RE: Fate of the Euro I think the dollar is going to decline for a bit as GDP uncertainty lingers. No clue from there.
Benny your deflation angle is playing out more than I thought it would.
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RE: Fate of the Euro I think the dollar is going to decline for a bit as GDP uncertainty lingers. No clue from there.
Benny your deflation angle is playing out more than I thought it would.
I don't remember Benny's deflation comment, but what has gotten significantly cheaper to offset everything else that is way more expensive over the last 3-5 years? So far, the deflation scariness comments I read in the media are bullshit to this consumer.Quote:
Originally Posted by Bromontana
I'm seeing rev misses and growth estimate markdowns; a continued trend of lower than expectation growth. In the case of the US, negative Q1 growth and a question mark on Q2. If Q2 disappoints it could be a net GDP reduction in H1 for USA (though less than 1%, it's noteworthy). I don't expect consumer prices to fall much at the onset, but if it doesn't correct in H2 you should start to see it. Either that or my sources are shit.Quote:
Originally Posted by liv2ski
How so? What is your "lifestyle"? (God, what a lousy word. I had an English professor that would make someone leave the room if that word was used.)Quote:
Originally Posted by Sirshredalot
Quote:
Originally Posted by liv2ski
I know you live in California, but houses.
And, it's really easy to shop cheap. Every store I walk into lately has sales of some sort going on. They all have to compete with WalMart and Amazon.
Depends where and how you live. Computers, flat screen TVs and some other electronic gizmos are dirt cheap if you aren't the poser consumer sucker who just must have the latest fad. Gasoline is $1 cheaper than it was one year ago. Housing is historically cheap in most parts of the country. Goods produced with Asian labor are cheaper, e.g., Costco jeans for $12.99, just as they were 5 years ago. OTOH, food and health care costs continue to inflate.Quote:
Originally Posted by liv2ski
But, looking at your personal consumer prices misses the point of the deflation threat. Some commodity items and some labor costs are deflating. Businesses are hesitant to upgrade their IT equipment because they figure it'll be cheaper in the future. The risk is that more and more business and people defer buying decisions with the expectation of lower future prices -- compounded by governments buying less per austerity measures and starve-the-beast politics -- a deflationary spiral begins and the central banks have no response because they have already slashed interest rates to 0 or near 0 or even negative.
When has this ever not been the case?Quote:
Originally Posted by Benny Profane
The all sorts of shit on sale all the time thing is relatively recent IME. When I was a kid in the 1960s, sales were a couple time a year thing. In the 1980s some retailers, e.g., furniture stores, audio equipment, started doing the perma-sale thing. That was confined to a few sectors until a decade or so ago.
JC Penny actually tried to go back to the old model you describe and got their asses kicked.Quote:
Originally Posted by Big Steve
I forgot to add...
Black Diamond C4 cams, which act as a proxy currency in the Southwest US, have been on sale new with prices discounted 20-30%. It's prime time for buying and using these things, yet they've been on sale for months.
If this isn't deflation I don't know what is!!
Price of money is deflating.Quote:
Originally Posted by liv2ski
I understand this ostensibly but get cobwebs trying to really understand it. Is it a statement that long duration low interest rate environs effectively deflate?Quote:
Originally Posted by 4matic
Errrrr....I think the Merican dollar is about as strong as I can remember over the last few years against the Euro and Canadian dollar, so how is it deflating in value at this point in time? Just because the FED hit Ctrl P into infinity? The printing is inflationary, but we haven't been slammed as hard as we deserve yet, because everyone else is printing too. At some point we are fucked. Just not today and likely not tomorrow.Quote:
Originally Posted by 4matic
Printing money is not inflationary. That is a Moneterist myth. Without velocity fueled by demand and higher wages there is no inflation.Quote:
Originally Posted by liv2ski
The price of money. Not the value of a currency is deflationary. Zero and negative interest rates deflate the value of cash. That is why higher rates, imo, would be good for the economy and probably bad for asset prices.
And lower asset prices would hurt the oligarchs, so they will pressure the shit out of regulators to maintain the status quo. Only problem is the status quo is a path to implosion via gross imbalances in wealth/power, civil unrest from rising inequality, etc.
Whatever 4matic. My real life experience tells me the printing is inflationary. Everything I buy costs more today except for oil products and in CA those prices are pretty much back to the average paid over the last few years. So you can "academically" talk about "the price of money" and "Without velocity fueled by demand and higher wages there is no inflation".
But I say "BS" as will anyone else that pays the bills.
User error. Shop better. Lots of stuff is cheaper these days. See my prior post re some examples.Quote:
Originally Posted by liv2ski
Printing money can contribute to inflation if other inflationary factors are present. Printing money is also a proven effective counteraction to anticipated deflationary pressures. TBD whether it will be effective if and when a deflationary spiral starts.
