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Supposed Deflation In October Blows Door For QE3 Wide Open
The decoupling theme for dummies continues to be alive and well. Following yesterday's simply ridiculous economic data, today we learn that in October live got cheaper as broad inflation as determined by the CPI declined for the first time since Jun, printing at -0.1 on expectations of an unchanged reading, and down from 0.3% in September. The bulk of this drop was on the decline (?) in energy prices: ex food and energy CPI was up 0.1%. Well, with the WTI back to $100 in anticipation precisely of the QE3 loophole this report is supposed to open, we can promptly remove that "deflation" notion. Still, Fed hawks can stand down "looks like we passed a cyclical peak" says Bloomberg analyst TJ Marta. In the meantime, Year over Year inflation increased by 3.5%, or about 35% if one actually counts the things people buy and removes the hedonic adjustments due to a carton of milk now assumed to have a rearview camera, power steering and ABS brakes (as per the BLS), and costing negative money in real terms or something.
A decline in the energy index more than offset small increases in the indexes for food and all items less food and energy to create the all items decline. The energy index turned down in October after increasing in each of the three previous months as the gasoline and household energy indexes declined after a series of seasonally adjusted increases. The food index rose in October, but posted its smallest increase of the year as the fruits and vegetables index declined sharply.
The index for all items less food and energy increased 0.1 percent in October; this was the same increase as last month and matches its smallest increase of the year. While the shelter and medical care indexes accelerated in October and the apparel index turned up, the indexes for new vehicles, used cars and trucks, airline fare, and recreation all declined.
The all items index has risen 3.5 percent over the last 12 months, a lower figure than last month’s 3.9 percent increase, as the 12-month change in the energy index fell from 19.3 to 14.2 percent. In contrast, the 12-month change for all items less food and energy edged up from 2.0 to 2.1 percent. The food index 12-month change was 4.7 percent, the same figure as in September.
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it's all getting cheaper bc there are less people that can afford to buy shit...
currency inflation but number of units purchased deflating
seriously who believes this shit anymore? fact = consumer spending higher, consumer confidence lower. why? because the price of everything not included in the bullshit CPI (dont get me started on hedonics) is going UP, like food, and consumers are forced to spend more money on the shit and they're pissed about it.
this bullshit CPI makes GDP overstated too. realworld CPI at almost 12% and realworld GDP has been contracting since 2007. but what the fuck do i know? the phd economists at the fed and the BLS have it all figured out
Nobody who pays the least bit of attention believes it anymore.
Just before the end, the servants of the Perversion are only talking to each other.
"Supposed deflation" was the key phrase in the headline here.
Deflation has NEVER occurred under a fiat monetary regime, and anyone waiting to see it under our own might better spend their time searching for the edge of the flat earth. Governments throughout history have always, ALWAYS resorted to the same tactic when confronted by insurmountable debt: depreciate the currency. It is absurd and idiotic to expect to see a fiat currency RISING in value as the issuing government takes on exponentially more and more debt, and anyone who still holds to this intellectually insulting premise is either profoundly ignorant of ALL of monetary history, or else is merely a shill and a lackey spreading the propaganda and disinformation of the power elite. I cannot tolerate this deflationary bullshit talk any longer --- its clueless and/or dishonest proponents would have better luck trying to convince me that up is down and black is white.
I dont see anything getting cheaper myself, they mean theyre worried that the FED's 'assets' are getting cheaper. They dont give a shit about what we have to pay to get by or wage deflation.
You're on-the-mark. + a cool 1T
You don't seee anything getting cheaper 'cause you don't work at Goldman.
Housing is getting cheaper. Real estate took the lead heading into the crash, we will not recover until it corrects, but the gubmint won't let it. The Bernank can speak out of both sides of his mouth and you can have sector inflation in a deflationary environment. Or vice versa.
Demand destruction done the hard way! The feedback loop lives.
Everywhere but the S&P.
Many in the bottom 60% are borrowing to meet the inflated prices of food & energy. How long can that go on?
Not exactly. Look at the chart I maintain tracking the "necessities" one needs to live off of. It is a nightmare as year over year we've had sustained increases in prices. The difference is that this month's "total" report shows a mild decline M-o-M. Y-o-Y the "official" rate is still increasing and for things you need to live, it is off the charts.
http://johngaltfla.com/wordpress/2011/11/16/october-c-p-i-for-necessitie...
