[smallpoxgirl]

$this->bbcode_second_pass_quote('', 'T')he cost of living in the U.S. probably fell in October by the most in almost sixty years, while manufacturing and homebuilding sank deeper into a recession, economists said before reports this week.

[copious.abundance]

Wholesale deflation is officially here (for 3 months now). We await the CPI report tomorrow.

US October producer prices fall by record 2.8 pct
--> Reuters <--
$this->bbcode_second_pass_quote('', 'T')he Labor Department said the producer price index recorded its third consecutive monthly reduction after a 0.4 percent fall in September and a 0.9 percent retreat in August.

[copious.abundance]

^
Interesting analysis of the wholesale deflation number:
--> CNBC <--
$this->bbcode_second_pass_quote('', '[')...]

The 0.4% gain in core prices is old news, as can be seen in the components that caused the increase. For example, there was a 1.6% gain in the price of metal machine tools, a 4% increase in the price of tires, a 2.6% increase in the price of light trucks, and a 0.7% gain in the price of appliances. The common denominator for all of these is that they reflect prices pressures now gone with the wind. One price increase that reflects a new trend is the trend in the price of mobile homes, which increased 1.2% in October following a 0.8% increase in September. Perhaps the increase reflects recent foreclosure activity, which has forced home owners to trade down to smaller homes.

The deflation picture is most glaring in the prices of goods in earlier stages of the production process. Crude materials, which reflect materials at the earliest stage of the production process, fell 18.6% overall and a record 17.0% excluding food and energy, beating the previous record set, astoundingly, just a month earlier when prices fell 9.4%. Prior to September, the previous record was one 7.7% decline in February 1975.

Intermediate goods prices, which reflect the prices of goods at the middle stage of the production process, fell 3.9% overall, a record drop that beat the previous record of -2.3% set in April 2003. Core intermediate prices fell a record 1.7%, beating the previous record of -0.5% set in July 2001.

The massive declines in prices at earlier stages of production underscore the deflationary tendency that exists in the economy at the moment and which will exist for many months to come.

[copious.abundance]

It's official: We've got our first month of consumer deflation:

--> Marketwatch <--
$this->bbcode_second_pass_quote('', 'U').S. consumer prices plunged by the steepest amount since records were tabulated in 1947, the Labor Department reported Wednesday.

Prices fell 1% in October on a seasonally adjusted basis, with energy prices plunging 8.6%.

Both the overall and energy decreases were the biggest since the government began keeping such records. Data on the overall CPI date back to 1947, and the energy data go back to 1957.
Meanwhile, food prices in October rose 0.3%, the smallest gain since May. Gasoline prices fell a record 14.2% last month. The data on gasoline date back to 1967.

The core consumer price index, which excludes food- and energy-price inputs, eased 0.1%, the first time there's been a decline in the core rate since 1982.

Economists surveyed by MarketWatch had expected the overall October CPI to fall 0.9%, with the core pegged to rise 0.1%.

[Olaf]

If I am able to maintain a decent paying job, while it may be bad for the economy, it seems deflation can benefit me. If the costs associated with my living go down while I maintain a constant salary, I do better. The key there is obviously the 'maintain a decent paying job".

Making the best use of your money while in a deflationary period seems logical to me. Ie, investment in new home, paying down debt, investment in useful commodities or goods, etc. that are likely to increase in value when/if inflation kicks back in.

Help an economics simpleton out.

Olafr

[evilgenius]

$this->bbcode_second_pass_quote('Olaf', 'I')f I am able to maintain a decent paying job, while it may be bad for the economy, it seems deflation can benefit me. If the costs associated with my living go down while I maintain a constant salary, I do better. The key there is obviously the 'maintain a decent paying job".

Making the best use of your money while in a deflationary period seems logical to me. Ie, investment in new home, paying down debt, investment in useful commodities or goods, etc. that are likely to increase in value when/if inflation kicks back in.

Help an economics simpleton out.

