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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (69212)	9/1/2006 1:24:18 AM
From: Mike Johnston	Read Replies (2) \| Respond to of 110194

The figures show Michigan's median household income fell more than any other state's during the last six years. It was $46,039 in 2005 -- 12% less than what it was in 1999 when adjusted for inflation. and then you write: Many more states will follow the path of Michigan. We are indeed on the cusp..... of deflation. IMHO it is not deflation that is sinking the state (and the country). It is runaway inflation that is sinking real incomes in turn causing massive poverty. I bet if the CPI was not understated, median inflation adjusted income would be in the mid 30's and not 46K (down from 51K). Again, when you look at Florida, it is not deflation that caused consumer confidence to plunge there. It is runaway fuel,utility and insurance bills. We have had skyrocketing inflation for the past few years. Only now people are starting to feel the pain, because house ATM is sputtering. Bottom line: If due to inflation, inflation adjusted income goes down from 51K to 35K, the drop is not deflation, it is simply inflationary collapse of living standards.

To: mishedlo who wrote (69212)	9/1/2006 9:41:07 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

# Prices of homes are dropping. # Land prices are dropping. i don't see why you are claiming falling housing prices are deflationary. you never used to say rising housing prices were inflationary. we have all been in agreement for some time that housing prices will fall. RISING housing prices were not the basis for the inflationist argument (which you happily accepted). but now falling housing prices are the basis of your deflationist position? heads i win, tails you lose? in any case, this is asset deflation, which is different from an INcrease in purchasing power of money that one expects in CPI deflation a la Japan. that is what it is like in Japan--you go there after a few years and things are cheaper--literally! that's what deflation is. it isn't paying 10-15% more every year for insurance, healthcare, etc. such as we experience in America with our continually eroding USD. i think what will happen is people will simply be poorer due to deflating asset values...but the price of most goods and services will not come down--or only temporarily, and not on a scale that will compensate for the lost value of the assets. meanwhile, the secular deflationary windfall of goods from China will be replaced by INflation in WMT goods for Joe Sixpence because China is moving from slave labor to Dickensian labor. why? because the hardworking people of Chindia still want more of the pie, so demand will not go away. our standard of living will go down; theirs will go up. a fair trade! Bennigan's restaurant dropped the price of their half pound burger from $7.99 to $4.99. That's a drop of $3 or 37.54 percent! i know that must be exciting, since it totally contradicts 99% of restaurant diners' experiences. where exactly did you come by this information? guess what--Bennigan's the chain is not going to drop prices "37.54 percent" or it is going out of business. my guess is you walked into a sale. or else American consumers are so turned off by mad cow scares that nobody eats beef anymore. Prices at restaurant are dropping. i guess you say this based on the drop in one data point--a hamburger sale at some Bennigan's you came across. that's not an analysis. you need more data points. my experience at restaurants is that they keep raising their prices. i don't eat hamburgers, but everything else is MUCH more expensive than even a few years ago. i paid $4.60 for a crappuccino the other day, LOL. Mish, maybe your outlook is influenced by the local Danville economy, which sounds dreadful as the cheapest town in America (not that there's anything wrong with cheap--some of my best friends are cheap). things could indeed be deflationary in Danville, but i don't think it's what the rest of the country is experiencing. The $CRB just busted a 5 year trendline. here's another thing you never thought was inflationary on the way up, but now you think is deflationary on the way down. to the man with a hammer, everything's a nail. i agree w/Mike Johnston's analysis that people are being impoverished by understated INflation, not deflation. as people become impoverished, they will be less able to afford manicures and other discretionary purchases.