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Colonel Clink
15th December 2009, 19:49
"Deflationists got a whack on the side of the head today. Wholesale prices in the U.S. increased 1.8% in November more than twice as much as anticipated. That follows a 0.3% gain in October. About 75% of the increase was due to food and fuel costs. Producer prices are one of three monthly inflation gauges. One other, the cost of imported goods, rose 1.7% in November. And the government is scheduled to release the final gauge, the Consumer Price Index, tomorrow."

It's heeeeeeere! The inflation bogeyman rears his ugly head; are you paying attention?

H/T Dan Ferris and Sean Goldsmith

akak
15th December 2009, 19:52
"Deflationists got a whack on the side of the head today. Wholesale prices in the U.S. increased 1.8% in November – more than twice as much as anticipated. That follows a 0.3% gain in October. About 75% of the increase was due to food and fuel costs. Producer prices are one of three monthly inflation gauges. One other, the cost of imported goods, rose 1.7% in November. And the government is scheduled to release the final gauge, the Consumer Price Index, tomorrow."

It's heeeeeeere! The inflation bogeyman rears his ugly head; are you paying attention?

H/T Dan Ferris and Sean Goldsmith


Don't you know that according to our ever-wise government, food and fuel costs are irrelevant to inflation?
Why is that, you ask?
I don't know either, but they keep saying it, so it must be true!

LETMYSILVERGO
15th December 2009, 19:55
Right !!!!!!!!!!!!!! I Have Heard Other Claim There Has Been No Inflation..and They Are Right, As Long As You Don't Have To Buy Anything----------------and Even If Everthing U Wanted Was Free-- It Would Cost U More To Go Get It-- So There---

AND HERE IS WHERE I REALLY GET STEAMED--- THE ONLY THING I SPEND MONEY ON IS FOOD AND FUEL AND THEY DON'T COUNT THAT---I MEAN U COULD HARDLY FOOL A 3RD GRADER WITH THIS LOGIC.

Colonel Clink
15th December 2009, 19:59
Don't you know that according to our ever-wise government, food and fuel costs are irrelevant to inflation?
Why is that, you ask?
I don't know either, but they keep saying it, so it must be true!

Ya' know; there have been times when being a hard money guy was inglorious. This isn't one of those times. Stack on! :D

hippiebrian
15th December 2009, 20:41
"Deflationists got a whack on the side of the head today. Wholesale prices in the U.S. increased 1.8% in November more than twice as much as anticipated. That follows a 0.3% gain in October. About 75% of the increase was due to food and fuel costs. Producer prices are one of three monthly inflation gauges. One other, the cost of imported goods, rose 1.7% in November. And the government is scheduled to release the final gauge, the Consumer Price Index, tomorrow."

It's heeeeeeere! The inflation bogeyman rears his ugly head; are you paying attention?

H/T Dan Ferris and Sean Goldsmith

Oh my god, if this steady pace keeps up, we will hit 100% inflation in 75 months, or later! Hang on for hyperinflation!

Of course, I'm being sarcastic...let's not panic, I'm betting this won't keep up.

gottago
15th December 2009, 20:53
Oh my god, if this steady pace keeps up, we will hit 100% inflation in 75 months, or later! Hang on for hyperinflation!

Of course, I'm being sarcastic...let's not panic, I'm betting this won't keep up.



Why, did they blow up the printing press??

I didn't think so, which means your just blowing smoke out your azz...

hippiebrian
15th December 2009, 20:58
Why, did they blow up the printing press??

I didn't think so, which means your just blowing smoke out your azz...


If I could blow somke from there, I'd be in another line of work. Seriously, one month's inflation in production costs (which may or may not reach the consumer) is not a reason to panic. If it keeps up, then maybe we should worry a bit, but in the mean time, it's best to keep a calm mind and see what's happening. If it doesn't repeat itself over the next few months, it was nothing more than a blip. If it does, well, I'm glad I'm set up.

akak
15th December 2009, 21:02
If I could blow somke from there, I'd be in another line of work. Seriously, one month's inflation in production costs (which may or may not reach the consumer) is not a reason to panic. If it keeps up, then maybe we should worry a bit, but in the mean time, it's best to keep a calm mind and see what's happening. If it doesn't repeat itself over the next few months, it was nothing more than a blip. If it does, well, I'm glad I'm set up.

