Inflation – Has it arrived?

[sdduuuude]

[quote=Rich Toscano] I can’t speak for others, but to me, the “fuss” on this topic is that we’ve gone from rampant deflation hysteria six months ago to firmly positive inflation now. [/quote]

To me, hysteria seemed rampant in both camps, simultaneously, over the last six months. Interesting that both agree on gold.

I see no fuss here. I’ll take the under on a $10 gallon of milk in the U.S. by Jan 1, 2012.

[quote=Rich Toscano]A major premise of “inflationists” (at least of mine) has been that inflation will not likely be across the board but will probably be more apparent in items that are in shorter supply, that people need, and that are sought after globally.[/quote]

I just think there is still too much deleveraging to be done for inflation to win the day for quite some time.

Saying there will be inflation in things people need and apparent in items that are in “shorter supply” is kind of not a very bold statement. Sounds suspiciously like “demand” and “supply” will affect “prices.”

That is to say – it is entirely likely that we end up needing and/or able to afford less for the next few years.

[quote=Rich Toscano]
… I think the idea here is to try to understand what current trends imply for the future.
[/quote]

I’m seeing the oil trend up as it relates to unstable countries in the middle east – not so much related to US Currency and the Fed’s activities. I can’t find a chart of Libyan corn exports to prove that corn prices won’t be affected by the uprising.

[Rich Toscano]

[quote=sdduuuude]
To me, hysteria seemed rampant in both camps, simultaneously, over the last six months. Interesting that both agree on gold.

I see no fuss here. I’ll take the under on a $10 gallon of milk in the U.S. by Jan 1, 2012.
[/quote]

Yes, there are hysterical people on all sides of every argument, and I certainly agree with you on your over/under. But that doesn’t really change the point I was trying to make, which is that 6 months ago, the conventional wisdom was that serious deflation was a big risk (you need look no further than the Fed’s policy to see that). Now, here we are talking about prices of certain key items rising very rapidly.

That transition is interesting. So again, I can’t speak for anyone else, but to me the crux of this topic is not that yoy CPI is all that high (it isn’t) but that there has been a fairly rapid change in price pressures and the perceptions thereof.

[quote=sdduuuude]
I just think there is still too much deleveraging to be done for inflation to win the day for quite some time.

Saying there will be inflation in things people need and apparent in items that are in “shorter supply” is kind of not a very bold statement.
[/quote]

It’s not intended to be a bold statement, but nonetheless, some people seem to disagree. Even your quote above suggests this… you say that inflation will not win the day, but then in the very next sentence you give me a hard time for apparently stating the obvious when I say that the prices of things that people need will go up. Wouldn’t that be inflation? (In specific, the kind of inflation that matters — the one that concerns people’s cost of living?)

[Rich Toscano]

[quote=sdduuuude]
To me, hysteria seemed rampant in both camps, simultaneously, over the last six months. Interesting that both agree on gold.

I see no fuss here. I’ll take the under on a $10 gallon of milk in the U.S. by Jan 1, 2012.
[/quote]

Yes, there are hysterical people on all sides of every argument, and I certainly agree with you on your over/under. But that doesn’t really change the point I was trying to make, which is that 6 months ago, the conventional wisdom was that serious deflation was a big risk (you need look no further than the Fed’s policy to see that). Now, here we are talking about prices of certain key items rising very rapidly.

That transition is interesting. So again, I can’t speak for anyone else, but to me the crux of this topic is not that yoy CPI is all that high (it isn’t) but that there has been a fairly rapid change in price pressures and the perceptions thereof.

[quote=sdduuuude]
I just think there is still too much deleveraging to be done for inflation to win the day for quite some time.

Saying there will be inflation in things people need and apparent in items that are in “shorter supply” is kind of not a very bold statement.
[/quote]

It’s not intended to be a bold statement, but nonetheless, some people seem to disagree. Even your quote above suggests this… you say that inflation will not win the day, but then in the very next sentence you give me a hard time for apparently stating the obvious when I say that the prices of things that people need will go up. Wouldn’t that be inflation? (In specific, the kind of inflation that matters — the one that concerns people’s cost of living?)

[Rich Toscano]

[quote=sdduuuude]
To me, hysteria seemed rampant in both camps, simultaneously, over the last six months. Interesting that both agree on gold.

