Sorry, Jim Rogers, You Were Wrong About Inflation

Discussion in 'Economics' started by ByLoSellHi, Jun 17, 2009.

  1. Check out this article about GM Europe slashing car prices by 40%.

    Check out this article making a solid case that high end home prices will fall well into 2012 (and that's if we're lucky; it could be well into 2014 or 2015, depending).

    Check out this article stating dairy farmers are killing their herds because wholesale milk prices are where they were in the 1970s, and it doesn't make sense to feed them.

    And meat cows (feeders).

    Do you see a trend here? I could on with category after category, but I won't. I'll spare you.

    Suffice it to say, look for deflation, sometimes crushing deflation to set in big time now that the bailouts are not 'doable' politically anymore, and given the fed's aversion to keep expanding its balance sheet or borrow any more money than is required to meet fixed spending obligations, which means no growth and the end of stimulus.

    Deflation has hit the beaches at Normandy, and despite taking a few hits at first landing, with rising oil prices, etc., has soundly wiped out the bunkers of inflation, and has established a strong position to work its way inland.

    Deflation is the nefarious enemy, seducing consumers and businesses alike to delay as much spending as possible, even the 'stuff' that's essential, based on the expectations it will be cheaper next month, next year, and further down the road.
  2. gkishot


    I am always enjoying your posts.
  3. Yes, it looks like Rogers is early on the inflation trade (Schiff too) and it has probably cost both dearly, but just because they're early it doesn't mean it's not coming. I think it's going to be one helluva ride once the economy recovers in 201x.

    P.S. Didn't you say you lived in Florida? Do you wake up in cold sweats thinking about the economy or do you just suffer from a little insomnia? ( <----works wonders) I'm on PST and ready to crash.
  4. Inflation must not always be defined as “too many dollars chasing too few goods”. It could be the result of some freak accident like global pandemic or a great famine that can wreak havoc on our food supply. As a result, the commodity prices will skyrocket.

    I'm beginning to think inflation and deflation are two faces of the same coin. In order to inflate, you will need to deflate elsewhere and vice versa.
  5. To begin with, there was an excessive consumer based economy that is now deleveraging. All the products that were produced for that consumer are of course "excess" in terms of supply and demand.

    This goes for auto sales as there were too many cars, home prices as there were too many homes built and too many cows were bred for the obese indulgent consumer.

    Inflation as defined as money supply + credit is one thing, but hyperinflation is a currency event.

    While there may be temporary deflation, it is more of a risk then inflation, the policy makers agree on that in order to stall a collapse of the ponzi economy like Greenspan/Bush did a few years back.

    The problems arise when the deflation is so dramatic that our creditor/exporter nations feel that pain. In a dire scenario of extreme deflation some of our creditors might go bankrupt (especially Japan which still has imbalances built into their economy and JGB market or the GCC nations which suffer from low oil prices).

    When one of our main creditors is at a high risk of default or actually defaults then they will be FORCED TO SELL treasuries (this means that they will not have a choice like one Madoff investor that broke the camel's back) and that is when the real fun begins for currencies.
  6. bettles


    Deflation would be bad for the US government because it has such a large debt. Likewise, most consumers are in debt, so deflation would be bad for them.

    Inflation would be good for the US government. It decreases the debt vs. GDP and pushes people into higher tax brackets, increasing revenue. Citizens are not likely to revolt at inflation because they "feel" they are doing better. They are making more money so they feel richer, and they may even be able to pay back their debts. Granted, those who are not in debt and who have money saved up are getting screwed. But how many people have significant savings? One in ten maybe? They are the minority that the government is not going to be as concerned with.

    The US government (actually the Fed, but they will do the government's "will") has control over inflation based their control of the money supply. With inflation being so "beneficial", and with the government having control over whether it occurs or not, how can you argue that it will not occur?

  7. ........................................................

    Absolutely correct..........

    When $30 Trillion leaves a $70 Trillion economy....

    What has to happen to all prices ?

    When $30 Trillion is added to a $70 Trillion economy....what has to happen to all prices ....?


    ANY company who is betting on the notion of maintaining 70/70 prices is sadly mistaken....

    Sales are going to even be reduced at the lower adjusted prices ....because of unemployment numbers....

    What Rogers has right.....?

    The art of selling books by maintaining prospective book buyer exposure....


    As regards to the "cow killers"....

    The solution is simple....

    "Grass fed" only.....and "its natural"....

  8. Dairy farmers killing their herds.

    That's what's wrong with humankind.

    In the future there will be FEWER of us.

    Of this I'm certain.

  9. Wow, some people here do not even have a basic understanding of supply/demand.
  10. Hey, why don't you mail out these articles to all of the supermarkets so that they can get with the program and start cutting costs on food. Because that has not happened.

    Milk has stayed the same price, if not slightly higher. Food prices, in general, have been going up without a stop, along with water & electricity.
    #10     Jun 17, 2009