What Are The Causes Of Deflation
The causes of deflation are linked on to inflation and the only cure for inflation is a deflation. The next is a listing of causes of deflation and manifestations of deflation main up to the Better DEPRESSION that began in 2000 and may not end until 2020 (end of the mania).
When in search of the causes of deflation we have to keep in mind that the actual cause was credit inflation. Many gadgets on this list are manifestations of the credit score bubble popping. What’s exceptional is the depth and number of related objects on the list.
1. Progress of authorities in any respect levels federal, state, county and city. Cash sucked away from the market financial system to fund inefficient and bloated applications reaches one third of the financial system after which causes it to get prime heavy and crash.
2. Military waste. Wars and far of the money spent by all of the totally different divisions of our protection departments is poured down an entire in the ground-by no means to be seen again. Oil, meals, supplies, manpower, blood and lives.
3. Governments assist of (favorite) industries that wouldn’t make it in a free financial petroleum equipment service of wisconsin zoo system. Actual estate bubble – unwise lending practices.
Four. Real property deflation resulting in decreased wealth and lowered taxes to authorities on account of decrease income from each capital positive aspects tax and real estate property taxes. Ninety% drop by 2018
5. Stock market losses. Individuals really feel poorer so the do not spend. Pension and retirement petroleum equipment service of wisconsin zoo accounts lose cash on inventory and bond investments hurting skill to pay those retiring. Ninety% drop.
6. Excessive petroleum prices sucking cash out of peoples pockets that could have gone to buying goods and providers out there. We’re all on an oil meals chain utilizing useless dinosaur deposits for our power as a substitute of whale blubber like we we used to. Cash sent to overseas entities that in some instances is used to pay for assaults on us. Inefficient fuel guzzling autos, appliances, lighting and phantom loads on TVs, computers, microwaves and so on. Heat rises right Why is are the working parts of refrigerators beneath the realm meant to be cooled. Heat rises up via the whole refrigerator or freezer box. A waste of trillions of dollars in oil all these years.
7. Job losses – high unemployment which means less cash is round to buy goods and companies. Causes companies to layoff more employees in a vicious cycle snowball impact.
8. Collectibles, antiques, artwork and possessions in general dropping value. Lower costs when folks attempt to promote. They feel much less rich and can’t buy as many requirements. There will be many bargains in all kinds of property and possessions at the bottom as folks promote property to remain alive
9. Credit tightens up. Financial institution and lenders fears lead to strict requirements. Low curiosity rates are a sign cash is on sale. It’s an indication of weak demand and deflation. 10.The web. Decrease value of doing enterprise on-line means it is less complicated to startup a enterprise. Business and jobs go offshore to cheapest suppliers.
11. Farm commodities prices drop. Small farms get hurt most. Lowered revenue means they can’t purchase as many good and providers in addition to new gear.
12. PIIGS. Portugal, Eire, Italy and Greece. Inefficient authorities results in high unemployment inflicting spreading malaise in Europe and a spreading banking and labor disaster.
13. Interest charge drops. Savers and retired individuals counting on a safe return on their cash have less cash to buy items, providers and to make rent or house payments.
14. Saving rate climbs from 0 to 7% already in 2010. Means there’s much less cash for purchases. Hurts enterprise.
15. Increases in debt and credit card repayment means there is less money for purchases. Hurts business.
Sixteen. Folks travel, eat out and vacation much less. Companies are chopping way again on first class airfare People are cutting again on their vacation plans. 106 motels are in foreclosure in the summer of 2010 right here in the San Francisco Bay area.
17. Auto sales & leasing down. Bailout of GM and Chrysler. Persons are holding their vehicles longer and fixing them. Inventory value of Auto Zone parts store (AZ0) at a high level.
18. Clothes and retail shops hurting as individuals lower back and do with much less. Japan is in a long run deflation. Property values just hit a 36 yr low – summer of 2010. Japanese put on their clothes longer. We’re catching their disease.