I see no fuss here. I’ll take the under on a $10 gallon of milk in the U.S. by Jan 1, 2012.
[/quote]

Yes, there are hysterical people on all sides of every argument, and I certainly agree with you on your over/under. But that doesn’t really change the point I was trying to make, which is that 6 months ago, the conventional wisdom was that serious deflation was a big risk (you need look no further than the Fed’s policy to see that). Now, here we are talking about prices of certain key items rising very rapidly.

That transition is interesting. So again, I can’t speak for anyone else, but to me the crux of this topic is not that yoy CPI is all that high (it isn’t) but that there has been a fairly rapid change in price pressures and the perceptions thereof.

[quote=sdduuuude]
I just think there is still too much deleveraging to be done for inflation to win the day for quite some time.

Saying there will be inflation in things people need and apparent in items that are in “shorter supply” is kind of not a very bold statement.
[/quote]

It’s not intended to be a bold statement, but nonetheless, some people seem to disagree. Even your quote above suggests this… you say that inflation will not win the day, but then in the very next sentence you give me a hard time for apparently stating the obvious when I say that the prices of things that people need will go up. Wouldn’t that be inflation? (In specific, the kind of inflation that matters — the one that concerns people’s cost of living?)

[Rich Toscano]

[quote=sdduuuude]
To me, hysteria seemed rampant in both camps, simultaneously, over the last six months. Interesting that both agree on gold.

I see no fuss here. I’ll take the under on a $10 gallon of milk in the U.S. by Jan 1, 2012.
[/quote]

Yes, there are hysterical people on all sides of every argument, and I certainly agree with you on your over/under. But that doesn’t really change the point I was trying to make, which is that 6 months ago, the conventional wisdom was that serious deflation was a big risk (you need look no further than the Fed’s policy to see that). Now, here we are talking about prices of certain key items rising very rapidly.

That transition is interesting. So again, I can’t speak for anyone else, but to me the crux of this topic is not that yoy CPI is all that high (it isn’t) but that there has been a fairly rapid change in price pressures and the perceptions thereof.

[quote=sdduuuude]
I just think there is still too much deleveraging to be done for inflation to win the day for quite some time.

Saying there will be inflation in things people need and apparent in items that are in “shorter supply” is kind of not a very bold statement.
[/quote]

It’s not intended to be a bold statement, but nonetheless, some people seem to disagree. Even your quote above suggests this… you say that inflation will not win the day, but then in the very next sentence you give me a hard time for apparently stating the obvious when I say that the prices of things that people need will go up. Wouldn’t that be inflation? (In specific, the kind of inflation that matters — the one that concerns people’s cost of living?)

[Rich Toscano]

[quote=sdduuuude]
To me, hysteria seemed rampant in both camps, simultaneously, over the last six months. Interesting that both agree on gold.

I see no fuss here. I’ll take the under on a $10 gallon of milk in the U.S. by Jan 1, 2012.
[/quote]

Yes, there are hysterical people on all sides of every argument, and I certainly agree with you on your over/under. But that doesn’t really change the point I was trying to make, which is that 6 months ago, the conventional wisdom was that serious deflation was a big risk (you need look no further than the Fed’s policy to see that). Now, here we are talking about prices of certain key items rising very rapidly.

That transition is interesting. So again, I can’t speak for anyone else, but to me the crux of this topic is not that yoy CPI is all that high (it isn’t) but that there has been a fairly rapid change in price pressures and the perceptions thereof.

[quote=sdduuuude]
I just think there is still too much deleveraging to be done for inflation to win the day for quite some time.

Saying there will be inflation in things people need and apparent in items that are in “shorter supply” is kind of not a very bold statement.
[/quote]

It’s not intended to be a bold statement, but nonetheless, some people seem to disagree. Even your quote above suggests this… you say that inflation will not win the day, but then in the very next sentence you give me a hard time for apparently stating the obvious when I say that the prices of things that people need will go up. Wouldn’t that be inflation? (In specific, the kind of inflation that matters — the one that concerns people’s cost of living?)

