 or 4 corporations.

The Universal Income that Andrew Yang proposed seemed like a weird thing to me a couple of years ago, but it's a far more fair and just system than what is coming for us in the future. If society doesn't need our labor, society should at least provide citizens with a basic subsistence amount that can be used for food and shelter.

But we are entering an unsustainable system where our institutions are training people with things like Gender Studies degrees and there is zero demand for that skill, outside of another institution paying them to propagandize future generations with the same theories. These people will not have marketable skills, and they all can't pour coffee into cups (a job that will probably not exist in a few decades) so what will they all do?

There are many criticisms of China's social credit system, but it is one possible solution, as the wage / dollar system just doesn't function under this new model, and really has been collapsing ever since Nixon closed the Gold Window. Since that day, the old model has slowly been fading away, and money no longer means what it used to. It is not an asset the way it was throughout history, but instead an artificial token that special entities (governments and banks) are allowed to created freely at will. That is completely different from what money has meant throughout history until 1973.

Of course the alternative is that there is some sort of rebellion against this hellscape future, but I have yet to see it. Maybe our Chinese overlords will prevail...
 

vstk

Pigeon
The hyperinflationary nightmare continue on unabated. This week alone I had to load a wheel barrow with cash and push it all the way to the store to get a single loaf of bread. I don't know how much longer we can take this in America.

Oh wait, just kidding. Hope you all prepared for deflation.


View attachment 34017
Also, I like charts, so those are good. :)
I like charts too.

I am prepared for deflation, it could happen if we have a crisis 2008-9 style that destroys demand before inflation gets out of control. I think it is a very real possibility.

However, your palladium chart is a terrible argument for the deflationary case. It is a niche commodity mainly used in the auto industry, and its price has collapsed because of the supply issues with semi-conductors (chip shortage) and lower automobile production. In the end, this situation is inflationary.
ManheimUsedVehicleValueIndex-LineGraph.png

aKuJ5uqe


Other much more significant commodities have been having a great run. Natural gas has been parabolic for example. Take a look at this chart of the price of natural gas in Europe, it has become insane:


Energy prices everywhere have been going up up up with no major turnaround in sight (unless there is demand destruction). The US shale sector is crippled and is not reacting to the price increase like it used to.

In the end, God only knows what's coming for us.
 

Maybe somebody who's more savvy on economics than me can explain the reasoning behind these recent December articles. To me, a stellar economy by next year is an equation that just doesn't add up;

decimated restaurant industry
decimated air travel industry
decimated tourism industry
widespread border closures and quarantine requirements
utter reliance on spending packages and stimulus to save businesses. Not to bolster. Not to speed up 'recovery'. To save them.


I remember as far back as March they said that The Germ had already hit the airlines worse than 9/11 ever did. So what am I missing here? I don't see shuddering the world economy as just a shrugoff dot com bubble event that you can just saunter away from and be flush within another twelve months? I can't tell if its genuine Wall Street delusion or your typical shilling for shareholders.
I am going through this thread from the beginning, and thought this article posted here was just too priceless not to bring up as a reminder of how clueless the financial media, and mainstream economists are.
 

Blade Runner

Ostrich
Orthodox
Almost all media at this point is shilling, in one way or another.

Since 1821, 51 of the last 52 countries that went to 130% debt to GDP ratio defaulted in some way. They restructured, outright defaulted, had hyperinflation, etc. Japan is the only example, mitigated by their culture and savings ... and massive printing.

No one really wants to admit the music is going to stop, just like they don't want to admit that so many people in charge or control of our country and others around the world have really dastardly plans, and are, as a matter of fact, conspiring against most humans currently living in the world.
 

Max Roscoe

Pelican
Orthodox Inquirer
Also I believe Japanese debt is really held by Japanese pensioners. Unlike American debt which is held by foreign governments all over the world. It's a far different thing to take a bit less today in order to have more tomorrow, than it is to enter into long term securities contracts with foreign greedy capitalists.
 
I like charts too.

I am prepared for deflation, it could happen if we have a crisis 2008-9 style that destroys demand before inflation gets out of control. I think it is a very real possibility.

However, your palladium chart is a terrible argument for the deflationary case. It is a niche commodity mainly used in the auto industry, and its price has collapsed because of the supply issues with semi-conductors (chip shortage) and lower automobile production. In the end, this situation is inflationary.
ManheimUsedVehicleValueIndex-LineGraph.png

aKuJ5uqe


Other much more significant commodities have been having a great run. Natural gas has been parabolic for example. Take a look at this chart of the price of natural gas in Europe, it has become insane:


Energy prices everywhere have been going up up up with no major turnaround in sight (unless there is demand destruction). The US shale sector is crippled and is not reacting to the price increase like it used to.

