"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 11 hours Why Criminals' Cryptocurrency Choices Matter To Average Investors
  • 2 days OPEC ‘Supergroup’ Keeps Oil Exports Subdued
  • 2 days One Belt, One Road, One Direction for Precious Metals
  • 2 days Vicious Trio Keeps Bitcoin in Chokehold
  • 2 days How Infrastructure Is Driving A Commodity Boom
  • 2 days What’s Really Happening With Venezuela’s “El Petro?”
  • 2 days Gold Bull and Bear Markets
  • 3 days 5 Big Drivers of Higher Inflation Rates Ahead
  • 3 days U.S. And China To Face Off Over Aramco IPO
  • 3 days Gold Bulls, Brace Yourselves – Fed Hikes Are Coming!
  • 3 days Stocks Fail to Hold Gains, But Still No Correction
  • 3 days Cryptojacking: A New Threat Vector To Critical Infrastructure
  • 4 days Why The Next Oil Boom Will Be Fueled By Blockchain
  • 4 days 5 Things Investors Should Know About China this New Year
  • 4 days Is The South Korean Crypto-Drama Finally Over?
  • 4 days Miners’ Rally? What Rally? Watch Out for More Fake Moves!
  • 4 days Four Percent 10-year Note Yield Will Be a Floor Not a Ceiling
  • 4 days The End Is Near
  • 5 days 5 Record Breaking Gemstones Even Billionaires Can’t Buy
  • 5 days Irredeemable Currency De-tooths Savers
Why The Next Oil Boom Will Be Fueled By Blockchain

Why The Next Oil Boom Will Be Fueled By Blockchain

As blockchain tech works its…

U.S. Dollar Bull and Bear Markets

U.S. Dollar Bull and Bear Markets

The idea of endlessly repeated…

Good News For Inflationists: Medical Costs and Rent Surge; Mini-Stagflation Coming Up?

Hip, hip, hooray! The CPI is up more than expected, led by a huge 1.1% month-over-month surge in medical care supplies.

Medical care services jumped 0.9%, and shelter jumped 0.3%.

This will not help the economy. And it will subtract from consumer spending other than Obamacare and rent, but economists are cheering.


CPI-U All Urban Consumers

Changes in CPI


Real World Happiness

  • Food at home -1.9%
  • Energy -9.2%
  • Gasoline -17.3%
  • Fuel Oil -12.8%
  • Electricity -.07%
  • Used cars -4.0%


Unreal World Happiness

  • Food Away From Home +2.8%
  • Medical Care Commodities +4.5%
  • Shelter +3.4%
  • Transportation Services +3.1%
  • Medical Care Services +5.1%


Keynesian Theory vs. Practice

Keynesian theory says consumers will delay purchases if prices are falling. In practice, all things being equal, it's precisely the opposite.

If consumers think prices are too high, they will wait for bargains. It happens every year at Christmas and all year long on discretionary items not in immediate need.


Reality Check Questions

  1. If price of food drops will people stop eating?
  2. If the price of gasoline drops will people stop driving?
  3. If price of airline tickets drop will people stop flying?
  4. If the handle on your frying pan falls off or your blow-dryer breaks, will you delay making another purchase because you can get it cheaper next month?
  5. If computers, printers, TVs, and other electronic devices will be cheaper next year, then cheaper again the following year, will people delay purchasing electronic devices as long as prices decline?
  6. If your coat is worn out, are you inclined to wait another year if there are discounts now, but you expect even bigger discounts a year from now?
  7. Will people delay medical procedures in expectation of falling prices?
  8. If deflation theory is accurate, why are there huge lines at stores when prices drop the most?


Bonus Question

If falling prices stop people from buying things, how are any computers, flat screen TVs, monitors, etc., ever sold, in light of the fact that quality improves and prices decline every year?


Crazy Thinking

Anyone who thinks soaring Obamacare and rent is a good thing and will help the economy is crazy.

By the way, pay particular attention to the price of new and used cars. I expect a price plunge in those categories as people will have less discretionary spending thanks to a rise in Obamacare premiums and rent.


Related Articles


Mini-Stagflation

Mish Tweet

Won't that be fun?

By the way, Keynes thought a recession and inflation at the same time could not happen. Somehow Keynesian idiocy managed to survive anyway.

 

Back to homepage

Leave a comment

Leave a comment




Don't Miss A Single Story