[carlsbadworker]

[quote=Rich Toscano]Personally, I don’t believe this is the “big one”… I think it’s coming, but not until after our foreign creditors panic.[/quote]

I have the opposite point of view. I think our largest foreign creditors (a.k.a China and oil countries) did start to panic. However, they are not panicking about the dollar, as many think they would, but I always doubt about that because the dollar holdings are possessed by the rich and privileged few in those countries, who accumulated because of the political power they possess (or those who tied to them). Say, if you took a bribe of $1 million dollar overnight, would you worry about the dollar devaluation so much that you would risk not storing it in US treasury but in local currency that is more readily traceable and forfeit-able?

Instead, they are now panicking because of food/oil inflation (that is the result of the dollar devaluation and supply shortage). The rise of food and energy price presents a much bigger political structure problem as it is a bigger part of expenditure for their people. China has just announced that it would control its 2011-2015 growth rate to 7%. (http://e.nikkei.com/e/fr/tnks/Nni20110227D27JF946.htm) If you look at Chinese GDP growth history, you would notice how low that 7% figure is:
http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=CNY

I personally think applying brakes to the world’s largest growth engine at the moment has a bigger impact across the globe than for the treasury yield to increase one or two percentage points. This thread has many posts about how the government is in bed with the riches, but nothing drives those in power crazier than the possibility of losing that power. They will do everything to defend that regardless of the economy consequence and the feeling of their rich friends/relatives.

Given that the stock market is still fairly richly priced at the moment, I personally would gradually diminish my exposure rather than waiting to confirm that this is the “big one”.

[carlsbadworker]

[quote=Rich Toscano]Personally, I don’t believe this is the “big one”… I think it’s coming, but not until after our foreign creditors panic.[/quote]

I have the opposite point of view. I think our largest foreign creditors (a.k.a China and oil countries) did start to panic. However, they are not panicking about the dollar, as many think they would, but I always doubt about that because the dollar holdings are possessed by the rich and privileged few in those countries, who accumulated because of the political power they possess (or those who tied to them). Say, if you took a bribe of $1 million dollar overnight, would you worry about the dollar devaluation so much that you would risk not storing it in US treasury but in local currency that is more readily traceable and forfeit-able?

Instead, they are now panicking because of food/oil inflation (that is the result of the dollar devaluation and supply shortage). The rise of food and energy price presents a much bigger political structure problem as it is a bigger part of expenditure for their people. China has just announced that it would control its 2011-2015 growth rate to 7%. (http://e.nikkei.com/e/fr/tnks/Nni20110227D27JF946.htm) If you look at Chinese GDP growth history, you would notice how low that 7% figure is:
http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=CNY

I personally think applying brakes to the world’s largest growth engine at the moment has a bigger impact across the globe than for the treasury yield to increase one or two percentage points. This thread has many posts about how the government is in bed with the riches, but nothing drives those in power crazier than the possibility of losing that power. They will do everything to defend that regardless of the economy consequence and the feeling of their rich friends/relatives.

Given that the stock market is still fairly richly priced at the moment, I personally would gradually diminish my exposure rather than waiting to confirm that this is the “big one”.

[carlsbadworker]

[quote=Rich Toscano]Personally, I don’t believe this is the “big one”… I think it’s coming, but not until after our foreign creditors panic.[/quote]

I have the opposite point of view. I think our largest foreign creditors (a.k.a China and oil countries) did start to panic. However, they are not panicking about the dollar, as many think they would, but I always doubt about that because the dollar holdings are possessed by the rich and privileged few in those countries, who accumulated because of the political power they possess (or those who tied to them). Say, if you took a bribe of $1 million dollar overnight, would you worry about the dollar devaluation so much that you would risk not storing it in US treasury but in local currency that is more readily traceable and forfeit-able?

Instead, they are now panicking because of food/oil inflation (that is the result of the dollar devaluation and supply shortage). The rise of food and energy price presents a much bigger political structure problem as it is a bigger part of expenditure for their people. China has just announced that it would control its 2011-2015 growth rate to 7%. (http://e.nikkei.com/e/fr/tnks/Nni20110227D27JF946.htm) If you look at Chinese GDP growth history, you would notice how low that 7% figure is:
http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=CNY

I personally think applying brakes to the world’s largest growth engine at the moment has a bigger impact across the globe than for the treasury yield to increase one or two percentage points. This thread has many posts about how the government is in bed with the riches, but nothing drives those in power crazier than the possibility of losing that power. They will do everything to defend that regardless of the economy consequence and the feeling of their rich friends/relatives.