Being both a pack rat and a recent retiree (not by choice) I happened to be going through a pile of old magazines last week. I came upon some advertisements from major food stores dated January 2003. In 8 years prices for food have increased approximately 50%. I suspect that much of that increase happened in the last two years. Your chart showed food costs rising at only 5% YOY? It sure seems higher to me, and that ignores the recent increase in the price of peanut butter due to a bad harvest.
That's 5% Y-o-Y PER MONTH. Remember, inflation is a cumulative data point, the prices have not reversed since the 08-09 collapse. In fact if anything using their own data and your eyeball calculations, 50% would be about right when considered with packaging and quality of goods inflationary practices. Remember the 5% from October of last year is on top of the 5% from September of last year. Month over month the index might change but one has to consider the hedonic calculations used to manipulate monthly data. The annualized report with revisions tells a shocking tale which you have picked up on.
Here is the cumulative inflation chart from 1990 through the September report per the FED for NSA inflation indexes same as my first chart:
http://johngaltfla.com/wordpress/wp-content/gallery/monthly_econ-charts/...
I'll update that chart when FRED makes the data available.
1.05^8=1.48 5% compounded annually yields an increase of 48% in 8 years. Intuition doesn't work very well when dealing with exponential growth.
*DJ Fed's Bernanke: It's Free, Swipe Yo' QE3!
Gotta love those stats nerds, where's crude and brent now?
Deflation my ass.
This reminds me of the winter of 2007. Oil was strong with not so much fundamental support.
Was thinking the same thing, tho this time around high energy prices will blow up the EZ instead of housing.
2008 will be a cakewalk if the ECB doesnt backstop its banks.
Banks? What are they going to do about the countries?
The countries dont matter, the politicians will never let the people default, the public WILL pay.
But if the banks go boom, the rich may get hosed when the little people get pissed off enough to go into pitchfork mode.
ECB backstop the banks...yep its like watching broke winos trying to borrow $5 bucks from each other.
Is oil all you consume?
No, but oil gets everything you consume to you.
And sugar, they put it in everything now, both corn and cane, if sugar goes any higher Cuba will indeed become a workers paradise eh?
Deflation is the primary trend. That is what this whole mess is about. If we had organic growth, the ponzi would continue. The fact of the matter is that organic growth ran out decades ago. Since then growth has been synthetic - leverage and credit. Folks are too dumb to wake up to this because they only see prices going up. That is nothing more than the byproduct of this synthetic economic growth (fucking with the fiat).
Yes, there is deflation, that is why the fed is printing so much FRN$. Since the banksters created all the (bad) debt out of their asses, it's all being crammed back up in there. Think of it like a patient: can someone have heart disease and diabetes at the same time? Deflation and inflation are not mutually exclusive, they can exist together AND they are being distorted by gubmint intervention.
Great, everything is getting cheaper except the shit you need.
Ironically brought on by buying too much cheep Chinese shit you don't need.
Sadly a global story of our generation.
Glad I was never a 'consumer monkey' always jonesing to charge the latest Chinese crap on credit.
Now's a great time to snatch a jumbo sized hi-def flat screen 3d 1080p 600Hz NFLX ready...blah blah blah.
That will look great in the tent this winter.
They made us get rid of the tents.
But we will overcome!
I got an app on my iPhone that shows a picture of a campfire.
hi-def = hi-deflation? LOL!
I prefer to sit on cash bullion... Hi-tech goods don't last enough, it's pure waste to rush on these products. Waiting for the crash to order a new computer.
Cheep chinese shit sold to brainwashed consumers to keep a global ponzi alive for benefit of a few. And among the "few" are various factions/players playing against each other on timelines much longer than we consider.
As I do all the shopping the prices are astonishingly high.
In the past 2 yrs Albacore Tuna, has gone from $8.99 per 8pk, to $13.95. $5.00 friggin bucks a pack.
Anything edible or used in living (sustenance), is thru the roof.
European debt write downs, the municipal failures in the United States, the deleveraging and aging consumers around the world, as well as the social mood explained perfectly by Robert Prechter is going to bring deflation first, just like Hugh Hendry believes. The contagion is spreading rapidly through Europe and the debt to GDP picture I saw in this article yesterday explains it all:
http://www.ftense.com/2011/11/european-debt-to-gdp-map-french.html
Tyler, there is wage deflation. That is a concern to everyone!!!
wage deflation would be OK if things like food and gas deflated at a faster rate but they didn't, don't and after full scale printing begins will continue to won't.
Well, human population cannot grow indefinitely, can it. There would be a stop or at least an interval. This mess we're in right now looks like one.
