http://www.nytimes.com/2008/11/01/bu...arkets.html?hp

''... the Commerce Department reported that inflation was at 4.2 percent in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserves preferred ceiling
of 2 percent.''

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"Ignoramus27079" wrote in message
...

''... the Commerce Department reported that ...

I sure as hell don't call it metalworking...or anything related...

Vaughn

Ignoramus27079 wrote:

''... the Commerce Department reported that inflation was at 4.2 percent in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserves preferred ceiling
of 2 percent.''


Iggy,

I enjoyed filling my tank for less that 20 bucks (small car), then I went into the big
grocery store and noticed my savings had been grabbed by cost increases in food.

Btw, how is a quart of no-name motor oil priced at 2.89 a quart with gas is down to 2.22
in my area?


Wes
--

I'll have respect for the law when the law has respect for me.

On 2008-10-31, Wes wrote:
Ignoramus27079 wrote:

''... the Commerce Department reported that inflation was at 4.2 percent in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserves preferred ceiling
of 2 percent.''


Iggy,

I enjoyed filling my tank for less that 20 bucks (small car), then I went into the big
grocery store and noticed my savings had been grabbed by cost increases in food.

Btw, how is a quart of no-name motor oil priced at 2.89 a quart with gas is down to 2.22
in my area?


Good question. I think that deflation has not yet materialized.
--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
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"Ignoramus27079" wrote in message
...
On 2008-10-31, Wes wrote:
Ignoramus27079 wrote:

''... the Commerce Department reported that inflation was at 4.2 percent
in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserve?Ts preferred ceiling
of 2 percent.''


Iggy,

I enjoyed filling my tank for less that 20 bucks (small car), then I went
into the big
grocery store and noticed my savings had been grabbed by cost increases
in food.

Btw, how is a quart of no-name motor oil priced at 2.89 a quart with gas
is down to 2.22
in my area?


Good question. I think that deflation has not yet materialized.

That's the third month in a row that inflation has dropped, Iggy. And if
you're worried about deflation (quite a few of the world's economists are,
for reasons I'm sure you understand), the price of gasoline dropping from
$3.50 to $2.20 (it's $2.21 today here in NJ) is enough to set off alarm
bells.

We aren't there yet, but what economists are looking for now is signs that
we're going into something like Japan's "lost decade," the 1990s. With the
overnight rate at 1%, the Fed is out of gas and out of tools, except for the
weaker ones of lowering longer-term rates. If there's a further drop,
printing money and creating make-work jobs are the only tools left. And if
companies still don't want to borrow after that, as happened in Japan, we're
in for a hell of a bad ride.

Cheap gas may feel good now. It's certainly a relief. But to economists,
it's a sign of real danger ahead. Once deflation takes hold, there are no
remedies. You just have to wait it out -- typically, for around a decade.

Whoever is president, the likelihood is high that he'll have to pull out the
stops with fiscal measures the likes of which we haven't seen for decades --
and this, in an extremely unfavorable environment for further deficit
spending.

Brace yourself. We'd better hope that things turn up late in the first
quarter, as some business leaders think will happen. Otherwise, deflation
will drive us into a dead-man spiral.

--
Ed Huntress

On Fri, 31 Oct 2008 22:42:47 -0400, "Ed Huntress"
wrote:
snip
That's the third month in a row that inflation has dropped
snip
Not to quibble but its disinflation when the rate of increase
slows. Deflation is where the actual value of money increases.

http://en.wikipedia.org/wiki/Disinflation

It can be argued that the fall in the house value indicates a
deflation, but this would be inconsistent with the way the
increase in house costs did not count toward the inflation
numbers.

"F. George McDuffee" wrote in message
...
On Fri, 31 Oct 2008 22:42:47 -0400, "Ed Huntress"
wrote:
snip
That's the third month in a row that inflation has dropped
snip
Not to quibble but its disinflation when the rate of increase
slows. Deflation is where the actual value of money increases.

http://en.wikipedia.org/wiki/Disinflation

It can be argued that the fall in the house value indicates a
deflation, but this would be inconsistent with the way the
increase in house costs did not count toward the inflation
numbers.

Right. I'm not saying we have deflation, only that the rate of inflation is
dropping pretty consistently, despite the inflationary effects of higher oil
prices this year. And the danger is that it will cross the line and become
deflation, should the downtrend continue.

--
Ed Huntress

"Ed Huntress" wrote:

That's the third month in a row that inflation has dropped, Iggy. And if
you're worried about deflation (quite a few of the world's economists are,
for reasons I'm sure you understand), the price of gasoline dropping from
$3.50 to $2.20 (it's $2.21 today here in NJ) is enough to set off alarm
bells.

