The low inflation myth

The media is full of reports these days about low inflation or no inflation, in fact some refer to this period as another installment of the great moderation, or a protracted period of low inflation amid moderate, but positive economic growth.

Is this really true?

Let’s leave growth out of this for the [...]

Central Banking Vodooo

Last month in a surprise move The Bank of Japan (BOJ) moved to negative interest rates, meaning deposits of regulatory capital for some banks will be charged. Theory says this will incentives financial institutions to lend, and by doing so stimulate the economy. Theory. However many are comparing BOJ’s move to a step through the [...]

Working to Live or Living to Work?

The US economy is starting to feel wage pressure, with American median incomes (finally) back to levels last seen before The Great Recession.

So a happy end to 2016, eh? Not really. Even as incomes are rising so are expenditures. The chart below shows how much Americans spend on Health Care and Housing, divided by [...]

UhOh, deflation in Q2

I’ve previously written about falling commodity prices, a trend that seems that have intensified over the past three months.

There are two charts in this post, each reflecting performance of various commodities or commodity groups over the last quarter. The chart above shows four broad commodity price series, specifically $DJAAG (agricultural commodity prices, [...]

Soft commodities are falling

So where’s the inflation?

As documented in this blog and elsewhere, as one of the policy responses to The Great Recession the United States sharply increased it’s money supply. Generally, as the the supply of money increases so does possibility of inflation. However official metrics of inflation show historically low measures, leading some [...]

CPI or chained CPI what’s the difference?

Obama has proposed making fundamental changes to the way that various government benefits such as Social Security are adjusted for inflation. Specifically, its been proposed that the existing metric, the Consumer Price Index (CPI) be replaced with a different metric known as “Chained CPI”. What’s the difference?

The chart above shows two series: [...]

Looking back at commodities

I’m still looking into the sharp correction in commodity prices we’ve seen over the past few weeks. Interesting to take a longer term perspective. The chart above shows four series since April 2006 as follows: $DJAEN, Dow Jones Energy sub index, -74.35% (black area curve), $DJAIN, Dow Jones Industrial Medials -28.31% (lime area curve), [...]

Commodity wipeout or the recovery that wasn’t

Oh the forces of deflation are strong! What’s happening to commodity prices? In spite of claims about an economic recovery, we’re seeing a broad decline in commodity prices over the past three months. The chart above tracks $DJAEN, a measure of energy commodities (grey area curve in the background), $DJAPR (red line), a measure [...]

Hey American consumer feeling any poorer?

You should be. Between shrinking wages and low but relentless inflation the wealth of the American consumer has been steadily eroded. From time to time I’ve looked at the consumer price index, or CPI and it’s effects on various investible assets. But some folks find rather abstract metrics such as CPI a tad difficult [...]

Is inflation making an appearance?

The most recent CPI numbers make for interesting reading. Curious, but in spite of all the money thats been pumped into the US economy over the past few years inflation to date seems very subdued. The chart above shows sector specific CPI as follows: first, the Consumer Price Index for Food and Beverages (CPIFABSL, [...]