I have been arguing deflation with inflationists, goldbugs and the likes for years. To no avail. Today’s WSJ snippet (see below) confirms my view without a shadow of a doubt. There is no inflation as the central bank’s preferred inflation gauge slowed to an annual gain of less than 1%. Instead, we are in a deflationary environment where bad debt and credit defaults must be liquidated.
This becomes even more evident when you think about the amount of liquidity the FED had pumped into our financial system over the last 5 years. Despite, QE, over $1 Trillion in liquidity, and other monetary stimulus, inflation gauge remains at 1%. Without such massive stimulus today’s deflationary environment would be more clear.
Well, let me correct myself. There has been massive inflation over the last few years. In the stock market, the real estate market and some other commodities. Most of the liquidity the FED had infused went right into speculation. When the bear market of 2014-2017 starts all of that inflation will vanish into thin air. Understanding this clearly plays an important role in your upcoming portfolio allocation. If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and it’s internal composition, please Click Here.
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Attention: Deflation Is Here, What’s Next? Google
WSJ Writes: Inflation Slows Again, Bouncing Around Four-Year Low
Inflation isn’t just going nowhere. It may be slipping again.
The Commerce Department’s latest read of consumer prices on Friday showed price pressures moving in a direction many Federal Reserve officials find uncomfortable. The personal consumption expenditures price index — the central bank’s preferred inflation gauge — slowed to an annual gain of less than 1%.
The PCE index’s 0.9% annual increase in February marked the weakest reading since October, when year-over-year inflation touched a four-year low.
The latest data suggests the U.S. faces little risk of rapidly accelerating inflation as the Fed slows the amount of stimulus it’s pumping into the economy. Earlier this month, the central bank said it would lower the pace of monthly bond buying by another $10 billion to $55 billion.
Friday’s report showed the pace of food inflation increased in February after holding virtually flat the previous five months. But that gain was largely offset by declining prices for long-lasting durable goods and energy last month.
The consumer price index, a separate inflation measure calculated by the Labor Department and released earlier this month, rose 1.1% in February from a year earlier. That, too, was a slowdown from January.