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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (1788)	3/11/2004 11:00:11 AM
From: zonder	Respond to of 116555

the utter lack of follow-through of the PPI to consumers is evinced by 156,000 Wal-Mart SKUs, which fell 2% YoY. I don't know what that is. Why not look at a more universal number, CPI, which increased by 1.9% in 2003? this is what happens when you run into a deflationary wall. The problem with that theory is that there is no deflation to be seen for now. You might be right, in the end. But I find it curious that this "deflationary wall" that you say we ran into at the end of 2003 is still as invisible as it was some months before that. PPI is not the inflation rate. You have to take this one up with my Econ 101 professor :-). PPI is one of the two most commonly used indicators of inflation (the other being CPI). Now you might not agree it is the best indicator of inflation. But you cannot deny that it is an indicator of inflation. to the extent PPI does not translate into higher end prices, it is DEFLATIONARY I hear you re higher costs, wages, etc. But CPI is increasing. So PPI is translating into higher end prices. Yes, CPI is lower than PPI, which is not an earth-shattering development - it has happened before in various places. Much more often than we saw deflation happening. Again, you might be right about the unwinding of the credit bubble causing an economic recession... around the world, even. But from the recent economic data we have at hand, it just does not look like the high probability, imminent scenario that I felt Mish thought it to be. marginally, there could be a SIGNIFICANT increase in bankruptcies (there already has been!). Sure. Negative interest rates tend to encourage unwise investments with borrowed money. But I am not sure I agree with you that the marginal increase in bankruptcies as a result of these unwise persons going belly up from having spent too much over the past two years or so will cause a spiralling of the whole economy into deflation.