Inflation Or Deflation - What's Your Bet?

[winkie]

Inflation absolutley no doubt.

...depends what money you have and how you choose to spend it or not.

[catmandu]

Inflation. Until I see interest rates rise I won't believe the Bank's talk about how inflation is a bad idea. Anyway it's about time that BoE's predictions come true and inflation falls...otherwise who'll believe any of their other predictions.

[shindigger]

I think you are right - only concern house prices and some markets - shows how utterly bent their whole game has become.

The reason both of us picked tech is becuase it is the one market where decreasing prices is the norm and there is almost no expectation whatsoever there whatever is bought will increase in price after purchase.

As someone who is regularly checking prices of music tech kit, and in some cases buying same, i have to tell you, you could not be more wrong.

Prices of mixers, interfaces, mics, etc have surged in the last two years.

Heres an example.

http://www.dv247.com/mixers/yamaha-n12-digital-mixer-mixing-console--40677

This mixer was under £700 18 months ago.

Maybe it just depends on the definition of "tech".

And of course if you're Merv you would substitute this high end, firewire,workstaion mixer for a £200 Behringher.

Edited June 7, 2010 by shindigger

[OnlyMe]

As someone who is regularly checking prices of music tech kit, and in some cases buying same, i have to tell you, you could not be more wrong.

Prices of mixers, interfaces, mics, etc have surged in the last two years.

Heres an example.

http://www.dv247.com/mixers/yamaha-n12-digital-mixer-mixing-console--40677

This mixer was under £700 18 months ago.

Maybe it just depends on the definition of "tech".

And of course if you're Merv you would substitute this high end, firewire,workstaion mixer for a £200 Behringher.

Well yes, that's what collapsing your currency does.

[domo]

M3 in the us is deflating at a 10% annual rate. As fast as in the Great Depression. Things are going to get messy.

[okaycuckoo]

Deflation.

With an inflation hedge. But which one?

[Mikhail Liebenstein]

Wholeheartedly agree. If your TV breaks, you buy a new one straight away (no one repairs anything these days), and computers have been falling in price for the entire history of the technology industry, but that's still one of the most vibrant, innovative and profitable fields of industry around today.

The only things that people delay buying in the expectation of price falls are non-essentials purchased with debt where there is a viable alternative - basically buying houses instead of paying rent.

The lazy economist's mantra that 'deflation leads to deferred purchases' pretty much only applies to housing and speculative investments, and if the economy is forever steered by these small elements of the economy (as we know it has been for at least the past 13 years), then we are aw' doomed.

Have you checked computer prices lately. I am not talking about rubbish PCs which are being replace by laptops, but rather servers. You'll pay £3k now for a decent HP or IBM Pizza Box with 2 x Quad Core Xeons and 6GB RAM. The equivalent 2 years ago could be had for £1600.

[fallingbuzzard]

Slaves

Deflation.

With an inflation hedge. But which one?

[Guest_chris c-t_*]

It's coming...

UPDATE 1-BHP Billiton, Rio Tinto to hike iron ore price - Nikkei

07 Jun 2010 - 19:55

June 8 (Reuters) - Anglo-Australian firms BHP Billiton Ltd and Rio Tinto Ltd have notified Japanese steelmakers that iron ore price for the July-September period will be raised about 23 percent from the previous quarter, the Nikkei business daily said.

The paper also said Brazil's Vale SA is likely to follow suit.

The second consecutive quarterly hike will put iron ore at about $147 a ton, 140 percent higher than the fiscal 2009 price, the paper said.

Japanese steelmakers, who have agreed to negotiate resources prices quarterly instead of annually starting with the current fiscal year, are likely to settle for a price close to the proposed figure, the Nikkei reported.

With rapid price hikes in high-grade coal and iron ore, Japanese steelmakers are being forced to pass on the increases to large-lot users, including automakers, the daily reported.

