Deflation warning bells ring louder

Deflation warning bells ring louder

money.cnn.com

The government will report its key inflation index Friday morning, the Consumer Price Index, and economists believe the report is likely to show the first year-over-year drop in prices since 1955.

That's because deflation, or a widespread drop in prices, is one of the most destructive forces that can hit an economy.

...

Deflation is most often associated with the Great Depression. In 1930, consumer prices fell 2.3% and plunged 9% a year later. Prices fell nearly 10% in 1932 before the rate of decline started to slow. Still, prices didn't turn higher again until 1934.

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Our economy seems to be spiraling into depression

Todays futures point towards a sharp decline.

As times get tougher, businesses charge lower prices, bids get more competitive, and the profit margin sinks.

This means that business owners will have a harder time paying down their credit lines, and keeping their employees paid, let alone new investments.

One way to solve this problem would be to suspend income tax collection for six months, but that would actually work to solve some of the economic problems, and we all know that that is not the real plan.

We are in a corporate takeover.

The thing to find out, and I'm hoping the corporate records will show, is who are the shareholders? Who profits - for example - from the 'private, for-profit, corporate CIA' or the 'private, for-profit, corporate IRS' or the 'private, for-profit Social Security' - that those in charge are now telling us is 'broke.' Who is on the board of directors of 'UNITED STATES OF AMERICA, INC

www.rense.com...


money.cnn.com
(visit the link for the full news article)

Wait. Does that say widespread drop in prices hurts our economy?

Whose economy? The rich and wealthy?

I don't know about you, but I could stand to have everything available dirt cheap right now.

price is subjective to supply and demand. in this case feedom of choice is not in the equation

oh, don't worry, the price of the necessities will still be rising I bet.....ya know, those things that everyone knows you are gonna buy, because, well, if you don't, you just won 't be living much longer...

it's all those luxuries that will get cheaper, and the investment assetts, so the powers that be can swoop in with our taxmoney and buy them dirt cheap!

Originally posted by ben91069
Wait. Does that say widespread drop in prices hurts our economy?

Whose economy? The rich and wealthy?

I don't know about you, but I could stand to have everything available dirt cheap right now.

Here's the problem with deflation - while it may look to you like you could stand to have cheaper prices the problem is that people will hold out knowing that the cost will drop more. Companies will fold and more jobs will be lost. It's a death spiral. You may not notice right away that it's spinning at the top but eventually that spiral catches up to everyone rich included and takes us all down with it.

Another point is deflation has opposing influences on creditors and
debtors, just as inflation has. As prices of goods and services fall, the real value of the currency rises in terms of the amount of those goods and services it can purchase.

The money supply is being expanded Zimbabwe-style. You may as well use the dollar as toilet paper. What that means is that following a short period of deflation, we will face hyperinflation. So, first, the deflation will devastate employment, then prices will go through the roof.

Not good.

Except:
www.cnbc.com...

The market is worried about the risk of inflation right now. With what the government is doing. Take a look at gold It went from $840 last month to $1000 this morning!

I could post the M1 monetary base graph from the St. Louis fed, but I think everyone has seen that hockey stick. (If you haven't I will post it). What i would like to see is M3 but the Fed made sure we couldn't check that to see the extent of the damage they're causing.

Deflation my butt, this huge crash is what happens when you don't let markets correct and you try to preserve fake prosperity with fake credit.

People wonder why the credit markets are frozen? You try not saving and printing your credit from thin air. Your grandmother always said "Save your money because it is your lifeline and it is where credit is made".

Now savers are being punished by these stupid policies based on lies, and their credit is being unfairly destroyed while others' irresponsibility is being rewarded with government subsidies.

Stop falling for this deflation crap. Half these people don't know what the hell is going on anyway.

[edit on 20-2-2009 by projectvxn]

Deflation is what we experienced during the holidays and one of the prime indicators is the prices of crude oil.

But that is why the economical stimulus is suppose to stop, with enough money in the system to cause inflation.

So I will be very careful with this news.

Trying to replace a natural market correction with over-printing cause inflation in the end. Meanwhile the government is lying to the market, fudging data and telling us it's deflation. Meanwhile we all get robbed, while the government also tries to replace demand that only PRODUCTION can replace...God I hate the government. I hate them. They are such #ing morons.

Blame the powers that has taken over our very well and supposedly perfect system of government.

What we got now is nothing but a ponzi scheme.

^^^^^ Not morons, crooks.

Savings will be greatly devalued in the next few years. Those who hold long term fixed debt will benefit. People on fixed incomes will lose. Those whose incomes can rise with inflation will fare better.

In other words, those who have been conservative financially and have steady jobs or good retirements will be punished. Sorry Grandpa, you worked all your life for nothing.

In order to survive this thing, you will have to be quick to adjust and willing to change your ways of thinking about how to earn a living, and (ironically) you will be better off if you can hang on to that FIXED mortgage you committed fraud to get because the underlying asset will appreciate in dollar terms while the mortgage payment stays the same (but if your mortgage is variable you are screwed, as interest rates will have to rise).

The deflation is over people.
We went to the store last night and couldn't believe the price increases we where seeing. We asked a lady we know who works at the store and she said they have been getting calls several times a day ordering them to raise the prices on EVERYTHING IN THE STORE! For the last week!
She had talked to a few girlfriends who work at other grocery stores and the same is happening there too.
"Case in point we where going to buy a friend a bottle of Single Barrel Jack Daniels liquor for his birthday that was $43.99 just last week. (had to set aside the money) We went in last night to buy it and it had jumped to $54.99." They had the call that morning to hike it 11 dollars. It is across the board at all the stores here right now. It's not just alchohol it's the food stuffs and everything else too.
So you guys really need to get in and get what you can now because they are starting the price jacking NOW. They aren't waiting for things to get any worse.
I am seriously NOT trying to fear monger here! I am being realistic about this. If they are getting the calls now it has already started and is here. It is only a matter of time before it's worldwide, because they are running the price jumps 24/7. It has only been going on for a week so far, but it doesn't look like it is going to slow anytime soon.

Well for those that have not started their garden plots or had forgotten where their farmers markets are located is time to reacquaint ourselves with that.

And for those that have enough land and the out of the city is time to start raising some chickens.

I will start my garden this spring, but I can not have animals in my yard beside pets.

Don't confuse deflation w a commodities bear market.

reply to post by ben91069


Right ...... bringing down prices means less income for companies / less profit / less employees = more unemployment.

Its TAXESSSSSSSSSSSSSS