signs of inflation picking up

Discussion in 'Economics' started by mind, Feb 22, 2009.

  1. mind


    i expect huge jump in inflation. i would expect recent
    uptick already marked the turnaround. i would not be
    surprised to see double digit figures in 2010. your
  2. It sure beats a deflationary spiral and the liquidity trap.
  3. mind


    stagflation ain't big fun either ...
  4. Based on what exactly?

    By the way, I just noticed that you have not posted since Dec. 14th, 2008.

    No disrespect, but do you have another screen-name on ET that you have been posting under, or is Baron "paying" people more to post towards the end of the month in order to get web-activity up to present to potential advertisers?

  5. I have noticed local restaurants raising prices, as well as many grocery items going up. I think the deflation is only in assets that banks own, or that are financed by debt. But items that you need are already rising. Once the banks get fully bailed out, I am expecting 15-20% inflation next year. The stock market is showing an artificial deflation due to the banks hoarding cash. There is definitely a dislocation of asset prices between what banks think they're worth, and actual inflationary forces that are at work.
  6. mind


    i had another handle, but i got fired with that one ... :).
    i am just not that active here anymore. i do not have
    much to offer and do not need much. once in a while
    something interests me ... i don't get paid and i guess
    the board is busy enough to give baron quiet sleeps ...

    ppi as far as i know exceeded expectations. i did not
    expect any sign of inflationary pick up this early and
    i am still not sure if this is the inflationary move i
    expect. but these days you have to be flexible and
    adjust your plans quickly. i bought some additional
    gold and am going to go away from holding cash as
    soon as i sense the real inflationary wave ...

    here is a bloomber article on the issue:

    my rationale is pretty simple. all the bailouts are
    wishful thinking. governments can bail out companies
    occasionally, but the can't bail out the whole economy.
    they have their money only from this very economy.

    there are two forces in place: companies lowering
    prices in order to stimulate demand and government
    spending in order to stimulate that demand. my guess
    is that while a failed company does not reduce
    prices anymore an elected the government will continue
    spending. thus, in my book, the inflationary will outweigh
    the deflationary aspect of the process. admittedly not
    overnight. but i am trying to detect warning signs. i
    guess inflation is a pretty positively autocorrelated
    time series. once its going its going.
  7. mind


    about my thinking. though i would see rising prices in
    restaurants at the moment more like an accidental thing.
    i might be wrong. but actually i am interested in any
    kind of thing that gives an early warning. gold is quite
    interesting. i guess the recent move can be seen partly
    as a flight away from inflation ...
  8. Here's the real kicker. Food prices didn't correct with the disinflationary forces in this current downturn. With OPEC cutting output and mexico and russian oil fields in decline, it's only a matter of time before crude oil spikes in the 100's again. Oil and housing being the main disinflationary forces right now, things could get very ugly soon. Oil demand is already picking up in the US again. I personally don't think gold is a good inflation hedge. I think buying a broad basket of commodity and agriculture futures would be much better at protecting buying power.
  9. I can't imagine anything else. Although the first TRILLION of the new Spendulis Package seems to have pulled us out of a deflationary direction and into a more normal inflation range (not that normal is good). I think most of that money will never really see the street.

    The next couple of TRILLION really scare me though. I'm thinking about stocking my freezer with hamburger and cupboards with buns & secret sauce.

    Imagine, trillions of dollars flying around the country, picking them up by the handfuls. You come to me with a wad of cash looking for a hamburger. Sorry, if you want a hamburger it's gonna cost you 8 handfuls, 12 if you want cheese. And the restroom is for employees only.

    Now that I think about it, this package will prop-up housing values without even knowing it!
  10. Food prices have been partially derivative of energy prices. As soon as ethanol mandates are eliminated, food price deflation will start.

    Of course, bank credit trumps everything. Once they are fixed... get ready.
    #10     Feb 22, 2009