Not here.
yup!
note bien
when we start reading "think-tank stuff" about the "demographic problem" of too low birth rates and not enuf babies for future growth and funding liabilities/entitlements, maybe it's time to pause and check the wind vis-a-vis the mother ship and the bonfire of the insanities
L0L!!! ...bondfire of the inanities?
Global wage arbitrage finally crashing on our shores. Pushes us down while creating pressures to advance the Chinese middle class. The current economic landscape is not molded for this. So, we are trapped and so are the Chinese. Epic fail as the players in the game all realize at once a stalemate condition.
Wage deflation creates demand destruction, which fuels deflation. Right now we are in the middle of a huge dead cat consumer bounce fueled mainly by the college bubble and the flow of zombie money running scared, looking for yield and/or safety.
well if there is deflation then supposedly the banks will be f'd right?
First, if deflation was actually occuring, considering the banks have $1.6T in excess reserves (cash), I would say they are sittin pretty. The banks dont loose.
Besides, if a the circumstances were such that deflation harmed the banks and considering they control the money supply, you can bet there will be no deflation.
Deflation is only happening in one area and that is housing. The more people go underwater and walk away from their homes the more the banks need to get bailed out again. The lower rates go and the more people refi or modify their loans the lower the profit margin becomes for the banks. I don't see any way they are sitting pretty. With that being said I am getting hammered on skf.
many if not most of those mortgages were passed to Fannie and Freddie. Hello taxpayer! For those not purchased by Fannie/Freddy, see my note about the banks ability to controll money supply.
Fair enough. But that means barely surving, I don't see how they are sitting pretty. I am considering closing my savings account at a major commercial bank. I bet you did not factor this in to your equation either.
If barely surviving means rolling around in a $1.6T pile of cash with the ability to print more as needed, then yeah, I agree with your assessment.
barely surviving means getting bailout out recently and probably needing to get bailed out again in the next 12 months. The banks are toast. It's just a matter of when and how. If you feel comfortable owning them then do what you have to do. I will wait it out and see what plays out.
Citigroup is planning to cut as many as 900 jobs from its securities and banking division — and as many as 3,000 positions overall — as it grapples with turmoil in equity and debt markets, the Wall Street Journal reported Tuesday.
WTI OIL ABOVE 100
HOPE AND CHANGE BABY
Fuck it - as long as you don't eat, drive or want to keep warm this winter we're all good.
Those IPads are getting more productive with each quarter...
Print Print Print...you know you want to!!!
QE is wildly unpopular theyre not going to touch it in their precious little political season. However, they dont NEED to print anymore, just the rumor of such nonsense is enough to fuel their vapor rallies.
We need QE3 to kick the can past the 2012 Presidential elections. Afterwards, we will be going to a Gold standard because civil unrest and hyperinflation will be the top two concerns of every American in the country.
I see it very differently...the last thing anyone except Bernank wants to mention is another 'bailout for the rich', ES futures may just love scanning headlines with 'QE3' in them, but to the voters nothing is more unpopular.
They have no choice. We need to keep the financial system on its IV drip of cheap money, the Gov't needs to keep its wars going, and the American funded IMF needs to support a screwed up Europe. Twist is not big enough for the demands being palced on it. This is crunch time until a new system can be implemented.
They have no choice about what, totaly pissing off the voters and $140 oil in their precious little 'election season' where no politician wants to be within solar system distance of a bailing out the ultra rich QE? Hey let em go for it, that would be hillarious....but they wont.
Make no mistake QE3 is a hyper inflationary event, but its all they got left. Who would buy the bonds to keep the USS Amerika afloat? We are the greatest debtor nation the world has ever seen. These things never end well. All we can do is understand what is going to happen and plan accordingly.
Be real careful about planning for 'QE3'. Theyre happy to let everyone think thats what theyre doing but if and when they dont, the 'QE hedge' items could suffer big deflation.
yawn...Its been fun if not very informative. Good luck
Yep... its very sad. We all thought we had this figured out, that QE was what was driving the market and without it, it would tank. Well no QE for some time now and the market is still holding firm, metals are stuck, woe to anyone who invested money based on the "certainty."
Going to a gold standard without pulling the fed's charter would rank as only a moral victory. You have got to drive a stake through the vampire's heart or they will return for more blood.
.
I pray for Nuremberg-type trials someday for those who illegally transferred trillions of private debt/bad assets to the public citizen and turned the world's reserve currency (ours) into toilet paper.
