Living in a Free-Lunch World

It seems that every once in a while, we awake from a deep sleep with what appears to us to be a brilliant revelation. If we don't write them down often they will be forgotten by morning. Sometimes in the light of day we realize that they are totally ridiculous but occasionally they may turn out to be a flash of inspiration. I had one such experience a few weeks ago. Of late I have been increasingly disturbed by the growing gulf between Liberals and Conservatives. It seems that they can't find any common ground and for all intents and purposes might be living on entirely different worlds. My revelation, although perhaps not earth-shattering, was to me at least enlightening. I realized … [Read more...]

Deflation Watch: Key Economic Measures Turn South

Profits Peter Out

Last month (12 months ending January 2015)  inflation dipped below zero resulting in an annual deflation of  -0.09% rounded to -0.1% by the Bureau of Labor Statistics (BLS). The 12 months ending in February bounced up slightly to -0.03 but the BLS was able to round that up to Zero thus giving the impression that the deflation was over. But our Moore Inflation Predictor is saying otherwise. It indicates that we could be in for as much as 6 more months of deflation. And now the analysts at  Elliott Wave International have found that several key economic indicators are also turning Bearish and confirming our deflation prediction. These key indicators include: Corporate profits, Retail and Food … [Read more...]

Deflation Almost Zero

Annual Inflation Chart

The Bureau of Labor Statistics (BLS) released the inflation statistics for the month of February on March 24th. According to the official numbers there was neither inflation nor deflation for the 12 months ending in February. Technically that wasn't exactly correct. The Consumer Price index (CPI-U) in February 2014 was 234.781 and in February 2015 it was 234.722. So actually there was -0.03% inflation and as we all know negative inflation on an annual basis is called "the big D" or Deflation. However, since the BLS rounds all their results to one decimal place they have rounded it to zero, that is prices are essentially the same as one year ago.  Now before you send me nasty-grams saying … [Read more...]

Deflation Days are Here Again

Falling Inflation = Deflation

The U.S. Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI-U) data today for the month of January.  The verdict was that inflation had fallen rapidly from 0.76% in December to a slightly deflationary -0.09% for the 12 months ending in January. This is the first time since 2009 that we have seen Annual deflation although there were several times during 2014 that we saw monthly deflation. Monthly deflation (annual disinflation) means that prices are slightly lower than they were last month but still higher than a year ago, which typically happens a few times every year (generally in the 4th quarter), but this year prices began falling during the summer, indicating … [Read more...]

Annual Inflation Below 1%

Annual_Inflation_chart

The U.S. Bureau of Labor Statistics released their monthly Consumer Price Index (CPI) data on Friday January 16th for December and for the first time since 2009 reported annual inflation below 1% (although we calculated October 2013 at 0.96%). The Consumer Price Index (CPI) for December was 234.812 down from November’s  236.151 which was also down from 237.433 for October. This resulted in a monthly decrease in prices of -0.57% and an annual inflation rate of 0.76%. Overall energy on a “seasonally adjusted” basis was down -4.7% for the month and  -10.6% on an unadjusted basis for the entire year.  Fuel oil fell -7.8%  for the month (adjusted) and a whopping -19.1% annually. Gasoline was … [Read more...]

Bureau of Labor Statistics: Inflation Down

Annual_Inflation_chart_sm

The U.S. Bureau of Labor Statistics released their monthly Consumer Price Index (CPI) data on Wednesday December 17th for November and reported lower inflation. The CPI for November was 236.151 down from 237.433 for October. This resulted in a monthly decrease in prices of -0.54% and an annual inflation rate of 1.32% down from 1.66% in October. View the chart and read the full commentary on the current annual inflation rate. Although the FED has been targeting a 2% annual inflation rate, rates are currently much lower and have often been considerably higher than 2% as well. The FED has hit their 2% target a total of 6 times out of more than 300 data points. If we count all the … [Read more...]

Japanese Superman Meets Economic Kryptonite

SuperAbe

Abenomics: From Faith to Failure Why the biggest monetary stimulus effort in the world did NOT stop deflation in its tracks By Elliott Wave International When Shinzo Abe became the Prime Minister of Japan in December 2012, he was regarded with the kind of reverence that politicians dream about. He was featured in a hit pop song ("Abeno Mix"), hailed as a "samurai warrior," and featured on the May 2013 The Economist cover as none other than Superman. But in the two short years since, Abe as Superman has been struck down by the superpower-zapping force of economic kryptonite. On November 17, government reports confirmed that Japan's brief respite from a 20-year long entrenched … [Read more...]

Deflation: The Last Argument of Central Banks

Shadowstats

In today's article John Mauldin looks at "good" deflation vs. "bad" deflation, Austrian vs Monetarist vs Keynesian economics, causes of falling agricultural and manufactured goods prices, ShadowStats, hedonics, Asset Inflation Versus Price Inflation and more. ~Tim McMahon, editor Thoughts from the Frontline: The Last Argument of Central Banks By John Mauldin For a central banker, deflation is one of the Four Horsemen of the Apocalypse: Death, Famine, Disease, and Deflation. (We will address later in this letter why War, in the form of a currency war, is not in a central banker’s Apocalypse mix.) It is helpful to understand that, before a person is allowed to join the staff or board of a … [Read more...]

Inflation or Deflation? – Yes

Velocity of Money Trap

Over the years we've published a variety of articles on the inherent "tug-of-war" between inflationary and deflationary forces in the world including How can we have Inflation and Deflation at the same time? and Battle of the 'Flations both from back in 2008 and Deflation or Inflation - Which is it? in 2009 and Which is Stronger- Inflation or Deflation? in 2010. Another recurring theme has been Velocity of Money and Money Multiplier- Why Deflation is Possible and today John Mauldin will take a stab at each these critical topics once again. Understanding their interrelationships will greatly help you understand the monetary forces at work.~ Tim McMahon, editor The Flat Debt Society By … [Read more...]

Europe is Teetering on the Edge of “Japan-Style” Deflation

Disinflation

Europe: The ONE Economic Comparison That Must Not Be Named... Was Just Named The Continent is now teetering on the edge of a "Japan-style" deflation. Here's our take on it. By Elliott Wave International It's happened. The one economic comparison Europe has dreaded more than any other; the name that's akin to Lord Voldemort for investors has been uttered: "deflation." And it's not just "deflation." You can still spin that term in a positive light if you get creative enough. Say, for example, "Falling prices during deflation actually encourage consumers to spend." But once you add the following two very distinct words, there's no way to turn that frown upside down. And those words … [Read more...]