Fed: Inflation At Lowest Ebb Since 1960

[Realistbear]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQeD1PU0asH4&pos=6

Fed Rate Increase Pushed to 2011 as Inflation Ebbs (Update1)

By Shobhana "Showboat" Chandra and Alex "Al" Tanzi

June 9 (Bloomberg) -- Record-low inflation and prolonged unemployment mean the Federal Reserve will hold off raising interest rates until 2011, according to economists surveyed by Bloomberg News.

The central bank’s preferred price gauge will rise 1.1 percent this year, the

smallest gain in data going back to 1960,

and the jobless rate will average more than 9 percent through next year, the median estimate of 65 economists surveyed from June 2 to June 8 showed.

Lowest inflation in half a century might mean that there is a trend-line which points to (shhhh), deflation.

Could this mark the turning point and the beginning of a new cycle? Or, is the economy as Gordon suggested, all one way (boom only, no bust)?

Edited June 9, 2010 by Realistbear

[Injin]

Realistbear, on 04 June 2010 - 06:03 PM, said:

The reality is that everyone is "debasing" their currencies

[Realistbear]

Realistbear, on 04 June 2010 - 06:03 PM, said:

The reality is that everyone is "debasing" their currencies

The reality is that everyone is debasing their currencies.

You have nothing to fear from deflation, embrace it. It is every HPCers vewey bestest fwend.

Devalued currencies buy less. The less that is bought the lower the prices go. This only works when "everyone" debases in tandem. When such a phenomena occurs you have deflation, pure and simple. It is another tautology that you didn't quite spot. Prices can only rise when there is suffcinet purchasing power to buy--another tautology.

What should you do to protect yourself against deflation: go to cash, government bonds and avoid commodities and inflation hedges such as, shhhh, gold.*

http://finance.yahoo.com/news/Gold-Prices-In-tsmf-2333923435.html;_ylt=AngIRV2tGFCQXp1RrN58Nn.7YWsA;_ylu=X3oDMTE1bHVqZWp0BHBvcwM2BHNlYwN0b3BTdG9yaWVzBHNsawNnb2xkcHJpY2VzaW4-?x=0&sec=topStories&pos=4&asset=&ccode=

Gold Prices In Retreat

ByAlix Steel, , On Wednesday June 9, 2010, 12:06 pm

NEW YORK (TheStreet) -- Gold prices were retreating quickly Wednesday as investors took advantage of gold's record high to take profits.

Gold for August delivery was plumetting $18.20 to $1,227.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,242.60 and as low as $1,223.10. The U.S. dollar index was slipping 1.02% to $87.48 while the euro was rising 0.69% to $1.20 against the dollar. The spot gold price Wednesday was down $8.60, according to Kitco's gold index. The divergence between spot gold and the futures market indicates that investors might be holding on to their physical metal but trading paper gold.

Edited June 9, 2010 by Realistbear

[lowrentyieldmakessense(honest!)]

The reality is that everyone is debasing their currencies.

You have nothing to fear from deflation, embrace it. It is every HPCers vewey bestest fwend.

Devalued currencies buy less. The less that is bought the lower the prices go. This only works when "everyone" debases in tandem. When such a phenomena occurs you have deflation, pure and simple. It is another tautology that you didn't quite spot. Prices can only rise when there is suffcinet purchasing power to buy--another tautology.

What should you do to protect yourself against deflation: go to cash, government bonds and avoid commodities and inflation hedges such as, shhhh, gold.

is gold an inflation or deflation hedge

or is it a hedge against the government puppets

[Concrete Jungle]

[GloomMonger]

I've converted to the deflation camp. I think the powers that be have realised they can't stimulate inflation without losing control of it and deflation is preferable. It's time to reset the global economies through cuts and deflation.

Edited June 9, 2010 by GloomMonger

[Realistbear]

I've converted to the deflation camp. I think the powers that be have realised they can't stimulate inflation without losing control of it and deflation preferable. It's time to reset the global economies through cuts and deflation.

I think I am starting to lean slightly into the deflation camp also. All the money that has been printed in the last 3 years or so and the Fed have the lowest inflation in 60 years should tell you the direction things are moving.

