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Where The US Is Importing All The "Evil" Deflation From, In One Chart
A year after the Fed injected $1 trillion into the stock market, the US economy was supposed to show stable, benign inflation north of 2%, validating stable, benign "growth" and pushing yields well into the mid-3% range. It failed to do that, stumping many a Keynesian hack who can't explain how it is possible that inflation (at least the variety measured by the BLS, not the real type, like food, energy, tuition costs, and healthcare which is considered largely irrelevant) has so far failed to spring up.
For all those hacks, here is the answer in one simple chart.
Still confused?
The reason why the BLS' seasonally and hedonically-adjusted core inflation has failed to rise is because Japan, courtesy of its far greater on a relative basis QE and its crashing Yen, has been exporting deflation to the US hand over fist, and as the import price index released moments ago confirmed, imported deflation courtesy of Japan, whose index just dropped to 98.5 pushing overall import prices lower by -0.5%, is the biggest since mid-2010.
And since its is an interconnected, fungible world, one can either have a soaring Nikkei (in Yen terms if flat in USD) and plunging Yen, leading to ridiculous Japanese inflation imports (just ask the locals in Tokyo how much of their wages they spend on food, energy and anything that is imported these days) and a near-record Japanese misery index, or one can have the much desired US inflation, one can't have both.
Which, poetically, also means that when it comes to global growth, Fedonomics and Abenomics mutually offset each other.
Source: BLS
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Another "captain obvious" article on ZH. I need more coffee...
"Another "captain obvious" article on ZH"
only for those free thinkers that have held real jobs in their lifetime instead of living in an academia bubble since they were born (ie the Fed criminal Economic PhDs)
Now if you add a plot of the gold price against those, then your head may explode.
Glad to still see some financial articles on ZH, not morphing into EbolaHedge (not yet anyway).
But throwing deflation blame on Japan is just plain lame.
OUR govt kills OUR economy, killing demand for goods and services, resulting in lower prices, while Fed pours money into stocks.
See how simple that is? Don't even need charts.
The rich get richer in America and Japan. The livestock own less and less capital assets every day. The proles don't even OWN their iphones. How long before they lease their shoes and their shirts?
The "reform" of society into feudalism is nearly complete.
Agreed about excessive ebola coverage. It should be the job of the CDC and the WHO to panic Americans and get them to surrender their sovereignty to the UN, not ZH.
I still dont understand the interconnected dynamics of how this is "exporting deflation". Can anyone explain ?
I think it's as simple as Japanese exports to the US are cheaper due to the falling yen vs dollar. Maybe a secondary effect is the Japanese don't consume as much since their currency buys less.
Exactly. Boil it all down, strip out the fancy language and that's what you got. But you have to admit using phrases like "exporting deflation" will make you sound a lot smarter at your next black-tie affair.
correct, yes, this and the yen carry trade is the most worn-out whore in the whore house.
Lots and lots of whores, whorehouses, etc. Accepting this is an open system subject to human manipulation negates most of the economic works. It also says that shit is complicated... unintended consequences are the name of the game... and therefore Japan is only PART of the equation that is resulting in the economic outcome realized by the Average Joe.
Boil it even further and Abe's currency Seppuku beats Bernellen's autoerotic asphyxiation... (I'm guessing it sucks to be found that way alive, eh FOMC?)
So, they're giving us their FTDs (Financially-Transmitted Disease)?
It may not kill you right away, but like untreated STDs, it will ravage your body and brain over time.
Which black-tie affair is that? The funeral of money perhaps? Doubt we'll be getting an invite any time soon.
The article is bullshit because the japanese have not been cutting prices, rather they have been increasing margin, which they desperately need to do. The ""Deflation"" is comming from an overweight in gasolin prices, while oil is down 20% gas prices are down about 10.... The giverment created and artificial market basket to fuck social security recipients, and now its a marquee statistic. Going to the grocery store or to a fast food joint we have double digit real inflation, in those areas.
Dislocations all over the place. It is just reality catching back up to everyone - little by little. The more government attempts to restrain or redirect it, it simple "pops" up in other places. In fact, it is made worse because all of the "mechansims" are less efficient. Likewise, all these "mechanisms" are what insiders are gaming along the way.
The goal here IS IN FACT to allow this all to happen little by little. Not to stop it. Demographics alone tell the story - especially here and in Japan. This shit has been wargamed, think tanked, etc. since before I was born. peak EROEI, population constraints, resource constraints, etc.
Hey where is that jackass Bernanke? That she-ass Yellen can not possibly do any heavy-lifting when it comes to hauling all that sheist-dollar printing paper and ink barrels to the treasury dept...
Try some Black Black caffeinated gum. It is imported from Japan. It well help with the deflation.
http://www.youtube.com/watch?v=jCtXEFbc6Co
Can you blow bubbles with it?
