"Deflation" in Europe is actually Inflation in disguise

[GreenStox]

"Economics is so easy that only economists can't understand it" (No idea who said this)

I saw many articles about deflation in Europe, and the same thing always, it's just propaganda. The central banks are now going out of their way with the lies they put it, they even exceeded themselves in all those lies.

So what i`m talking about? It's all those mainstream news that say that there is deflation in Europe. They lie or they are idiots.  

The premise is simple:
1) QE money has been lent out to non productive companies, a.k.a companies that shouldn't exist in normal conditions, most of those companies are insolvent, and only the constant loans and cheap debt keeps them out of bankruptcy. These "zombie companies" create shitty products and services that obviously nobody wants, otherwise they would be profitable, however since their cost is easy to finance with infinite debt, they flood the markets with it. So we got shitty products and services flooding the market, at an ever decreasing price.

2) Ok so far so good. Supply is every increasing, but demand doesnt. Demand is frozen, as people have less and less money, or in best case scenario they have the same income, so consumption declines or stays constany while supply is growing. Now because of this, all prices go down, except the ones that are directly pumped by qe money (stock market, bond market), all other markets are going down in price.

Now the question is, is this deflation? I don't think so, only an amateur would say this (which we have plenty of "economists" on TV saying it)

Actually since, wages go down too, infact, they go down even faster, thus the purchasing power of the consumer goes down. That is inflation my friends, disguised as deflation, because the price goes down, but demand goes down faster than price (unhonest price discovery and artificial pricing).

Thus at the end of the day, the consumer has less money, and relative to his wallet, the price goes up actually. The absolute price can go down, but the relative price to his wallet is going up.

Is it that hard to understand, seriously? Those idiot presstitutes and their idiot "experts" can't even understand this what a 5 year old can understand?

Now after they hijack the "deflation" word lemme explain what deflation really is: product & service price goes down and demand goes up. That is deflation.  

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[Erdogan]

Deflation is not the source of the misfortune.

Deflation, the reduction of output of the economy, is the sympthom of QE/ZIRP.

[GreenStox]

Deflation is not the source of the misfortune.

Deflation, the reduction of output of the economy, is the sympthom of QE/ZIRP.

Looks like people still dont understand what deflation is. It's not deflation that is happening. It's a skewed inflation or reverse inflation, that has the same characteristics as inflation.

What is happening now: Prices go down, demand goes down faster -> Prices are rigged, unhonest price discovery , artificially high prices

Normal market: Price goes down simultaneously with demand

Deflation market: Price goes down, demand goes up


So since now the price goes down slower than demand, the purchasing power of the currency is decreasing => Inflation, and the net income of the consumer aswell.

In a deflationary economy, the currency is always strenghtening, the purchasing power of it is going up, and the consumer has more money, thus he will spend more => Prices go down, demand goes up.

Is it that hard to understand bro? 

[Get-Paid.com]

Deflation is not the source of the misfortune.

Deflation, the reduction of output of the economy, is the sympthom of QE/ZIRP.

Looks like people still dont understand what deflation is. It's not deflation that is happening. It's a skewed inflation or reverse inflation, that has the same characteristics as inflation.

What is happening now: Prices go down, demand goes down faster -> Prices are rigged, unhonest price discovery , artificially high prices

Normal market: Price goes down simultaneously with demand

Deflation market: Price goes down, demand goes up


So since now the price goes down slower than demand, the purchasing power of the currency is decreasing => Inflation, and the net income of the consumer aswell.

In a deflationary economy, the currency is always strenghtening, the purchasing power of it is going up, and the consumer has more money, thus he will spend more => Prices go down, demand goes up.

Is it that hard to understand bro? 

What would be your best method to fight it then?

[GreenStox]

Deflation is not the source of the misfortune.

Deflation, the reduction of output of the economy, is the sympthom of QE/ZIRP.

Looks like people still dont understand what deflation is. It's not deflation that is happening. It's a skewed inflation or reverse inflation, that has the same characteristics as inflation.

What is happening now: Prices go down, demand goes down faster -> Prices are rigged, unhonest price discovery , artificially high prices

Normal market: Price goes down simultaneously with demand

Deflation market: Price goes down, demand goes up


So since now the price goes down slower than demand, the purchasing power of the currency is decreasing => Inflation, and the net income of the consumer aswell.

In a deflationary economy, the currency is always strenghtening, the purchasing power of it is going up, and the consumer has more money, thus he will spend more => Prices go down, demand goes up.