If the gold bugs are unloading paper they may be about to stampede realising that their paper gold is as fiat as anything else. Contamination will spread to physical as evidenced by the drop in fiat physical caused by unloading the fiat paper. All values are relative and nothing has set intrinsic value IMO.

As a wise man once said: "Not all sell-offs are profit taking, some mark the beginning of a bear market."

Deflation it is.

Edited June 9, 2010 by Realistbear

[Injin]

The reality is that everyone is debasing their currencies.

You have nothing to fear from deflation, embrace it. It is every HPCers vewey bestest fwend.

I have nothing to fear from inflation or deflation.

We don't have any deflation.

Devalued currencies buy less. The less that is bought the lower the prices go. This only works when "everyone" debases in tandem. When such a phenomena occurs you have deflation, pure and simple. It is another tautology that you didn't quite spot. Prices can only rise when there is suffcinet purchasing power to buy--another tautology.

I'm not a goldbug.

There is no deflation.

Edited June 9, 2010 by Injin

[Injin]

I think I am starting to lean slightly into the deflation camp also. All the money that has been printed in the last 3 years or so and the Fed have the lowest inflation in 60 years should tell you the direction things are moving.

If the gold bugs are unloading paper they may be about to stampede realising that their paper gold is as fiat as anything else. Contamination will spread to physical as evidenced by the drop in fiat physical caused by unloading the fiat paper. All values are relative and nothing has set intrinsic value IMO.

As a wise man once said: "Not all sell-offs are profit taking, some mark the beginning of a bear market."

Deflation it is.

Nope.

Inflation plus paper money ramping.

[Realistbear]

Germany, May 1921, there was no inflation. August 1921 and inflation came and the rest is history.

The point is that because there is no deflation now does not mean there will not be any. The Fed's statement that inflation has ebbed to the lowest rate in 60 years seems to demonstrate that a trend line toward deflation is under-way.

[Bloo Loo]

In other news, Iran is sanctioned and worse, Bernanke has pledged to do whatever is required to "protect" the "recovery".

imprime imprime.

[Injin]

Germany, May 1921, there was no inflation. August 1921 and inflation came and the rest is history.

no, there was already inflation at that point - the price rises come after the inflation.

The point is that because there is no deflation now does not mean there will not be any. The Fed's statement that inflation has ebbed to the lowest rate in 60 years seems to demonstrate that a trend line toward deflation is under-way.

Eventually there will be deflation after the paper currencies have been utterly eviscerated and people repudiate them.

until then, inflation all the way, just as there has been inflation ever since the central banks were put into place. It's all they know how to do.

[Realistbear]

http://www.rickackerman.com/2010/06/britain-is-the-first-to-choose-deflation/#more-23001

Deflation has spread to HPC home page now.......................

[Bloo Loo]

no, there was already inflation at that point - the price rises come after the inflation.

Eventually there will be deflation after the paper currencies have been utterly eviscerated and people repudiate them.

until then, inflation all the way, just as there has been inflation ever since the central banks were put into place. It's all they know how to do.

it is also the only way they can have their interest paid.

[swissy_fit]

no, there was already inflation at that point - the price rises come after the inflation.

Eventually there will be deflation after the paper currencies have been utterly eviscerated and people repudiate them.

until then, inflation all the way, just as there has been inflation ever since the central banks were put into place. It's all they know how to do.

Injin which (if any) of the money supply measures do you think are the most useful, and why?

[Injin]

Injin which (if any) of the money supply measures do you think are the most useful, and why?

Notes and coins.

Because that's what money is.

The rest of it is just double counting and other forms of fraud.

[swissy_fit]

Notes and coins.

Because that's what money is.

The rest of it is just double counting and other forms of fraud.

Not a very useful answer considering your stance that inflation is purely an increase in money supply(which I agree with, btw)

Are there more notes and coins all the time?

[Injin]

Not a very useful answer considering your stance that inflation is purely an increase in money supply(which I agree with, btw)

Only notes and coins are money.

Are there more notes and coins all the time?

Sure are.

[Realistbear]

It is arguable that it is not only notes and coins that are "money." If the end result is to acquire something, that which is offered in exchange is "money" in its effect.

This is the core of the argument against the gold bugs who insist that Gold is immune to fiat or market prescribed valuation.