Why is that a worry? My simplistic view is that the market is working. I remember, quite
fondly, where gas hit $0.999 a gallon not so long ago. No one cried for a bail out of big
oil like we just did for banking.

I think the growth model is dangerous. It implies we need more to market to. Remember
when zero population growth was an item of interest?

When you look at our numbers as far as consumpution, we and the world would be better off
if there were fewer Americans, Canadians, and Europeans.

A world of 2 Billion would be far richer. And we waste time talking about global warming.

Some things need deflating.

Wes
--
"Additionally as a security officer, I carry a gun to protect
government officials but my life isn't worth protecting at home
in their eyes." Dick Anthony Heller

"Wes" wrote in message
...
"Ed Huntress" wrote:

That's the third month in a row that inflation has dropped, Iggy. And if
you're worried about deflation (quite a few of the world's economists are,
for reasons I'm sure you understand), the price of gasoline dropping from
$3.50 to $2.20 (it's $2.21 today here in NJ) is enough to set off alarm
bells.

Why is that a worry? My simplistic view is that the market is working. I
remember, quite
fondly, where gas hit $0.999 a gallon not so long ago. No one cried for a
bail out of big
oil like we just did for banking.

I think the growth model is dangerous. It implies we need more to market
to. Remember
when zero population growth was an item of interest?

When you look at our numbers as far as consumpution, we and the world
would be better off
if there were fewer Americans, Canadians, and Europeans.

A world of 2 Billion would be far richer. And we waste time talking about
global warming.

Some things need deflating.

That's a good question, and I should really let Iggy or George give you a
good explanation, but here's an oversimplified version that may make the
point.

Lower prices that result from improved productivity, or from new mineral
discoveries or even an "adjustment" to inflated prices are good things, by
themselves. But lower prices that accompany a declining economy are
deflationary -- the same thing costs less, even though its cost of
production hasn't (yet) dropped. At a certain tipping point, the downward
pressure on prices becomes self-perpetuating. And, unlike inflation, there
are no monetary actions that can stop it. Once it's locked in, there are no
fiscal actions that can stop it either. You wind up in a spiral that has to
work itself out over time. Japan just went through 10 years of it, roughly.
During the Great Depression, the whole world went through 10 years of it.

To explain why it happens, let me offer this simplistic example: Say that
commerical banks need a 4-point spread to make money. In other words, they
have to charge 4% more for loans than the interest they pay to depositors.
Now say there is an economic contraction, and manufacturers and service
businesses are downsizing to adjust to declining markets. They don't want
capital for expansion and they couldn't pay the interest if they wanted it.
So banks drop their rates to try to keep loans moving, because that's how
they make their money. When it hits around 4%, government officials,
bankers, investors, and corporations start sweating. If it hits 2%, you're
in a dive. Think about that 4% spread: Even if banks pull in their horns and
batten down the hatches, they can't live on less than 3%. So, what can they
afford to pay to depositors? Negative 1%. In other words, for the bank to
stay in business, it has to *charge* depositors 1% for them to accept
depositors' money.

Of course, they then have no depositors. This is a kind of equilibrium,
because they don't have many borrowers, either. g In Japan in the early
'90s, banks dropped their loan rates to 0% interest (with some government
help, of course) and they still couldn't give out loans. There was no growth
in the economy and nobody wanted their stinking money.

You probably notice that, in these circumstances, stuffing your money under
your mattress produces a higher return than depositing it in a bank. This is
very bad ju-ju. Your investment choices boil down to Serta Perfect Sleeper
or Sealy Posturepedic.

Nobody's going anywhere. Banks are dead in the water, industry keeps cutting
wages, prices keep dropping, and the economy is as dead as a road-killed
'possum. If the Fed has already dropped their overnight rate below 1% and
banks still don't want money, then the Fed has lost control of the monetary
system. There is nothing more they can do.

At this point Congress takes over and tries desperately to prime the pump
(expect this to happen within six months from now). They'll pump money into
infrastructure projects, and then into any make-work they can come up
ith -- think CCC Camps and the Writer's Project, circa 1933. But if they've
waited too long, all this will do is debase the currency. They can cause
some inflation this way but no real economic growth.

Anyway, the point is NOT that deflation is likely -- it's extremely rare and
unlikely. The point is that once you pass that tipping point, and the
economy is trending down with no turnaround in sight (think, like right
now), you're in deep doo-doo. There are no monetary or fiscal tools left to
stop it. When the Fed's overnight rate drops below 1%, you're at the end of
the rope. And that's why it scares the living bejesus out of government
treasury people, bankers, and businesspeople. And it should scare all of us.

BTW, the overnight rate just dropped to 1%.

