Archive for category Inflation Trends

US Wealth Plunged 38% – Official Now

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The official verdict from the Fed.

The average American family lost 38.8 percent of its wealth from 2007 to 2010, with the biggest losses concentrated among households with the most assets tied to their homes, a Federal Reserve study shows.
Median net worth declined to $77,300 in 2010, an 18-year low, from $126,400 in 2007, the central bank said in its Survey of Consumer Finances. Mean net worth fell 14.7 percent to a nine-year low of $498,800 from $584,600, the central bank said today in Washington.

The recent financial crisis left the median American family in 2010 with no more wealth than they had in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday.

The middle class has been destroyed.

“The impact has been a massive destruction of wealth all across the board,” said Lance Roberts, who oversees $500 million as chief executive officer of Streettalk Advisors LLC in Houston. “What you see is an economy that’s really very, very stressed for the bottom 60 to 70 percent of the population that’s struggling just to make ends meet.”

Gold and Silver Correction – What’s Next

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Gold and Silver have been correcting since the parabolic move in August 2011.
The main concept to keep in mind without following the daily moves up and down of Gold and Silver is that last week end Spain announced that it will seek a US$125 Billion bail out package from the European Union. The EU will provide that bail out in the form of issuing new Euro currency.
From time immemorial, when paper money becomes too abundant, as now, it loses it value and people turns back to precious metals: Gold and Silver.
Using 1913 as the base reference year, the US Dollar today is worth $0.046 (4.6 cents) in 2010 terms (latest data). That means the US Dollar has already lost 95.4% of it’s the creation of the Federal Reserve who was tasked with the job o f currency watch in 1913. And if we base the value of today’s US Dollar as compared to 2001, it is worth $0.813 (in 2010 latest statistics). That’s a 18.7% devaluation since 2001. Today in 2012 is likely less because the US government alone has printed an addition Trillion dollars. Extrapolating for 2012, we have that a US Dollar is worth now 78.9% of what it used to be in 2001. That’s a 21% devaluation. Consider it also a 21% inflation (by reduction in purchasing power).

is chart.

A from 1970 to now, see th
At this exact moment, most people are not totally aware but as the knowledge becomes gradually known, the masses will come rushing back in to purchase gold and silver and a new valuation will take place increasing gold and silver exponentially.

As of now, volume purchases has been slowing down. From a contrarian perspective (early adopter),, the stage is set for the next big move.

Riots – What To Do, Laws Will Not Help

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Riots will be increasing as the European financial crisis intensifies. Spain and Greece continues being on the top of the list. The USA will soon have its opportunity.

Under these conditions, all beliefs will shaken and citizens will find that contracts and laws will be changed. To prove there are no guarantees in life.

The following is a report in Bloomberg News.

‘Civil Disorder’
Nevada State law “permits the suspension of contracts in ‘situations of emergency such as a riot, military action, natural disaster or civil disorder,’” analysts led by Shannon Groff said in a report.
“The city plans to argue that the layoffs required following failure to achieve the needed concessions would create a public safety emergency,” according to the report.
In Henderson, another Las Vegas suburb and Nevada’s second- most-populous city, assessed property value dropped by 45 percent in the same period as North Las Vegas’s fell by half.

Japan’s 20 Years of Quantitative Easing Must Be Studied

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What Can We Learn From Japan 20 Years of Quantitative Easing
Japan, the world’s third-largest economy as measured by GDP has been in a deflationary depression for two decades with very low, if not negative, gross-domestic-product growth, and deflation more often than inflation.

On a net basis, Japan’s government-debt-to-GDP ratio has been steadily increasing from 11.5% in 1991 to 113% in 2011 only rivaled by Italy’s. And most recently it reached exponential proportions of major concern. Japan’s gross government debt is now over 220% of gross domestic product, according to the International Monetary Fund, by far the largest ratio of any Group of Seven (G7) country.

Is This The End of Japan’s Economy?

Does all this mean that Japan is finished as a major economy?

Hardly. Despite little growth in GDP per capita since 1995, it is a wealthy country. Japan has the highest Per Capital Production of Any Major Economy. In 2010, GDP per capita was still more than that of France, Germany, the U.K. and Italy. And China’s economy is now larger than Japan’s because of its huge population, 1.3 billion compared with 128 million, however China’s $5,414 GDP per capita is only 12 percent of Japan’s $45,920.