In the end, God only knows what's coming for us.

Although what you say about palladium is true it's not the whole story. Demand for new cars is especially weak (hence the price in palladium). The financial media loves the chip shortage narrative but it's only partially the case. I'd also love to see a chart of used car sale volumes to see if they're as healthy as everyone who loves price-as-proxy as the best measure of demand insists. Either way you can see how things like copper, despite a biblical flood of "money printing," can't really break out of the highs of the 2000s. This is also why idiots always can be counted on to buy gold during these "hyper-inflationary" scares but are left scratching their heads over why it sells off during the always-quickly-approaching next crunch. We see the same sort of trends in corn and wheat. Really, who can honestly say $70 oil (forget about NEGATIVE oil) is somehow an indication of a global inflationary period? No, that's flatly dishonest.

It doesn't matter where you look: people who try to sell inflation are either wholly ignorant or have something to sell you. In either case, plenty of propaganda, very little analysis or specifics. THE FED INCREASED BANK RESERVES!!!!! OMG!!!! However, there's a reason few people talk about the economy anymore...it's gone. (the debt limit, once a fiasco, is nothing but a blip now and the Rs don't even pretend they care about fiscal matters anymore). Like with the constitution being a dead topic, we're just waiting for the fat lady to sing now when it comes to this over-leveraged house of cards.

I can't comment too much on the natural gas situation but this appears to be another case of willful supply chain destruction. Would you agree?
 
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Max Roscoe

Pelican
Orthodox Inquirer
Yeah I saw that weird jobs headline this morning.
For some reason the jobs report is "disappointing" despite the fact that it results in the unemployment rate declining to 4.8%.:hmm:


Of course I don't believe any of those numbers, but I do believe that they are measuring something, just not what they are reporting (ie when they say employment increases, it does, it's just that we are not at 95% employment ! Maybe it went up from 76 to 77%.

Anyway I pay a small amount of attention to this types of data, as it's related to my job in financial forecasting, and 200,000 jobs per months has been the benchmark of "normal" for a long time.

In other words, there's nothing disappointing about this. If I didn't listen to media or politics, I would think this was some good news. I was equally perplexed when the media started piling on Biden when 13 people died in Afghanistan and they turned it into a week long news event. I don't think jobs reports are that important, particularly to the average voter, but I wonder if this is being spun negatively to make Sleepy Joe look bad.

But the whole thing is absurd. If the unemployment rate is really below 5%, then how could this possibly be disappointing? Unemployment is never supposed to be zero outside of somewhere like North Korea where you are assigned a job for life.
 
For some reason the jobs report is "disappointing" despite the fact that it results in the unemployment rate declining to 4.8%.:hmm:

It's because no one serious looks at unemployment...they look at labor force participation. It hasn't changed much and is hovering dangerously too close to 50%. That's scary. Jobs haven't kept pace outside of a tepid re-opening and this despite everyone insisting it was the now-ended unemployment money causing a labor shortage. Guess what? Like I predicted earlier, that was a lie like everything else. Next we find out how bad things get when they fire a bunch of people because they won't take the vaccine. This Xmas is probably not going to be pretty. At least we can stop hearing the inflationistas cherry-pick data. :)
 

Blade Runner

Ostrich
Orthodox
We don't have to cherry pick anything. Even with your "deflationary forces" it's still just DISinflation. Notice how that still keeps rearing its head. More juice will come, less products will be available. Yeah, prices and cost of living are going to go down o_O.
 
We don't have to cherry pick anything. Even with your "deflationary forces" it's still just DISinflation. Notice how that still keeps rearing its head. More juice will come, less products will be available. Yeah, prices and cost of living are going to go down o_O.

I've been thinking a little about what you mean by disinflation and here's why I'm not sold: the covid panic was the pure deflationary collapse of the world economic engine. It was what conspiracy theorists have waited 50 years for. The elite have tried to reset the system and to some extent it did work but it also threw things into disarray. However, the data is pretty clear and stacking up: less people working, no huge bump in exports or imports, a global re-opening which is horribly weak, and a situation that continues to erode after only a year. From the bottom of the covid collapse, things look like inflation (or in your case, disinflation, if I understand you correctly) but like I just said, we all know the economy is blown out and are just scrambling for the scraps before everyone starts grabbing their dollars again and the banks constrict credit once more.
 
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