Tuesday, July 13, 2010

One for the deflationists – including techieman

UK Inflation Falls to CPI 3.2%, Precisely inline with 2010 Forecast - Delusional Deflationist Continue to See Non Existant Deflation

''The reality of the situation remains in that the worlds economies swim in an ocean of inflation with the occasional ripples of deflation on its surface as the following graphs illustrate that the pseudo economists with their persistence deflation clearly only see the deflationary ripples whilst missing the deep inflationary ocean.''

Posted by hpwatcher @ 07:35 PM (1817 views)
Please complete the required fields.



13 thoughts on “One for the deflationists – including techieman

  • Walayat’s graph:-

    Any comments on Nadeem Walayat’s article – and above graph – very gratefully received.

    Reply
    Please complete the required fields.



  • ok i am biting. In our “debate” about the US when you posted a 2 year old chart on US M3 which you relied on to prove there was no deflation and when I pointed out the latest version showed a contraction in M3 therefore the definition of deflation IN THE US, you then tried to argue that no one knows what M3 looks like. Eh?

    http://www.housepricecrash.co.uk/newsblog/2010/06/blog-finding-a-problem-for-a-solutionbernanke-was-always-going-to-be-a-print-happy-deflationist-29344.php

    I then concede:

    “No. 43: As i said in the UK you may CURRENTLY have a point [that there is inflation].”

    The point is we have had the biggest reflation to thwart deflation, so its no wonder its CURRENTLY reflecting inflation, and the CPI has reduced to 3.2% from 3.4% – so watch this space.

    This is actually nothing to get excited about. If you keep pouring firelighters on the barbie wont it keep burning? Excepting the rise in VAT the question is what happens when you reverse that reflation and tighten – either fiscally or monetarily or both?

    As i said before i have no interest in where we are its where we are going.

    Of course its easy to call inflation (the UK is dominated by a core inflationary trend). Its not exactly clever to say we will have inflation (cause we NEARLY always do).

    What is clever is to say there will be deflation and when we will get it. The chart (in particular the RPI that you havent posted) underwent some deflation (which was of course why we went mad in the reflation). Will we get more deflation or not? Hopefully not but i dont think its much value to bury heads in sand. Let see what happens in the next six months.

    In any case if we have asset price falls (including HPs) then really wont we (even you HPW) be happy?

    Recaptcha : nerves not

    Reply
    Please complete the required fields.



  • Now if you want to argue for hyper-inflation, because of all the “printing” then i eagerly await that argument. How much reflation have we had and to what extent has this caused the increase.

    As N says,

    “Therefore the ConLib governments and Bank of England’s objective remains to continue with the mantra of temporary inflation whilst all the time using inflation as one of its primary tools to stealthily erode the value of the annual deficit and total accumulated debt by stealthily taxing earnings and savings to ensure annual interest payments that are set to grow to £70 billion remain manageable in real terms.”

    Fair comments that might well be the objective, but they are pretty crap at aligning actual with targets.

    Reply
    Please complete the required fields.



  • With the VAT rate being due to jump…. Could this great bit of news be fudged to make the….. later pain, seem less painful.

    Now with public sector head count cull on the cards….. How many private sector people will be moaning they didn’t get a pay rise?

    Soz

    Reply
    Please complete the required fields.



  • ok i am biting. In our “debate” about the US when you posted a 2 year old chart on US M3 which you relied on to prove there was no deflation and when I pointed out the latest version showed a contraction in M3 therefore the definition of deflation IN THE US, you then tried to argue that no one knows what M3 looks like. Eh?
    I think that my basic argument still holds – that deflation simply isn’t possibly in a fiat system.

    The point is we have had the biggest reflation to thwart deflation, so its no wonder its CURRENTLY reflecting inflation, and the CPI has reduced to 3.2% from 3.4% – so watch this space.
    I agree that there has been reflation.

    Of course its easy to call inflation (the UK is dominated by a core inflationary trend). Its not exactly clever to say we will have inflation (cause we NEARLY always do).
    It’s the degree of inflation that’s important; a small amount of inflation has always been considered healthy to keep the system running smoothly.

    In any case if we have asset price falls (including HPs) then really wont we (even you HPW) be happy?
    Houses are massively overvalued, if the prices go down – which we ALL want – I tend to think of it as devaluation of house prices and not deflation.

    Now if you want to argue for hyper-inflation, because of all the “printing” then i eagerly await that argument.
    That will mean that the govt debts really are completely out of control.

    Reply
    Please complete the required fields.



  • Does the 2.5% VAT increase for 2011 automatically give us a baseline 2.5% inflation for next year (or there abouts, I know VAT isn’t on everything). ?

    Reply
    Please complete the required fields.



  • stillthinking says:

    Will the government extend the loan guarantees to the financial system?

    The inflationist argument seems to rest, to me, on QE, happened and expected, and expansion of government debt over the next 5 years. There is no credit expansion in the private sector. But at the same time we know that if the government avoids deflation by borrowing and presumably in the end pure BoE credit expansion, then the currency gets blown out.

    What is missing in the debate about inflation or deflation, imo, is the idea that because the two are at different ends, then there must be a happy middle way, but there is not. Either we deflate or we inflate. There is no position in the middle. So another question should be, can the UK government inflate to the required extent? No. Their inflation linked liabilites are too large, there are too many eyes on them, they indeed have (previous) inflation coming in from the existing devaluation and Chinese wages and petrol shortages etc

    I think what we see know is an explanation of what happened to Japan. Each day, each step, was too too painful to consider apart from to slowly gradually deflate, rather than take the shock, and they ended up with 20 years of it.