19. Bank bailouts and freeze up. Trillions of derivative dollars disappear regardless of government intervention to try and repair the problem. Roaring 20’s inflation of up to 10% a year had bankers again fearing the money that they had lent out could be near worthless in simply 10 years. They clamped down and stopped lending inflicting the economic system to go into a tailspin. The identical factor is happening right now solely worldwide. The Higher Depression will be three times as lengthy and 3 times the dimensions of the 1930’s depression.
20. Spending on leisure and sports event attendance declining. Robert Prechter sees sports star salaries slumping from right here on.
21. State, county and metropolis cutbacks and layoffs as a consequence of both decrease gross sales tax and real estate property tax revenue. 46 states are in the crimson already. California has a 17.3 billion greenback deficit. Illinois has a 13.5 billion dollar deficit. 5 states are technically bankrupt.
22. CPI drops. Client Value Index chart on a down trend. Index does not embody vitality and food. Loopy.
23. Socialized medicine. 16% of a once vibrant American free market financial system planned to be controlled and micro managed by authorities. A job killer and an incentive killer.
24. Cap and Trade. Extra restrictions on business imply business gets cautious and pulls back. A job and incentive killer.
25. Baby boomers retire. They draw out their financial savings stop buying greater properties. They start sucking social security and medicare monies out moderately than contributing.
26. Bankruptcies grow. Folks hand over and default. Enterprise and lenders are weak – they write off losses and retrench.
27. Volatility will increase. Flash crash of 998 points in the Dow. Fear increases. Folks pull cash out of the markets and park it in safe ninety day authorities T Bills at virtually zero curiosity.
28. Gold to silver ratio bottoms April of 2006 hits 80 to 1 October of 2008. Silver is an industrial commodity. Weaker financial system means weaker demand as evidenced by prime in worth.
29. Margin debt on stocks tops out at $384.1 Million-Sept. 2008.
30. OTC, over the counter stock costs and share quantity peak in 2000 with lower peaks in 2004 and 2006. Lesser total dollar amount traded reveals pattern of disappearance of market froth at the identical time as what has turned out to be a 13 year head and shoulders topping formation.
31. Tea Celebration. People are cranky as of late. Temper change to pessimism about government and elected officials. Surge in conservative discuss radio (Rush Limbaugh, Mark Levine) and conservative Tv shows (Genn Beck).
32. Crime, Gangs and Mexican Boarder and Mexican drug cartel problems. Fear and better value of law enforcement and border patrol.
33. Video gaming. Non productive. Decreased train leading to obesity and well being issues. Addiction to the purpose of flunking out of college.
34. Fishing license sale soar in Michigan. Individuals making an attempt to catch a source of protein to complement their diets.
35. Personal pay colleges. Individuals out of work try and retrain in a different trade. Some end up with a giant pile of debt and no real job opportunity.
36. Medical tourism will increase. As a lot as one third cheaper value for medical and dental procedures.
37. End of throw away society. People search the web and publications like Consumer Reviews to search out the very best and longest lasting merchandise. Firms construct higher merchandise.
38. Gross sales of Kubota and different small tractor corporations sales. improve – a back to the country – back to the farm trend. Fear about crime and meals availability. Folks search “elbow room”.
39. Xenophobia – Gated communities. Concern others. Worry of strangers. People that can afford it seek sanctuary in upscale living. Immigration uproar at our Mexican boundary. Fear of the crime wave.
40. Solar environment friendly home systems purchases – security & savings.
Forty one. Disintermediation. Borrowing short-time period cash to show around and lend it longterm. If curiosity charges go up quicker on the quick-time period money than the loans they’ve made with the money, they’re caught again like what happened throughout the financial savings and loan disaster again in the mid 1990’s.
Forty two. Socialism Features. Wasteful progress of government allocating scarce assets as an alternative of the free markets. Harmful.
Forty three. Barack Hussein Obama – socialist president hires and appoints all leftist/liberal pondering folks. Solely 10% of them have any enterprise expertise. None have any financial savvy. Gets enterprise frightened, unsure and cautious. A freeze up.
44. Peoples temper wanes. NewsTV discuss of “these troubled instances.” and now “these dangerous occasions.” A destructive social temper began 2000. Realism and skepticism morph intorealization and outrage..