Fiscal irresponsibility + exponentially-expanding official debt + widespread political and financial corruption + completely unbacked fiat currency = inflation and/or hyperinflation

It is only a question of when. If I were a betting man, I would not be betting on seeing it very far down the road.

Colonel Clink
15th December 2009, 21:05
Granted, One month does not a trend make. But as i asked: Are you paying attention?

Apparently so. :rolleyes:

Colonel Clink
15th December 2009, 21:44
Fiscal irresponsibility + exponentially-expanding official debt + widespread political and financial corruption + completely unbacked fiat currency = inflation and/or hyperinflation

It is only a question of when. If I were a betting man, I would not be betting on seeing it very far down the road.

akak; like the invading martians?

akak
15th December 2009, 22:08
akak; like the invading martians?

No, that would be "Ack, ack ack ACK ack!"


http://billsmovieemporium.files.wordpress.com/2009/02/mars_attacks.jpg

hippiebrian
15th December 2009, 23:05
No, that would be "Ack, ack ack ACK ack!"


http://billsmovieemporium.files.wordpress.com/2009/02/mars_attacks.jpg

lmao...Quick, sell the silver and buy Slim Whitman cd's!!!

LETMYSILVERGO
15th December 2009, 23:10
lmao...Quick, sell the silver and buy Slim Whitman cd's!!!

TAKE THAT U DIRTY STINKING MOTIONLESS BUBBLE HEADED MARTIAN !!!

( MAYBE THAT IS THE NEXT BUBBLE TO GO POP )--

UmassSteve
16th December 2009, 01:32
I'm coming forth in total ignorance right now, so please be kind as you seek to educate me... :(

I've always had trouble understanding if price increases are always inflationary by definition, or if they were only inflationary when caused by an increase in the supply of money rather than a decrease in the supply of product.

For instance...I've always assumed fuel was taken out of the inflation equation because prices can sky rocket there without an increase in the supply of money because of supply and demand, and the complexities of an oil-based global economy meant that prices would vary greatly and the inclusion of oil in the inflation equation would make it seem like our currency was either losing value due to printing or because other currencies were gaining strength relative to the dollar when that is not necessarily so. If, for instance, the dollar rallied against all other currencies while the price of oil was increasing, in dollars, due to sky rocketing global demand, it would appear that inflation was occurring and our currency was losing value when, in reality, the opposite is true. Is that still technically inflation, or is that something else?

valerb
16th December 2009, 01:37
"Deflationists got a whack on the side of the head today. Wholesale prices in the U.S. increased 1.8% in November more than twice as much as anticipated. That follows a 0.3% gain in October. About 75% of the increase was due to food and fuel costs. Producer prices are one of three monthly inflation gauges. One other, the cost of imported goods, rose 1.7% in November. And the government is scheduled to release the final gauge, the Consumer Price Index, tomorrow."

It's heeeeeeere! The inflation bogeyman rears his ugly head; are you paying attention?

H/T Dan Ferris and Sean Goldsmith

You know, there might just be an explanation for that rise in November. The dollar fell 2% from the beginning of November until the end. This month, it is up more than it was at the beginning of November, so there is every reason to expect to see that blip in November being reversed in December. Besides, if the cost of a Big Mac doesn't go up or down, it's not effecting us.

akak
16th December 2009, 01:50
I'm coming forth in total ignorance right now, so please be kind as you seek to educate me... :(

I've always had trouble understanding if price increases are always inflationary by definition, or if they were only inflationary when caused by an increase in the supply of money rather than a decrease in the supply of product.

For instance...I've always assumed fuel was taken out of the inflation equation because prices can sky rocket there without an increase in the supply of money because of supply and demand, and the complexities of an oil-based global economy meant that prices would vary greatly and the inclusion of oil in the inflation equation would make it seem like our currency was either losing value due to printing or because other currencies were gaining strength relative to the dollar when that is not necessarily so. If, for instance, the dollar rallied against all other currencies while the price of oil was increasing, in dollars, due to sky rocketing global demand, it would appear that inflation was occurring and our currency was losing value when, in reality, the opposite is true. Is that still technically inflation, or is that something else?

