Thursday, July 10, 2014

Where the Price Inflation Is

The below chart, put together by Time, shows what prices have climbed in the past five years and which have not.

The technology sector leads the way in falling prices. This should come as no surprise as productivity gains in the sector have been truly spectacular. But the increases in gasoline and beef prices shows the underlining price inflation.

In the long run, massive money printing can even out pace super-productivity gains. We are likely very near that point. When technology prices start to climb, overall price inflation is going to accelerate significantly. Be prepared.



  1. In other words, sectors with the most government intervention have flourishing cartels whose customers pay ever rising prices...

  2. Black Swans?

    The Bloomberg story above references the fact that there are credit default swaps – aka OTC derivatives – on Banco Espirito Santo. But what’s missing from the analysis is, “what happens if one of the counterparties who has made the bet that this bank will never go bankrupt can not pay off the bet it has made?”

    What happens? A defaulted bank will now be bailed out creditors – depositors and debt holders, in that order. But what about the entities that have to make the payments associated with the credit default swaps?

    We don’t know who the counterparties are and we don’t know who will be on the hook – until after the fact, which by then it’s too late. We don’t know this because the Too Big To Fail Banks made sure they paid your elected Congressmen to pass laws that enabled the TBTF’s to keep this information hidden away. I bet even Jamie Dimon, pre-chemo, has no clue whatsoever if JP Morgan is on the hook or if JP Morgan is exposed to someone who is on the hook.

    THIS is what could potentially trigger a bigger run on the bond market and THIS is exactly the dynamic of which regulators in the U.S. are terrified. And THIS dynamic is why the Fed was discussing putting capital controls on bond mutual funds. And THIS is why the Vice Chairman of Black Rock, Barbara Novick, is going around like the Sicilian Mob Boss promoting the concept of the need to have a bailout mechanism for the derivatives clearing mechanism. Clearly Black Rock is highly exposed to credit default swaps.

    the printing will continue.

    1. You nailed it.

      Love the site you linked too.

      My only complaint is that the Federal Reserve will keep printing and printing and printing until it all falls apart.

    2. LINKED TO, not linked too...!

  3. This inquiring mind asks What about rent? My rent has gone up and up

  4. I've become weary of the bad inflation is just around the corner.... What makes true this time?

    BTW: Auto insurance would be higher regardless because cars have numerous airbags to be replaced on collisions, structures and parts that are destroyed to absorb crash energy, etc and so on. All that stuff takes more money to fix and of course makes cars total out more frequently. Oh and because it's forced purchase provided by cartel created by government licensing.