The CBs are trying to protect their bubbles. If you gradually inflate away a large debt over time it becomes smaller on a relative scale. The problem is they are fighting deflation as the debt bubble gets bigger and the deflationary winds grow stronger. It is a losing proposition.
so I have been waiting with baited breath for the day when Janet announces that Japan is "too big to fail" and she needs to bail them out .....
Deflation is evil for the jerks running this giant Ponzi, but good for
the rest of us via lower prices.
yup, deflation kills the ponzi, especially the housing ponzi, which is the one they are trying most desperately to inflate
yeah, I had to laugh, at work, on Fox News, they had a realator touting it is a time to buy a house.
According to realtors, it's always the time to buy a house
And the more you spend on it, the bigger your commission!
My sis-in-law, a realtor, just bought a house WAY over market.
Recovery, don't ya' know.
I'm sure that will work out better than the mortgaged to the gills house she wants to sell and can't.
In the world of realtors, it is ALWAYS time to buy. Prices soaring? Better get in fast. Prices crashing? Bargains galore.
Kind of like the gold salesman...
Only if you are retired (well funded) or out of debt because eventually nobody can afford to pay you current wage or any wage at all. Remember farmers slaughtering their livestock in the depression. They were worth more dead and you can only eat so much meat.
Deflation is not just a drop in prices. It also pertains to velocity of money.
Cheering for deflation as if it is somehow going to make things better in the context of the current system is fantasy.
Inflation is the expansion of the ponzi. Deflation is the death of the ponzi. Hyperinflation is like a ponzi heart attack (broken debt). Doesn't always occur. Ponzi's can also simply drop dead (outright default). The ponzi is current system we all exist in.
Sort of like the notion of just shutting down the Matrix... and everyone is suddenly flushed into a different world - naked and not having a clue what comes next, where the next meal comes from, etc.
Yeah, harsh anology. YMMV depending on numerous factors. The heavier a nation or area depends on "the system" to survive, the uglier the outcome when the Deflationator pulls the plug (just a matter of time).
Clearly the solution is to print moar.
Print moar until it kills what's left of spending.
Like cutting the legs off on the stool and wondering why it falls down.
This is an easy one to fix. Japan is winning, Yellen. Straighten your Benny Hill wig and print MOAR FRNs!!!
Benny Hill wig. Lol. She does look like poor Benny.
$1 Trillion of debt in one year. One TRILLION (that's 1,000 Billions, 1 Million Millions).
So if we all max out our credit cards and don't pay they will offset each other?
Where do societies dig these people up? The same cabbage patch that says Ebola is contained?
They can always knock a couple of zeroes off and "recalibrate" the currency.
As that ever happened before? /s
"Beggar thy neighbor" doesn't work if everyone's doing it...
We're well past Beggar My Neighbour, it's now Bugger My Neighbour!
Race to the bottom bitchez!
LOP - Obvious to who? Wall st insiders. F wall st insiders and God bless ZH for keeping us Joe 6pks aware of the financial BS perpetrated on us.
HedgelessWhoresMan...
Uh... Doesn't that make you a gay male prostitute who refuses the johns' offer to wear a condom? Just sayin'...
not to mention all the complentary printing, whilst complementary in theory, is in reality directly competing with each other in driving and turning the currents of international capital flow.
being the 'cleanest dirty shirt' isn't some great prize.
Being the cleanest shirt doesn't work when people stop wearing shirts.
I am so friggin beyond wearing shirts
Demographics are a bitch BITCHEZ
Deflation is the natural direction for prices in a time of higher productivity. You want inflation? Then you have to decrease productivity, and reduce the amount of 'stuff' on the market. Prices will rise.
But they want the best of both worlds...high productivity AND higher prices. Oh yeah, don't forget about low wages...they want those too.
What they WANT is not in line with reality. Therefore they will never get it, despite all their misguided efforts.
What sucks is that the rest of us have to sit around, lives on 'hold', while they keep trying.
It would be comical if it wasn't so damned aggravating.
Bemused Observer
You Nailed it!
They need to make tax reductions on pay for folks to have more dispoable income (to consume) or dish out a whole load of printed money, hense the artical of them doing exactly that! LOL.
Also why broke .GOV's around the world increasing minimum wages to try and stoke wage inflation..............they need to hurry as the robots are on there way to do more tasks than most can think.
My 2Trillions worth LOL
Stated perfectly. It's like the absurdity of saying you want the economy to get better, but that falling gasoline prices (which give consumers more disposable income) pose a problem because you will miss your arbitrary inflation mark.