Steve, that is not a ignorant question at all, but an excellent one!

Strictly speaking, no, the kind of price increase that you are discussing is NOT a reflection of inflation. Remember, think of what is being "inflated" in the term "inflation" --- it is the money supply, NOT prices. Although it must be admitted that in popular discussion and analysis, any price increase is automatically termed "inflation", but that is both sloppy and inaccurate.

There can be situations where the money supply increases and (at least certain) prices decrease, as was the case for computers and electronics in the 1990's and 2000's, and gold in the same timeframe. One can also have, as you outlined, certain prices increase while the money supply remains stable or actually decreases, and there are plenty of examples of this in history as well. But most often, of course, as the money supply increases, general prices increase as well. But the "inflation" is actually in the money supply, and the change in prices is just a secondary (and sometimes much-delayed) effect.

valerb
16th December 2009, 02:09
.

There can be situations where the money supply increases and (at least certain) prices decrease, as was the case for computers and electronics in the 1990's and 2000's, and gold in the same timeframe. One can also have, as you outlined, certain prices increase while the money supply remains stable or actually decreases, and there are plenty of examples of this in history as well. But most often, of course, as the money supply increases, general prices increase as well. But the "inflation" is actually in the money supply, and the change in prices is just a secondary (and sometimes much-delayed) effect.

That's how it is supposed to work, however increasing your money supply doesn't always have an inflationary effect, as the last year has shown us. It's hard to create inflation by printing massive amounts of new money, when everyone around you is doing the same thing. They tend to cancel each other out.

hippiebrian
16th December 2009, 02:18
http://www.economicshelp.org/2008/12/money-supply-and-inflation-in-us.html

Maybe this will help explain...

valerb
16th December 2009, 03:15
http://www.economicshelp.org/2008/12/money-supply-and-inflation-in-us.html

Maybe this will help explain...

I guess you can't argue with something that seems to concur with reality. "We have to print a lot of money to avoid deflation, but not too much that would cause inflation". He could have been a bit more specific with his numbers, any numbers.

hippiebrian
16th December 2009, 03:33
I guess you can't argue with something that seems to concur with reality. "We have to print a lot of money to avoid deflation, but not too much that would cause inflation". He could have been a bit more specific with his numbers, any numbers.

I agree, but he did what he set out to do, dumbed it down enough for someone like me to grasp it a bit easier.

UmassSteve
16th December 2009, 09:31
Akak, thanks, that gave me most of what I needed to know. But that then leads me to another thought question.

So, apparently we had this housing bubble recently. It was in the news or something. Anyways, house prices decreased all around the country to the tune of several trillion dollars. We'll say 3.4 trillion. So 3.4 trillion dollars of value simply disappeared. How is that reflected in the money system? Is it even reflected in the money system? I guess I am having trouble understanding if the total money supply remained the same and the value of homes decreased or if something else occurred.

Because if the money supply was actually decreased somehow by the massive lost of value of homes, then that changes my worries about inflation brought on by this recent spending spree. Somewhat.

Mighty_Men_of_Baltimore
16th December 2009, 09:39
Akak, thanks, that gave me most of what I needed to know. But that then leads me to another thought question.

So, apparently we had this housing bubble recently. It was in the news or something. Anyways, house prices decreased all around the country to the tune of several trillion dollars. We'll say 3.4 trillion. So 3.4 trillion dollars of value simply disappeared. How is that reflected in the money system? Is it even reflected in the money system? I guess I am having trouble understanding if the total money supply remained the same and the value of homes decreased or if something else occurred.

Because if the money supply was actually decreased somehow by the massive lost of value of homes, then that changes my worries about inflation brought on by this recent spending spree. Somewhat.

Huh? If a hard asset falls in value, that does not decrease the money supply.

UmassSteve
16th December 2009, 11:43
See, that is what I thought.

