What is deflation, well in essence its where prices continue to drop so as to speak and one of the primary reasons for this is the rise of the machines or the emerging super AI trend.
As the US economy continues to reel from shutdowns related to the coronavirus pandemic, the oldest worry in the economics world has begun to rear its head — should we be worried about inflation?
The data suggests no. On Tuesday, we learned the largest-ever monthly drop in consumer prices was recorded in April. And as Gregory Daco, chief U.S. economist at Oxford Economics said Tuesday, “A surge in inflation is the least of our worries.”
Instead, it is disinflation that has now taken hold in the US economy.
Disinflation is most simply defined as a lack of either inflation or deflation. To some, this might sound like a dream consumer scenario: nothing changes.
For the Federal Reserve, disinflation is a bit too close to deflation for their liking. And this scenario bolsters the case for the central bank keeping its unprecedented expansion of monetary policy in place for some time.
“If required, the Federal Reserve can go bigger, or longer, in the execution of its programs, and we think the central bank will fight hard against any persistence in this disinflationary impulse,” said Rick Rieder, BlackRock’s chief investment officer of global fixed income, in an email on Tuesday. https://yhoo.it/2WQK8DB
What is deflation? The charts below explain it well
If you understand what inflation is then understanding deflation is even easier. We warned about this long time ago; the only way to keep inflation in check is to keep enslaving large portions of the populace. You destroy industries, you wreak just enough havoc to create the impression that everything is about to fall apart, but the only thing that falls apart is another chunk of the middle to upper-middle class; these guys now join the ranks of the poor. They are now forced to work in sectors that pay less. When you factor inflation a $15 per hour job still pays a lot less than $3 an hour in the 1970’s or $5 per hour job back in the 1980s.
So you can see how cunning the guys at the top are. They create the impression they are paying you more, but when inflation is factored in you, are getting next to nothing. This is how the Fed will keep inflation in check, and this is the game the Gold bugs have not figured out yet. They are focussing on the absolute definition of the inflation, which is an increase in the money supply, but the Fed is 10X smarter than its given credit for. They were smart enough to provide the patient, with sufficient medicine to prevent the symptoms of the disease from manifesting. The symptoms of inflation is an increase in prices, and they controlled this by only including a certain basket of goods in their equation. Why would they do this?
The answer is obvious because they can manipulate those sectors freely. This is why farmers are dumping millions of gallons of milk as they don’t want to lower the price anymore. However, milk in the store still costs quite a bit. Why is this? Because of the middlemen, that make more money than the farmers. AI will change this, suddenly these middlemen will be killed, and farmers will be able to sell their products directly to supermarkets or individuals. While everyone will celebrate and call this a fantastic win, guess what, it will be another force of deflation, and this will allow the Feds to increase the money supply even more. The Fed’s are not master chess players; they are master Go players. https://bit.ly/2Z2Ueni
While we will have bouts of inflation (rising prices), the overall long-term trend for inflation is down, and that’s because machines will keep replacing humans, forcing prices to drop and allowing governments to control a larger swath of the population.
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