Greenspan will lead them. Watch for the wet spot in little Timmy's pants. I hope they make The Bernank shave that stupid beard.
Why do we need Trials? I am pretty sure judge Dredd types will appear and vigilante justice will take over when hyperinflation gets going and the oil stops. We'll have Gaddaffi type Utube videos of our own leaders accounting for their actions directly with the people.
Everyone knows who to target.
If somebody ever did take out Blankfein, Mozillo, Paulson, etc then I will build a statue in their honor.
Stop your meds. Listen to that voice in your head. It is god giving you instructions. You do follow god's will right?
Speaking of meds, time to get back on yours, topcall. ;)
We need trials because the alternative is mob rule. The trials must be based on the rule of law, however, something that has been sorely lacking in recent years. I, for one, do not want to witness something akin to the French Revolution here. If you're not familiar with it, do some reading. The trials they had were farcical.
We will be so broke, how will we get a hold of all these rich people living abroad, probably in China or south America?
won't print --just backstop IMF so it can bail out Europe-- same old shit-- FED protects banks around the world and you get to pay with inflation tax--
We're all Greeks now. My girl friend is even considering back door love.
coffee that was in my mouth is now on the table.
Irritable Bowels thinks that anal sex is hilarious.... Is this a Yalie?
But seriously, do not give into your girlfriend because anal sex is a slippery slope to homosexuality, once you realize it can be clean and tighter better intercourse how long will it be till you are doing it with just anyone? It is gateway sex.
Do not have anal sex with an ethnic type that eats lots of hot foods.
It burns. Oh the pain!
I kid you not, unless my large penus is extra sensitive.
topcallingtroll
When you learn to spell your appendage,we will take you seriously.
Maybe he spelled it that way because he is Latin.
(But myself, I find their dark purple genitalia rather repellent.)
"a carton of milk now assumed to have a rearview camera, power steering and ABS brakes (as per the BLS)"
Now that's funny. Nice one.
Deflation is for delusioalist.
Fuck you's ly'n sacks of shit statistic dudes/dudettes.
are you still talking about qe3? dude, your wife left and shes not coming back, get over it
LMAO
But she's been replaced by M0 who's promised to go through periodic 'augmentation' enhancements until she dies.
OK Kito.
Here why you won t see deflation: M2 growth at 20%. Check out this page.
http://www.alsosprachanalyst.com/economy/pboc-broadened-the-definition-o...
China prints only Inflation in China lies so much that the electricity companies are in deep losses as well as gas distribution companies in mainland China.
Check this one:
http://news.xinhuanet.com/english2010/indepth/2011-11/14/c_131246449.htm
Walmart was warnign about inflation in March and said the company would be affected by the end of the year.
http://www.usatoday.com/money/industries/retail/2011-03-30-wal-mart-ceo-...
Here you have it, a classic push cost, with revenues beating while profits are down at Walmart.
http://online.wsj.com/article/BT-CO-20111115-706803.html
China has always dealt with banking crisis by pumping every 10 years since 1949. After the latest pumping in 2000 the consumption share of GDP plunged, so the people of China always paid for the bank mop-up.
Until you see deflation in China (not supposed or whatever deflation = less than 5% inflation, or some other BS.) Deflation is Japan with no bail out of banks, very little pumping, have the stock market, the banks and the conglomerates repay the hard way with hard yen, no recut of debt principal through direct bailout or through money pumping inflation. Japan never experience neither inflation nor high unemployment up until 2008. Check the misery index in US. Since GDP touch 0% growth in 1992, Japan has the same price index. Since we touch bottom in late 2008 on economic activity, inflation index has already recouped 7.6%. While economic activity has not recouped since 2007 , inflation index is already above the 2007 peak activity level = stagflation.
Not Japan whatsoever.
I am using official BLS statistics! Stagflation is back again, Rosenberg is wrong, there was no magic vaccine against stagflation which was invented. Subpar capacity utilization and inflation are teh order of the day.
To summarize: China inflation = Walmart costs = Consumer inflation on basic necessities. Energy well look at oil price.
Japan situation = USA situation, we are light years away from that.
The more I think about it the more I think the Count Daracula had the right idea ---stick the deserving enemy on poles along the road as a deterant, so to speak. lets see-- TOTPOTS-- (tyranny of the person over the state) and BAPAKOLP--(bankers and politicians and kings on long poles) its like a new language--bapakolp totpots! (or how you doing today pardner).