Is it that hard to understand bro? 

What would be your best method to fight it then?

Well since its inflation, the best way to fight it is to stop printing money. Or raise interest rates and atleast pretend to not print money.

The best solution is to abolish all central banks, they rig the whole economy anyway, and they wont increase the interest rates now with all the world debt.

http://www.nationaldebtclocks.org/

[hua_hui]

Deflation is not the source of the misfortune.

Deflation, the reduction of output of the economy, is the sympthom of QE/ZIRP.

Looks like people still dont understand what deflation is. It's not deflation that is happening. It's a skewed inflation or reverse inflation, that has the same characteristics as inflation.

What is happening now: Prices go down, demand goes down faster -> Prices are rigged, unhonest price discovery , artificially high prices

Normal market: Price goes down simultaneously with demand

Deflation market: Price goes down, demand goes up


So since now the price goes down slower than demand, the purchasing power of the currency is decreasing => Inflation, and the net income of the consumer aswell.

In a deflationary economy, the currency is always strenghtening, the purchasing power of it is going up, and the consumer has more money, thus he will spend more => Prices go down, demand goes up.

Is it that hard to understand bro? 

What would be your best method to fight it then?

Well since its inflation, the best way to fight it is to stop printing money. Or raise interest rates and atleast pretend to not print money.

The best solution is to abolish all central banks, they rig the whole economy anyway, and they wont increase the interest rates now with all the world debt.

http://www.nationaldebtclocks.org/

At the moment central banks are still pivotal for our economies. All of our financial transactions are processed by them or acted as middle men.

[Amph]

Deflation is not the source of the misfortune.

Deflation, the reduction of output of the economy, is the sympthom of QE/ZIRP.

Looks like people still dont understand what deflation is. It's not deflation that is happening. It's a skewed inflation or reverse inflation, that has the same characteristics as inflation.

What is happening now: Prices go down, demand goes down faster -> Prices are rigged, unhonest price discovery , artificially high prices

Normal market: Price goes down simultaneously with demand

Deflation market: Price goes down, demand goes up


So since now the price goes down slower than demand, the purchasing power of the currency is decreasing => Inflation, and the net income of the consumer aswell.

In a deflationary economy, the currency is always strenghtening, the purchasing power of it is going up, and the consumer has more money, thus he will spend more => Prices go down, demand goes up.

Is it that hard to understand bro? 

What would be your best method to fight it then?

bitcoin/something decentralized, something that is deflationary, and not controlled by a central entity, we have all this right now, it just that you can't force the bank/government to adopt it, you should "force" the people around the world first, then the bank/gov will follow compulsorily

[odolvlobo]

Sorry, GreenStox, you are not talking about deflation. Depending on who you talk to, deflation is falling prices or a reduced money supply. Deflation can't be inflation in disguise because they are direct opposites. Inflation is rising prices or an increased money supply, again depending on who you talk to. You are writing about

[johnyj]

There can not be deflation when the money supply increases. However people's income is different: Those in the bottom of the food chain are still suffering from a lower demand and lower income, while those at the top of the food chain are getting higher income and higher demand for those things that are not included in inflation/deflation statistics (capital goods and assets)

So the price of capital goods and assets will rise quickly, bring hyperinflation at top of the food chain, while the price of daily consumption goods will still drop, drag the CPI, PCE indicator down

[GreenStox]

Sorry, GreenStox, you are not talking about deflation. Depending on who you talk to, deflation is falling prices or a reduced money supply. Deflation can't be inflation in disguise because they are direct opposites. Inflation is rising prices or an increased money supply, again depending on who you talk to. You are writing about

Sorry , as i learned in university (not as if that is some very accurate info), i learned that deflation is the decrease of the money supply. That is a good definition of it.

Falling price isnt a deflation, its just falling price, the price cannot inflate/deflate, only the money supply can. Prices can rise and fall, thats the only thing they do, or remain the same.

When we talk about deflation, we must have a fixed, or a decreasing money supply. Bitcoin is not entirely deflationary, but i would say its semi-deflationary.

Deflation can't be inflation in disguise because they are direct opposites.

Yes but we dont have deflation. The presstitutes only hijack the word "deflation" and call the current phenomena deflation, when its obviously not.

Most people, like you, think that deflation is equal to decreasing prices, which is obviously not. Prices can decrease in inflationary enviroment too (although only for a temporary time until the real printing press kicks in).

