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Two Months After Saying "Deflation Isn't Going To Happen" ECB Warns "Negative Inflation" Is Coming
Remember when on the last weekend of October, the ECB released the results from its latest farcical stress test, which contained the following pearl: "within the massive 178-page Stress Test document, there is a "whopping" 4 mentions of the word inflation (deflation appears just once). Here is what the "Stress Test" does say about inflation: "... while the adverse scenario does not strictly embody a prolonged deflationary environment, it does entail material downward pressures on inflation. Thus, the scenario leads to annual inflation rates for the euro area below the baseline rates by 0.1 percentage points in 2014, by 0.6 percentage points in 2015, and by 1.3 percentage points in 2016. The implied adverse inflation rates amount to 1.0% in 2014, 0.6% in 2015 and 0.3% in 2016."
But the real stunner came in the press conference in which the ECB Vice President Vitor Constancio had this to say:
My question would be on how credible these tests are. Looking at the adverse scenario, you haven't even included deflation. You have not included an interruption in gas imports to Europe. You have not included full-on sanctions on Russia. So please elaborate and convince us.
Constâncio: The scenario for the stress test was published earlier in the year, so some of the things you mentioned would not have been considered. But indeed, what was considered is a severe shock being the growth of other countries. If you look to the scenario, you see that for the US, there is also a big deceleration of growth which is part of the scenario and also for other countries that are the markets of the euro area. So that is embedded in those assumptions of indeed a big drop in external demand directed to the euro area. That's the first point. The scenario of deflation is not there because indeed we don't consider that deflation is going to happen.
We promptly reacted to this ludicrous "assumption":
So.... wait a minute. Just because the ECB, in all of its brilliance does not think a scenario is possible is precisely the necessary and sufficient reason to not include it in the stress test!... Uhmm, guys in Frankfurt: here's a tip - the quote-unquote Stress Test, and especially its adverse scenario, is precisely there to "assume" everything that you don't consider is going to happen!
Because how do you rebuild confidence in a system in which the market is telling you deflation is the most likely outcome, and yet you fail to even model for it because, drumroll, you want to rebuild credibility, however by only modeling what you, and not the market, "consider will happen"!?
So what happens less than two months later on December 20, 2014?
This: "European Central Bank Vice President Vitor Constancio said in a magazine interview he expected the euro zone inflation rate to turn negative in the coming months."
Bloomberg adds: "The oil price decline doesn’t create a simple situation for us in the short-term" ECB Vice President Vitor Constancio cited as saying in interview with Wirtschaftswoche printed in German. As a result, he said that "We now expect a negative inflation rate in the coming months."
We love semantic games as much as the next guy, but even we can't help but observe that the official definition of "negative inflation" is....
And the punchline: "That’s something every central bank has to look at very closely.”
But... but... but.... just two months ago YOU SAID there is no need to look at "that" because - lo and behold - the ECB in all its infinite idiocy, doesn't "consider that deflation is going to happen."
And that is why, with "brilliant" central-planning academics such as this one in charge of micromanaging everything, who have no clue what the real world is like, the world is doomed.
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LOL !!!
I simply LOVE the Orwellian bullshit from these guys. NEGATIVE INFLATION. ROTFLMAO !!!
The have to make the opposite sound negative and by implication BAAAAD
I like it when the shit I buy is cheaper. Who in the fuck likes to pay higher prices. It sounds like governments have a problem, not people.
Hang on now. It's not just about having cheaper stuff to buy.
It's about how much you HAVE to spend.
If that needed thing such as fuel or energy is cheaper.......did it get cheaper by a GREATER amount than you have lost in purchasing power over the last decade ?
If not.....then you are still losing.
If you money is still losing value.....you are not gainig anything if one or two expenses in your life just got temporarily cheaper.
And if too many things become too cheap then you could end up with a pay freeze or worse a job loss because your job was dependent on a high energy, high inflation, high debt scheme.
Then.....even if what you had to buy was just a penny and you didn't have even that.....then it would not matter how cheap it was.
Prices move before wages. If you are a wage slave and not independently wealthy from holding productive assets then inflation invisibly erodes your pruchasing power.
Defaltion on the other hand....
So.....rush out now and buy all the cheap shit you can......before it's too late.
.......and for the children.
It's always for the cheeldren.
