Good deflation also existed in the Roaring»20s when the driving new technologies were electrification of factories and homes and mass - produced automobiles.
We've consistently predicted
the good deflation of excess supply, but in our two Deflation books and subsequent reports, we said clearly that the bad deflation of deficient demand could occur — due to severe and widespread financial crises or due to global protectionism.
We've been forecasting chronic
good deflation of excess supply because of today's convergence of many significant productivity - soaked technologies such as semiconductors, computers, the Internet, telecom and biotech that should hype output.
Not exact matches
Finally, as I have noted a number of times before, my biggest fear about the next recession is that it leads to actual wage
deflation (nominal as
well as real):
«Japan has repeatedly tried to explain that Japanese policies are taken to overcome
deflation and, by all means, these are measures to overcome
deflation as
well as recession.
Subdued inflation forced the BOJ to revamp its policy framework in 2016 to one
better suited for a long - term battle against
deflation, which targets interest rates instead of the pace of money printing.
«
Deflation fears have abated, which is
good, but it has pushed up bond yields.
On Dollar General's conference call, management blamed the weather, food price
deflation and food stamp cutbacks, as
well as growing competition from Wal - Mart, for the underperformance.
In times of economic instability and
deflation (falling prices), bonds have performed
better than stocks in the past.
In all these cases the effect of debt
deflation extracting interest is not only on spending — and hence on current prices — but on the economy's long - term ability to produce, by eating into natural resources and the environment as
well as society's manmade capital stock.
«Simplification, standardization and
deflation are repositioning the oil industry for
better profitability and cash generation in the current environment than in 2013 - 14 when the oil price was above $ 100 a barrel,» Goldman Sachs analysts said in a research note on Wednesday, as quoted by Bloomberg.
If you've been on the site for awhile, you have a head start because we've already discussed the importance of a discipline known as asset allocation, which involves selecting among different asset classes to build a
well - balanced portfolio that can weather different economic environments, tax regimes, global conditions, inflation or
deflation, and a host of other variables that history has shown will fluctuate over time.
According to Goldman Sachs, Big Oil is now repositioning itself for
better profitability and cash generation in the oil - at - US $ 50 world than they were in the US$ 100 - oil price environment, due to simplification, standardization, and
deflation.
Some deflationists like A. Gary Shilling also believe an excess of supplies play into this
deflation dynamic that result in what Dr. Schilling calls «
good»
deflation.
Lowflation marks the point at which prices are rising at
well below that target rate for months, even years, persistently teetering on the edge of
deflation.
To become more positive on the stock, the analyst is looking for sequential improvement in same - store sales, food price
deflation and
better - than - expected profitability.
Companies are still very focused on currency trends that are impacting their business as
well as on margin pressures — whether it's cost inflation through wage growth or price
deflation and the compressing of margins.
As with the Bear Stearns hedge funds, the Greek episode may
well foreshadow a
deflation of the bubble in sovereign debt.
In Japan, the world's third largest economy, Prime Minister Abe, after initiating policies to tackle
deflation, has vowed to take a swing at structural reform as
well.
Without such policies, output would likely be even lower, and the world economy might
well have tipped into
deflation.
In contrast, bad
deflation reigned in the 1930s as the Great Depression pushed demand
well below supply.
So
deflation in the years ahead is likely to be a combination of
good and bad.
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 deflatio
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 deflatio
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 deflatio
Deflation: How to survive and thrive in the coming wave of
deflationdeflation (1999).
«Overall, we suggest the sustained competitive intensity has weighed on the business, as
well as
deflation, and under such an environment, independent supermarket retailers lose market share,» he said.
«It was designed to be flexible when times weren't
good, and we're almost in
deflation now,» said Vecchio, co-founder of the regional Long Islanders for Educational Reform group.
For all of his attempts at ego
deflation, it's interesting that two of the three more conventional Schwarzenegger vehicles, Terminator 2 and Total Recall, rank among his very
best films to date.
Included in the PowerPoint: Government Government Macro Policies (AS Level) a) Types of Policy: fiscal policy, monetary policy and supply side policy - instruments of each policy b) Policies to correct balance of payments disequilibrium - assessment of the effectiveness of fiscal monetary and supply side policies to correct a balance of payments disequilibrium - expenditure - reducing and expenditure - switching c) Policies to correct inflation and
deflation - assessment of the effectiveness of fiscal, monetary and supply side policies to correct inflation and
deflation This PowerPoint is
best used when using worksheets and activities to help reinforce the ideas talked about.
