The world seems to be heading
for a deflationary abyss with governments around the world flinging money at the problem with no worries about sowing the seeds of inflation later.
Is this the right portfolio
for a deflationary economy?
Agree but I think we're still in
for a deflationary period before we get to an inflationary one.
Dr. Gary Shilling was way ahead of most commentators in arguing
for a deflationary environment.
Not exact matches
If the public starts to doubt, it may demand higher wages or payments to compensate
for expected price increases, or delay investments or purchases in anticipation of
deflationary pressures.
«The difficult task
for the BOJ is breaking the
deflationary mentality that exists in Japan,» he said on CNBC Asia's «Cash Flow.»
Lakos - Bujas said he and his team view «normalizing inflation and declining global
deflationary risks as a positive
for equities at this stage of the cycle, and believe there has been some overreaction to inflation headlines lately.»
Other reasons
for an increase include heading off a
deflationary debt spiral, and conversely, the risk of very high inflation.
As a result, we anticipate that firms may increasingly try to minimize their market data costs by turning to lite versions of existing terminals or piece together newly available alternatives — a trend we view as
deflationary for the industry.
For example, fixed - income securities, defensive stocks and blue - chip companies paying dividends can afford protection in
deflationary environments.
For what it's worth though, seems to me the liquidity trap / demand slump story is a better description of reality, it's not clear why your story would produce disinflation /
deflationary pressures.
But the
deflationary pressures are only temporary and inflation caused by energy supply failure will see huge inflation figures
for at least the next few years.
In the US and Europe,
deflationary pressures increase the ability of central banks to loosen monetary conditions, and because too many economists assume too easily that what is likely to be true in the US must be true everywhere,
deflationary pressures in China are unleashing calls
for lower interest rates and greater credit expansion in China.
So there is no appetite
for disinflationary pressure in today's global environment, whereas two decades ago the
deflationary pressures that Japan might have unleashed were welcome.
How long it takes
for China to overcome
deflationary pressures depends, I think, really on two very different sets of policies.
But economists worry that the commodity mess reflects a weakening global economy, lowering the value of trade worldwide and perhaps even pushing some countries into the same kind of
deflationary spiral that has hampered the Japanese economy
for decades.
Even
for knowing absolutely nothing about what's happened to Japanese interest rates over the past 20 years, as they've followed the
deflationary policy the GOP seems to prefer.
One of the most worrisome areas is Europe, which has long struggled with chronic low growth and technically crossed into
deflationary territory with a negative inflation reading
for December.
Against a backdrop of deflation around the world, China's producer price index and purchase price index have been dropping
for several years, and the latter is lower than the producer price index, further indicating that China shouldered the external
deflationary pressure.
However, at least
for now, it appears that the
deflationary pressures of the past few years are beginning to subside rather quickly.
The one sector where costs have continued to inflate every year looks to be set
for technology to have its
deflationary effect.
Euro - area consumer prices fell on an annual basis last month
for the first time in more than five years and ECB President Mario Draghi has warned that the
deflationary risks may demand a response.
Preston: [00:05:21] They're trying to pump as much cash into the system as possible because there are these enormous
deflationary forces that have been at play
for 35 years here in the U.S. at least.
Earlier fears of a
deflationary spiral appear to have been allayed, but with a considerable output gap to close, there is little prospect of demand - induced price rises
for some time.
Gold's purchasing power, its relative value versus commodities, has risen
for centuries during
deflationary periods.
These are the primary explanations
for sub-par growth, near -
deflationary conditions, and, most recently, negative interest rates in Japan and the Eurozone (together with the euro - linked economies of Denmark, Sweden and Switzerland).
Millar stresses the periodic upward revaluation of gold as the mechanism
for defeating a
deflationary debt depression at the end of an economic cycle.
«
For the next two years,
deflationary pressure is going to be dominant, and it is going to become a time bomb down the line if and when we keep monetizing large deficits.
Central banks will try everything to avoid or reverse a
deflationary collapse in paper asset markets because a
deflationary collapse is «game over»
for their credibility, governments, and politicians.
If the global recovery were to fall short of current expectations, prospects
for the Australian economy would be adversely affected and global
deflationary forces could gain momentum.
In today's issue, you'll read how desperately Japan has been trying to shed the «
deflationary curse» it's been haunted by
for decades.
This has now been negative since May, portraying a pace of economic activity that is well below potential and therefore continues to be consistent with both (a) a continuing ultimately
deflationary economic Supercycle Bear Market Period, or Winter, and (b) our working model
for after - shock, double double - dip business cycle contractions over the next four years.
While the current cyclical upswing will help to alleviate
deflationary pressures in the short term, there remain ongoing structural concerns
for the Japanese economy.
However, at its meeting in July, the Bank of Japan (BoJ) highlighted how far the country's economy still has to go to overcome
deflationary pressures, as the central bank further reduced its inflation forecasts
for the period up to early 2019.
Ditto
for the globalization of production and the other
deflationary forces we've been discussing since we wrote two books on deflation in the late 1990s, Deflation: Why it's coming, whether it's good or bad, and how it will affect your investments, business and personal affairs (1998) and Deflation: How to survive and thrive in the coming wave of deflation (1999).
As one private equity investor points out, protecting under - performing sectors might have been wise in
deflationary times (to keep unemployment from ballooning) though as reflation returns the need
for productivity to restrain costs could present an argument
for reform in the worst - performing sectors.
For someone who has never been good at keeping a savings account this is a miracle and I owe it to bitcoins
deflationary nature.
Bill points out that this concept of the fatal power of the disease, provided by Silkworth, became in AA a powerful
deflationary tool, shattering the ego at depth and laying the subject open
for conversion.
Smart analysts in the City are pointing out that because the private sector - household and business - is paying down debt at a rate of knots, this is not the time
for the Government to apply a savage
deflationary squeeze as well.
Balls said: «I believe it would be economic madness
for George Osborne to go ahead with
deflationary spending cuts and the VAT hike that his advisers have been whispering about to the newspapers.
If there is no, or negative inflation, the COLA
for that year will be zero — in other words, even in a
deflationary environment, Social Security benefits aren't adjusted downward.
In our view, the ultimate impact of these forces is
deflationary, and against the backdrop of falling yields and lower investment returns, investors have been willing to pay up
for growth.
Particularly, in a situation such as that which exists today, where the shadow banking system responsible
for much of the last few years of credit expansion is now dramatically contracting outside any possible control of the central banking authorities, there is no alternative but
deflationary collapse with a concomitant moon shot in the value of the world's reserve currency v. all other asset classes.
Switzerland accounts
for 5.2 % of the EU's imports, and these imports will now be slightly cheaper, which puts some
deflationary pressure on the EU, particularly in the Swiss - specialized industries of chemicals, medicinal products, machinery, instruments and time pieces.
We have been in a
deflationary world
for some time now.
With much of the global economy struggling under the weight of massive debt loads and unfavorable demographic trends, it's an open question whether the next few years will involve higher interest rates — as most experts have expected, and continue to expect — or whether these
deflationary forces will keep interest rates low
for a while longer.
The graph in the second article shows that it takes a long time
for inflation to come back after the economy has been in a strongly
deflationary mode, where bad debts have to be eliminated one way or another.
At that time, everyone was concerned with Japan's aging population, its tremendous sovereign debt, its
deflationary environment, and the fact that corporate management had little concern
for shareholders.
I think that the
deflationary forces are much too strong
for the failed reflationary strategies being pursued.
They believe that we are in
for another round of a 2008 - style
deflationary crash... or worse.