Comments on: Revealed: The Real Inflation Story

By: Lachlan

Lachlan — Mon, 29 Jun 2009 11:57:01 +0000

Inflation comes about from an increase in the money supply. That new money has to become available to consumers to trigger inflation.
To date little new money is getting into the hands of consumers from what I can see. For example, in the US the bailout money given to banks resides where it came from , at the Fed. Its possibly being kept there to soak up the next round of balance sheet issues to be caused by mortgage defaults. Its hard then to see how high inflation or hyperinflation could start there right now.
In my town in Queensland inflation in consumeables is still very alive while property has been copping discounts for some time, though nothing drastic yet.
I see higher inflation as being likely in the future because of what governments and central banks have done in the past. Recently they have shown intentions towards playing with fire on a grander scale to prevent financial sector failure (eg cash handouts around Christmas in Aust., monetisation of debt in USA)
It seems for the time being the world is in limbo waiting for the next and imminent crash in everything. I suppose this inflation/deflation debate will go on and on throughout until we either get increasing money or credit in hand or we dont. Hopefully not.

By: Michelle

Michelle — Sat, 27 Jun 2009 22:33:05 +0000

Buy your ‘basket’ of goodies is changing, look at what Mars, Cadbury etc are doing with their chocolates, reducing the size but keeping the price the same.

Then look at how they measure CPI as well, including substitution and more importantly everyday costs that regularly increase but never get counted

How about that for a topic?

PS: What will tuesdays lotto numbers be and where are fixed & variable interest rates going over the next 1-3 years, If you happen to glance at the crystal ball :0)

By: Yorkie

Yorkie — Sat, 27 Jun 2009 12:53:57 +0000

Justin, you must have been asleep at economics 101 because what you are saying isn’t even economics for dummies.

“Inflation is Always
and Everywhere
a Monetary Phenomenon”
A famous quote by the Nobel Prize winning monetary economist Milton Friedman.

If you dont know what a monetary phenomenon means its an increase in the money supply. You might want to actually know even a little about economics before you make this kind of silly comment.

By: sabtrader

sabtrader — Sat, 27 Jun 2009 11:54:06 +0000

No money supply is not inflation.
It can put pressure on inflation but
inflation is a product of supply and demand
while consumer confidence remains week all this money is going to be saved not spent.

By: rob

rob — Fri, 26 Jun 2009 06:00:53 +0000

real inflation is about what the median family can spend on living . I am tired of opposing views on inflation/deflation. It is all theoretical, not practical. What it comes down to is what do you do if there is inflation or deflation – for those with thousands and those with tens of thousands. HOW TO SURVIVE. what is chosen is my choice, all i ask is some lucid choice

By: Justin

Justin — Fri, 26 Jun 2009 02:19:42 +0000

I have some news for you, the rate of increase in money supply is NOT inflation. Inflation is simply an increase in the price of a basket of goods – inflation can be caused by increasing money supply, but increasing the money supply does not always increase inflation.

It would be nice if you could explain to your readers how an increasing money supply is inflationary when we are at the same time experiencing a massive deleveraging of both business and households. Yes it’s probable that the monetary authorities will lose control of inflation some time in the future when they misjudge/mistime when to start tightening, but that is certainly not occurring at the moment. And to claim “Because if the amount of money in the system has increased it devalues any money already in circulation” is simply laughable – money’s value is derived from its purchasing power. Increasing the amount of money does not necessarily mean a fall in the purchasing power of money. Economics 101 guys.

By: Bear

Bear — Fri, 26 Jun 2009 01:47:55 +0000

Thanks for my daily dose of reality. I am sick and tired regulatory fan boys (& girls) in the mainstream media. However I do think that most of it predicated by government spin and the inability of the press to any proper analysis.