Obama drops oil prices

[OriZ 3,157]

Im not an economist and I've never even played one on tv but I don't think measuring the strength of the dollar against other currencies is

how you measure inflation.

I'm willing to go with the consumer price index.

I don't think the price of copper, gold and silver have an undue influence on the CPI

Housing, food and transportation are the biggest chunks.

You're willing to go with the CPI? Awesome. Lets take a look here:

http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CU_cpibrief

After bouncing from the worst of the recession in 09 it never reached the 08 highs(when it comes to rate of change) and lookie lookie - the chart looks very similar to that of many commodities and metals i.e. it started declining in either 2011 or 2012.

Let me throw in the Producer Price index as well which doesn't look any better:

http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=WP_ppibrief

When has there ever been hyperinflation with the CPI gaining on average less than 2% a year? Answer - never.

When has there ever been hyperinflation without oil, gold, silver or other commodities or metals soaring? Answer - never.

When has there ever been hyperinflation with the dollar RISING? Answer - never.

Those are all signs of the opposite.

We are in a DEflationary period and have been in one for about a decade now. So long as people keep worrying about inflation it's not going to happen if you ask me and they will miss their chance to fight the real threat which is 1930's style deflation. Only once that deflation runs its course and eventually the fed in its desperation will implement even more extreme policies to try and fight it than the last 6 years, will we begin to see hyperinflation.

What do you mean by education being a bubble? The prices of education or the worth of the education?

I'm talking about the price of education. It's just not sustainable.

Edited October 27, 2014 by OriZ

[GandD 5,966]

I'm talking about the price of education. It's just not sustainable.

Can't disagree with that

[Dan and Judy 614]

You're willing to go with the CPI? Awesome. Lets take a look here:

http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CU_cpibrief

After bouncing from the worst of the recession in 09 it never reached the 08 highs(when it comes to rate of change) and lookie lookie - the chart looks very similar to that of many commodities and metals i.e. it started declining in either 2011 or 2012.

I agree that we are not in a state of hyper inflation. I am also not worrying about hyper inflation. Conversely I am also not worrying about a little deflation, I welcome it.

The chart above shows inflation every year but one and you can go back 30 years with inflation every year but one.

The trouble with a 2% inflation every year is that if income doesn't go at the same rate people are losing purchasing power.

If income is going up at 1% every year at the same time, In 10 years people have lost 10% of their purchasing power.

[DavenRoxy 1,073]

The trouble with a 2% inflation every year is that if income doesn't go at the same rate people are losing purchasing power.

If income is going up at 1% every year at the same time, In 10 years people have lost 10% of their purchasing power.

Which is exactly where Obama's 1% annual raise puts our military. After so many years of low-ball raises, the military finally started playing catch up in the late 90's and early 2000's. And now they have been reduced once again. I believe in 2012 most government wages actually went down, because of a 1% raise but a 2%+ increase in federal taxes.

Yeah, it sucks that inflation continues to outpace income.

[OriZ 3,157]

That's a whole nother story. My point was oil prices dropping(and other commodities for that matter) are more a sign of an unhealthy global economy than something that should be welcomed, and that in my humble opinion oil is set to continue lower for the next few years, followed by stocks as usual being the last asset to join a broad based decline. I wouldn't call it "a little deflation" if it makes 2008-9 look like a walk in the park which I believe it will.

[OriZ 3,157]

Oil prices dropping might appear at first as a positive thing, but the truth is, the reason behind it is the looming and approaching deflation. And it has nothing to do with Obama for better or worse. So oil will keep dropping in the coming years, along with pretty much every asset except the US dollar. Yes, I know it's pretty much the exact opposite of what everyone believes - runaway inflation and a crash of the dollar. But they have been saying that for years and none of it has happened. The dollar today is higher than it was a few years ago and oil is lower. I still remember arguing with my wife when she believed the "experts" every time in the last few years that they predicted gas would go over $5 a gallon. I told her before it does that it will go under $3. Now I think before it does that it will even go under $2. Again, it's not tomorrow morning. It's a long process that takes years, especially when EVERYBODY's trying to fight it.

Lookie lookie. I found this one especially for Teddy. October 2014.

Next.

[The Nature Boy 7,659]

Lookie lookie. I found this one especially for Teddy. October 2014.

Next.

You are a financial god. You need to manage my millions. Of pennies