I guess I am just confused as to why this was supposed to be a deflationary time period (let's just accept that, a debate about whether that is true or not is legitimate but not what I'm looking at!). Is it the falling wages and unemployment slowing the exchange of money through multiple different parties and reducing consumer demand for products?

I guess I am just confusing the destruction of wealth (American house holds losing trillions of dollars of networth) with destruction of money in the system. How does destruction of wealth affect money supply and inflation/deflation, if at all?

Longhaul
16th December 2009, 13:01
That's how it is supposed to work, however increasing your money supply doesn't always have an inflationary effect, as the last year has shown us. It's hard to create inflation by printing massive amounts of new money, when everyone around you is doing the same thing. They tend to cancel each other out.

Which will explain the eventual disconnect between commodities and all fiat currencies that have tried to print their way to more prosperous times, correct?

DaleFromCalgary
16th December 2009, 13:51
Another point about this is that the supposed great increase in wealth is only hypothetical until you actually cash it in and take fiat currency out of the system on a net basis. When house flippers were just rolling over their debt, only a small percentage of fiat currency was taken out of circulation (and immediately recirculated to buy SUVs and large-screen TVs). When everyone rushed to the exits in 2007, the amount of fiat currency actually available could not match the demand for it, so the housing market collapsed. If you have a $400,000 house that can't be sold at that price, then the supposed wealth of the house is entirely fictitious.

It is like the old joke about a man who bragged his dog was worth $50,000 and proved it by trading with someone else for two $25,000 cats.

valerb
16th December 2009, 14:59
Which will explain the eventual disconnect between commodities and all fiat currencies that have tried to print their way to more prosperous times, correct?

That's what people keep saying, but there is no evidence of that separation taking place to date and lord knows we have added a lot of dollars in the past year.

admthrwn
16th December 2009, 21:43
See, that is what I thought.

I guess I am just confused as to why this was supposed to be a deflationary time period (let's just accept that, a debate about whether that is true or not is legitimate but not what I'm looking at!). Is it the falling wages and unemployment slowing the exchange of money through multiple different parties and reducing consumer demand for products?

I guess I am just confusing the destruction of wealth (American house holds losing trillions of dollars of networth) with destruction of money in the system. How does destruction of wealth affect money supply and inflation/deflation, if at all?


Basically, this is how I understand it. We will have both deflation and inflation at the same time. There will be deflation if you price in comparison to gold, and inflation if you price in dollars.

Try not to think of our dollar losing value because of our "printing money." But rather, we will have to print money because of the falling dollar. Completely two different causes with the same effect.

Everyone thinks that because of all of this bailout nonsense and the "printing of money" that that is what is causing a fall in the dollar. While in reality, it is the fall of the dollar that is causing the bailouts.

The cause of the fall of the dollar is because of the massive debt, there is much worry about the U.S. being able to repay these loans, which causes countries to not want to buy U.S. debt. The more and more the U.S. tries to fight deflation, the more and more it has to borrow. And the more and more the U.S. borrows, the more and more confidence in repayment is lost, and farther the dollar falls.


While deflation is going on, and prices fall, home prices drop, wages drop, people lose their jobs the government will feel even more need to "stimulate." Since government has no money of its own, it has three choices to get the money: Tax, Borrow, or Create. There's no way in hell they are going to raise taxes, the people would go apeshit and that's not very good for re-election, so that option is out. Next best thing is to borrow, but borrowing more only puts more downward pressure on the dollar, and eventually no country will want to lend to the US. When this happens all hell breaks loose, because the dollar will drop big time. While home prices are dropping due to deflation, imports will skyrocket because of the falling dollar, even though no money was "printed out of thin air."

So now the government has to fight deflation, AND inflation. It can't tax cause everyone's broke, and it can't borrow because no country will lend because there's no faith in repayment. So it must create. It will create money to help the deflation of home prices, and to prop up companies not making profits due to lack of sales, and it will create money to help people pay for the rising cost of food and energy and imports. But to no avail, the dollar will keep falling, but now, at double the speed. HYPERSPEED!

The end.


That's just how I understand it as simply as my mind can comprehend. I could be way off base.