Included in the PowerPoint: Macroeconomic Objectives (AS Level) a) Aggregate Demand (AD) and Aggregate Supply (AS) analysis - the shape and determinants of AD and AS curves; AD = C+I+G + (X-M)- the distinction between a movement along and a shift in AD and AS - the interaction of AD and AS and the determination of the level of output, prices and employment b) Inflation - the definition of inflation; degrees of inflation and the measurement of inflation;
deflation and disinflation - the distinction between money values and real data - the cause of inflation (cost - push and demand - pull inflation)- the consequences of inflation c) Balance of payments - the components of the balance of payments accounts (using the IMF / OECD definition): current account; capital and financial account; balancing item - meaning of balance of payments equilibrium and disequilibrium - causes of balance of payments disequilibrium in each component of the accounts - consequences of balance of payments disequilibrium on domestic and external economy d) Exchange rates - definitions and measurement of exchange rates - nominal, real, trade - weighted exchange rates - the determination of exchange rates - floating, fixed, managed float - the factors underlying changes in exchange rates - the effects of changing exchange rates on the domestic and external economy using AD, Marshall - Lerner and J curve analysis - depreciation / appreciation - devaluation / revaluation e) The Terms of Trade - the measurement of the terms of trade - causes of the changes in the terms of trade - the impact of changes in the terms of trade f) Principles of Absolute and comparative advantage - the distinction between absolute and comparative advantage - free trade area, customs union, monetary union, full economic union - trade creation and trade diversion - the benefits of free trade, including the trading possibility curve g) Protectionism - the meaning of protectionism in the context of international trade - different methods of protection and their impact, for example, tariffs, import duties and quotas, export subsidies, embargoes, voluntary export restraints (VERs) and excessive administrative burdens («red tape»)- the arguments in favor of protectionism This PowerPoint is
best used when using worksheets and activities to help reinforce the ideas talked about.
Also argues that
deflation can be benign — though when debts are high, I can't see it being a
good thing now.
Companies with lots of cash and relatively little debt are likely to perform
better (not necessarily
well — just
better) during
deflation than cash - poor, highly leveraged companies.
With
deflation, less and less cash is required over time to buy the exact same
good or service.
Similarly, building an emergency fund is also always a
good idea, but might prove especially wise if you work for a business likely to suffer during
deflation.
Gold does
better in
deflation than inflation.
Growth - Value switching based on the yield curve works
better (i.e., has higher Historical Surviving Withdrawal Rates) when there is inflation than when there is
deflation.
First, you need to understand that your principal as
well as semi-annual payment can fall in periods of
deflation.
25 % in long - term U.S. Treasury bonds, which do
well during prosperity and during
deflation (but which do poorly during other economic cycles).
Both articles mention that bonds are a
good idea under
deflation and both mention that the stock of companies with little debt should be preferred.
Barclays might have added a hedge against
deflation as
well, another function cited by Deutsche Bank.
But banks are by definition net lenders that should do
well from
deflation.
Worse yet, neither
deflation —
better known as «depression» — nor hyperinflation are adequately understood by the general public, including many investors and financial experts.
The
best way to avoid being cleaned out by
deflation is to be free and clear, or as close to it, before
deflation hits.
Jeffrey Gundlach, founder of DoubleLine, which has been the
best performing bond fund so far this year, tells the FT's Dan McCrum that
deflation is a greater risk than inflation because he believes it would take another crisis to trigger big monetary policy changes.
The bonds have greater safety and appreciation in the asset class, which has proven to do
well during times of
deflation and debt leveraging.
This tells us that stocks can do
well in times of inflation and
deflation, but the primary risk we are concerned with are sudden changes in inflation rates.
But it's not clear where Smurfit stands in this regard — there are certainly fresh threats to global growth, and debt overhang will restrain the developed markets for years to come — on the other hand, Smurfit's now a dominant player, emerging markets continue to perform
well, and Western central banks continue to pump out a tsunami of liquidity to combat debt
deflation.
Japan has been in the process of purchasing securities, and the European Central Bank has started purchasing as
well, in order to stave off
deflation.
TIPs would seem to provide more cost - effective insurance, even
better because they simultaneously insure against inflation and
deflation.
Overall, the Fed's efforts to end the
deflation and resuscitate the financial system, while
well intentioned and based on the
best available information, appear to have been too little and too late.
The money supply might
well contract at this point due to the liquidity trap plus debt
deflation plus general
deflation.
Deflation happens without the terrible consequences that Keynesian economists predict; and the country, now under democratic rule, is experiencing its 4th year of market economic growth
well above 7 %.