The Journey into Deflation

A guest on Bloomberg interpreting Albert Edwards’s perspective that we’re already seeing significant deflation in the U.S.

Comments

[CautiousInv...:]

An interesting video that touches upon the current debate over low bond yields; the bond market sees neither recovery nor reflation.

If deflation does come to pass, there will be a few winners: cash, those with outstanding loans and any fixed system of payments.

Coversely, corporations will have no power over pricing, with prices possibly falling and unless cost are reduced proportionately, margins will shrink.

Sep 03 01:22 PM

[CautiousInv...:]

Clarification: if you owe money it is bad; if you are owed money it is good.

Sep 03 01:23 PM

[Robert Mart...:]

The bond market is NOT a good indicator of future inflation.

U.S. Treasurys are getting tremendous support from quantitative easing, as Zero Hedge has repeatedly noted. seekingalpha.com/artic...

Fed support for Treasurys via quant easing is distorting the bid/cover ratio and giving a false sense of security to observers who describe the auctions as a "success". Quant easing is making a sham of Treasury auctions, and I'm waiting for the major media to pick up this story. (After the fact, of course). That's why I'm monitoring various ETFs that hedge inflation. seekingalpha.com/artic...

Bottom line: Fed intervention is distorting inflation signals. Remove quant easing, and inflation fears will skyrocket.

Sep 03 01:44 PM

[peterthepai...:]

they said it couldn't happen...

they said the fed could prevent it...

all the kings horses...?

Sep 03 01:45 PM

[Jasper M:]

On Sep 03 01:23 PM CautiousInvestor wrote:

> Clarification: if you owe money it is bad; if you are owed money
> it is good.

. . . . IF your creditors can pay. That, I fear, may be a much smaller fraction of the total than conventional wisdom is ready to accept.

Nice video. thanks, Paul

Sep 03 02:02 PM

[Pullease:]

U.S. Future Inflation Gauge at 10-Month HighReuters
September 04, 2009

(Reuters) - A gauge of U.S. inflation pressures rose sharply to a ten-month high in August, indicating that deflation is unlikely under current economic conditions, a research group said on Friday.

The Economic Cycle Research Institute's U.S. Future Inflation Gauge (USFIG), designed to anticipate cyclical swings in the rate of inflation, rose to 89.6 in August from 84.6 in July.

The index has now risen from a 51-year low in March to a ten-month high, said Lakshman Achuthan, managing director at ECRI.

"Thus, the risk of deflation has clearly dissipated for now, but inflation is not yet a clear and present danger," he said.

The July USFIG annualized growth rate, which smoothes out monthly fluctuations, shot higher to 6.5 percent from negative 8.8 percent in July, revised from negative 8.6 percent.

The gauge was pushed higher by rising commodity prices, said Achuthan.

Sep 04 10:11 AM

[whidbey:]

The concern I would have is the role of a purchase deflated component in the economy (it is not followed to my knowledge): how many consumers or policy makers use import costs to make decisions?

Instead consumers look at their incomes and more to the point, their "permanent income hypothesis". How much permanent income do I expect over the relevant horizon? Most consumers are income oriented and not too well aware of prices paid in the broad sense over any given time period. But very interesting.

Sep 05 05:40 PM