Better listen to the authorities and do what they say.
You don't hate children, do you?
If they would just plot it on an inverse y chart they would have a nice up trend.
Newspeak at its finest
At this time of the year.....yes......yes I DO hate children. Even my own.
Here's what I want to tell them......"You want something for Christmas......I already gave you something. A roof over your head.....a soft bed to lie down on every night and food on the table every day.
Now slag off and get a job if you want anything above that.
Then I wake up from my dream in time for the wife to show me what she just bought for all the kids......and that she's going back tomorrow because something else is on sale.
..... < sigh >
Now there's the giving spirit! ;)
You sound taxed. Hope you receive anything that inspires your spirit. Your kids are lucky to have a provider. They are the next generation, so please consider your interests well vested.
And don't forget to take care of yourself sometimes too.
LOL !
Thanks for that. I was being a bit of a Grinch for effect. But I do get a bit down this time of the year. It's sooooo soul sucking to see what we've done to this holiday period. For God's sake they started selling Xmas stuff before Halloween. I just got back from Wally World getting some candy for Stocking Stuffers and half the Christmas candy aisle was VALENTINE'S DAY CANDY BOXES !!!! THIS SHIT NEVERS ENDS.
And also....I'm a Protestant. My ancestors used to not celebrate Christmas at all because they saw it as a Catholic conceit.....sort of the way the Church could compete with Hannaka and the Pagan Saturnalias......which is where most of the Christmas traditions come from.
Now in America we said screw it all......just "BUY....BUY.....BUY !! In fact.....it's called Black Friday at Thanksgiving because most retail stores don't make a yearly profit until this time.
So....show what a Great Person you are by buying all this shit at deep discounts for Christmas........do it for the children.....and baby Jesus.
( sigh )......
"So.....rush out now and buy all the cheap s#!@ you can......before it's too late."
Otherwise known as a buying opportunity for ZHedge readers. PMs, food, homesteading equipment... get it now! .......for the children.
DETROIT: Ally Financial Exits TARP with Focus on Future $ALLY
http://hedgeaccordingly.com/2014/12/detroit-ally-financial-exits-tarp-wi...
Why is it when we see lower prices they sell it as "Negative Inflation" instead of stating it as lower prices. Yet when prices are rising they cheer inflation and reapedly say higher prices?!?!?!
Exactly. They're so afraid to use the 'D' word. It's PATHETIC - well, actually, it's DEFLATION, but you know what I mean!
DavidC
"It's not Impotence. It's ED: Erectile Dysfunction." How about "Failure to launch"?
What a bunch of Financial Fluffers! Do they spit or swallow? Some of each, I suppose, depending on how 'dirty' they are.
no. the fluffers are on the putin threads
Funny how often a fappar* will come along and try to turn every thread into one.
*fairies against President Putin and Russia
Yes, it's a waste of a good avatar.
negative inflation is newspeak for deflation. just like recession is the modern day word for depression.
BRILLIANT----A NEW ECONOMIC TERM " NEGFLATION " It means we planned for inflation and got deflation. Yellen wil be sure to use it at her next FED policy meeting in describing price of energy and commodities as well as her bedroom activity
I believe the latest MMT term for this condition is 'disinflation'. ;)
Anti-reversed backwardflation.
backwardaded non reflation
STOP IT !!!!!
You all are going to make my head explode like in "Scanners" !!
Okay, how's about positive deflation, does that sound better to ya?
They are so scared of deflation that they can't even utter the word!
Gold and deflation, are like stakes and garlic to our modern day vampires.
Useless motherfucker. All peasants of the 17th century knew that "negative inflation" is called deflation.
Must be a closet positive guy, without lights.
DETROIT: Ally Financial Exits TARP with Focus on Future $ALLY
http://hedgeaccordingly.com/2014/12/detroit-ally-financial-exits-tarp-wi...
negative inflation = moar crony theft
SuperNonValeur
I mean, really. At this point, after 6 solid years of constant BS from these pieces of shit, all that needs be said is "Fuck ALL central wankers....er.....bankers.
Can you be more concise and specific?
Fuck the Fed!
Better?
Fuck you, Bernanke!
