TwoCitiesCapital Posted September 25, 2015 Share Posted September 25, 2015 Japan announced that inflation was negative for August. Stripping out fresh foods, core inflation was was also negative at -0.1% - the first negative print in core inflation since the beginning of the current QE program started in 2013. Abe-nomics isn't working just like none of the other QE programs in Japan ever worked. Sure, someone will probably have the excuse that China's weakening yuan is wreaking havoc on Japan's export economy. I'd just add that there always seems to be some good excuse for why any individual QE program doesn't work, but I've yet to hear a good excuse that explains why they have all collectively failed without a single instance of success in stimulating "normalized" growth and inflation. We're not there in Japan after nearly 10 rounds of QE. We're not there in the U.S. after 4 rounds of QE. We're not there in Europe during the first round of QE. Hey, I know what we need! MORE QE!!!! Link to comment Share on other sites More sharing options...
obtuse_investor Posted September 25, 2015 Share Posted September 25, 2015 "I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail." -- Abraham Harold Maslow (1966) Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted September 29, 2015 Share Posted September 29, 2015 Deflation in Germany again http://www.bloomberg.com/news/articles/2015-09-29/german-inflation-turns-negative-for-first-time-since-january Oversupply of housing in North Dakota will lead to lower rents/sales prices in the area. Will this happen in other shale states? This could be the first creep of deflation into housing in U.S. CPI. http://www.bloomberg.com/news/articles/2015-09-29/man-camp-exodus-spurs-real-estate-crisis-across-u-s-shale-towns Link to comment Share on other sites More sharing options...
Jurgis Posted September 29, 2015 Share Posted September 29, 2015 "I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail." -- Abraham Harold Maslow (1966) I suppose it is tempting, if you only hold FFH, to treat everything as if it were deflation. ;) Link to comment Share on other sites More sharing options...
ERICOPOLY Posted September 29, 2015 Share Posted September 29, 2015 Japan announced that inflation was negative for August. Stripping out fresh foods, core inflation was was also negative at -0.1% - the first negative print in core inflation since the beginning of the current QE program started in 2013. Abe-nomics isn't working just like none of the other QE programs in Japan ever worked. Sure, someone will probably have the excuse that China's weakening yuan is wreaking havoc on Japan's export economy. I'd just add that there always seems to be some good excuse for why any individual QE program doesn't work, but I've yet to hear a good excuse that explains why they have all collectively failed without a single instance of success in stimulating "normalized" growth and inflation. We're not there in Japan after nearly 10 rounds of QE. We're not there in the U.S. after 4 rounds of QE. We're not there in Europe during the first round of QE. Hey, I know what we need! MORE QE!!!! You cannot say it failed to work. You don't know how much worse deflation would be in the absence of it. Therefore, how do you know? For example, perhaps it might be a roaring success if you achieved 1% deflation instead of an otherwise 4% number. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted September 29, 2015 Share Posted September 29, 2015 Japan announced that inflation was negative for August. Stripping out fresh foods, core inflation was was also negative at -0.1% - the first negative print in core inflation since the beginning of the current QE program started in 2013. Abe-nomics isn't working just like none of the other QE programs in Japan ever worked. Sure, someone will probably have the excuse that China's weakening yuan is wreaking havoc on Japan's export economy. I'd just add that there always seems to be some good excuse for why any individual QE program doesn't work, but I've yet to hear a good excuse that explains why they have all collectively failed without a single instance of success in stimulating "normalized" growth and inflation. We're not there in Japan after nearly 10 rounds of QE. We're not there in the U.S. after 4 rounds of QE. We're not there in Europe during the first round of QE. Hey, I know what we need! MORE QE!!!! You cannot say it failed to work. You don't know how much worse deflation would be in the absence of it. Therefore, how do you know? For example, would be perhaps be a roaring success if you achieved 1% deflation instead of an otherwise 4% number. And the same argument would apply to you - you can't say that it worked because you don't know what inflation/deflation would have been without it. We could have ended in the exact same place. But I do think it's clear that the results have not been what was targeted by any of the policy makers that implemented it, which is a better gauge of failure than people who claim it was a success have. Link to comment Share on other sites More sharing options...
