"Deflation" in Europe is actually Inflation in disguise

[Get-Paid.com]

Why am I thinking now both JPY and EUR will suddenly also reverse in a bad way and that something big has started here.

As the dollar has run up on JPY and EUR printing the only question is how little of a dip can the FED create. The last couple times they tried to bring it down EUR and JPY went right back to where they were or worse and the dollar went up.

There were expectations to raise the rate in June, but based on how the EUR/USD is acting it would probably be postponed (and the EUR will keep on getting stronger against the USD for a short term) - probably August would be the date when this would reflect a strong reversal as many economists expect the Fed to eventually raise the rate, so if it's not June it would be September and then the EUR/USD might even reach parity.

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[qiwoman2]

I sincerely believe that all this economic fumbling about is a precursor to war in Europe. There are other forces at play that want another major war to break out in Europe, most probably again in the problematic Balkans as there is a lo0t of ethnic strife left over from the Ottoman Era. 

[GreenStox]

We are witnessing a depression being masked by the central banks of the world. I don't care to know why, but I do know that eventually this shit show will fall apart. Historically the fed has raised or lowered rates to "control" the economy. I think we can all agree our fed is paralyzed now. It can't raise rates in a deflationary environment...period. The only choice it has is either to continue zirp as it has since 08' or go negative. That's it...period. Anything to the contrary is complete noise and an excuse to drive markets down to btfd.

It can raise rates because deflation, because that would make corporations go bankrupt, thus reversing the deflationary spiral, that is caused by cheap loans and wreckless risk-taking.

However it cant raise rates because the USA has a so big debt, that it would go literally bankrupt at an interest rate of 6%.

(Not to mention the other catastrophes that would happen if the private debt defaults)

[Mehek]

"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.  

When the prices go down ( i.e deflation takes place ) obviously demand will increase and eventually supply limit will decrease depending on consuming amount. Therefore , the purchasing power is going down which causes inflation. It's  a tactic basically by  the European government to gain more profits from the people.
 

[greBit]

According to investopedia, Inflation occurs when the price of goods and services rise, while deflation occurs when those prices decrease. The balance between the two economic conditions is delicate, and an economy can quickly swing from one situation to the other. So yes, the Europe is just maybe an inflation in disguise but I wouldn't really believe that, come on... There is a huge difference between inflation and deflation and we all know what it really is...

[manselr]

Is there any fiat currency that isn't suffering from inflation or hyperinflation at all? I can't think of a single one (that's relevant in worldwide economics, not some local noname crap)

[ThEmporium]

I am always in a thought that Inflation is the worst scenario ever during the crisis or any economic disaster, But after reading your post, I came to know that Deflation is to be considered more seriously and eventually it has a drastic impact on country's economic condition. Well I am given to understand that during deflation, poor has benefits and rich will get bad hit, is that true ?

[GreenStox]

I am always in a thought that Inflation is the worst scenario ever during the crisis or any economic disaster, But after reading your post, I came to know that Deflation is to be considered more seriously and eventually it has a drastic impact on country's economic condition. Well I am given to understand that during deflation, poor has benefits and rich will get bad hit, is that true ?

Deflation is a good thing, but not in the current economy. Besides deflation is only temporary, until the avalanche is contained, when all hell breaks lose, the inflation will pour down like an avalanche on the economy.

All inflation is sucked up in the bubbles: stock,bond, estate, land, car, etc

When the bubbles pop, you will have hyperinflation.

[edric]

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.

That is exactly what Greece kept doing, borrowing money proportionately and now they are unable to pay that back. They lost control and now its out of their hands. Most of us saw this coming and why did they wait long enough till things worsened to such limits.

[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.

That is exactly what Greece kept doing, borrowing money proportionately and now they are unable to pay that back. They lost control and now its out of their hands. Most of us saw this coming and why did they wait long enough till things worsened to such limits.

Any debt above 70% of the GDP is impossible to pay back.

The current world average is about 80% or something along that line.

This also includes companies that have more than 70% debt to assets ratio, most companies are overleveraged.

Its obvious that the world economy will collapse.

