I'm not a fan of doing anything more than patching potholes and fixing bridges, since I think we are prolly past peak driving. However the major highways around me have names like US 101, US 99, Interstate 5, Interstate 80, and they were all built with mostly federal dollars.
As for prices, I think we are headed here...
Is ‘Biflation’ Real?
With the consumer price index flatlining, economists are watching warily for signs of deflation. The Fed said on Aug. 10 it would buy Treasury bonds to ward off fears that the recovery is stalling, which could bring falling wages and prices. Meanwhile, home sales appear set to drop now that a federal tax credit has expired. But the commodities market is one place where signs of deflation aren’t visible. Copper is up some 14 percent over the last year, oil is still near $80, and wheat is skyrocketing. Some economists warn that inflation, not deflation, is the real threat. What is going on?
It may be “biflation,” a concept now gaining currency on economic blogs. The term is generally defined as inflation and deflation occurring simultaneously in different parts of the economy—specifically, rising prices for commodities that trade in global markets and falling prices for things bought with credit domestically, like homes and automobiles. “I think there’s some truth to it,” says Nariman Behravesh, chief economist at IHS Global Insight, noting that demand from India and China buoys metal and oil, while unemployment and weak consumer demand in the U.S. keep home prices low. Some economists remain skeptical. Columbia University’s Ricardo Reis says it’s common sense that when overall inflation is near zero, sectors will be positive and negative in equal proportion. Others point out similarities to stagflation, or rising prices plus sluggish growth. One thing is certain: the U.S. recovery is fragile. Whichever “flation” takes hold, at least we’ll have a name for it.
newsweek.com
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Biflation is a state of the economy where the processes of inflation and deflation occur simultaneously.[1] The term was first introduced by Dr. F. Osborne Brown, a Senior Financial Analyst for the Phoenix Investment Group.[2] During Biflation, there's a rise in the price of commodity/earnings-based assets (inflation) and a simultaneous fall in the price of debt-based assets (deflation).[3]
The price of all assets are based on the demand for them versus the volume of money in circulation to buy them.
With biflation on the one hand, the economy is fueled by an over-abundance of money injected into the economy by central banks. Since most essential commodity-based assets (food, energy, clothing) remain in high demand, the price for them rises due to the increased volume of money chasing them. The increasing costs to purchase these essential assets is the price-inflationary arm of Biflation.[4]
With biflation on the other hand, the economy is tempered by increasing unemployment and decreasing purchasing power. As a result, a greater amount of money is directed toward buying essential items and directed away from buying non-essential items. Debt-based assets (mega-houses, high-end automobiles and stocks) become less essential and increasingly fall into lower demand. As a result, the prices for them fall due to the decreased volume of money chasing them. The decreasing costs to purchase these non-essential assets is the price-deflationary arm of biflation.
en.wikipedia.org |
