One hears much confusion about whether we are in a period of inflation or deflation. I looked at price charts, and it is clear to me. Beginning in June, the US entered a period of sharp deflation. That means, of course, many things we buy now cost less than they did four months ago. Here are examples:
From June 30 to October 10th:
Travel: Gas is down -30%; oil is down -40%;
the Mexican peso has collapsed -25%. Very cheap there now.
The Euro is down -30%, the Indian rupee is down -17%.
The cost of shipping a container across the Pacific is down more than half.
Food: ag commodities are down -40% to half: corn, copper, soybeans, wheat
Shelter: houses are down another -16%. Consequently mortgage payments are lower because the mortgages are smaller. Copper, a major expense in new homes, down -43%.
Retirement: most stock portfolios are down -40%
Goods: computers are cheaper, Apple rumored to announce its first sub-$1,000 laptop
Last week I bought a new backup computer for $169, including XP pro installed.
Some retailers beginning Christmas sales -- in October.
Income: My guess is that bonuses will be smaller this year. A contractor friend tells me it is very common for jobs to be re-bid for lower prices. He is lowering his prices.
Looking at megatrends, many things we paid for years ago are now free:
Mail, i hardly ever mail a letter anymore. All free email.
Magazines, i haven't bought a magazine in years. it's all on the internet
Newspapers, same with newspapers. I haven't subscribed for years.
Maps, thanks to google and yahoo.
Software, no need for Microsoft office, we have google docs, Open Office.
Photography: remember "film" and "developing"?
The bond market is expecting deflation. The spread between TIPS, inflation protected bonds, and treasuries are trading at negative yields, indicating bond traders expect deflation to continue. Finally, those ultimate doomsday protectors against inflation, gold and silver, are down from June prices. Silver is down dramatically, about -50%.
Deflation just suddenly happened. There are periods in economic cycles where cash US dollars are the best investment, and we've just experienced one of those periods. Those with US dollars, as in our managed accounts, are relatively wealthier today than four months ago.
return to: easankatir.com
From June 30 to October 10th:
Travel: Gas is down -30%; oil is down -40%;
the Mexican peso has collapsed -25%. Very cheap there now.
The Euro is down -30%, the Indian rupee is down -17%.
The cost of shipping a container across the Pacific is down more than half.
Food: ag commodities are down -40% to half: corn, copper, soybeans, wheat
Shelter: houses are down another -16%. Consequently mortgage payments are lower because the mortgages are smaller. Copper, a major expense in new homes, down -43%.
Retirement: most stock portfolios are down -40%
Goods: computers are cheaper, Apple rumored to announce its first sub-$1,000 laptop
Last week I bought a new backup computer for $169, including XP pro installed.
Some retailers beginning Christmas sales -- in October.
Income: My guess is that bonuses will be smaller this year. A contractor friend tells me it is very common for jobs to be re-bid for lower prices. He is lowering his prices.
Looking at megatrends, many things we paid for years ago are now free:
Mail, i hardly ever mail a letter anymore. All free email.
Magazines, i haven't bought a magazine in years. it's all on the internet
Newspapers, same with newspapers. I haven't subscribed for years.
Maps, thanks to google and yahoo.
Software, no need for Microsoft office, we have google docs, Open Office.
Photography: remember "film" and "developing"?
The bond market is expecting deflation. The spread between TIPS, inflation protected bonds, and treasuries are trading at negative yields, indicating bond traders expect deflation to continue. Finally, those ultimate doomsday protectors against inflation, gold and silver, are down from June prices. Silver is down dramatically, about -50%.
Deflation just suddenly happened. There are periods in economic cycles where cash US dollars are the best investment, and we've just experienced one of those periods. Those with US dollars, as in our managed accounts, are relatively wealthier today than four months ago.
return to: easankatir.com
fred clancey
Invite as author
Misleadng title of your Knol
your secondary title shows you're looking backwards. Looking backwards, you're right on
of course, but you say your profession is to detect new trends which, along with the primary title,
seems misleading given the stats you cite, esp since you draw nothing about the future from
those backward looking stats. Unless you're drawing inferences about the future from the
past deflation, why not be clearer about what you're doing?
The reader has to agree that the disruptive technologies are lowering the future cost of many things we used to do via more expensive media, but that's your ONLY connection with the future whereas your primary article title suggests something else. If we go past your point-in-time snapship I think your article gives more reason to be bullish on tech than on the US$.