After Greece , Italy is the next (normally it would be Japan but they got printing press , Italy doesnt)

[Amph]

According to investopedia, Inflation occurs when the price of goods and services rise, while deflation occurs when those prices decrease. The balance between the two economic conditions is delicate, and an economy can quickly swing from one situation to the other. So yes, the Europe is just maybe an inflation in disguise but I wouldn't really believe that, come on... There is a huge difference between inflation and deflation and we all know what it really is...

defaltion can occur when the purchasing power of your currency is stronger, not only because of the value of goods but because of the currency itself, like it could be for bitcoin, you can buy more because bitcoin will be worth 10k in the future(random example)

instead with inflation is generally referred to an increase in the value of the goods

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.

That is exactly what Greece kept doing, borrowing money proportionately and now they are unable to pay that back. They lost control and now its out of their hands. Most of us saw this coming and why did they wait long enough till things worsened to such limits.

Any debt above 70% of the GDP is impossible to pay back.

The current world average is about 80% or something along that line.

This also includes companies that have more than 70% debt to assets ratio, most companies are overleveraged.

Its obvious that the world economy will collapse.

After Greece , Italy is the next (normally it would be Japan but they got printing press , Italy doesnt)

snip

italy is not in a good situation, but their unemployment rate fell in comparison with 2014(only 0.6% but it's still something), i'm not so sure that it will end like greece, time will tell

[HigsonPP]

So basically the deflation gives rise to inflation in disguise.The main idea of deflation is price goes down , demand goes up. But here, the demand is going down faster than the price. Which is decreasing the purchasing power of people.

[GreenStox]

italy is not in a good situation, but their unemployment rate fell in comparison with 2014(only 0.6% but it's still something), i'm not so sure that it will end like greece, time will tell

Trust me it will, Italy is the next in the line of falling dominoes.

Italy has not good unemployment, all italian companies go offshore and send companies to south asia or east europe.

The only people left there are the legacy workers and the big boys.

If they start freezing assets there too, then the big boys with their stash of money will lose it all like in greece.

[HarHarHar9965]

So basically the deflation gives rise to inflation in disguise.The main idea of deflation is price goes down , demand goes up. But here, the demand is going down faster than the price. Which is decreasing the purchasing power of people.

Yes, but here the deflation is taking place because purchasing power of supposedly one currency is comparatively higher because of the value of the currency rather than the commodities. That is the reason why the deflation seems as inflation in 'disguise'. If the people aren't capable enough to have any purchasing power, than what is the use of these products and this currency? 

[edward222]

It's a skewed inflation or reverse inflation, that has the same characteristics as inflation.

reverse inflation,
the only word that describes reverse inflation is,
deflation.

[GreenStox]

Well the ECB doesn't have to print a single more eurocent for us to see Hyperinflation.

The inflation is already here, it's just that it's contained in these enourmous derivative bubbles:  1.6 quadrillion $ , that will see it's fair share in the European Union aswell.

When the hot potato gets bassed back and forth between the banks, and the bubble starts to pop, i bet everyone will start buying hard assets, so the big bubble will split into smaller bubbles.

Just imagine some whale buying up all farmlands, it will definitely rise food prices, as he expects to recover his investment by increasing food price, and since he has alot of farmland, his food price increase will increase it all over the region.

But inflation will trickle down in many other ways aswell: Stock market cashout, broker account cashout, and aquiring various other hard assets.

[n2004al]

As for me deflation is wonderful. And this way must be theoretically for everyone which think only a little. Everything will cost less and with my same amount of money I will have the possibility to do more things with those. To buy more, to have more fun, to live better. More the time goes on more I will better and more I will have and more I will be well. I will have as conclusion always more goods and money.

But the question it is not so easy. In a more complex meaning the economist tell that the deflation, in overall situation, is not good for the economy. They believe that "generally .... deflation is a problem in a modern economy because it increases the real value of debt, and may aggravate recessions and lead to a deflationary spiral." The deflationary spiral is "a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price." So it can be see that the overall situation in long term may (can, will) not be improved but deteriorates. For this reason the economists until now has chosen and propagated the inflationary model of economy.

The question is: It is everything right in the above reasoning? Are right the economist? Their thoughts are thoughts or are any case or event which prove those? Only the practice can verified those. And that's the point. There were moments or better periods or situations of deflation in some country of the world during its story. Those testify that the answer to the above questions is mainly yes. Everyone who want to learn more about those can go to Wikipedia (from which are taken even the sentences quoted above from me) following this link: https://en.wikipedia.org/wiki/Deflation