rb Posted September 29, 2015 Share Posted September 29, 2015 You cannot say it failed to work. You don't know how much worse deflation would be in the absence of it. Therefore, how do you know? For example, perhaps it might be a roaring success if you achieved 1% deflation instead of an otherwise 4% number. +1. Refreshing. A rare sane comment on this topic. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted September 29, 2015 Share Posted September 29, 2015 Japan announced that inflation was negative for August. Stripping out fresh foods, core inflation was was also negative at -0.1% - the first negative print in core inflation since the beginning of the current QE program started in 2013. Abe-nomics isn't working just like none of the other QE programs in Japan ever worked. Sure, someone will probably have the excuse that China's weakening yuan is wreaking havoc on Japan's export economy. I'd just add that there always seems to be some good excuse for why any individual QE program doesn't work, but I've yet to hear a good excuse that explains why they have all collectively failed without a single instance of success in stimulating "normalized" growth and inflation. We're not there in Japan after nearly 10 rounds of QE. We're not there in the U.S. after 4 rounds of QE. We're not there in Europe during the first round of QE. Hey, I know what we need! MORE QE!!!! You cannot say it failed to work. You don't know how much worse deflation would be in the absence of it. Therefore, how do you know? For example, would be perhaps be a roaring success if you achieved 1% deflation instead of an otherwise 4% number. And the same argument would apply to you - you can't say that it worked because you don't know what inflation/deflation would have been without it. We could have ended in the exact same place. But I do think it's clear that the results have not been what was targeted by any of the policy makers that implemented it, which is a better gauge of failure than people who claim it was a success have. Yet I don't argue that it succeeded. Nor do I argue it failed. I just know that we don't know. Link to comment Share on other sites More sharing options...
rb Posted September 29, 2015 Share Posted September 29, 2015 Just to add that the only actually properly done QE to date has been QE3 in the US. The rest have been quite poor. Japan in particular with fits and starts of smallish amounts. The last one had promise it remains to be seen if BOJ stays the course. Link to comment Share on other sites More sharing options...
Crip1 Posted October 1, 2015 Share Posted October 1, 2015 Some key data that flies in the face of the deflation thesis... http://finance.yahoo.com/news/why-buffalo-wild-wings-prices-are-going-up-nov--1st-152124092.html ;) -Crip Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted October 1, 2015 Share Posted October 1, 2015 Some key data that flies in the face of the deflation thesis... http://finance.yahoo.com/news/why-buffalo-wild-wings-prices-are-going-up-nov--1st-152124092.html ;) -Crip Prem better cover his derivatives now!!!!! Link to comment Share on other sites More sharing options...
Guest Dazel Posted October 1, 2015 Share Posted October 1, 2015 or buy another restaurant chain as a hedge! shareholder discount anyone? Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted October 1, 2015 Share Posted October 1, 2015 or buy another restaurant chain as a hedge! shareholder discount anyone? No. People want him to fry bigger fish. Not hot wings! Link to comment Share on other sites More sharing options...
Jurgis Posted October 1, 2015 Share Posted October 1, 2015 Some key data that flies in the face of the deflation thesis... http://finance.yahoo.com/news/why-buffalo-wild-wings-prices-are-going-up-nov--1st-152124092.html ;) -Crip That's funny. It does seem that prices in restaurants are going up pretty much. Link to comment Share on other sites More sharing options...
rukawa Posted October 2, 2015 Share Posted October 2, 2015 I have never heard that definition before. Do you think FFH is investing hundreds of millions based on your theory of deflation? I think they are investing hundreds of millions of dollars based on the idea that the US is in a Great Depression scenario which I think is wrong. You don't get much deflation from a consumer credit crisis. Because you can't fire your wife. You get deflation from business/financial credit crisis. During both the Great Depression and the Japanese credit crisis it was businesses that held huge debts. The deflation during the Great Depression was due to bank failures and businesses firing workers and lowering prices. This was explained competely by Irving Fisher. This is completely different than the current situation because the Fed bailed out the banks and the businesses were not heavily in debt to begin with. So you were never going to get huge deflation. Plus the retirement of the baby boomers is an inflationary tailwind. The whole thesis never made sense. Link to comment Share on other sites More sharing options...
wisdom Posted October 2, 2015 Share Posted October 2, 2015 7 years of money printing across the world and we are still talking about the first interest rate hike. Does that sound like inflation? I wonder what happens when the next slow down hits or all the misallocated capital over the last 8 years results in losses. I guess that may lead to inflation. Link to comment Share on other sites More sharing options...
goldfinger Posted October 2, 2015 Share Posted October 2, 2015 Ask Europe where they think they are going as we speak. Ask Japan where they are and have been for a long time. 10y treasury yields at 2% in the US, inflation close to 0 after a few rounds of QE american style... Link to comment Share on other sites More sharing options...
