mish, let me try to clarify--is your position that commodities are actually deflating?
My position is that commodities, other that energy and some metals are not signaling anything. When beans were deflating I was not ranting that it meant deflation, but when they were inflating others here were ranting inflation abut all the way down became silent.
Well IMO beans and corn etc are a function of weather and a function of over-under planting and a function of speculation, a function of crop supports, and a fuction of world population. They surely are not a function of inflation, the US$ or anything else.
My position on copper is that it is a function of overinvestment into chip factories and lack of investment in copper mines and that price too has little to do with inflation.
That leaves energy and gold. Since I believe in peak oil, and since we have geopolitical factors, I do not know exactly what % of oil's rise has to do with loose money by the US, vs rising demand in a peak oil world. That said, the end result of steeply rising oil prices in a world of stagnant wages (developed world US Japan Europe UK) is not inflationary but deflationary. GDP estimates have been wratched down everywhere because of it. It is likely to kill jobs, profits, and cause a recession. Those are deflationary IMO, and that is my basic position.
In an attempt to fight deflation, we get all sorts of distortions, like copper, like lumber (now falling like a rock), and most important like housing. When housing goes, you will not see inflation anywhere IMO.
Mish |
