Inflation/Deflation

I have long been a critic of government inflation statistics. Not so much with regard to the methodology they use, but because the measure of “average” inflation across the broad economy doesn’t really describe the inflation that the majority of Americans experience. I’ve written about that at length in several letters and now my good friend Ron Arnott, along with his associate Lillian Wu, presents us with a research paper that lays out what inflation actually looks like for most Americans – and the picture is not pretty.

Gluskin Sheff Chief Economist David Rosenberg is bucking the bearish trend on Wall Street and running with the bulls instead, touting positive jobs and wages data as a sign that inflation—the current gold standard for economic recovery—may be right around the corner...

The present economic expansion is being brought about by massive stimulus policies and, as such, does not constitute genuine economic growth. Such bogus economic growth by way of monetary and fiscal stimulus can go on only until either the collapse of hyperinflation brings an end to the artificial boom or the amount of accumulated debt makes state bankruptcy inevitable.

Staying ahead of inflation is hard enough but even trying to tread water, to stay even with inflation, becomes extremely difficult when you have the lead weight of inflation taxes around your neck, pulling you down.

In spite of the indications presented here I'm willing to bet that both growth and inflation will prove to be even higher than expected in the years to come. Here's why.

Deflation is often considered a highly unfavorable phenomenon, however there are different types of deflation that have different implications. In other words, the effects of deflation depend to a large extent on the particular context...This article distinguishes between good deflation and bad deflation.

Unlike a number of countries in Europe the U.S. is currently not dealing with general price declines but, that being said, the risks of such an occurrence have increased materially. This article outlines a number of such deflationary risks and how they might impact the U.S. economy.

Should we be concerned when tepid economic growth and low inflation are accompanied by increasing public and private debt? Are we borrowing just to stay alive? [As I see it,] national governments will increase national debt loads in order to stay in power until one or more of them default. Then their will be financial panic which will most certainly be deflationary. Here's why.

This article takes a look at the expected trends in the price of oil, cost of living and currency wars and how they most likely will impact inflation.

We keep hearing about how controlled inflation is but in reality, we are seeing increases in many important segments of our society. No inflation they say. Let us look at some key items.