Toyota Motor Corp <7203.T> and Nippon Steel Corp <5401.T> are huddling over a 25 percent hike for a key steel product to 20,000 yen ($217.6) per ton, it said.

With demand for coking coal and iron ore in China and other emerging economies expected to soar in the medium and long run, their prices are likely to stay on an upward trajectory, the Nikkei said.

"We have to pass on hikes to steel prices and ask clients to shoulder increased costs," the paper quoted JFE Holdings Inc 5411.T<> President Hajime Bada as saying. ($1=91.91 Yen)

Edited June 7, 2010 by chris c-t

[Guest The Relaxation Suite]

We've had about 1200% inflation since 1970 so I am thinking we have to go down. Deflation to correct the out of control inflation of the last generation.

Edited June 7, 2010 by Tecumseh

[Guest The Relaxation Suite]

It's coming...

UPDATE 1-BHP Billiton, Rio Tinto to hike iron ore price - Nikkei

Sure - when the housing bubble bursts in China you watch and see what happens to local demand there for resources.

Edited June 7, 2010 by Tecumseh

[getdoon_weebobby]

being saying were in a deflationary slump since 07 , have questioned that a few times , but really dont see any change. sovereign countries have now maxed out their credit cards which means no one has any ammo left. i still think hyper inflation could be the end game but its a long way ahead if us still.

[fallingbuzzard]

there's no point in fixing a price to Japan when China is buying spot!

Sure - when the housing bubble bursts in China you watch and see what happens to local demand there for resources.

Edited June 7, 2010 by fallingbuzzard

[Fairies Wear Boots]

When people say we are going to get deflation, is that the deflation where prices of stuff go up?

[DTMark]

Similar question...

When people talk about deflation does that refer to the decrease of money in the economy, or to falling consumer prices?

I see deflation in the former and inflation in the latter, especially with regard to basics like food and fuel.

[Timm]

Well, we are seeing credit money hover on the edge of deflation again, with a lot of people paying down debt as fast as they can. On the other hand, we saw an explosion in base money recently, and that could happen again with the stroke of a pen. If you accept that QE is an inflation of the base money supply that is.

Edited June 8, 2010 by Timm

[Confounded]

We've had about 1200% inflation since 1970 so I am thinking we have to go down. Deflation to correct the out of control inflation of the last generation.

Interesting quote by Bill Bonner in last weeks Moneyweek "as measured in Britain, consumer prices rose as much in the last 40 years as in the entire preceding 700 years"

[OnlyMe]

Interesting quote by Bill Bonner in last weeks Moneyweek "as measured in Britain, consumer prices rose as much in the last 40 years as in the entire preceding 700 years"

Oh well, that's all the improvements from productivity, automated manufacturing and all the computing power you could wish to throw at production GONE and then some.

[Tired of Waiting]

(...)

"deflation is the worse disease for an economy as it is even harder to eradicate (...)

Print more money?

.

Edited June 8, 2010 by Tired of Waiting

[fallingbuzzard]

Most on here think about prices. Everyone sees price inflation, even if very small, but only the few that experience income reduction, and its usually big, feel it.

Similar question...

When people talk about deflation does that refer to the decrease of money in the economy, or to falling consumer prices?

I see deflation in the former and inflation in the latter, especially with regard to basics like food and fuel.

[davemb]

massive inflation will happen. personally i would like deflation .

[scottbeard]

Ultimately though because of the ever greater malinvestment the ultimate reset becomes bigger and bigger until its unstoppable and deflation wins because even hyperinflation results in deflation when the currency is reset. The malinvestment will always ultimately be destroyed

Tamara - could you explain this please, i'm confused?

In economics, deflation is a decrease in the general price level of goods and services.

en.wikipedia.org/wiki/Deflation

Today a loaf of bread costs £1

Post-hyperinflation it costs £1,000,000

Post-currency reset it costs 1 new currency unit

Where is the deflation in that?