This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world’s foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter’s FREE 60-page Deflation Survival eBook, part of Prechter’s NEW Deflation Survival Guide. The following article was adapted from Robert Prechter’s NEW Deflation Survival eBook, a free 60-page compilation of Prechter’s most important teachings and warnings about deflation. By Robert Prechter, CMT I am tired of hearing people insist that the Fed can expand credit all it wants. Sometimes an analogy clarifies a subject, so let’s try one. It may … [Read more...]
Three Myths of Deflation and Recession
This article is part of a syndicated series about deflation from market analyst Robert Prechter, the world’s foremost expert on and proponent of the deflationary scenario. For more on deflation and how you can survive it, download Prechter’s FREE 60-page Deflation Survival eBook, part of Prechter’s NEW Deflation Survival Guide. The following article was adapted from Robert Prechter’s NEW Deflation Survival eBook, a free 60-page compilation of Prechter’s most important teachings and warnings about deflation. By Robert Prechter, CMT Myth 1: “War Will Bail Out the Economy” … [Read more...]
Why the Bailout Won’t Work
By Andrew Gordon The economy is now staring eyeball-to-eyeball with an activist U.S. government. It will legislate, reform, supervise, bully, give out money like cotton candy and get concessions in return. It will encourage technological development in environmental and other “future” industries. It will seek sources of energy other than the oil and gas we get from Mexico, Canada and OPEC. And it will put generous sums of money behind these initiatives. The Obama government emphatically does not want banks to sit on the money they get from the government. Nor do they want it to go to shareholders in the form of dividend payments. This is why I look for more companies to cut their … [Read more...]
What is so bad about Deflation?
By Tim McMahon The average annual inflation rate dropped again this month. At a monthly rate of -1.01% October's drop was touted as "the largest monthly drop on a seasonally adjusted basis since 1947 when the Bureau of Labor Statistics first started tracking seasonal adjustments" and it brought the annual inflation rate off its highs and down to a more reasonable 3.66%. November's monthly rate was almost twice as large at but it was hardly mentioned in the news. This month the annual inflation rate has dropped down virtually zero-- 0.09% with a monthly drop slightly larger than the one two months ago. Just a few months ago the annual inflation rate was 5.6% and now it is … [Read more...]
The Inflation Beast is About to be let out of its Cage
By Andrew Gordon How bad is it going to get? Our reference point is the 1930’s and the Great Depression. But people in Russia and Asia only have to recall events of a little more than a decade ago. The “Asian Contagion” actually began in Russia in 1998 when the country defaulted on its national debt. The crisis then hit Thailand and within a year had spread to all of Asia with a few exceptions (Malaysia and China being the main ones). I had a front row seat. At the time, I ran a technology-transfer business in Southeast Asia and our central office was in Jakarta, Indonesia. For a while it looked like the crisis might skirt Indonesia. But it didn’t. And when it hit, it hit with a … [Read more...]
Deflation or Hyperinflation?
By Tim McMahon, Editor The monthly inflation rate dropped like a rock for the second month in a row. Journalists touted last month's drop as "the largest monthly drop on a seasonally adjusted basis since 1947 when the Bureau of Labor Statistics first started tracking seasonal adjustments". What are they going to say this month when it is almost twice as large? Largest drop since last month? This is real live deflation on a monthly basis (although not on an annual basis... yet). Basically, deflation is falling prices (or more accurately a decrease in the money supply that results in falling prices) while disinflation is a slowing of the rate of increase in prices. Are we in a … [Read more...]
Take action in a Deflationary Environment
Editor’s Note: In the following article Robert Prechter shows you how to prepare for a deflation. By Robert Prechter, CMT The ultimate effect of deflation is to reduce the supply of money and credit. Your goal is to make sure that it doesn’t reduce the supply of your money and credit. The ultimate effect of depression is financial ruin. Your goal is to make sure that it doesn’t ruin you. Many investment advisors speak as if making money by investing is easy. It’s not. What’s easy is losing money, which is exactly what most investors do. They might make money for a while, but they lose eventually. Just keeping what you have over a lifetime of investing can be an achievement. That’s … [Read more...]
Making Preparations and Taking Action in Today’s Deflationary Environment
Editor’s Note: In the following article Robert Prechter shows you how to prepare for a deflation. By Robert Prechter, CMT The ultimate effect of deflation is to reduce the supply of money and credit. Your goal is to make sure that it doesn’t reduce the supply of your money and credit. The ultimate effect of depression is financial ruin. Your goal is to make sure that it doesn’t ruin you. Many investment advisors speak as if making money by investing is easy. It’s not. What’s easy is losing money, which is exactly what most investors do. They might make money for a while, but they lose eventually. Just keeping what you have over a lifetime of investing can be an achievement. That’s … [Read more...]
Why the Bailout Will Result in Hyperinflation
Editor's Note- In this article Olivier Garret, CEO of The Casey Report shows us the massive extent of the bailout compared to every major Government expenditure from the Revolutionary War and the Louisiana Purchase to the Iraq War in inflation adjusted terms and the results are pretty scary. Based on the magnitude of the bailout expenditures it appears Hyperinflation is already baked into the cake. You thought WWII and Iraq were expensive? You "ain't seen nothin' yet. The current bailout is larger than all the major government expenditures since the revolutionary war combined. And lest you think that is because the bailout is comparing inflated dollars against more valuable (and … [Read more...]
Stagflation – What is it?
What is Stagflation? The simple definition of Stagflation is a "stagnant economy coupled with price inflation". Thus the term Stagflation... it has nothing to do with Deer. In other words, in stagflation prices are going up while the economy is going down. The word was coined during the inflationary period of the 1970's. Under normal conditions one would expect inflation to heat up the economy i.e. increase buying demand. That is one reason the FED generally increases interest rates during periods of higher inflation. This helps to cool the economy and prevent inflation from spiraling out of control. Of course ,if you have read other articles on this site, you will know that … [Read more...]