Need moar iPads! Me hungry
Need lurk moar?
http://encyclopediadramatica.ch/The_Comprehensive_Theory_of_Lulz
They have to print 1T just to get back to zero point zero.
There is no deflation except for the space between Bernanke's ears.
0.01%? Starbucks went up 10% on their coffee menu yesterday so I guess that is in BLS speak about 0.01%. Turkey for the Thanksgiving table up 30% from last year, remember when they practically gave those away as lost leaders? The last time I bought one was Tday 2004 when my Mom was still alive, I am pretty sure it was $9 for a 17 pound bird, it is close to triple that now. But just in the last year I see so many things that I used to buy regularly that have doubled or well more than, like spicy brown mustard, it ruined me for regular mustard, but it is now more than double last years' price. I do not even go into the produce section anymore, and meat, they should have smelling salts on a string next to the plastic bag rolls. And rice, sugar, coffee, potatoes, oil, breads, frozen vegetables, in Safeway the tiny one serving can of vegetables is now the same price as the big cans families buy, basic stuff all way more than doubled. I can do a fair amount of substitution and eat a lot less meat, but, food generally is eating me more than I am eating it. I don't know how a family gets by even with food stamps.
Yes food is just about a double at this point. I used to buy liters of Coke for 2/$1, those are $2 each now. Meats are ridiculous, looking at beef tenderloin to make beef Wellington for Christmas dinner, $15 a pound.
SheepDoggie, I will send you a recipe for hamburger Wellington, of course now that hamburger is almost $6 a pound you better hurry before the recipe becomes road kill possum Wellington, a favorite in Alabama I hear.
Six bucks a pound?
You homos must be shopping at a prissy little organic food store, or you are falling for the black angus bullshit.
A cow is a fucking cow man. I dont give a shit who its parents were.
That's just your excuse for dating Janet Napolitano.
Regular hamburger at Safeway here is $5.59 per pound troll, but a friend of mine who works in the meat department there says stock up because says he it is going up over Thanksgiving when nobody eats hamburger for about a week so they are not going to notice. And no I shop at normal stores because I am like other gay people, we are EVERYWHERE. But the last time I was in the hippy organic store for bulk spices at a fraction of the Safeway cost it absolutely filled to capacity with dirty little breeders, and not one of my gay friends would have anything to do with such a tacky place.
No till gardening, French Intensive and Companion Planting in a bed 20' x 60' feeds us all Summer (find good sources for manure and cardboard), passively heating your greenhouse and using row cover on your beds inside (15'X40' feeds us all Winter: we're in the S. Appalachians, but the method works even as far as Maine).....fuck 'commercial', dyed, GMO, run-of-the-mill Monsanto test-tube food-stuffs. Grow yer own bitchezz..........!
Double from when? What was the year when you could by a liter of Coke for $0.50? It's like saying I once could have purchased - but for lack of money - a new Ferrari for $12,500. That was in 1962 and bears little relevance to recent price increases.
no way today's early down holds. wti over ramps almost to 101...wonder why? its only a matter of time before the correlation algos kick in and buy spy, euro, gold. wait, is there a disconnect begnning....perish the thought! and by the way, these quant jocks will massage the data any way they want, with or without energy, with or withough food, anything to make their case about the deflation story, which in the real world, beyond that of gov't statistics, is complete nonsense.
Its obvious folks that we are in a BEEF/CHICKEN/TURKEY bubble. Its the farmers chance to make CEO like profits. Not only has their profit gone up 100's of % but I am sure they are borrowing as much as they can, re mortgaging the farm, re financing any equipment, etc etc. Anything to squeeeeeeeze that last drops of fiat out of this economy and into their pockets.
oil went from $90 to $70 area so energy did get cheaper for a few weeks. what is stupid is that the fed always EXCLUDES energy and food and now they want to include it for one month and justify QE3.....thats too funny.
All I know is my coffee is becoming a luxury. Case of shitty average beer is like a $1 can without booze taxes, sales tax, etc. For Bud?!
These CPI guys apparently don't shop at my grocery store. What BS the CPI is.
These CPI guys apparently don't shop at my grocery store. What BS the CPI is.
Because they are not ALLOWED to show food AND FUEL IN THE NUMBERS.
http://www.youtube.com/watch?v=Q9_fBDDTIuI
DavidC
The MIT Billion Price Project seems to be tracking close to the Govt data through 9/28 shows some leveling off about 0.5%. bpp.mit.edu/usa Does anyone know much about whether this data is corrupted? Seems reliable to me.