The concept of Deflation and Inflation
Most people deal with Inflation and Deflation as it would be one single number. My point of view is different and I believe it helps to see the importance of undertstanding how Inflation is created through Deflation. I further believe it helps to put financial advice in the right context and making better financial decisions. Identifying the tipping point of Deflation into Inflation is important as it is the point where your tactics need to change.
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Filed under: Inflation
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as i see it, any CPI based on hedonic prices (to the extent utilised by the US government) is useless because it dies not reflect people’s behaviour. so when robert shiller replaces OER in the government CPI by the CSHI in the CS-CPI the result is about as irrelevant as the official CPI. that doesn’t come as a surprise because in my opinion robert shiller is also substantially wrong calculating his own s&p 500 p/e ratio.
i believe i see why his figures are popular yet i prefer shadowstats.
commission is lower than revenue. let’s assume $2 billion of revenue.
revenue is a fraction of price, let’s say $50 billion for a nominal value (at expiry) of, say, $60 billion.
so investors exchanged $50 billion of cash for the promise to be paid $60 billion later.
from the $50 billion, $500 million are paid, 1.5 billion are kept, 48 billion are invested just as if the buyers had left them at the bank.
the inflationary effect comes from doubling the money, not from the commission, no?
as i see it: yes and no.
companies selling basic goods do well, while luxury goods are hard to sell.
so while the total money supply decreases (deflation) only certain prices fall… others rise. so technically and/or statistically the figures won’t reflect people’s perception.
hyperinflation as i see it, on the other hand, can only be triggered by distrust. and that’s something that’s not going to happen any time soon. so i’m coming to the same conclusion with different arguments.
go to peter schiff’s channel and learn about economics?
beore i’m willing to accept someone’s view of economics i check out his track record.
go figure how much money you would have “made” had you followed peter schiff’s advice in the past.
how much sense does it make from an investor’s point of view to announce doom if it will happen only years ahead?
and ask yourself whether you’d follow someone’s advice if he profits from you buying only certain products.
good night, and good luck.
I think this recovery is for real – I don’t think it’s too late to jump in – there may be a bit of a pull back but I truly believe we have entered a new bull market
good luck with your buy-and-hold strategy you’re going to implement under a false assumption. you’ll lose money (at least adjusted for inflation) throughout the coming years.
How right! There is no such thing as long term in investing (money)
Investing is and always will be a matter of riding punctually the better horse before jumping on a better rising horse.
Knowing one year before the right horse to ride is good only if you can time your jump well. And it is seldom on year in advance.
Politicians want people to believe that long term in financial investment do exist because long term benefits more to societies. But long terms dont exist.
I dont see the exact target of your comments here.
What are you smashing down? Building infrastructures and local consumption in WG as a way of improving the situation or the financial approach to fund it?
absolutely.
admittedly, if florgat91 were right and this were a bull market (since he said “new” i presumed he meant “secular”) then “buy now and sell in a few years” would work.
it’s just that the probability of such a development is far too low.
making money out of money requires investor skills. it’s obvious many professional portfolio managers don’t have these skills. neither do many folks charging you for their advice. and the stupid propaganda on the net doesn’t make it easier, either.
Dude get another barber.
thanks for the “thumb down” for my comment.
you must be a peter schiff fan. let me tell you something.
i’m glad you’re there. really. i need you.
because the world needs people who think they do great while they lose money. otherwise, the rest of the world couldn’t make money.
you are in for a big surprise
Thanks for your videos.
What is your take on this stock market rally. Is it just temporary or a real bull market?
In 2009, we basically have finished setting ourselves up with an ARM for our national debt. When it resets, we will lose the ‘house’.
Until the bank “assets” are flushed, written down, whatever…….We will be in a deflationary spiral. Add to that Central and Eastern European debt denominated in Euros…..still on the books. The only the fed can do is actually stand on the corner handing out cash. Otherwise, the banks will horde it. Lack of credit growth suffocates the weak survivors. The banks have to go bankrupt. Or nationalize. The Zombie breeds deflation. Denial = Deflation.
have you got a reference / data ?
Is there any widely accepted measure of velocity of money ?
Watch my videos of the Deflationist Harry S. Dent, Im in the inflation camp but he does put some point forward for deflation not inflation that you might want to listen to
intelligent people are in the inflation camp…to be a deflationist you need to admit that the more you print the more value it has..they will say the banks are holding the money and not letting it into the economy…but they will and they are
I think Japan’s 20 year deflationary head fake confused a lot of people, like Bernake and the like, Japans carry trade exported a lot of inflation out of the economy…
Mr. JBerni1-you rock!!! Even the most dynamic economists are not talking about this!!! Thank you!!! I understand you better after I read the pamphlet by the Federal Reserve Bank of New York.
two interesting points:
(*)so as US tries to “inflate” it’s economy, Saudi Arabia and OPEC take away that money to the extent US is dependent on oil.
(*)Multiplier is KEY today. May or may not happen.
@fox20012 : verrrry interesting point you make. Carry trade takes inflation OUT of the economy! (people take the liquidity locally and invest in foreign assets). So that is a problem for central bankers in OPEN economies like US/JAPAN etc.
They may have to impose CAPITAL CONTROLS.
What is he talking about? “Depression”? I thought a depression was a major, world shaking event. Not a slight change in the markets, that goes unnoticed by the media.
Either he is wrong, or I misunderstood the meaning of the word.
Depression, in economic terms, is just the ‘recession’ of the economy. From late 2008, most global economies have not be expanding and the majority have actually been working backwards. For example, there is an increase in unemployment and the GDP has also decreased (some countries have declared backruptcy).