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ECB Inflation Expectations Crash; Slashed By Half In Just 9 Months
Back in March the ECB predicted 2014 inflation would be 1.0%, with prices rising to 1.3% in 2015. Since then one can say that deflation has once again taken hold, and following two consecutive cuts to 2014 inflation expectations, moments ago Draghi just released the ECB's latest set of inflation expectations. In a nutshell: in just 9 short months, the ECB's current year inflation forecast has been cut in half, with 2015 inflation also down nearly 50%, from 1.3% to 0.7%.
Of course, now that deflation is apparently stimulative according to the global Keynesian think tank, because plunging oil prices are supposedly a "tax cut" equivalent and will "force consumers to spend more", this is good news right?
Well, maybe not. Because while Europe's troubled consumers will indeed have greater purchasing power, deflation is now rapidly becoming the norm in Europe, as can be seen in the following "worst case" inflation assumptions used in the ECB's latest, October, stress test. Yes, the ECB did infact assume 1.0% inflation for 2014, and no deflation ever "because it simply just can't happen."
And remember: when it comes to inflation, the ECB couldn't care less about the middle-class. All it cares about is inflating away those trillions in Non-Performing Loans plaguing Europe's insolvent banks, which when all is said and done, the ECB, aka Europe's "bad hedge fund" will have no choice but to monetize.
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Rates are telling you there is no short-term inflation. looks and smells like deflation to me.
Rates are telling you that the central bankers have clear control of the bond market, nothing more.
And who provides these reported 'numbers' ?
People still believe any of it despite the repeated examples of widespread fraud ?
So long as there are 7+ billion people (and growing) competing for a better standard of living, deflation is a fucking myth asshat.
moral hazard and thermodynamics are a real bitch.
although i agree, one aspect to consider the the growth of assets (including financial, derivatives etc) compared to populations growth. I would suspect that has far outpace pop growth. but food and materials costs will continue to increase. it won't be inflation though, just simple demand exceeding supply driving prices. Salaries will not rise. Basically it is a myth that the global middle class will grow. there are no more assets. the majority of people will always be poor. if there is any wage growth, costs will increase keeping them poor. But i don't believe there will be any wage growth. but who knows. i've been wrong on thsi market for 4 years!!
Yes, same as it ever was, of course this time around there is now 7+ billion of us....
"Modern economics" ignores things like scarcity.
Paul Krugman says "winning"
It's a good thing that everything will be fine in 2016. The central banks just have to wait for everything to fix itself. /snark
Rates are telling you there is no short-term inflation. looks and smells like deflation to me.
"All it cares about is inflating away those trillions in Non-Performing Loans plaguing Europe's insolvent banks, which when all is said and done, the ECB, aka Europe's "bad hedge fund" will have no choice but to monetize."
When can we finally get to the monetizing part? Feels like I've been waiting forever.
They are trapped like rats.
Asset inflation worked so many times in the past. It will not work this time.
DEFLATION
"DEFLATION" -- In everything you don't need for survival or a high standard of living. Everything else, not so much.
Clearly they should be printing moar, we can't have the serfs getting more for thier funny money.
perhaps the solution is to just give them less funny money (entitlements)
Gator, what do you think that will do to consumption? In the EU it would seem that there would be less impact than in the USA.
Seems like the old "made the bed, now they must sleep in it" story. How do you unwind something decades in the making in a short period of time?
In the USA, eliminating entitlements is a great election platform in localities and regions. Can someone run for POTUS on it? In the EU, it is the status quo.
As said about British welfare, created & expanded by the Labour Party over many decades:
"what you give someone today as kindness, tomorrow they demand it as a right"
The can they have been kicking down the road is about shot. Time to get a new can. ECB QE: OPEN UP THOSE SWAP LINES AS WIDE AS THEY WILL GO!! They have allot of bad paper to make good.
Well, if Draghi's inflation expectations for 2015 really do come in at 0.7%, people in the EU will be well pleased.
But of course we all know that officially reported CPI figures are nowhere near the actual CPI. We will then have a state of madness whereby actual CPI continues to rise but official data shows deflation (or disinflation to begin with). And of course ECB actions are based upon official data.
Does anybody wonder why the financial system is falling to pieces?
Draghi needs to hire Obama's Ebola Czar to institute media blackout of any unpleasant facts that pop up.
Draghi cannot fight the 'deflation monster' until he creates the monster!
Given the EUR weakness against the dollar, how can there not be inflation in the EU? No wait - Let's crush one of the EU's biggest trading partners (Russia) so that we actually import MOAR deflation! And let's do it using Oil Prices - which actually imports even MOARER deflation! Well done Fed!
Right, because the cost of living in the E.Z. is so low...
morons.
Moral hazard and thermodynamics are a real bitch.
Every indicator is pointing to deflation...
PMI
http://www.globaldeflationnews.com/purchasing-managers-index-pmi-weakens...
Oil
http://www.globaldeflationnews.com/plummeting-oil-prices-spur-deflation-...
Black Friday
http://www.globaldeflationnews.com/black-friday-weekend-spending-a-disas...
Not quite. "prices" are really irrelevant if the majority of your population don't even have a wage/job...
We spent the first 10 years of Japan's stagnation noting that it was because they wouldn't write off the bad loans and allow failed banks to collapse. Twenty five years later, Japan still hasn't done it, and Europe and the US have almost completed the first decade of their Japonzification.
Abe! Abe!
He's our man.
If he can't do it,
Nobody can.
Half a loaf is better than none. s/c