Inflation/Deflation

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com - a site for sore eyes and inquisitive minds - finds the most informative articles on the internet each day. He edits them for the sake of clarity and brevity to ensure a fast and easy read and posts introductory paragraphs to them on the site. He also provides a link to www.munKNEE.com where his edited excerpts of the original article are posted. Below are the latest articles for your enjoyment. Words: 500

The developed economies of the world have opened the money spigots...[and this] massive money and credit creation is sitting in the banking system like dry tinder just waiting for a spark to set it ablaze. How quickly it happens is anyone’s guess, but once it does we are likely to be enveloped in a worldwide inflation unlike anything before ever witnessed. [Let me explain further.] Words: 625

There is an all out assault on the part of global central banks to destroy their currencies in an effort to allow their respective governments to continue the practice of running humongous deficits. In fact, the developed world's central bankers are faced with the choice of either massively monetizing Sovereign debt or to sit back and watch a deflationary depression crush global growth. Since they have so blatantly chosen to ignite inflation, it would be wise to own the correct hedges against your burning paper currencies.

Despite the practical impossibility of real comparisons we know perfectly well that the value of a dollar or a pound, shekel, rouble or euro isn’t what it used to be...This fact, however, doesn’t stop us from almost exclusively focussing on how much money we have today rather than what it can purchase for us: we think about money in nominal terms rather than real ones [- and that is what is known as money illusion. Let me explain.] Words: 873

The stock market and inflation expectations remain joined at the hip. As the crowd anticipates higher inflation, the stock market rallies, and vice versa. This positive correlation between inflation and stock prices (a proxy for the economic outlook) won’t last forever and it’s anyone’s guess when [that will be but I have my views on it if you are so interested]. Words: 557

Currency wars arise when a country steals growth from trading partners by cheapening its currency to promote exports. The new currency war began in 2010 when President Obama declared in his State of the Union address that it was the policy of the United States to double exports in five years. Since the U.S. would not become twice as productive in five years, the implication was the U.S. would severely cheapen its currency to achieve this goal. [Let me expand upon this.] Words: 666

I respect many of the writers who believe that we will experience hyperinflation... but I think they are jumping the gun. Hyperinflation is something that is easy to say - and it certainly achieves the sensational headlines that so many financial writers seek - but it is much more difficult to achieve. At this point none of the economic or political factors required to set off hyperinflation are present. The question should not be whether or not it is possible, but whether or not it is probable in America today and in my opinion the probability of such happening is very low. [Let me explain why that is the case.] Words: 2695

Core CPI [continues to rise, remaining] above the Fed's inflation target of 2%. [That being said,] how inflation is impacting our personal expenses depends on our relative exposure to the individual components. [Let's take a look at the specifics.] Words: 291

The Fed justified the previous round of quantitative easing "to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate". In effect, the Fed has been trying to increase inflation at the macro level, but what does an increase in inflation mean at the micro level — specifically to your household? [Let's take a look and see.] Words: 957

The primary obstacle to economic recovery is widespread insolvency among households and banks (meaning liabilities exceed assets). A consumer who is broke cannot spend, and a bank that is broke cannot lend. Devaluing the dollar would reduce the real value of the debt (increase the nominal value of the assets), rendering millions of households and most banks instantly solvent. [Let me explain.] Words: 590