What do the terms "Inflation and Deflation" mean. The common answer is, Inflation is too many dollars chasing too few goods and services, while Deflation is too many goods and services chasing too few dollars. My own answer is, Inflation happens when Government prints too many fiat dollars and Deflation is when Free Enterprise produces more goods and services than can be sold in the home country and should, therefore be exported to other countries which have an inflationary problem or a low Gross Domestic Product (GDP) problem and need to import goods and services. Since we have been exporting our producers instead of our production and exporting our dollars to buy foreign production imports, we are now seeing the first serious signs of Inflation which will surely become Hyper-Inflation if we do not slow imports, speed up exports and stop printing dollars. On the other hand, we have already gone too far in debt to remedy the problem ($17 Trillion in borrowed funds and up to $200 Trillion in contracted but unfunded debt obligations in Medicare, Medicaid, Social Security and Federal Retirement promises). Add to that Obamacare from cradle to the grave and we end up with empty cradles and everybody in the grave. So since our Gov has sold our birthright for a mess of porridge, with our co-operation like a lustful dope addict, they just have two options ... Default on all debt which leads to economic calamity, or Print enough new fiat money to pay the debt which leads to inflationary calamity (dollar ain't worth doodely). So don't blame the grocer or the distributor or the farmer, blame the worthless dollar printers up in the Fed Castle and the President, Congress, and Media in bed with them while the presses roar in the basement 24 hours a day. RB
Here, from todays news, is what is beginning to happen in America. RB
"Living Standards Will Suffer" as Food Prices Surge
From USA Today - April 17. 2014
Food prices are registering sharp gains, climbing 4% in both February and March and threatening to put a damper on the economy.
What's happening is that wholesalers have raised the prices they charge grocers, and grocers in turn have passed along the increases to their customers, USA Today reports. That obviously creates a hardship for consumers, who account for about 70% of GDP. "Living standards will suffer, as a larger percentage of household budgets are spent on grocery store bills, leaving less for discretionary spending," Chris Christopher, an economist at IHS Global Insight, told USA Today. | |
Rents No Longer "Affordable" for Most AmericansFrom The New York Times
April 17, 2014 - April 17, 20014
Demand for rental housing has soared over the past seven years, and that has pushed rents higher than many middle-class Americans can afford to pay.
A rule of thumb is that households shouldn't pay more than 30% of their income on rent and utilities.
But now half of U.S. renters devote more than 30% of their income to housing, up from 38% in 2000, revealed a report from Harvard University. Housing Secretary Shaun Donovan has called this "the worst rental affordability crisis that this country has ever known.
WHAT IS DEFLATION?
Wicipedia Says:
In economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). This should not be confused with disinflation, a slow-down in the inflation rate (i.e., when inflation declines to lower levels)
About.com Says:
The standard deflation definition is when asset and consumer prices continue to fall. This may seem like a great thing to consumers, except that the cause for widespread deflation is a long-term drop in demand. Unfortunately, a drop in demand means that a recession is probably already underway, with job losses, declining wages, and an ongoing decline in the value of your home and your stock portfolio. Deflation is a result of businesses dropping prices in a desperate attempt to get people to buy their products.
Investopedia Says:
A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression.
WHAT IS INFLATION?
Wicipedia Says:
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.
About.com Says:
Because inflation is a rise in the general level of prices, it is intrinsically linked to money, as captured by the often heard refrain "Inflation is too many dollars chasing too few goods". To understand how this works, imagine a world that only has two commodities: Oranges picked from orange trees, and paper money printed by the government. In a year where there is a drought and oranges are scarce, we'd expect to see the price of oranges rise, as there will be quite a few dollars chasing very few oranges. Conversely, if there's a record crop or oranges, we'd expect to see the price of oranges fall, as orange sellers will need to reduce their prices in order to clear their inventory. These scenarios are inflation and deflation, respectively, though in the real world inflation and deflation are changes in the average price of all goods and services, not just one.
Investopedia Says:
During World War II, you could buy a loaf of bread for $0.15, a new car for less than $1,000 and an average house for around $5,000. In the twenty-first century, bread, cars, houses and just about everything else cost more. A lot more. Clearly, we've experienced a significant amount of inflation over the last 60 years.
So, what is a husband, wife, parent, college graduate, workaholic or flunky supposed to do?
Kick the old bums, that did it to us, in D.C., out of office on election day. A few of the new ones have been fighting our battle, so leave them there. Not that it will solve the problem. Too late for that, but at least we will be rid of the old geniuses who betrayed our trust. Some of them are quiting already. Why anyone would want the job, now, is a mystery to me. They would have to either be a glutton for punishment, have a lust for power, or be a true partiot who wants to die for a good cause. RB
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