Too hot growth can surely cause inflation, but these central bankers think creating inflation will create faster growth, which isn't actually true.
shaking the trees to make the wind blow
Then you have to decrease productivity, and reduce the amount of 'stuff' on the market. Prices will rise.
... unless demand is also falling and unemployment is also rising...
There are more than 1 set of factors and combinations.
Its all goalseeked bullshit.
Transfer/concentration of wealth to a tiny elite will reduce "consumer" demand,
as will distorting the economy by military (throw-away) and police-state spending.
Productivity can also be stifled in various ways such as failure to support the
physical and social infrastructure.
Whether or not 'Misery' really does love company,
certain people do benefit by it.
Pretty good summary, but still relying on growth to continue forever in a closed system with finite resources. Good luck with that. I strongly suggest we get those fusion reactors online and a decent space program up and running...
Those are merely the talking points they use to keep the masses confused and compliant while they steal the stored wealth of the nations by printing money from nothing.
The goal is to steal and to hide the crime while doing it. Claiming they eant good paying jobs, growth, only a little inflation, and price stability of course are counterintuitive if you nly think about it for a second.
What these teives have going for them though is that the huddled masses do not and will not think for a second.
So Beggar Thy Neighbor is a zero sum game.
#Currency Wars
Krugman will counter in a sweaty faced defense strategy.
Krugman's boner just retracted like a turtles head into his overgrown, lady garden
Deflation? Don't sweat it. That currency debasement turkey will be coming home to roost pretty soon.
Which falls on the shoulders of Central Planning experts who thought the expansion of printing more money to offset paying off the debt. Destabizing the USD to skim rewards and trick the muppets in believing a 6 year old recovery was days away. The Wall Street Group is so fucked once the petty cash is removed from their piggy bank.
All that's needed is an old fashioned pandemic to finish it all off faster.
Would you like Ebola with that?
When Madoffian fiat creation meets Scrooge Mcduck profit skimming --as fast as Cool Hand Ben/Yellen/Boj can pull his/her fiat six shooter -- the overall effet on real economy is ZILCH. The profits are under the mattress, not used in productive investment.
BUT, the real economy is still too debt leveraged due to past shenanigans and ongoing Casino plays adding fuel to the fire of "I owe yous' " due, further down the derivative road.
We have hit the real, systemic defiance/credibility asymptote.
Whats so difficult to understand about that? Capitalism is about faith in the system !
And now, with QE cavitating bad the fiat pump is showing signs of aging!
Gravity is a bitch. Watch that drain of coming commodity hyperinflation sucking in fiat and resulting risk asset deflation.
And those Keynesian hacks can do nothing against a ponzi of this size anymore than the Austrian austerity mantra.
In fact, if the casino were shut down, the banks and shadow banks Gl-Steagalled again and then infrastructure investment occurred, we might have a chance to kick start real growth based on a new paradigm.
But that's wishful thinking as we are on a downward toboggan without brakes controlled by the FED; aka we are slaves of the old paradigm.
Looks like we can't avoid a dystopian meltdown.
If ebola wipes out say, 400 million people, of which, 30-45 million are in the USA (Rah!), prices for housing in select areas - those hardest hit - will be much, much cheaper.
And, added bonus, everything else will be cheaper - if you can get your hands on anything - due to demand destruction.
Georgia Guidestones say deflation is inevitable.
Get ye to your three+ acres of farmland.
Ebola is a farse. Don't get dragged down with this manufactured threat.
Its deflation in what you own, inflation in what you need.
Misery....we love misery!
This is the kind of high quality seditious factoids that we will never see in the mSm hystrionic babble. Or "election" rheotric. Everything else is bullshit.
I dunno, US has had the same issue with inflation expected (desired!) and not received ever since TARP in 2008, so I'm not sure a Japanese move in 2012 is a fundamental cause.
If you thought the FED went all-in with QE, "You aint seen nothin yet"!
I can hear the screeching of the the QE tires already!
Deflation is inherent in rapidly increasing run-up to the Singularity .
Production speeds up : more and cheaper .
This leads to a mutual sense of betrayal by tops and bottoms alike .
Nobody can keep up , and they blame each other .
Talk to the Elite . Are they gloating ?
No . Worried . Scared .
See http://andreswhy.blogspot.com/2011/11/unfairness-of-betrayal.html
They fund projects like http://andreswhy.blogspot.com/2013/10/calico-immortality.html
or off-planet ventures like space-x , etc .
I can confirm this in the motorcycle market. Remember the 70s and 80s when Japanese motorcycles sold in the US for half the price of equivalent European bikes? During the 90s and Oughts, Japanese and European bikes sold at rough price parity, doing wonderful things for European manufacturers like BMW and Ducati. Well, Honda and Yamaha have recently introduced new bikes at price points thousands of dollars below the models that they replace.