It takes a bit longer to compile the inflation information for a variety of countries so we are just getting information for August from the Organisation for Economic Co-operation and Development (OECD) for their member countries. Consumer prices in the OECD area rose by 1.6% in the year to August 2010, the same inflation rate as in July. Growth in energy prices slowed to 4.8% in August compared with 6.2% in July, while consumer prices for food rose by 1.4% compared with 1.1% in July. Excluding food and energy, the annual inflation rate held steady at 1.2 % in the year to August 2010. To calculate the U.S. inflation rate between any two dates use our Inflation Calculator. … [Read more...]
Deflation or Inflation: Can Helicopter Ben Come to the Rescue?
Why the Fed Cannot Stop Deflation Countless people say that deflation is impossible because the Federal Reserve Bank can just print money to stave off deflation. If the Fed’s main jobs were simply establishing new checking accounts and grinding out banknotes, that’s what it might do. But in terms of volume, that has not been the Fed’s primary function, which for 89 years has been in fact to foster the expansion of credit. Printed fiat currency depends almost entirely upon the whims of the issuer, but credit is another matter entirely. What the Fed does is to set or influence certain very short-term interbank loan rates. It sets the discount rate, which is the Fed’s nominal near-term … [Read more...]
Hyperinflation in Weimar Germany vs. The U.S. Now
Postcards From Weimar Germany Justice Litle, Editorial Director, Taipan Publishing Group Monday, September 20, 2010 The Weimar Republic is perhaps the quintessential example of hyperinflation. But the buildup took longer than one might think. Walter Levy is a German-born oil consultant. His father, a German lawyer, took out a life insurance policy in 1903. Every month he had made the payments faithfully," recounts Levy. "It was a twenty-year policy, and when it came due, he cashed it in and bought a single loaf of bread. Such was life in the German Weimar Republic. Things got so bad there for a while, dentists and doctors stopped asking for currency, seeking … [Read more...]
Inflation and Housing Prices
Being "real tangible assets," houses tend to act as inflation hedges. But in recent times they have appreciated by multiples of the inflation rate. This is due more to loose lending practices that to loose monetary policy. In the following article David Galland addresses the current state of housing prices and where they might be headed. ~Tim McMahon, editor Should You Buy a House Now? By David Galland, Managing Editor, The Casey Report Recently, we have had a number of queries about real estate. And no wonder. For starters, real estate prices have come down. Plus, in an environment with next to zero interest rates, the idea of possibly picking up some income-producing property on the … [Read more...]
Deflation: First Step, Understand It
There is still time to prepare if deflation is indeed in our future. "Fed's Bullard Raises Specter of Japanese-Style Deflation," read a July 29 Washington Post headline. When the St. Louis Fed Chief speaks, people listen. Now that deflation -- something that EWI's president Robert Prechter has been warning about for several years -- is making mainstream news headlines, is it too late to prepare? It's not too late. There are still steps you can take if deflation is indeed in our future. The first step is to understand what it is. So we've put together a special, free, 60-page Club EWI resource, "The Guide to Understanding Deflation: Robert Prechter’s most important warnings about … [Read more...]
What is the Real Definition of Inflation?
By Tim McMahon Define Inflation: A simple way to define inflation is "an increase in the price you pay for goods" but that only tells part of the story... It could also be seen as a "decline in the purchasing power of your money". But there is more to inflation than that. There are two sides to inflation "Price Inflation" and "Monetary Inflation". Jump to: Inflation Definition | Inflation Cause | Inflation Risk | Inflation Rate | Inflation Hedge Price Inflation vs Monetary Inflation: Technically, Price Inflation is when prices get higher or it takes more money to buy the same item and this is what people commonly think of when they hear the word inflation. Monetary Inflation … [Read more...]
How Paper Money Fails
About right now, I imagine 90% of our subscribers and most of the analysts in my building think I'm nuts. Truthfully... I feel a little bit like Chicken Little. I've been saying the risk of hyperinflation is a more serious threat to our wealth (and way of life) than a massive deflation. Meanwhile, just about every month it looks more and more like Europe's banking crisis will cause another round of serious deflation in the world's asset prices. I'm starting to look pretty foolish... I thought economic growth would be stronger than expected, not weaker. I thought job growth would be stronger than expected, not weaker. I thought yields on long-term Treasury bonds would move higher, not … [Read more...]
Global Inflation and Double-Dip Recession Prospects
By Martin Hutchinson, Contributing Editor, Money Morning Last week's stock-market meltdown was a worldwide affair, and was touched off by trader fears of a global "double-dip" recession. However, the truth is that the odds of a recessionary reprise are high in just a few countries - primarily those that have experienced excessive fiscal and monetary "stimulus," or that have real inflation problems. The rest of the world is recovering just fine. … [Read more...]
20 Questions with Robert Prechter: Signs Point to Deflation
June 30, 2010 Signs point to Deflation By Elliott Wave International The following article is an excerpt from Elliott Wave International’s free report, 20 Questions With Deflationist Robert Prechter. It has been adapted from Prechter’s June 19 appearance on Jim Puplava’s Financial Sense Newshour. Jim Puplava: Bob, I want to pick up from last September. Since then we've had several quarters of positive economic growth. Asset classes rose substantially, CPI turned positive, gold has hit a new record, oil is close to $80 a barrel. I guess a lot of our listeners would like to know, have these events altered your views on deflation? … [Read more...]
Gold – The Optimal Investment for Inflation and Deflation
History shows that gold is an excellent performer in both inflationary and deflationary economic scenarios. Author: Ronald Stoeferle Posted: Thursday , 24 Jun 2010 VIENNA (Erste Bank) - The central question of whether the next few years will be dominated by inflation or deflation still remains unanswered. In periods of inflation, tangible assets are the preferred asset class, whereas in times of deflation, cash is king. Gold is liquid, divisible, indestructible, and can be easily transported. It has a worldwide market and there is no default risk associated with it, which means it is cash of the highest quality. Therefore gold is the optimal investment both in deflation and … [Read more...]