Olafr

[Cid_Yama]

Of course sounder thinking economists don’t see deflation as evil, as Jorg Guido Hulsmann points out in his just published Deflation & Liberty, "it fulfills the very important social function of cleansing the economy and the body politic from all sorts of parasites that have thrived on the previous inflation." And although Hulsmann’s definition of deflation is the proper one: a reduction in the quantity of base money, while what the main-stream blathers on about is a drop in prices, the point remains: "There is absolutely no reason to be concerned about the economic effects of deflation – unless one equates the welfare of the nation with the welfare of its false elites," explains Hulsmann.

Deflation is a "great liberating force," writes Hulsmann, "because it destroys the economic basis of the social engineers, spin doctors, and brain washers."

link

link

[seldom_seen]

$this->bbcode_second_pass_quote('', '"')it fulfills the very important social function of cleansing the economy and the body politic from all sorts of parasites that have thrived on the previous inflation."

[cube]

$this->bbcode_second_pass_quote('seldom_seen', '')$this->bbcode_second_pass_quote('', '"')it fulfills the very important social function of cleansing the economy and the body politic from all sorts of parasites that have thrived on the previous inflation."

[heroineworshipper]

Inflation is like gravity. U don't like it, but U need a certain amount of it. It's much harder to stop runaway deflation than it is to stop runaway inflation. U can't force people to spend money, in the current system. A planet of savers just hoards cash, no matter how much U print.

[MrBean]

What you got is asset deflation and food inflation. Meaning starvation.

[shady28]

$this->bbcode_second_pass_quote('MrBean', 'W')hat you got is asset deflation and food inflation. Meaning starvation.

[MrBean]

$this->bbcode_second_pass_quote('shady28', '4') months ago people could (and did) try to make that argument. The fact is, asset inflation drove consumer price inflation. By the same token, asset deflation drives consumer price deflation. In July, asset deflation finally hit the commodities markets (which include food). 3 months later (October) consumer price indexes drop 1% in a single month - that is a 12% annualized deflation rate in the CPI. --snip--
The data speaks for itself. Here are some links to that data. Click the chart icon on the left: --snip--

[Tyler_JC]

One little problem...

How are most Americans supposed to pay their mortgages if the real value of their payments increases?

Deflation is a disaster for a heavily indebted country like the United States.

That's why we're not going to let it happen.

[vision-master]

$this->bbcode_second_pass_quote('Tyler_JC', 'O')ne little problem... How are most Americans supposed to pay their mortgages if the real value of their payments increases? Deflation is a disaster for a heavily indebted country like the United States. That's why we're not going to let it happen.

[Tyler_JC]

$this->bbcode_second_pass_quote('vision-master', 'D')eflation is good for the poor folk. Bad for those rich ppl. I say bring on the deflation..........

[eastbay]

$this->bbcode_second_pass_quote('Tyler_JC', '')$this->bbcode_second_pass_quote('vision-master', '')$this->bbcode_second_pass_quote('Tyler_JC', 'O')ne little problem... How are most Americans supposed to pay their mortgages if the real value of their payments increases? Deflation is a disaster for a heavily indebted country like the United States. That's why we're not going to let it happen.

[Polemic]

$this->bbcode_second_pass_quote('Tyler_JC', 'O')ne little problem...How are most Americans supposed to pay their mortgages if the real value of their payments increases? Deflation is a disaster for a heavily indebted country like the United States. That's why we're not going to let it happen.

[VMarcHart]

$this->bbcode_second_pass_quote('Tyler_JC', '')$this->bbcode_second_pass_quote('vision-master', 'D')eflation is good for the poor folk. Bad for those rich ppl. I say bring on the deflation.

[EnergyUnlimited]

$this->bbcode_second_pass_quote('Tyler_JC', 'O')ne little problem... How are most Americans supposed to pay their mortgages if the real value of their payments increases? Deflation is a disaster for a heavily indebted country like the United States. That's why we're not going to let it happen.