For example, if I wish to acquire a 1959 Les Paul Standard in mint condition for $50,000 the seller may accept a brick of gold weighting XX ounces. If gold collapses next week by 30% the seller would then demand XX + X. The gold is the same as money in relative terms--the only difference being that $50k still buys the Les Paul but gold has devalued in relative terms and more of it has to be offered.

[swissy_fit]

It is arguable that it is not only notes and coins that are "money." If the end result is to acquire something, that which is offered in exchange is "money" in its effect.

This is the core of the argument against the gold bugs who insist that Gold is immune to fiat or market prescribed valuation.

For example, if I wish to acquire a 1959 Les Paul Standard in mint condition for $50,000 the seller may accept a brick of gold weighting XX ounces. If gold collapses next week by 30% the seller would then demand XX + X. The gold is the same as money in relative terms--the only difference being that $50k still buys the Les Paul but gold has devalued in relative terms and more of it has to be offered.

I guess they mean gold is immune (ish) to classic fiat money inflation, but it's not immune to price movements or speculation.

[Injin]

It is arguable that it is not only notes and coins that are "money." If the end result is to acquire something, that which is offered in exchange is "money" in its effect.

Try it in a shop.

This is the core of the argument against the gold bugs who insist that Gold is immune to fiat or market prescribed valuation.

Fiat means forced, market means freely traded.

For example, if I wish to acquire a 1959 Les Paul Standard in mint condition for $50,000 the seller may accept a brick of gold weighting XX ounces. If gold collapses next week by 30% the seller would then demand XX + X. The gold is the same as money in relative terms--the only difference being that $50k still buys the Les Paul but gold has devalued in relative terms and more of it has to be offered.

Which has nothing to do with inflation or deflation.

That's just trade for ya.

[Injin]

I guess they mean gold is immune (ish) to classic fiat money inflation, but it's not immune to price movements or speculation.

You can have a paper money that isn't a fiat money.

Fiat means forced, it doesn't mean paper. This sort of terminology creep is one of the tools of manipulators to get peopel to take their eye off the ball.

[Errol]

Anyone in paper gold deserves what is coming to them.

[okaycuckoo]

Deflation it is.

Exactly my words three years ago on t'other side. Been waiting patiently.

But gold will still be good, once it's had a pullback and everyone's scared of it.

[betterToDo]

This sort of terminology creep is one of the tools of manipulators to get peopel to take their eye off the ball.

No, its just a well-known aspect of the human condition to which I observe, with a glorious sense of warm irony, you seem especially vulnerable.

This is the core of the argument against the gold bugs who insist that Gold is immune to fiat or market prescribed valuation.

Never ever heard anyone make such a silly argument. Linky? Or .... Is that actually why *you* think people buy gold?

Only notes and coins are money.

Rubbish of course, but good post. Its the way you state nonsense with such confidence. Run for office or write a book, don't waste it on us.

Prices can only rise when there is suffcinet purchasing power to buy--another tautology.

You mean prices can't rise when purchasing power falls? Prices are denominated in what, "purchasing power"? Fairy lights? I'm going for fairy lights.

What should you do to protect yourself against deflation: go to cash, government bonds and avoid commodities and inflation hedges such as, shhhh, gold.*

Right. Cool. So... what happens to an over-leveraged banking system in deflation, and what pressures does that put on a debt-based currency? If you notice any obstacles to your line of thought, just swerve round them as per usual. Or, use Injin's trick, and just restate the same thing repeatedly until everyone gives up.

As a wise man once said: "Not all sell-offs are profit taking, some mark the beginning of a bear market."

Really, so a wise man is someone who says "sometimes it doesn't just go down a bit, sometimes it goes down lots!" That is literally all that quote says. Literally. You really think that's wise?... and not only that, wise enough to quote?!?!

There is no deflation.

Deflation it is.

Just for the sake of sanity, could you both offer your definition of deflation? I *think* RB defines inflation as price rises judging by the OP, although in literally the same thread then referred to that Rick Ackerman article as being about deflation, which appears to be referring to money supply.... so RB is undecided. Injin? Don't feel you have to stick to just one definition, feel free to ****** about with it a little, and remember to change it when we least expect it.