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Money Printing Deja Vu - German Inflation Is Surging (Again)
Weidmann had warned us about this...a new index, created by Handelsblatt, measuring the inflation of asset prices in Germany confirms the suspicion many have held - while German CPI stagnates (printing modestly hotter than expected today, driven by continued rises in higher gasoline prices and food prices), asset prices are rising sharply amid an over-relaxed monetary policy.
- Consumer prices briefly increased by 2.4 percent in 2011, but then declined again and even turned negative at the start of this year.
- Asset prices, on the other hand, increased by 4.4 percent in the first quarter of 2015 alone, according to the new index.
- The sharp rise in asset prices is attributed to the ECB’s relaxed monetary policy.
It has been a perennial concern of German economists: The European Central Bank’s loose monetary policy could be setting the stage for rampant inflation in Germany.
“Hyper inflation” is a term long feared by the German public ever since it experienced skyrocketing prices in the 1920s and 1930s – the kind that forces families to transport cash in wheel barrels to the local supermarket.
It is a fear that helps explain Germany’s reluctance to back the Frankfurt-based ECB, which sets monetary policy for the entire 19-nation euro currency zone, and which has embarked on a series of aggressive moves recently to fight the very opposite of hyper-inflation. “Deflation,” or falling prices, is a danger that is currently threatening much of Europe. Most economies have recovered much more slowly than Germany since the 2008 financial crisis.
So far there has been no proof that the ECB’s policies are leading Germany into any kind of dangerous territory. Annual consumer price inflation briefly rose to 2.4 percent during the course of 2011, but then it declined again. In fact, in January 2015, German prices fell into negative territory.
The picture may now change. For the first time, in a project launched by Handelsblatt, an institute in Germany has sought to measure the rising value of assets in the Europe’s largest economy.
Their results tell a very different story. The new index, which will now be released quarterly, supports the notion that asset prices have increased substantially over the past few years.
German economists believe the ECB’s monetary policy is driving up asset prices, while consumer prices have remained relatively flat. The new index backs up their arguments.
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Source: Handelsblatt
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Yet the DAX is at all time highs.
Asset Prices?
That would be the Stock Market Casino stuff, the paper vapor created out of thin air, right?
It’s not things like physical Gold & Silver & Oil and other commodities since everyone knows that commodities are not assets.
Or did I miss something?
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Retail spending in February 2015 was strongest in the last 15 years.
15 years ago Germans spent their DEUTSCHMARKS before the conversion to Euros.
All DMs had to be spent before the conversion due date. Now the EUR is going into the shitter. I can only hope that my fellow countrymen and women are buying precious metals with their toilet paper instead of buying Chinese trinkets. The RE indexes all show that money is flowing into steel and concrete but the valuations are already crap. Gold and silver is where it's at. Nothing else will survive the reset.
German RE is not a good place to put your money right now, it's manipulated by cheap money printing like the German stock market. Gold Hündinnen!
I don't quite understand you there. All DMs had to be spent before the conversion? Not exchanged for Euros later? Surely the conversion surcharges would not be that great.
Oh yes, they converted after the due date BUT it was difficult to put DM cash back into the bank.
We effectively had capital controls and after a grace period, the moneychangers (literally) bought DM at a discount
Every German suspected that prices would go up once the conversion happened - which they did. Some retailers simply pricing DM into EUR which meant a 100% price increase.
The whole thing was stupid from the getgo
In case you haven't been to Deutschland lately - there is a building sprouting on just about every plot of buildable land. Reminds me a lot of Spain in 2002.
As mortgages are less than 2% for a fixed rate loan, and only 13% of Bürgerinnen und Bürger own shares or equity funds (see FT link below) - it appears place to go is into housing. Looks unsustainable to me, especially considering demographic trends. But who knows, it may follow Spain and take another 4 years before peaking out and crashing. Could be sooner, if the USA market rolls over, as the leading indicators suggest.
http://www.ft.com/intl/cms/s/0/67b0de42-ce49-11e4-9712-00144feab7de.html...
That's not true. They will even convert the old DM now to Euros - though I'm not sure I'd want to or what rate you'd get
Luciferians!
the writing is on the wall. the fed and ecb will eventually buy all the stocks and all the bonds.
Not sure about the Fed and ECB, but that certainly seems to be the plan in Japan.
New Normal.
"World Inflation Falls To A New 5-Year Low"
Confusion reigns. Sometimes it rains.
The article from Handelsblatt is kind of stupid. I don't think we witness a low CPI but fraud. The problem is in the formulas. Isn't it that governments are now prisoners of their fabricated statistics? The desire to print low CPI's to justify low interest rates and to show an statiscally elevated GDP has created a system that is globally reducing CPI systematically to a marginal number. Shadowstats, I believe, calculates 7-8% CPI for the USA using the pre-Clinton formula. A "silly" consumer basket, hedonistic principle and subsidies in combination with price controls for example particularly in the EU agricultural and energy sector (making the consumer to pay taxes in lieu of higher prices) distort the figures dramatically. The central banks globally abuse the distorted CPI figures to lament about slowing credit expansion, thereby intentionally confusing consumers which from their individual viewpoint have an interest in falling prices and are not concerned about credit expansion. The whole system is apparently about "managing society", seems to be completley wrotten and should be disposed off on the dump of history.
5 year olds trading yogi yo cards UNDERSTAND that the Yakuza Abe card of which there are 10 zillion printed is "worth" less than the Hari Kiri card of which there are "only" 10 billion.
Economics is the new alchemy and anyone who believes any of this gobbledy gook is retarded or less than 5 years old.