Category: Inflation
The analysis published under this category are as follows.
Tuesday, June 24, 2008
Inflation and Negative Real Interest Rates are Necessary to Avoid Depression / Economics / Inflation
By: John_Mauldin
This week's Outside the Box will challenge a few of your base assumptions. Paul McCulley, the managing director at PIMCO, offers us a kind word for inflation and the reasons that the Fed will be on hold for a lot longer than the markets currently think. And part of that is to avoid a real recession or even a depression. Getting this debate right is important.
These are indeed interesting times we live in. I look forward to being with Paul at the end of July on our Maine fishing expedition, where he can defend his proposition to the group of economists and analysts gathered there. Have a great week.
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Monday, June 23, 2008
Inflation and Wages- Another Dangerous Economic Fallacy / Economics / Inflation
By: Gerard_Jackson
Economic fallacies are like dormant microbes, sooner or later they once again become active. However, the view that wages can cause inflation is one fallacy that never seems to go away. There are economists in the US, the UK and Australia warning that wage rises could trigger an inflationary surge. Nothing new here. In early 2005 Mark Whitehouse and Kemba Dunham of the Wall Street Journal complained that too much job growth generated inflation. In their view good job numbers would probably "fuel fears of higher inflation and cause bond prices to fall and interest rates to rise".Read full article... Read full article...
Saturday, June 21, 2008
Fed and US Dollar Credibility at Stake Due to Financial Crises and Surging Inflation / Interest-Rates / Inflation
By: Money_and_Markets
Jack Crooks writes: For the currency markets I follow, and every other financial market right now, inflation is the buzz word. Each and every new report of rising prices releases new concern — whether the threat is revealed in Brazil, the United States, Europe or even your local grocery store.
No one likes forking over more cash this month than they did last month ... for anything. But this inconvenient fact is being increasingly realized across the world.
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Friday, June 20, 2008
Inflation Out of Control- Three Ways to Protect Yourself / Personal_Finance / Inflation
By: Money_and_Markets
Mike Larson writes: I hate to be the one to yell "FIRE" in a crowded theatre. But the time for keeping quiet has long since passed. The time for ignoring the gathering clouds of smoke is over. It's time to sit up, pay attention, and get your portfolio the heck out of harm's way ... because we have a full-scale, five-alarm, inflationary wildfire on our hands.
Allow me to walk you through the overwhelming, undeniable evidence ...
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Tuesday, June 17, 2008
UK CPI Inflation Breaks Above Bank of England's Upper 3% Limit / Economics / Inflation
By: Nadeem_Walayat
The UK Consumer Price Index rose to 3.3% for May 08 above the consensus forecasts of 3.2% pushing inflation to a 11 year high on the back of a surge in import and producer prices. Surging inflation not only puts a hold on further UK interest rate cuts but opens the door to what can only be construed as panic rate hikes later in the year to prevent a wage price spiral from taking hold and pushing the UK economy into stagflation.Read full article... Read full article...
Sunday, June 15, 2008
Central Bankers Finally Tightening the Interest Rate Screws on Inflation / Interest-Rates / Inflation
By: Money_and_Markets
Mike Larson writes: Believe it or not, it's finally happening. It's dawning on Federal Reserve policymakers ... and on many other global central bankers from Canada to Asia to Europe ... and beyond. The "it" they're starting to accept?
It's time for tighter monetary policy.
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Sunday, June 15, 2008
INFLATION Means the Choice Between Stagflation and Recession- Part 2 / Economics / Inflation
By: Prieur_du_Plessis
Click here for Part 1 - Jim Sinclair (Mineset): Bernanke has painted himself into a corner
“The euro is down hard today on the premise that this is the start of increased interest rates in the US, a statement that is totally ludicrous.
“There are two possibilities here:
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Sunday, June 15, 2008
INFLATION Means the Choice Between Stagflation or Recession / Economics / Inflation
By: Prieur_du_Plessis
The Electric Light Orchestra lyrics “… you took me ohh, higher and higher baby, it's a living thing, it's a terrible thing …” have been mulling through my head over the past week as central bankers' inflation-fighting rhetoric moved to centre stage.
A succession of hawkish comments from US policymakers persuaded pundits that the US rate-cutting cycle was over, resulting in a stronger US dollar, plummeting government bonds, predominantly lower global stock markets (with Asia seeing the most red), and non-agricultural commodities coming off the boil.
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Saturday, June 14, 2008
Recession Required to Defeat Inflation? / Economics / Inflation
By: John_Mauldin
- Whip Inflation Now
- Where Can We Get Help on Inflation?
- The Patient Died Anyway
- Inflation in Asia and Europe
- There Are No Good Solutions
President Nixon instated price controls on the 15th of August, 1971. Inflation was a little over 4% at the time. Price controls manifestly did not work (resulting in shortages of all sorts and a deep recession) and were rescinded a few years later. President Ford went to Congress with programs to fight inflation that was running closer to 10% in October of 1974, with a speech entitled "Whip Inflation Now" (WIN). He famously urged Americans to wear "WIN" buttons. That policy too was less than effective, and the buttons, in a history replete with silly gestures by governments, should stand on anyone's top ten list of such silly gestures.
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Friday, June 13, 2008
The Consumer Price Index: Inflating the Money Supply / Economics / Inflation
By: Adrian_Ash
"...With the cost of living always rising, not falling, it's a good job there's so much more money around to help pay for things. Right...?"
SURELY the 20th CENTURY'S greatest marketing coup – besides making cigarettes taste of freedom and youth rather than the Sandakan death-march – was kidding the world that "inflation" meant rising prices.