RE: Liv2Ski ^^ I think the pressure you're feeling is because real income for those below the douche class has been falling for decades. You're feeling strapped despite stable prices because of eroding income. I read some of your earlier notes on some difficulty after the crash, but 4Matic is pretty agnostic on these things. His contribution is very helpful imo as it's just what he sees and very little spin.
My guess is that you are aspiring above your means, and shopping where the other aspirational upper middle class shop. You spend too much on cars, to look good, when a much cheaper slightly used car will more than suffice, you spend your money where the 1% (not the .01%) do, including travel and eating out. All of those prices have risen since the recession, since those people are doing quite well and spending like drunken sailors. The rest of the country is still living paycheck to paycheck. Nobody has any money, and credit is tight for those illiquid schmoes. Shop where they shop. Trust me, the stuff is pretty much the same, and, the name brands are marked down a lot, too. No Whole Foods and Lexus, more WalMart, Sears, and Subaru.Quote:
Originally Posted by liv2ski
Ain't nothing sadder than a fifteen year old Lexus going by. But old Subarus are badges of honor.
Quote:
Originally Posted by Big Steve
Shop better...really? I am spending above my means....Really? Guys, nice try, but neither of those responses apply to most anyone's real life expenses and certainly not mine. Didn't one of you guys get married due to the rising costs of health care coverage? How about rent (which I don't have, but most people are paying out the ass for) Utilities, food, insurance, car repairs, I could go on and on. Shit is not getting any lower priced except on electronics and computers. So don't talk to me about deflation.Quote:
Originally Posted by Benny Profane
When I can buy my home, a new car, that trip to Yurp for 40% off, then we can talk about deflation or at least where prices were 10-15 years ago.
^ how many properties do you own and manage? One of the cooler people I've met is the father of a friend back east. He has about a dozen or so condos in Hilton Head and travels most the year when he's not tending to his units. Very laid back and wealthy on paper, you'd be hard pressed to figure that out meeting him though. He never got higher than a bartender/part owner before starting in RE, very humble guy.
You do know that the dollar is about 25% stronger relative to the Euro than two years ago, right? I'm watching it closely, because I'll be back in Italy maybe this year. But this relates to what I was saying about spending above one's means. I really shouldn't do Europe, and stay closer to home, so, I really can't complain either way. It's a luxury.Quote:
Originally Posted by liv2ski
http://www.businessinsider.com/china...urnover-2015-5
http://www.businessinsider.com/china...rges-in-2015-5
Proof positive that the RE market in China is crashing big.
Seriously, I wonder if this is why Yellin is signaling rate rises. She's looking at this, not us.
Quote:
Originally Posted by liv2ski
There's a guy on Seeking Alpha, JasonC, that is brilliant. I suggest anyone wanting to learn about modern econ read his posts. This response is to someone claiming the same money print inflation argument:
The Transactional Velocity Effect Of Speculation And Financialism
"You printed charts that are mechanically the level of GDP divided by the M1 money stock and the MZM money stock respectively. That is an income velocity. That is what those charts are showing, what they are of. That you do not understand what they are or how they were created is not my problem. And no, they do not show how fast money is changing hands. They show GDP as a flow of money per unit time divided by a stock of money in existence as each of those time periods, producing a time series with the units of 1 over time.
How fast money is actually changing hands, on the other hand, is what the FedWire series I posted actually shows. Granted, only those transactions cleared by FedWire, but since that is almost all transactions by volume (40 to 50 time GDP, for example), yes that shows how fast money is actually changing hands. And the income velocity series you posted have nothing to do with that. It is precisely your confusion (or perhaps, blurring for the reception of others) between these concepts that has required my string of posts to set the matter straight.
Next you try to claim both that you are not of the crowd getting the fundamental call on inflation wrong, and then in the very next breath that "inflation is anything but tame". There is. No. Inflation. Grok please. Inflation has not been a serious economic problem in the United States since the early 1980s. At worst, we have had brief periods since when it hit 4% a year late in cycles, and it has persistently run 2-3% a year, falling over that entire stretch. Inflation in the last 10 years was lower than it was in the 10 before. It was lower in that 10 than in the 10 before that. We have had persistent, ongoing reductions in the rate of inflation, to very modest levels - barely detectable levels, even.
And yes, we all understand that half the financial world predicted high inflation as a result of Fed policies since the 2008 crisis. Loudly, we heard you and them the first 1000 times. But everyone screaming so has been and remains utterly and completely wrong. Precisely this, is the reason we are even having this discussion - because all rational men can see this by now, but people stuck on their busted predictions from half a dozen years ago will not learn and digest it and move on.
Inflation is a fall in the exchange value of money. Not a change in the relative price of certain categories of assets, like stocks or long dated financial claims generally. The massive increase in the money supply has not resulted in inordinate price increases. Full stop. How it is calculated has nothing to do with it, and spin cannot save the miss, for all those who predicted that said increase in the (narrow) money supply must and would result in inordinate price increases. They were simply wrong. They were wrong because their theories are false. And they will say anything to avoid facing that patent fact.