FIRE Economy | timiacono.com - Part 4

Inflation Since 1510 (in the U.K.)

Super long-term charts like the one below, painstakingly created at Deutsche Bank and appearing in this item at Business Insider, are fascinating in that they tell a story that few seem interested in hearing, namely, that the world’s financial system and conventional thinking about economics has transformed radically in recent decades as the world switched to a pure paper money system administered by central bankers.

Obviously, you’d see a similar chart for the U.S. where, prior to the 20th century, high rates of inflation used to coincide with wars and was followed by periods of deflation to reverse those price increases almost invariably caused by supply shocks and temporarily abandoning a hard money standard to fund the war effort. Technological advances also fueled prior bouts of deflation, however, even a hint of deflation these days is considered taboo and must be countered by central bank money printing on a grand scale.

In what is part of a growing trend, economists at Deutsche Bank are asking whether deflation is really as bad a thing as most dismal thinkers think it is, as conventional wisdom toward deflation increasingly appears to be another case of The Emperor’s New Clothes.

Cramer Says “Sell” (No, Not Really)

Haven’t watched or heard CNBC’s Jim Cramer in some time, but, just the first few seconds of this clip from yesterday, after what can only be described as a monster rally sandwiched between two monster sell offs (the latter coming today, apparently) just seems so dated.

What does he have to say? CNCB puts it thusly:

Mad Money host Jim Cramer preps investors for the next blitz down.

I could only take it for about two minutes – he seemed pretty sincere.

For those looking for something more highbrow, see The Bear Case for Stocks at Barron’s

Error! Error! Error!

My apologies in advance if this takes too long to load or is overly annoying (if so for the latter, just check back on Friday morning and the next links post will displace this post from the top spot), but I felt compelled to share the animated .gif that Bloomberg is using to alert readers that it can’t find the requested file during what can only be described as an “exciting” (if ultimately unsuccessful, so far) makeover of its website.

Money managers trailing U.S. index fund returns by double digits over the last few years no doubt share some of the sentiments expressed by the gentleman above when looking at their Bloomberg terminal … and that’s what kind of makes the graphic fun.

“I Don’t See a Downside”

We filled up the tank the other day and were again amazed at the numbers we saw while doing so. Consumer confidence in the U.S. is skyrocketing as we ‘Mericans are getting a nice little bonus every time we gas up the family car and, for those of modest means, saving $20 at the gas station can be a pretty big deal.

But there’s a downside…

As noted above, oil exporting countries around the world (most of whom we ‘Mericans dislike) are feeling a good deal of pain and that pain is likely to persist for some time.

But, what is not stated in the video is that there will be pain here in the U.S. too as the shale oil industry slowly comes to grips with the idea that $50 oil might not be so transitory. As noted in this report at The Atlantic, shale oil has been responsible for a good deal of the jobs growth in recent years and there are already reports of layoffs by shale oil producers, a trend that is likely to accelerate as long as oil prices are low.

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