Given that the stock market is still fairly richly priced at the moment, I personally would gradually diminish my exposure rather than waiting to confirm that this is the “big one”.

[carlsbadworker]

[quote=Rich Toscano]Personally, I don’t believe this is the “big one”… I think it’s coming, but not until after our foreign creditors panic.[/quote]

I have the opposite point of view. I think our largest foreign creditors (a.k.a China and oil countries) did start to panic. However, they are not panicking about the dollar, as many think they would, but I always doubt about that because the dollar holdings are possessed by the rich and privileged few in those countries, who accumulated because of the political power they possess (or those who tied to them). Say, if you took a bribe of $1 million dollar overnight, would you worry about the dollar devaluation so much that you would risk not storing it in US treasury but in local currency that is more readily traceable and forfeit-able?

Instead, they are now panicking because of food/oil inflation (that is the result of the dollar devaluation and supply shortage). The rise of food and energy price presents a much bigger political structure problem as it is a bigger part of expenditure for their people. China has just announced that it would control its 2011-2015 growth rate to 7%. (http://e.nikkei.com/e/fr/tnks/Nni20110227D27JF946.htm) If you look at Chinese GDP growth history, you would notice how low that 7% figure is:
http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=CNY

I personally think applying brakes to the world’s largest growth engine at the moment has a bigger impact across the globe than for the treasury yield to increase one or two percentage points. This thread has many posts about how the government is in bed with the riches, but nothing drives those in power crazier than the possibility of losing that power. They will do everything to defend that regardless of the economy consequence and the feeling of their rich friends/relatives.

Given that the stock market is still fairly richly priced at the moment, I personally would gradually diminish my exposure rather than waiting to confirm that this is the “big one”.

[carlsbadworker]

[quote=Rich Toscano]Personally, I don’t believe this is the “big one”… I think it’s coming, but not until after our foreign creditors panic.[/quote]

I have the opposite point of view. I think our largest foreign creditors (a.k.a China and oil countries) did start to panic. However, they are not panicking about the dollar, as many think they would, but I always doubt about that because the dollar holdings are possessed by the rich and privileged few in those countries, who accumulated because of the political power they possess (or those who tied to them). Say, if you took a bribe of $1 million dollar overnight, would you worry about the dollar devaluation so much that you would risk not storing it in US treasury but in local currency that is more readily traceable and forfeit-able?

Instead, they are now panicking because of food/oil inflation (that is the result of the dollar devaluation and supply shortage). The rise of food and energy price presents a much bigger political structure problem as it is a bigger part of expenditure for their people. China has just announced that it would control its 2011-2015 growth rate to 7%. (http://e.nikkei.com/e/fr/tnks/Nni20110227D27JF946.htm) If you look at Chinese GDP growth history, you would notice how low that 7% figure is:
http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=CNY

I personally think applying brakes to the world’s largest growth engine at the moment has a bigger impact across the globe than for the treasury yield to increase one or two percentage points. This thread has many posts about how the government is in bed with the riches, but nothing drives those in power crazier than the possibility of losing that power. They will do everything to defend that regardless of the economy consequence and the feeling of their rich friends/relatives.

Given that the stock market is still fairly richly priced at the moment, I personally would gradually diminish my exposure rather than waiting to confirm that this is the “big one”.

[Rich Toscano]

Carlsbadworker, I think you misunderstand what I mean by the “big one.” I am referring the potential for a serious inflation.

And no, they are not panicking about our debt yet. But I feel pretty confident they eventually will.

[Rich Toscano]

Carlsbadworker, I think you misunderstand what I mean by the “big one.” I am referring the potential for a serious inflation.

And no, they are not panicking about our debt yet. But I feel pretty confident they eventually will.

[Rich Toscano]

Carlsbadworker, I think you misunderstand what I mean by the “big one.” I am referring the potential for a serious inflation.

And no, they are not panicking about our debt yet. But I feel pretty confident they eventually will.

[Rich Toscano]

Carlsbadworker, I think you misunderstand what I mean by the “big one.” I am referring the potential for a serious inflation.

And no, they are not panicking about our debt yet. But I feel pretty confident they eventually will.

[Author]

Posts