If the average consumer's earnings decrease faster than prices, that is inflation, and we got that exact thing happening now!

[deisik]

There can not be deflation when the money supply increases. However people's income is different: Those in the bottom of the food chain are still suffering from a lower demand and lower income, while those at the top of the food chain are getting higher income and higher demand for those things that are not included in inflation/deflation statistics (capital goods and assets)

This has been the case in Japan for nearly two decades by now. Deflation there started in the early 1990s, and despite the efforts by the Bank of Japan and the government through the reduction of interest rates and quantitative easing (money printing), it nevertheless persisted...

[GreenStox]

There can not be deflation when the money supply increases. However people's income is different: Those in the bottom of the food chain are still suffering from a lower demand and lower income, while those at the top of the food chain are getting higher income and higher demand for those things that are not included in inflation/deflation statistics (capital goods and assets)

This has been the case in Japan for nearly two decades by now. Deflation there started in the early 1990s, and despite the efforts by the Bank of Japan and the government through the reduction of interest rates and quantitative easing (money printing), it nevertheless persisted...

I`m not sure what "deflaton" you have in Japan. Also please stop using deflation as a synonym to price decrease because they are not!

Also, you dont even have price decrease in Japan. So their government is a totally liar.Just look at BTC/JPY price:

1 BTC = 155 £
1 BTC = 27800 ¥

How shitty that currency is, the prices obviosuly go up as the curreny is becoming toilet paper...That sounds like hyperinflation to me, but i must be an idiot for observing that, the mainstream media presstitutes are always right isnt it?

[umair01]

Moving some of the currency into btc,stop printing bills, raising taxes,interest rates may help in easing it, having more and more people adopting the btc and educating them on the convenience and vaue of  decentralized transaction

[deisik]

There can not be deflation when the money supply increases. However people's income is different: Those in the bottom of the food chain are still suffering from a lower demand and lower income, while those at the top of the food chain are getting higher income and higher demand for those things that are not included in inflation/deflation statistics (capital goods and assets)

This has been the case in Japan for nearly two decades by now. Deflation there started in the early 1990s, and despite the efforts by the Bank of Japan and the government through the reduction of interest rates and quantitative easing (money printing), it nevertheless persisted...

I`m not sure what "deflaton" you have in Japan. Also please stop using deflation as a synonym to price decrease because they are not!

I think you'd better stop misusing the term, deflation means decrease in general price level, period. This meaning is well established and accepted by most. Regarding the average consumer's earnings decreasing faster than prices (which you consider as inflation), you are evidently confusing a bunch of different economic notions and phenomena. Do you count unemployed (and partially employed) as an average consumer, and thereby their earnings (or lack thereof)?

And yes, deflation in Japan started with real estate market collapse (prices fell drastically)

[GreenStox]

Deflation is painful for those who print money. Deflation is good, in absolute terms, for everyone else,, even those in debt. Debt means temporary boost in funds & lower prices means more purchasing power.

Actually for indebted persons its not, because their wages could go up, but the nominal value of the debt goes up aswell, along with the interest rates, and that can hurt them.

You got a 30.000 yen debt, which is like 150$, suddently the yen gets stronger now you got a 150.000$ debt referenced in 30.000 yen. Which one is better?

However in a deflationary economy people would not be indebted so hard. Credit cards would not exist, and only business loans would be made, as cars and houses could be bought from 1-2 year salaries.

[johnyj]

There can not be deflation when the money supply increases. However people's income is different: Those in the bottom of the food chain are still suffering from a lower demand and lower income, while those at the top of the food chain are getting higher income and higher demand for those things that are not included in inflation/deflation statistics (capital goods and assets)

This has been the case in Japan for nearly two decades by now. Deflation there started in the early 1990s, and despite the efforts by the Bank of Japan and the government through the reduction of interest rates and quantitative easing (money printing), it nevertheless persisted...

As I said, for some people it is inflation, for some others it is deflation, depends on where you are in the central bank's food chain. In an expansionary monetary policy, those who first get central bank money will always get rich regardless of inflation/deflation. And these rich guys might not be interested in spending money to stimulate the economy (which is the most inefficient use of money during a recession), they just send their money oversea and hunt for other assets

Because JPY had experienced strong appreciation even after the finish of plaza accord, most likely their money supply increase were not fast enough because of the fear from the housing market collapse

[johnyj]

Deflation is painful for those who print money. Deflation is good, in absolute terms, for everyone else,, even those in debt. Debt means temporary boost in funds & lower prices means more purchasing power.

