Managing Editor

Consumers Buy Into Disinflation

Let's not forget timing. The real time inflation indicator is just that: it takes the measure of the dollar on a DAILY basis.

The Bureau of Engraving and Printing hasn't stepped up the minting of new currency--YET. What happens first is an increase in the issuance of Treasury bills, notes and bonds. Increased Federal Reserve Note production follows as tranches of bills and notes are redeemed.

The indicator can head downward during the current disinflationary phase before turning north when the dollar's reinflated.



On Nov 14 05:40 PM Consider_this wrote:

> Response to Hervert Hoover,
>
> Inflation of prices of items (not produced in the country) without
> corresponding increase in *WAGES* of people is actually deflationary.
>
>
> It's not hard to envision why if wages don't have inflation, price
> inflation ends up deflationary overall.
>
> In the end, true inflationary spiral can happen only if WAGE is also
> inflating.
>
> My problem is that with global arbitration of wages; and production
> capacity of GOODS and ENERGY is outside of the country; and outsourcing
> controlling wage increase domestically; the only way you can get
> into an inflationary spiral within the USA; is if USD complete depegs
> with the rest of the world and goes into a downward spiral.
>
> However, that kind of inflation-attempt would happen with a high
> price: Cutoff of foreign goods and energy (too expensive); Cutoff
> of govt funding; Removal of USD as a reserve currency.
>
> Because we will lose (reasonably priced) energy and foreign goods,
> whether the economy will end up collapsing completely, thereby skipping
> wage increase (to increase wage, you need to have functioning economy
> and jobs), or be able to go into an inflation period, is unclear.
>
>
> This is the part that inflation scenario arguments that I cannot
> find. In pre-globalization days, it is possible to have Germany style
> chaos; In modern integrated era, WHAT IS THE MECHANISM to achieve
> overall wage gain?

PPI: the Numbers behind the Numbers

Thaks for your comment.

Apparently, snarkiness doesn't translate well on the page.

I, personally, DON'T feel reassured by the core numbers. I haven't yet found a way to live without food and energy.

The Dollar, Inflation and You

Thanks for your comment. Agreed. The move to a specie-backed currency wought be a fractious event.

How would your new currency idea work?

Who's Wrong About Inflation?

Notsosmart - There ARE monthly indexes of food and energy inflation maintained by the Bureau of Labor Statistics. They're included in each CPI report, though you'll usually need to scroll through a few lines in the report to find 'em.