I must be getting old. Things seem to change awfully quickly. It seems like just yesterday that gasoline was well over $4.00 a gallon and inflation was 5.6%. It was July 2008 and inflation was the hot topic, everyone was worried about costs climbing exponentially. It seemed like every time I went to the store things cost more. Oil was a speculator’s dream and a car owner’s nightmare. And then came the crash. Oil prices came crashing down along with the stock market and the banks. The big news was deflation. The media was beating the drum about how bad deflation was and how this was the first deflationary period since 1950. Funny, I didn’t hear anyone at the gas station or the … [Read more...]
Why Deflation is in the Cards
By James Stephenson Deflation is not just cost of living, but also declines in assets values and debts. Deflation started in 2008 with declines in stock prices down (40%), houses (20%) and commercial real estate. In a credit crisis, falling prices trigger more selling as we saw in late 2008. As people scramble for cash, falling asset prices actually reduce the supply of potential liquidity or cash. Don't be fooled by the "bear market rally" which will end. As the credit contraction continues, prices will be slashed to stimulate sales at any cost and deflation will be seen in cost of living and consumer prices. The "problem" is too much debt built up over 25 years - up 80% since … [Read more...]
Deflation: Micro vs. Macro
Deflation By Joshua Burnett If you’re anything like me, one of the problems you run into when trying to convince someone that the hyperinflation scenario will occur is an argument that revolves around us currently being in a deflationary period. People (and those involved with the economy and stock market especially) have a hard time seeing looming hyperinflation (that might occur as soon as a year and a half away) when what they’re currently seeing is… deflation. But wait a second; how in the wide world of sports are we seeing deflation when we’ve been printing money like our lives depend on it? Let’s return to market fundamentals, and the ever-present difference between macro and … [Read more...]
Deflationary Forces Hit the Movies
Deflationary Forces- On March 4th 2009 the New York Times ran an article entitled, "Theater Chain Begins Recession Special: $1 Popcorn and Sodas" talking about Carmike Cinemas instituting their own "stimulus plan". In an effort to help flagging weekday sales the theater chain is cutting those outrageous concession stand prices. Normally during tough times people will cut back on discretionary spending perhaps opting for a night at home with Netflix rather than a night out at the theater. And this is what seems to be happening during weekday nights. However, during weekends quite the opposite is happening. It seems that receipts on weekends are actually up 17% so far in 2009 over … [Read more...]
Deflation and Depression through the Years
By Tim McMahon, Editor Deflation has cropped up at various times throughout the nineteenth and twentieth centuries. Overall since 1913 when the Bureau of Labor Statistics began tracking inflation we have had 22 years that had one or more months when the annual inflation rate was negative (i.e. deflation). Most of those are clumped into larger deflationary periods. The six major deflationary periods are: January 1921 - February 1923 26 months July 1924 - November 1924 5 months July 1926 - November 1933 7 ½ years (with only 5 positive months and 5 zero inflation months.) March 1938 - January 1940 18 months May 1949 - June 1950 … [Read more...]
6 Questions about the Financial Crisis
March 11, 2009 Elliott Wave International, receives thousands of questions every year from web site visitors and subscribers on their free Message Board. Here the company shares 6 of the recent critical questions on the financial crisis and 6 answers provided by their professional analysts. For more free questions and answers or to submit your own question, visit Elliott Wave International’s Message Board. Q: Can increased government spending help stop the crisis? What do you think about the new mortgage bailout plan – or bailouts and proposals for additional government spending in general? The opinions on whether or not this will ultimately work seem so divided... … [Read more...]
Can the Federal Government Really Stop a Deflation?
The Last Bastion Against Deflation: The Federal Government 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 Now that the downward portion of the credit cycle is firmly in force, further inflation is … [Read more...]
What is so bad about Trade Protectionism?
By Tim McMahon "As the bill moved through Congress, formal protests from foreign countries flooded into Washington, eventually adding up to 200 pages. Both houses voted aye nonetheless. While the legislation sat on the President's desk, 1,028 American economists called for a veto. Herbert Hoover made it the law of the land anyway, swallowing his own reservations and, on June 17, signing the Tariff Act of 1930".-- Time Magazine You may have heard of Smoot-Hawley and not have a clue what language they are speaking. According to Wikipedia, The Smoot-Hawley Tariff Act was an act signed into law on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels. … [Read more...]
How to Protect Yourself During a Deflation
10 Things You Should and Shouldn't Do During Deflation 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 1) Should you invest in real estate? … [Read more...]
A Layman’s Guide to Government Intervention
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...]