Zorrofan Posted October 2, 2015 Share Posted October 2, 2015 I have never heard that definition before. Do you think FFH is investing hundreds of millions based on your theory of deflation? I think they are investing hundreds of millions of dollars based on the idea that the US is in a Great Depression scenario which I think is wrong. You don't get much deflation from a consumer credit crisis. Because you can't fire your wife. You get deflation from business/financial credit crisis. During both the Great Depression and the Japanese credit crisis it was businesses that held huge debts. The deflation during the Great Depression was due to bank failures and businesses firing workers and lowering prices. This was explained competely by Irving Fisher. This is completely different than the current situation because the Fed bailed out the banks and the businesses were not heavily in debt to begin with. So you were never going to get huge deflation. Plus the retirement of the baby boomers is an inflationary tailwind. The whole thesis never made sense. Wouldn't the retirement of baby boomers be deflationary? Smaller retirement incomes mean less spending..... cheers Zorro Link to comment Share on other sites More sharing options...
barsax Posted October 2, 2015 Share Posted October 2, 2015 Wow!! That US jobs report was pitiful. Rates aren't going up for some time, bonds are still the best asset class...deflation anyone? Link to comment Share on other sites More sharing options...
NewbieD Posted October 2, 2015 Share Posted October 2, 2015 Wouldn't the retirement of baby boomers be deflationary? Smaller retirement incomes mean less spending..... cheers Zorro Especially the dying of baby boomers should be deflationary.. :D Link to comment Share on other sites More sharing options...
obtuse_investor Posted October 3, 2015 Share Posted October 3, 2015 An article on US Inflation in the latest Economist. The lowdown Persistent low inflation results from more than cheap oil and a strong dollar http://www.economist.com/news/united-states/21669952-persistent-low-inflation-results-more-cheap-oil-and-strong-dollar-lowdown Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted October 3, 2015 Share Posted October 3, 2015 An article on US Inflation in the latest Economist. The lowdown Persistent low inflation results from more than cheap oil and a strong dollar http://www.economist.com/news/united-states/21669952-persistent-low-inflation-results-more-cheap-oil-and-strong-dollar-lowdown Stop posting your deflationistic propaganda. You can't possibly imagine that deflation is a real threat can you? I mean, the Fed would never let it happen! After the energy dip rolls off and all of the companies/states we've been dependent on for minuscule growth roll over on a YoY basis, the U.S. economy and inflation will come roaring back to life. Link to comment Share on other sites More sharing options...
rukawa Posted October 3, 2015 Share Posted October 3, 2015 Wouldn't the retirement of baby boomers be deflationary? No. People who retire spend, but don't work. They draw down savings and spend their pensions. This reduces labour supply much more than it reduces consumption. For instance a person making $100000 retires with pension of $20000. Lets say they spend $100000 when they were working and now spend $20000 in retirement. Retirement has reduced consumption by $80000 but reduced production by $100000. These assumptions of course are very conservative because typically people save money pre-retirement and spend down savings post retirement. Baby boomers are not being replaced by new workers. This labour supply is going down. You can already see this occurring in the labour participation rate. Right now unemployment is 5.1. Wages will start rising. I expect profit margins will shrink and when they can't shrink any more inflation will start. Link to comment Share on other sites More sharing options...
Zorrofan Posted October 3, 2015 Share Posted October 3, 2015 Wouldn't the retirement of baby boomers be deflationary? No. People who retire spend, but don't work. They draw down savings and spend their pensions. This reduces labour supply much more than it reduces consumption. For instance a person making $100000 retires with pension of $20000. Lets say they spend $100000 when they were working and now spend $20000 in retirement. Retirement has reduced consumption by $80000 but reduced production by $100000. These assumptions of course are very conservative because typically people save money pre-retirement and spend down savings post retirement. Baby boomers are not being replaced by new workers. This labour supply is going down. You can already see this occurring in the labour participation rate. Right now unemployment is 5.1. Wages will start rising. I expect profit margins will shrink and when they can't shrink any more inflation will start. Very interesting....thanks for your reply. Couple this with the roll off from the oil price collapse (as pointed out by TwoCitiesCapital) and we could see some interesting results over the next few years..... Link to comment Share on other sites More sharing options...
wisdom Posted October 4, 2015 Share Posted October 4, 2015 http://www.ft.com/intl/cms/s/0/2968bc5e-68fe-11e5-a57f-21b88f7d973f.html?ftcamp=traffic/partner/feed_headline/us_yahoo/auddev#axzz3ndhwzhHT Deflation in asia Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now