Actually for indebted persons its not, because their wages could go up, but the nominal value of the debt goes up aswell, along with the interest rates, and that can hurt them.

You got a 30.000 yen debt, which is like 150$, suddently the yen gets stronger now you got a 150.000$ debt referenced in 30.000 yen. Which one is better?

However in a deflationary economy people would not be indebted so hard. Credit cards would not exist, and only business loans would be made, as cars and houses could be bought from 1-2 year salaries.

People should not get into debt in the first place. Every logic that applies to healthy person might not be suitable for a sick person

Debt always involves some future uncertainty, thus incur some kind of risk, there is no systematic way to remove that risk. The most risk-free way is to use saved money, then there will be no loan, no interest, perfectly stable finance

But people are greedy, they want something that they don't have today and they hope that they can pay it back tomorrow, so they take loans. IMO loan is some kind of gambling, you bet your future for something that you want today, and if that future does not hold, you will lose much more than the occasion when you don't gamble

If a society is full of gamblers, then the normal logic does not work any more, there will be strange theory and logic developed to specifically serve this kind of society

[virtfund]

Wages don't go down in the short-term. so declining prices in the EU is "real" deflation, even relative to the purchasing power of consumers.

[deisik]

There can not be deflation when the money supply increases. However people's income is different: Those in the bottom of the food chain are still suffering from a lower demand and lower income, while those at the top of the food chain are getting higher income and higher demand for those things that are not included in inflation/deflation statistics (capital goods and assets)

This has been the case in Japan for nearly two decades by now. Deflation there started in the early 1990s, and despite the efforts by the Bank of Japan and the government through the reduction of interest rates and quantitative easing (money printing), it nevertheless persisted...

As I said, for some people it is inflation, for some others it is deflation, depends on where you are in the central bank's food chain. In an expansionary monetary policy, those who first get central bank money will always get rich regardless of inflation/deflation. And these rich guys might not be interested in spending money to stimulate the economy (which is the most inefficient use of money during a recession), they just send their money oversea and hunt for other assets

Inflation (and deflation, for that matter) is not defined on a personal basis, as you might have known. It is a general price increase or decline. Furthermore, whether or not the rich guys might be interested in spending money to stimulate the economy is not directly relevant to the point you first made, that deflation cannot exist in an expansionary monetary environment (actually, it works against your point). In fact, an expansionary monetary policy is used to fight deflation, but its mileage, as it were, may vary, and they have to coexist, at least for some time (by definition)...

[johnyj]

There can not be deflation when the money supply increases. However people's income is different: Those in the bottom of the food chain are still suffering from a lower demand and lower income, while those at the top of the food chain are getting higher income and higher demand for those things that are not included in inflation/deflation statistics (capital goods and assets)

This has been the case in Japan for nearly two decades by now. Deflation there started in the early 1990s, and despite the efforts by the Bank of Japan and the government through the reduction of interest rates and quantitative easing (money printing), it nevertheless persisted...

As I said, for some people it is inflation, for some others it is deflation, depends on where you are in the central bank's food chain. In an expansionary monetary policy, those who first get central bank money will always get rich regardless of inflation/deflation. And these rich guys might not be interested in spending money to stimulate the economy (which is the most inefficient use of money during a recession), they just send their money oversea and hunt for other assets

Inflation (and deflation, for that matter) is not defined on a personal basis, as you might have known. It is a general price increase or decline. Furthermore, whether or not the rich guys might be interested in spending money to stimulate the economy is not directly relevant to the point you first made, that deflation cannot exist in an expansionary monetary environment (actually, it works against your point). In fact, an expansionary monetary policy is used to fight deflation, but its mileage, as it were, may vary, and they have to coexist, at least for some time (by definition)...

The whole picture is more complex than some single formula. After 2008, added money supply just flew out and pumped up the commodity and oil price around the world, and to china, to raise the housing price in china. So the inflation can be exported, no current economy theory discuss this in detail. Even in home country, new money are mostly used to buy more and more bond, thus drive the bond inflation, but bond is not included in the CPI/PCE, the whole nation would still be dragged into deflation (Due to more debt, and less consumption as a result)

Of course those money will eventually "trickle down", but since majority of those money flowed to some other area, the effect of an expansionary monetary policy might not be felt in 5-10 years, makes the operation itself very inefficient and a waste of resource, the only thing it achieves is moving wealth to the money creator and their friends