--
Ed Huntress

''... the Commerce Department reported that inflation was at 4.2 percent
in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices


I just had my best year ever at the roadside market, and a terrible year at
wholesale. The cause was the same in both cases. Retail groceries raised the
price of apples over 50% from last year. I kept price the same on commodity
apples and raised 10% on premium varieties for both wholesale and retail.
Thus my roadside price was way below the grocery and customers noticed.
Grocery sales died and took the wholesale with it. There was no good reason
for the groceries to take that large increase.

I bet the same thing is happening in a lot of other areas.

karl

I don't normally reply to political posts, especially in NGs where they do
not belong, but I will make an exception to this one. I sincerely worry
about our country when the people that elect our leaders are so massively
uninformed. The population's exposure to a biased media and the media's
propensity to edit by exclusion world news frightens the hell out of me. Of
course, you say, I am talking about somebody else, that could not be me.
Well, boys and girls, it is you. The person in the mirror you see in the
morning. I refuse to label Americans as ignorant or stupid, as most of the
rest of the word does, because it is far from the truth. However, if you do
not feel insulted by the rhetoric spewed from the mouth of both candidates,
you should be and it is indicative of the level of understanding in the
general population.

Please do your own simple arithmetic. There is no such thing as a free
lunch. Everything has a cost, please ask yourself where the money will come
from for the advertised programs being spouted and if you determine that
there are no funds for these things, no matter how noble and righteous they
may be, you must NOT trust anything else the candidate says. We are already
in a terrible state with massive national, corporate and personal debt. If
you think the sub-prime mortgage thing is big, think about personal credit
card debt. It is even bigger. Remember, no man is truly free, if he is in
debt. What are you going to do about it. Don't look somewhere else. Look in
the mirror. Put a plan together and vote responsibly.
Steve

"Ignoramus27079" wrote in message
...
http://www.nytimes.com/2008/11/01/bu...arkets.html?hp

''... the Commerce Department reported that inflation was at 4.2 percent
in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserve?Ts preferred ceiling
of 2 percent.''

--
Due to extreme spam originating from Google Groups, and their
inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

"Steve Lusardi" wrote:

Please do your own simple arithmetic. There is no such thing as a free
lunch. Everything has a cost, please ask yourself where the money will come
from for the advertised programs being spouted and if you determine that
there are no funds for these things, no matter how noble and righteous they
may be, you must NOT trust anything else the candidate says. We are already
in a terrible state with massive national, corporate and personal debt. If
you think the sub-prime mortgage thing is big, think about personal credit
card debt. It is even bigger. Remember, no man is truly free, if he is in
debt. What are you going to do about it. Don't look somewhere else. Look in
the mirror. Put a plan together and vote responsibly.
Steve

If you took all of Gates money, it would be 200 a head one time. He is the richest man in
America.

The numbers do not work. Obama is a Hope Hustler, nothing more cynical than offering hope
to people that will not be significantly better off after the election.

The bailout, well that one at 850B across 300M heads is 2833 bucks per person.

The Social Security IOU's make the bail out look like chump change. Obama is selling hope
to desperate people and CAN NOT come though on his election promises. The money isn't
there to grab and sustain the promises.

I'd love it if someone could make my world better but Obama can't. McCain will have to
live within reality even though he has made a few promises. It is an election, stuff gets
said, pay attention to what can be done and pick your candidate.

As a Libertarian leaning Conservative, endorsing McCain gives me heart burn. But that is
the lay of the land this cycle.


Wes
--
"Additionally as a security officer, I carry a gun to protect
government officials but my life isn't worth protecting at home
in their eyes." Dick Anthony Heller

Ignoramus27079 writes:

Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserveƒ Ts preferred ceiling
of 2 percent.''

We are in a huge deflation. The CPI and other "inflation" indexes are
political inventions with little attachment to reality in sign,
magnitude, or timing.

Trillions and trillions in bubbled debt and stock market valuation,
which was money or its liquid equivalent in the minds of its owners, has
literally disappeared. The money supply has shrunk by an enormous
proportion, beyond any government ability to counteract. Market prices
a few months ago were based on paying with paper pyramid assets that
have vanished.

Petroleum is a very sensitive commodity to such conditions. One day it
is buried in the Arabian sands, a few weeks later it is sloshing in your
automobile tank. It is also a monetary vehicle as a financial
commodity, so its price also reflects its usage as a short-term money
substitute/equivalent. That's why prices have fallen by half from the
summer, as I predicted, reflecting the current massive money supply
deflation.

Groceries are not sensitive, they lag by months. Between producers,
wholesalers, and retailers, groceries are still priced from last
summer's conditions, as if gasoline were still $4.50/gallon.

A lot of retail stainless products are selling as if nickel were still
$25/lb, which is a pointless price lag. Look at the 5-year chart here;
it sums up the old bubble and the current deflation quite graphically:

http://www.kitcometals.com/charts/ni...istorical.html