And let Yellen off the hook?
nobody wants to fuck that thing
I Taut I Taw a Puddy Tat
http://www.youtube.com/watch?v=38aDWDUjlOY (2:56)
Newspeak dictionary -
"Deflation is new Negaive Inflation"
George Orwell "2014" (c)
but but low prices for people is good?
In the end, low prices are the only to prevent revolt. Only allowed when TPTB fear losing power. That's where we are, now. QE ended just 2 weeks before mid term elections. There will be a stock market crash before the nest QE. They need one to provide a 'cover story' for their counterfeiting.
Do they experience "kinetic ejection of gray matter" when their heads encounter a "kinetic event"?
we had lowflation, now negative inflation, next one for sure will be deflation!
I wouldn't hold my breath... They are more likely to come out with a new way to calculate inflation.
repurposed inflation, deconstructed price increases.
"NEGATIVE INFLATION" is used so the algorythmic SELL isn't triggered!
kinda like using "fees" instead of taxes so voter ire isn't triggered.
now you're getting it, huh.
The machines must have their algos so haywire they have no idea what's happening.
Deflation = good for purchasing power of the poor and middle class = bad for the elite.
Good for fat old Gemans with €€€, bad for the rest
Why are you even here? Do explain how higher prices is good for the poor and bad for old fat Germans?
If you owe someone money deflation is bad because you owe them more
If you don't have any money deflation is irrelevant
If you are rich and you borrow money deflation is good because they owe you more
Deflation = good for those not involved with debt.
= bad for borrowers and lenders.
Deflation=death of paper debts=bad for elite. It means 'debt slaves' are escaping the plantation, either by choice (paying down debt) or by necessity (laid off and/or bankrupt).
Negative inflation....there's a word for that....don't they know it!
Life is just getting negatively better. More aerosol spaying to resume shortly to improve moral.
Like a little asphalt over a pot hole.
Correction....IMPROPELY APPLIED asphalt over a pot hole.
"Pothole......what pothole ?"
prices get cheaper.....sounds good to me....whats that you say, my house is now underwater 55%.....guess i wil live here for the next 50 months rent free and then buy same house for the CORRECT PRICE.....like i said , sounds good to me !!!!!
Did you check with the man upstairs about that 50? Or was ya just really hopin??
I call a double bogey a "reverse eagle".
You forgot the words "death" and "spiral".
From the people who admitted that when it gets bad they lie.
As if the PHDs and MBAs have a clue of the damages done by their egos ?
"The curios task of economics is to demonstrate to men, how little they really know about what they imagine they can design" FA Hayek
"The ideas of economist's and political philosphers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed the world is ruled by little else, practiacl men, who believe themselves to be quite exempt from any intellectual influence, are usually the slavbes of some defunct economist's" J M Keynes
Both knew it was all bullshit ! and still is, nothing new at all
Truly is there ANYONE on this site that believed this guy anyway?
We have had this deflation scare before and as we move along prices continue to work their way higher. For a while I was one of the people concerned we would see the world tumble into a massive deflationary cycle as debts went unpaid and credit collapsed. Now I have come to think inflation is getting closer every day.
This would mean the "major deflationary period" is mostly behind us and it has not been disinflation as much as inflation being kept in check because of several factors, including where the money flowed, weak demand, dropping velocity of money, and the onetime benefit of lower interest rates. Before you discount the possibility that we will move directly from where we are into stagflation then hyperinflation please consider that hyperinflation paves the way for governments and those in power to make a transition to a replacement currency and a reset of the whole system.
http://brucewilds.blogspot.com/2014/11/deflation-i-think-not.html
Markets are not always efficient and the idea that they are is a myth manufactured by so-called experts such as Paul Krugman in the ivory towers of academia. Disconnected from the real world those responsible with guiding our banking institutions often fail to see potential second and third order effects of debt monetization. In many ways they pose one of the greatest threats to the stability of our economic system.
A policy of blindly trusting anyone who claims to be an expert has disaster written all over it. If the bond market is indeed a bubble ready to pop its collapse will be full of ugly ramifications that will not only effect bond holders but will test the economic foundations of both the country and the world. Not only would bond holders be stripped of wealth but soaring interest rates would magnify the nations debt service and rapidly impact our deficit in a negative way. The article below explores just how big a problem it could cause.
http://brucewilds.blogspot.com/2014/12/bond-market-bubble-has-ugly.html