General Progress in Standard of Living Can Be Achieved

With that said, looking at Japan today in 2012, it is not necessary correct to assume that such a 20 year of lost economic progress would result in a decayed country as anyone who visits Japan can clearly express the country is as modern now than ever before and that people’s living standards and confidence appears unharmed. However, what can be said is that Japan does not have a large disparity between rich and poor. Putting it in different terms, it can be said that there is no middle class in Japan or you can change the perspective and say it is all a middle class in Japan.

How Can The Yen Currency Remain Strong With Constant Quantitative Easing?

What will happen to Japan with a 220% and growing government debt-to GDP, we will find out however Japan has demonstrated resilience over its 2 decades of quantitative easing and as such is a suitable case study of how a major economy like Japan with its prior decade of glory and economic success in the 90’s sustained itself in a constant deflationary depression for over 20 years. What created it and more importantly why and how can a currency like the yen’s endure such a considerable strength against the US dollar and other major currencies over that long period where other economies like Zimbabwe ended up in a hyper inflation and destruction of their currency basis. In addition, this study could shine light as to what to expect under the conditions that created an deflationary depressed Japan.

What History Tells Us About Commodity Trends

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Here is a clear quantitative chart showing the past 200+ years.

History has repeated several times since 1795 with the same ending with large scale war especially by looking at the agricultural commodities curve.
From peak to peak is years to 60 years

The end result – a long term commodity trend that escalates in prices running up in a final hyperbolic move.
This parabolic move also comes with social concerns and major New reports about the permanency of the situation. Here is where dooms day News are at a maximum.

Notice that the drops in commodity prices are always shorter than the uptrend (as is also the case with equities) and it (commodity) always ends when there is a parabolic move up (as equities – as this is mass and herd behavior), then commodity prices collapses and toward the end of the commodity lows, the stock market spikes up ending with new bubble.
Commodity cycles from bottom to peak are:
1824 – 1872 (bottom at 1879) Civil War 1861 – 1865
1879 – 1922 (bottom 1932) World War I – 1914 – 1918
1932 – 1948 (bottom 1970) World War II – 1939 – 1945
1970 – 1982 (bottom 1992) Cold War 1945- 1991
1992 –

Equity cycles from bottom to peak are:
1920- 1929 (bottom at 1932) Grow period
1932 – 1949 – NO Grow period
1949 – 1965 Grow period
1965 – 1982 – NO Grow period
1982 – 2000 Grow period
2000 – 2016(?) – NO Grow

A final look at the Grow – No Grow is clearly seen and especially from 2000 to Present

Gasoline Prices Jumps 3.5% in 3 days

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Iron Ore Prices Catapulted 2002-2012

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The peak of Iron Ore was in February 2011 at 187.
Prives have been relatively low at 12 until 2004 when it took off.

China Commodity Consumption

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China’s economic growth continues to absorb major commodities resources.

Commodity Growth Continues 1970-2012

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Inflation Alert – Indian Suddenly

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This story reflects how inflation attacks. All of a sudden.
India Inflation Unexpectedly Quickens, Curbing Rate-Cut Room
By Unni Krishnan – May 14, 2012

Indian inflation unexpectedly accelerated in April, crimping the central bank’s scope to extend interest-rate cuts and bolster economic growth.

The benchmark wholesale-price index rose 7.23 percent from a year earlier, after climbing 6.89 percent in March, the Ministry of Commerce and Industry said in a statement in New Delhi today. The median of 32 estimates in a Bloomberg News survey was for a 6.67 percent gain.

Reserve Bank of India Governor Duvvuri Subbarao signaled last month that inflation might limit the room for further cuts after he slashed the benchmark rate by half a percentage point, flagging price risks from the fiscal deficit, energy costs and a weaker rupee. Pressure on Asian nations to support growth has resurged as Greece’s political turmoil threatens to deepen the European debt crisis and exports falter from Taiwan to Malaysia, prompting China to cut banks’ reserve requirements on May 12.

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