Deflation will continue! Let’s review the evidence!
In today’s Wall Street Journal, September 8, 2016, there was this article: “Decline in Prices Puts Pressure on Grocers”. What is happening is that prices (generally) are continuing to decline (for most goods) as consumer spending power is waning/slowing. Kroger, the largest U.S. supermarket is expected to flash deflation woes when it reports earnings tomorrow (Friday). Whole Foods and Supervalu also are experiencing price declines as are Sprouts Framers Market and Smart & Final Stores. All this is starting to affect earnings and profits within the food industry and soon the stock prices within this industry will also decline. Let’s review some other deflationary forces which have been at work for years. Why is this trend not likely to change going forward?
Over in Japan, the general population is declining and all the QE stimulations of the Central Bank have not overcome the general deflationary trend which has been evident for years. Deflation (and/or disinflation) is also evident in most of the European Economies with countries like Sweden, Denmark, Norway, Spain, Italy, Portugal, Germany, France witnessing no real price inflation within their overall economies. Deflation (especially within the ‘goods’ sector) results from lack of ‘consumer’ demand and buying power. Consumers have been spending and borrowing but the supply of goods and products has exceeded their overall spending for these items. The farm economy is also experiencing deflationary forces (at present) as land prices are now declining as product prices decline (generally).
All this is leading to a situation where our stock markets (now in a huge bubble) will start to trend downward as all this evidence is digested by traders and investors. This deflationary trend has been evident to me for some six years. I have been writing about this trend within this blog even as many other pundits have espoused more inflation and even hyper inflation as our destiny. What many seem not to understand is that we now have robotics industries and computer technologies…which allow increasing rates of production (especially ‘goods’ production) at lower and lower costs. Soon we will witness the biggest bubble of all (the real estate market) start to experience price declines. I am witnessing this now in my area of the Southwest. House prices have peaked in many areas!
Home values (a $25 trillion market) have now maxed IMO. All the low-interest rates have not helped many borrowers/spenders…who still can not break the ‘affordability’ gap (down payment issues and income ratios) which favor primarily a limited group of mostly Baby Boomers. Affordability for the millennials (a growing group) has not occurred and most millennials have been ‘renting’ for their housing needs. Rents have also maxed as ‘affordability’ is now the issue within the renting sector of our economy. All this means that current trends will lead to more deflation going forward. The only option left for our elite Central Bankers is a ‘helicopter drop’ or similar (digital money transfers directly to consumers). This digital ‘helicopter drop’ would need to be immediate and in the multi-trillions to be meaningful. I see this as unlikely!
All this means that the DEFLATION genie is real and that the options of our elite Central Bankers are limited. When I look at our overall DEBT situation in the USA and the World, I also witness a threshold level (of debt) that is stifling future growth. Check out this website and ask yourself is this trend of debt and deficits can continue forever: http://www.usdebtclock.org. The election of Hillary or the Donald will not change what is now on the books. A serious economic depression is coming and the ‘fuse’ has been lit. We must wait for the dominos to start their fall…as we watch the markets being pushed to ever greater levels of absurdity. We could say that the ‘cycle’ of change is upon us and this ‘cycle’ is now unfavorable for those who are manipulating our economies.
The indices which have revealed the emerging deflationary trends have been the Baltic Dry Index, The Cass Freight Index, and the China Containerized Freight Index. The only real expansion taking place today is in Africa, South Africa, and Korea. All the positive spin which I witness from our deceived media personnel who continually spin that ‘ALL IS Well’ should be discounted when real evidence is factored into the picture. Layoff’s and retail closings are now ubiquitous as consumer spending has slowed and borrowing has slowed. Our pumped up stock markets may continue to fool the many for a few more weeks/months, but for those who look at the real economy (consumption of goods) the evidence is overwhelming that all is not favorable.
Some minor ‘fear’ is starting to surface as the price of silver and gold has been increasing gradually since the beginning of 2016. Gold and silver reveal that many ‘insiders’ are now recognizing that our markets have peaked and that this ‘house of cards’ (called our Global Economy) must come crashing down soon. The manipulators may attempt to hide the evidence until AFTER the November 8 elections in the USA (if they can). Our stock markets ‘want’ to decline to conform to the real markets, but our manipulators who rig our markets with their master computers and algorithms are preventing this decline.
Central Banks are the culprits as they now TRADE our markets to prevent the crash from happening. The U.S. Fed has some 500 day traders operating from 33 Liberty Street, N.Y. What are they trading? Central Banks are not supposed to trade markets under real Capitalism. But real Capitalism is no longer a reality. We now have a Casino Capitalism which flows with digital currencies within an interconnected Global Economy! All this has mostly evolved since the financial crisis of 2008. Today, computers (controlled by our Central Banks) operating behind closed doors rig and manipulate all our digital markets. This is not leading to prosperity but it is leading to a huge crash and collapse of all markets!
The wise, however, will ignore all the hype and manipulations and start to prepare for some dire events down the road. Deflation leads to a global Depression under the Keynesian economic model. Keynesianism demands more spending, borrowing, credit, and value enhancements for all asset classes in order to survive. The Keynesian Model is a one-way street. It all started after the last Great Depression (1929-37) when John Maynard Keynes and our Central Banks adopted his model for our planet. Today, this Model is defunct as DEBTS have created an impossible continuance for this Model. The game is OVER for Keynesianism! Few want to admit this reality! Go to this website for further evidence: http://www.usdebtclock.org. Check out all the numbers for yourself! Prepare now for major change! I am: https://kingdomecon.wordpress.com.