Inflation, deflation, and disinflation are all in the eyes of the beholder, and all depend on the definition. Still I expect another round of deflation possibly with prices but more importantly with credit, my preferred measure of "flation".
I suspect most of you will reply an emphatic yes, but some of you will say no. Before I give you my take, please ponder a similar question: "Is inflation or deflation coming?"
What the S&P 500's dividend futures are signaling is that these quarters will be pretty lackluster in terms of overall economic growth. Given the lagging effect of the dividends, we currently expect the U.S. economy to begin slowing significantly in the first quarter of 2012, recover a bit, then fall back in the second half of the year.
We're really not sure why so many people seem to be surprised that new, seasonally-adjusted, weekly jobless claim filings persist in clocking in at levels above 400,000, or that the adjusted values for the previous weeks tend to be revised upward. Provided the established trend remains in effect, the number of seasonally-adjusted initial unemployment insurance claims filed each week in the U.S. is perhaps the easiest economic statistic of all to forecast.
Roubinbi served as a senior economist for international affairs at the Council of Economic Advisers under the Clinton administration, and he spent a year working as lead adviser to Timothy Geithner, who was then undersecretary for international affairs.
When the value of assets (loans) drop significantly, banks become capital impaired and cannot lend. This is happening now even though banks are hiding losses by not marking assets to market prices.
We already had a whiff of deflation in gold prices last week as commodities sank in harmony with sinking equities markets. That small of a sample can hardly be used to justify a bigger trend and I’m not trying to make last week out to more than it is, but signs pointing to recession are hard to ignore at this point.
The only thing that is true is the way in which Perry blasted the Fed is wrong, and I hope that costs Perry the nomination in favor of Chris Christie.
With real wages falling and jobs exceptionally hard to get (and keep), this drop in personal income will be accompanied with more unwillingness of banks to lend, and therefore must be considered highly deflationary.
All in all, given the variation we observe from year to year, the formula we presented on the chart will be accurate to within 12% of the actual amount of money collected by the U.S. government in any given year if you only know the median household income, and often much less than that amount. That's pretty remarkable considering how much, and how often, U.S. income tax rates have changed since 1967.
Obama wants to create jobs via stimulus measures. It's a fool's mission. Stimulus plans that do not fix the structural problems are as productive as pissing in the wind. Then when the stimulus dies, which it is guaranteed to do, a mountain of debt remains.
It's time to stop debating whether or not the US or Europe is headed into recession. The facts show the entire global economy is in recession.
Prior to the Great Financial Crisis I had a bet with "Heli-Ben", a staunch hyperinflationist who insisted we would hyperinflation before deflation. I won the bet but have not yet received my prize, a "crying towel" from "Heli-Ben".
The bear market is back says Australian economist Steve Keen. I agree. Moreover, the recent action, including the rally, offers sufficient evidence. The biggest percentage gains in history have all been in bear market rallies.
Congress and the President are down to the wire on cutting a debt limit deal. The President's goal has been to sound fiscally conservative, make clear the August 2 deadline, point to the need for a combination of spending cuts and tax increases, and encourage more discussions.
QE2 was the $600 billion sequel to the first big run that the Fed had taken at jolting the economy back to life. When added to QE1, $2.3 trillion was pumped into the economy; a completely unprecedented effort.
Inflation and deflation are monetary phenomena. As far as inflation goes, these price movements are noise. However, for those who think price is what matters, food prices are headed down.
It takes a rare confluence of circumstances to produce low growth and high inflation. But the Fed did it! That confluence is not an every day occurrence. Or even every business cycle occurrence. The Fed has to work really hard to get that kind of mojo going.
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