Forum Post: Deflation is coming! Deflation is coming! Why are the consumers so confident then?
Posted 10 years ago on Dec. 15, 2014, 10:36 p.m. EST by grapes
(5232)
This content is user submitted and not an official statement
Deflation is disastrous for an economy according to the economists. Recent figures show the U.S. economy's wholesale price level dropping. Consumer confidence indices reach new highs unseen for nearly eight years. Why are the consumers so confident about their economic prospects (including wage gains!) if they are heading into a disaster? Maybe it is not a disaster or they are all hallucinating.
A part of the U.S. economy has enjoyed many decades of deflationary pricing with exceptional booms of growth - the high-tech consumer goods sector. People did not cry about the lack of inflation in the sector. Why not?
The Turmoil in the Commodities Markets is so Dangerous and Frightening I can hardly bear to Contemplate it.Now Taxpayers in the US are On The Hook for 300-380 TRILLION worth of Swaps.Eliminating ALL doubt that Something Wicked This Way Comes...for the 99%
I worry about the ricocheting effect of the drop in commodities' prices on the servicing of U.S.-dollar-denominated debts of heavily indebted emerging market countries. It can cause a fright response in the financial markets.
Response to collapsing energy markets/companies worldwide?Superintense Rampathon driving S&P into the Stratosphere.Out of the frying pan & into the Core of a Nuclear Reactor turned up to 11? Strange days indeed.
Switzerland is glowing bright blue Cerenkov radiation with the breakthrough to negative interest rate. Probably much hot/dirty money gushed into Swiss Banks for a safe place to hide. Hmmm, could it be the tycoons' money, that of dictators or corrupt officials of collapsing countries? The Chinese fortune cookie says, "May you live in interesting times."
World Revolution is the Only Solution.
With wages starting to climb in the U.S., there will be less U.S. motivation around to support World Revolution. It seems that the rest of the world is working up quite a head of steam, though. Let the untraditional leaders lead.
Well,around here-as of early this year,Poor White People are saying truly radical things such as I've never heard from them in my whole life.Really,what use does Corporate have for poor unemployed people whatever our race?Right Wing of Uniparty is going to Revoke the right of the poor to collect SNAP-I just lost mine.We have no right to work,and cannot force anyone to employ us.Assuming there are jobs&transportation available where we live-not the case here.Moving is not possible without money,so there you have it.Unstoppable Force meets Immovable Object.Prognosis:Civil Unrest.
Civil unrest in the form of policemen being assassinated and policemen killing black civilians is already here despite the improvement of the U.S. economy.
I suppose you know what's happening in Venezuela right now.
Yes, from docu-drama projection model, not up-to-the-minute primary data. Venezuela should already be somewhat supported by their oil exports to China because China pegs the renminbi to the U.S. dollar. Venezuela was teetering on political disruptions a while ago. It can gain some revenue from a reduction in oil product subsidy, a bit like our airlines not dropping their airfares despite greatly reduced fuel costs.
The price of oil crashed and so the country is collapsing. Soon they'll default on their debt.
It figures with Venezuela's long-running socialist governing philosophy and dependence on oil riches for funding. A debt default can become a Lehman moment due to the psychological contagion starting a stampede of unwinding debts (which we all have built up to ultra-astronomical numbers). The rebalancing to come must involve massive destruction of debts by recognizing them as uncollectable. Blessed be the borrowers. Woes to the money lenders, for they shall see the Folly of Man.
The people will go about their daily routines and get clocked upside the head as usual.
It is a timeless classic custom.
Consumers obviously don't complain about deflation since they benefit when prices go down.
A deflationary spiral would indeed be disastrous for the overall economy but the FED will not allow that to happen. That's why we have the FED in the first place.
The optimism probably came from the higher capacity utilization in years and the manufacturing sector.
http://www.nasdaq.com/article/us-industrial-output-surpasses-prerecession-peak-20141215-01166
There was increased factory output. These pertain to producers not consumers so the producers should be worried about importing deflation from abroad causing job losses soon. However, the precipitous decline of oil prices allows consumers to have more money left over to spend on other goods and services leading to economic expansion.
The loss of jobs in the oil sector will likely be offset by gains of jobs elsewhere because oil sector is not as labor intensive per unit of product output as other sectors. It seems that net gain of jobs is possible.