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Friday, June 13, 2008
Bernanke's Open Mouth Operations Attempt at Halting Inflationary Dollar Slide / Economics / Inflation
By: Joseph_Brusuelas
Over the past fortnight Fed Chairman Ben Bernanke has engaged in “open mouth operations” to shape market expectations regarding future monetary policy out of the US Federal Reserve. Mr. Bernanke rhetorically intervened in the global currency markets to prop up a beleaguered dollar, explicitly expressed unease over the current course of inflation and signaled that the Fed would not tolerate a breakout of inflation expectations. Not bad, for a Fed Chairman fighting multiple crisis on multiple fronts. Read full article... Read full article...
Tuesday, June 10, 2008
Inflationary Demand Destruction Delusion / Economics / Inflation
By: Captain_Hook
Demand destruction refers to the effect of a rising price on a good, service, or commodity, where a rising price has the increasing effect of curbing demand. Central planners live under the assumption the above condition set applies to commodities within current circumstances, which we categorize as quasi-hyperinflationary times at present. Here, the understanding is monetization efforts aside for definitional purposes; along with recognizing True Money Supply (TMS) growth rates have been contracting in the States, and nowhere near what could be even be considered high levels, the theory is lags associated with accelerated gains witnessed previously are still working through the system sufficiently to export reactionary inflation in emerging markets that reside on the very cusp of potential hyperinflationary conditions. Read full article... Read full article...
Tuesday, June 10, 2008
Importance of Real US Inflation Rate in Forming Investment Decisions / Stock-Markets / Inflation
By: John_Mauldin
This week in Outside the Box we look at Bill Gross's recent essay on measuring inflation. How you measure inflation makes a difference not only in social security payments but also in what your real returns on bonds are. As Bill notes, there is a significant difference in how the world measures inflation and how it is done in the US. He gives us some insights that are very thought-provoking.
In the last decade economists regularly argued the CPI over-stated inflation by 1%. Now Gross suggests that it may understate inflation by 1%. This week's OTB makes for very interesting reading. Bill Gross is managing director of PIMCO. (www.pimco.com)
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Monday, June 09, 2008
UK Heads for Stagflation as Factory Price Inflation Soars to New Record / Economics / Inflation
By: Mark_OByrne
Gold closed at $895.50 in New York Friday and was up $23.30 and silver closed at $17.37 and was up 30 cents. In the New York Globex market gold subsequently rallied to $902.20 late Friday. Both traded sideways in Asia this morning prior to rallying higher in early European trading.The gas explosion in Western Australia will further curtail supply of gold from that part of the world. It has led to the loss of some 30% of the state's gas supplies and is already creating serious problems for Western Australia's massive gold mining industry and will curtail supply for months, rather than weeks.
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Friday, June 06, 2008
Inflation One Year Ahead - A Look at the Inflation and the Consumer Price Index / Economics / Inflation
By: Joseph_Brusuelas
The recent rise in inflation has not yet been properly captured by the variety of inflation indexes used by the market to assess the pricing environment. The publication of the April Consumer Price Index elicited howls of derision from the market due to the very dubious -2.0% decline in the price of gasoline suggested by the report. At the time, our reaction was that it did not pass the “laugh test” and that once the seasonal adjustments made by the Bureau of Labor Statistics are “adjusted” we are quite confident that the actual increase in headline prices will be accurately accounted for and the increase in core prices that most individuals have observed will also work their way into the data. Read full article... Read full article...
Friday, May 30, 2008
The False Prosperity of Inflationary Booms / Economics / Inflation
By: Adrian_Ash
"...So what's not to love about an inflationary boom...?"
"EVER WONDERED WHY your family budgets never seem to work out as planned?" asked Harry Browne in his 1970 best-seller, How You Can Profit from the Coming Devaluation .
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Wednesday, May 28, 2008
Central Banks Joined in the Inflation Targeting Craze / Economics / Inflation
By: Adrian_Ash
rt = g rt- 1 + (1 -g ) rt* + q [ Et pt+j – p* ]
"If we wait until a price movement is actually afoot before applying remedial measures, we may be too late..." John Maynard Keynes, A Tract on Monetary Reform (1923)
JUST WHAT ARE central banks for exactly?
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Tuesday, May 27, 2008
Higher Prices Here to Stay / Economics / Inflation
By: Paul_J_Nolte
Absent big economic news, a few rumors of buyouts affecting select stocks, the markets were focused on energy prices and their new ascent to dizzying heights. Cuts of SUV production by Ford and reports of sales up over 20% of hybrid vehicles (not to mention articles about motorized scooters) indicate consumers are beginning to seriously look at changing their driving habits. While conservation remains a couple of years away, the fact that much of the discussion has finally hit the table is a good start.Read full article... Read full article...
Thursday, May 22, 2008
US Treasury Bonds Fast Becoming Certificates of Confiscation / Interest-Rates / Inflation
By: Adrian_Ash
THE PRICE OF GOLD BULLION slipped $10 from a new five-week high in London early Thursday, pulling back to $925 per ounce as crude oil broke new record highs and the US Dollar fell yet again on the forex market." Gold has rallied over 8% in the last five days and is now trading over $80 higher than May's low," notes Mitsui, the precious metals dealer, in London today.
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Wednesday, May 21, 2008
UK Inflation Heading Back to 2%- What's Mervyn King Smoking? / Economics / Inflation
By: Adrian_Ash
"...The fiat-money experiment – along with the financial life-forms and hallucinations it spawned – has broken out of the lab and onto the street..."
WHEN ALBERT HOFMANN – the Swiss chemist who discovered LSD – passed away at the start of this month, newspaper editors the world over reported it as the death of the man "who experienced the first ever bad trip."
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