Elliot Wave International: “Does This Look Like INFLATION To You? We Didn’t Think So.”


The logic is simple, yet somehow it escapes the great minds of those that are in charge of the US Economy. Deflation it is.

Elliot Wave International. August 07, 2009.

Does This Look Like INFLATION To You? We Didn’t Think So.

So: Is it time to pin on those Whip Inflation Now buttons once again? According to many mainstream experts, the answer is YES. They’re leading the charge for a “WIN 2″ campaign in the United States, and filling the financial airwaves with references to the 1970’s oil crisis, wage freezes, and wheelbarrows full of cash.
Their logic is simple: As the U.S. government and Federal Reserve continue their hand-over-fist policy of printing money and forklifting trillions in bailouts to the battered banking sector — eventually, prices will rise to compensate for the increase in supply.
They’re forgetting one important thing: demand. The Fed’s helicopters can continue crop-dusting all the currency it wants onto the U.S. economic soil; but prices won’t start to “shoot upward” unless people actually spend the currency. Until that happens the “seeds” go dry and wither — it’s a condition known as “deflation.”
Look around: the only real inflation is in the amount of talking about it. Since September 2007, the Fed has slashed interest rates ten times, to a record low of .25% to 0%. Combine that with the $12.8 Trillion in bailout money over the same period, and you have the single largest inflation-creating scheme in history. By all accounts, gold prices should be moonbeams above their March 2008 peak — yet they haven’t budged from the upper $800-$900 per ounce range in two years.
On a similar note: commodity values have weakened, the “face” value of many outstanding loans is crashing (See: July 15 Wells Fargo sale of $600 million in distressed subprime loans for $0.35 on the dollar), and the real estate slump continues to intensify — despite mainstream claims to the contrary.
(Which ‘Flation: In, or De? The August 2009 Elliott Wave Financial Forecast reveals that the winds of change have turned in one direction; the time to act is now. Get the complete story today)
Housing: The second most illuminating sector of the economy is NOT signaling inflation. Quite the opposite; here, the following close-up from the August 2009 Elliott Wave Financial Forecast (EWFF) speaks for itself.
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As for the foremost indicator of US economic health — the consumer — the August Financial Forecast offers this picture of Consumer Debt as a Percentage of Personal Income since 1983.
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In EWFF’s own words:
“As long as the value of real estate holdings was rising, consumers were willing to expand their debt burden. But psychology has completely reversed. Consumers are trimming their debt exposure at a quickening rate.”
This is NOT the face of inflation. Get the full story today. Click here for a risk-free subscription.
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