    This is the least of our worries. The economic recovery plan is that funds abroad, invest in the UK which they know has an overall taxation rate of 50%, in order to export back to where they already are? Without considering that maybe they might just invest there instead.

    Reply
    Please complete the required fields.



  • hpw “I think that my basic argument still holds – that deflation simply isn’t possibly in a fiat system.”. Why? because they can just print and print and print? It makes deflation less likely true. But then again the Thames barrier makes london flooding less likely, but if we have a Tsunami up the Thames then the barrier makes no odds. Similarly its not the cash thats the issue, its (as ST says) contraction in CREDIT.

    The dollar is a fiat currency and yet as i have pointed out there IS a contraction in M3, which IS deflation! How then can your argument that deflation simply isnt possible hold any credibility when anyone can see it with their own eyes?

    “Of course its easy to call inflation (the UK is dominated by a core inflationary trend). Its not exactly clever to say we will have inflation (cause we NEARLY always do).
    It’s the degree of inflation that’s important; a small amount of inflation has always been considered healthy to keep the system running smoothly” – misses the point i am making. Deflation is an outlier. if there is deflation its much more sinister than inflation in the UK, because there is [nearly] always core inflationary influences. Therefore its easy to just extrapolate a prior trend, and MOST of the time that is the right thing to do. So yes the odds are on the inflationists side. But sometimes a 100/1 shot wins the grand national!

    If you agree there has been reflation then what happens when they put the brakes on the reflation. That is the question you should be asking yourself. You must beieve that at the sign of any trouble they will reflate again, really i think that hand has been played.To come back with there is inflation caused by the money thats already in the system is just wrong.

    So you are NOT arguing for hyperinflation? Weird cause i thought you were.

    I agree the fall in HPs and any Asset classes for that matter is not deflation. Deflation is the fall in the money supply. FAlls in HPs (and other asset classes are symptoms of deflation just as HP “inflation” are symptoms of an inflation of the money supply.

    The funny thing is that when most were arguing for the continuing falls in HPs i said no they look like they will bounce (caused by the reflation). I still justdont understand how anyone can be arguing that HPs will fall if they also believe that inflation will not be benign.

    Reply
    Please complete the required fields.



  • If you agree there has been reflation then what happens when they put the brakes on the reflation.

    The banks will stop hoarding? The point is that little of this money has actually hit the economy yet, so your argument about deflation simply doesn’t work. When inflation does hit, there may be a degree of hyperinflation.

    You must beieve that at the sign of any trouble they will reflate again
    It’s a possibility – and more money will hit the stock market and it may rise. I mean, you yourself are always boasting about how much money you are making? Yeah?

    FAlls in HPs (and other asset classes are symptoms of deflation
    Daft comment. House prices fall for all sorts of reasons, not necessarily deflation.

    when most were arguing for the continuing falls in HPs i said no they look like they will bounce (caused by the reflation).
    I don’t remember you making that comment at all.

    I still justdont understand how anyone can be arguing that HPs will fall if they also believe that inflation will not be benign.
    I don’t see anything strange in that. HP are just one asset class amongst many – it’s all a question of what will be the next flavour of the month – but not all asset classes are tied to 30 years borrowing.

    Reply
    Please complete the required fields.



  • The best opportunity for deflation to occur is during the time of credit contraction caused by the 2008 Financial Tsunami.

    But did you see deflation in late 2008 or early 2009?

    The only way to tackle hyperinflation is not to raise interest rate but cut down government spending & sterling printing press or encourage private sector investments in productive activities.

    Reply
    Please complete the required fields.



  • What BOE do is to print sterling to support UK government spending which in effect no difference to burning bank notes!

    Those government expenditures aren’t devoted to productive activities.

    Reply
    Please complete the required fields.



  • “It’s a possibility – and more money will hit the stock market and it may rise. I mean, you yourself are always boasting about how much money you are making? Yeah?”

    Firstly yes it is a possibility whereas before it was a probability.

    Er no actually i dont ALWAYS boast. I did say i made £42k on a 10% position, on that very thread. That is the ONLY TIME and i did apologise for that, because it was dumb and really was a bit of a prattish boast. If it helps i currently have an unrealised loss of £58k. shorting FTSE scale up from 5164 (as i mentioned that level in a post on here). Now if you want to cheer on the FTSE so i lose more, really be my guest.

    “when most were arguing for the continuing falls in HPs i said no they look like they will bounce (caused by the reflation).
    I don’t remember you making that comment at all.” I dont think you were here then to be fair, i actually cant be ar5ed to dig out the posts i made, but this from TC might assist: (No no thats ok no apology necessary! – or maybe TC is making it up too?)

    http://www.economicvoice.com/uk-house-prices-fall-for-three-consecutive-months/50011595#axzz0teO1b54J

    As for my “daft comment”. I really cant take that seriously from someone who cant look at a US chart of M3 and see a line below zero.

    I have placed my bets (literally) and maybe you have placed yours so we sink or swim by that analysis. Who knows you may even be right! But to ignore the possibility of being wrong (which is why traders have things called “stops”) is a pretty big oversight in my book. At the end of the day its up to you though.

    Reply
    Please complete the required fields.



  • I have placed my bets (literally) and maybe you have placed yours so we sink or swim by that analysis. Who knows you may even be right! But to ignore the possibility of being wrong (which is why traders have things called “stops”) is a pretty big oversight in my book. At the end of the day its up to you though.

    Of course; that’s all part of the fun. I have made plenty of losses, but also some small gains.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>