Wednesday, November 19, 2008

US inflation falls

It is down 1 percent in a month, which is definitely one for the deflationists.

However, we still have some way to go before we hit a true deflationary spiral ie when the inflation rate turned negative and the price level falls.

The chart above tracks the US inflation rate since 1914. Deflationary periods were quite common after the end of the first world war. However, there there none after the end of the Korean war.


  1. And there isn't going to be one this time. The so called 'fear of deflation' is just giving justification to their inflationary policies, no one actually believes this bullshit!

  2. Well, if we had a currencies that were not merely 'managed currencies' (i.e paper promises from the likes of Bush, Bernanke, Brown and King) things would already look like the thirties.

    I think we will get a different kind of deflation now, to do with trading and retail mark-ups. Too many people have been living high on the hoof on the basis of 90% and more mark-ups on Asian goods. Throwaway fashions have been sold for ridiculous prices because of easy credit. Now purchasers may have to spend real money rather than credit, those sort of prices will have a long way to drop.

    More interesting is where the cost of your VW, BMW, Lexus etc. ends up. Will they be affordable for people selling throwaway fashion at Bluewater? I doubt it! Maybe Bluewater will fade away...

    B. in C.

  3. "there there none after the end of the Korean war"

    "there was none", actually.

    Apart from that, I agree with Rick above.

  4. I'm believe we have been in deflation for most of 2008, and it's finally hitting the CPI after running stocks and housing ragged.

    BTW, would people please stop refering the the pre-war gold standard as if it was a real one. It was still a managed currency with inflationary central banking, it just had a limit on how far things could get out of hand by having gold convertibility.

    It was nothing like a 100% reserved gold standard, which is what would eliminate the credit cycle.