The Japan government has finally convinced it's population to start spending more of their money, rather than saving it, which has in the short term caused a little bit of inflation. Japan increased their money supply for two decades and had deflation during the period. I think Japan had two decades of deflation because their population saved the increase in their money supply, the extra money did not circulate, and the result was there was no increase in the velocity of their money. I think we here in the US will get our expected higher inflation if and when the 4.4 trillion expansion in the fed's balance sheet results in large increase in the velocity of money. When bank loans to the working labor class significantly pick up, I think we should get our higher inflation.
correct. The problem is..at $4 for a gallon gas and skyrocketing cost of food and health insurance I don't see this happening any time soon.
Most people around the world have no clue why the price of stuff is rising all the time, they just assume it's normal. Here is the explanation: www.youtube.com/watch?v=iFDe5kUUyT0 Thanks for your contribution Redneck
people have limited income and lower disposable income..inflation isn't low.. if you look at price oil it was flat for 15 years...reason natural gas is low is technology and lots of new supply like shale gas. as for technloogy it's mostly been innovation and no new innovation so price computers fall. or flat. and cheaper processes. only inflation is insurance and health care cost..more insurance and more taxes eat up disposable income.
inflation isn't low, the biggest expense is health care cost and property taxes has gone ,up ..people are paying 50% more in gas cost and insurance and bus tickets have increase 50% since 2000. price of food and cloting is rock bottom if you were to put tarriffs on imports,,,inflation but people disposable income are low so retail for non-essentials are going down. business cannot raise prices or no sales, this isn't wall street where prices are an illusion and fake. wall street isn't the real economy.
Talk about the last time the US , UK and elsewhere had bad inflation. What was happening then . Maybe similar demand is necessary. Year 2005 . I had a guy quoting a bathroom remodel. He quoted $65 hour and $35 hour for his helper/son. I asked if his son was to become a master plumber. He said no, he was a Software engineer student. I said no. Point is , that he could GET $100 hour . There was high demand for his service. South American labor was everwhere in the trades sending USD across borders. A seamstress i knew was the owner, landlord and potential flipper of three properties in my town. A friggin sewing lady! Everyone had virtial home equity ATM in their living room to fund anything. Unemployment 4.4% or rather, what was considered full employment . Government was doing their part, borrowing, spending. A commodity bubble with WTI at $140 with forcasts north of $200. Food shortages and subsequent food price infation with civil unrest and riots in some countries. Price of rice was very high. Steel, ore, coal, potash/fert, copper, gold were also bubbles. Farm, engineering, construction and mining products and industries were in high demand mostly driven by China. Maybe Canada and Aus. were the only majors not in super malinvestment frenzy. Only in the face of this scenario did the Fed start tightening with 7 rate hikes preceding the crisis. Sure the Fed is always slow, " behind the curve" , unable to recognize a bubble but my point is this. I think the fed loves those bubble times. Doing a fine job. That is high inflation. A bubble. It is caused by shortages and high consumer demand/spending. Does anyone see this now? A couple generations were burnt. The boomers are de leveraging/saving . The younger folks, most, really unaware of the above, have poor debt/equity ratios due to shool and car loans. People dont want or cant qualify for the vast monies available at low rates and, as someome has said, there is no money velocity. -1 gdp. 1 data point but this is a tepid growth and expansion. Structural unemployment with no wage pressure(used to be fed enemy number 1). Consumers are levered with low paying jobs and that is why inflation is low. Theory aside. I do realize inflation in my goods and services are high relative to my rate of pay increases amd i dont like it either. So, my purchasing power is worse this year than it was last year so i wont be inflating anything. Big week in central bank land. I guess euroland has low inflation as well. I know the subject of this thread is LOW inflation but ijust dont understand how some think rates will soar and prices will inflate anytime in the next few years. I think it is required spin/optimism of tightening in 2015 of the fed funds rate similar to the mantra " the expansion will pick up speed" next year. Bullshit. Really , can anyone see a tightenimg cycle to reduce the demand for credit? By the way, wasnt Bernanke quoted to the effect that he could stop inflation in fifteen minutes? Some reverse repo thing. I would have to google that or ask Martin, who i hear sips Cognac with French bankers.
+1 thanks for this insight.. it is loaded with interesting facts... i do agree.. the stock market..m 401K etc.,. is for the top 10 % of the country.. 50-70% of the folks are all living hand to mouth. they dont have a clue as to what is goin on. feel sorry for them.. RICH POOR gap is gettin bigger..
HMM.. Kind of .true..but the definition of a bubble is money chasing limited resources.. so assets are getting inflated in one way... when there is deleveraging. the reverse will occur.. give this another 18-24 months.
evidently, people have been calling for $15/hour for minimum wage aka the living wage. The irony is low interest rate stimulates China economy; investment bankers gets cheap money from the FED, then instead of investing the money in the US, they invest it in China. Obama has made it more expensive to do business in the US. at least, he's added oil to fire.