Forty five. New Tariffs and commerce sanctions. Smoot-Hawley bill passed in June of 1930 raised tariffs on 20,000 imported items during FDR’s Presidency. Delayed the U.S. economic system rebound from the 1930’s depression.
46. China & other development economies. Providing cheaper goods and companies thereby taking jobs and market share. Communist capitalism. They do not care if they make a profit. They want market share.
47. Terrorism. Additional money spent trying to protect us- a drain. Patriot act. Hiring extra government workers.
48. Laws. Uncertainty is a enterprise and job killer. Every minute congress (and every other government group) is in session we lose extra freedoms.
49. Taxation. Cancelling the Bush tax cuts. A enterprise killer. Bailouts mean U.S. taxpayers take on trillions of threat.
50. Problems in Persian Gulf. A nuclear Iran. Hisbola and Hamas hatred of Israel. Oil from area is lifeblood of the West.
51. Federal Reserve Bank. An immoral monopoly and cartel. Unhealthy timing now means its portfolio is now 50% mortgage securities and other forms of riskier financial institution debt. Its bag of tricks is empty with brief-term interest rates near zero. Helicopter Bernanke (We are able to take helicopter hundreds of cash and dump it on any downside) is a gradualist. In reality he inherited this whole downside from Alan Greenspan and past fed heads and their bankster mates. The Fed can not stop the deflation and Larger Depression.
Fifty two. Interest charges rise. Next everybody that ran to the security of bonds gets caught. As interest rates rise the value of the bond drops causing capital losses. Robert Prechter thinks many company and state and municipal bonds will likely be worthless on the depths of the Larger Depression. States, counties and cities experiencing reduced income attributable to drops in peoples revenue along with drops because of decreases in property values are already seeing their bonds decreased to junk status by the scores businesses.
Fifty three. M-three down. The federal government doesn’t publish total money supply figures anymore. Why Perhaps deflation shows up there first. M-three is estimated to be down 9.7% an enormous deflationary drop.
54. Financial institution Failures. We are having bank failures at charges not seen because the 1930’s. 1,000 banks a 12 months and extra. Thus far the federal government regulators have swooped down and both taken over or organized a merger of troubled banks. It will change as the numbers of financial institution bankruptcies increase. They are going to be out of money and forced to simply let them fail.
Fifty five. FDIC now taken over by our authorities. The Federal Deposit Insurance Corporation thought has a fatal flaw. Propping up troubled monetary institutions makes them take possibilities an interact in unsafe banking practices because they assume the government will at all times be there to bail them out. Now, you and that i the taxpayer will probably be saddled with trillions in debt in the aftermath of the washout coming to the FDIC.
Fifty six. Peak oil. The year 2005 is being called the yr when petroleum production peaked. High oil and energy costs suck money proper out of peoples pockets. They forgo purchases of different products and services causing those industries to contract. Deflationary.
57. Debt stress. 46% in a current poll are debt stressed out.
Fifty eight. Credit card pay downs. For households making $50,000 or more 50% are paying down their card debt.
59. Unemployment close to 10%. Do not forget this does not count those that stopped on the lookout for a job, went back to high school, retired or on unemployment. Possibly one other 15%
60. Commodities prices dropping. Oil, many grains, lumber, silver, copper and so on. dropping in price. Housing and car manufacturing use quite a lot of copper. Down trends.
61. Real estate deflation. 50% drop in costs in some areas. Builders confidence index is at new low. Many, many layoffs Many housing and business loans written on adjustable of interest phrases back in 2005 to 2007 are coming up for his or her rate reset or coming due and payable. Many could not qualify for a complete new loan or be able to make the new higher fee. The Austrian faculty of economic thought says each time there is a mania with credit score inflation at it is root there might be a big crash.
Every time Robert Prechter says the underside of the Better DEPRESSION won’t be till 2016 or so. He thinks costs can be down 90 % on most belongings, Cash shall be “King.” When you’ve got cash at the moment your cash will purchase numerous things at a low cost. PS If you may think of extra causes of deflation please write them within the forum area beneath.deflationeconomy.com Reprint rights allowed with attribution back.
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