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Consumer Prices Drop In March

By Big Tent Democrat, Section Economy
Posted on Wed Apr 15, 2009 at 08:04:57 AM EST
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Pop the champagne!:

Consumer prices dipped unexpectedly in March, leaving inflation in the last year falling at the fastest clip in more than a half-century. The Labor Department says consumer prices edged down 0.1 percent last month as a drop in energy prices offset the biggest rise in tobacco prices since 1998. It was a better performance than the 0.1 percent rise that economists had expected.

Lower prices!! Great!? Ugh, no. Demand drops, and so do prices. And interests rates are already at zero. That's what happens in a depression. BTW, the big rise in tobacco prices is not due to increased demand, but to a big federal tax hike.

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    Consumer Prices Drop In March | 81 comments (81 topical)

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    Here's the part I love about (5.00 / 4) (#5)
    by inclusiveheart on Wed Apr 15, 2009 at 09:12:47 AM EST
    these reports lately:  "unexpectedly"

    Huh?

    The analysts need to get out more.  They might have noticed that they were the only people in the stores if they actually went to one.

    Just about every piece of news that proves that we are still in a decline includes the word "unexpectedly".  They are starting to look really silly saying that they didn't expect to see declines in a declining market.

    That was my first thought too (none / 0) (#9)
    by ruffian on Wed Apr 15, 2009 at 09:39:02 AM EST
    Who exactly did not expect this?

    Next month's headline: Housing prices unexpectedly declined.

    Parent

    And next year's headline now: (none / 0) (#11)
    by Cream City on Wed Apr 15, 2009 at 09:46:15 AM EST
    Income Tax Revenues Decline
    With Millions Out of Work

    Parent
    I've already seen that headline (5.00 / 1) (#15)
    by inclusiveheart on Wed Apr 15, 2009 at 09:51:13 AM EST
    this year.

    Parent
    Yes... (none / 0) (#18)
    by MileHi Hawkeye on Wed Apr 15, 2009 at 10:05:27 AM EST
    ...the decline in sales tax revenue is what is hurting the state and city budgets right now.  People aren't buying goods and the tax revenues are cratering.  

    One of the lead stories on the local news this morning was a small town in the metro area that is going under because of the lack of revenue.  

    Parent

    Sales tax is different (5.00 / 1) (#47)
    by Cream City on Wed Apr 15, 2009 at 11:22:58 AM EST
    and yes, it has been down for some time.  But I was talking about income taxes, and the job loss has accelerated this year (so it won't show up income taxes 'til next year).

    Parent
    The drop in sales tax... (none / 0) (#51)
    by MileHi Hawkeye on Wed Apr 15, 2009 at 11:33:48 AM EST
    ...relates directly to unemployment and thereby income tax.  When government entities have to cut jobs and funding for projects, it is a direct hit to the unemployment roles.  It is a viscious circle.  

    Let's not forget that local and state governments are the biggest employers in many places.  

    Parent

    I hardly call (none / 0) (#57)
    by Catch 22 on Wed Apr 15, 2009 at 01:50:59 PM EST
    JACK HEALY the guy who wrote the article an analysts. He is more of a jack of all trades writer with not particular expertise in finance. And if you fo to the BLS website linked in the article you will see no "unexpectedly" written there.

    BTW overall prices didn't drop. The core rate of inflation was actual up 0.2 for accuracy's sake. So contrary to what you think about prices, other than oil going down - which was a no brainer, all other prices is stayed the same or rose slightly.

    So with the The core rate of inflation was actual up 0.2 there was no decline in prices in your declining market.

    It would really help if you read the actual articles and understood what they were saying and who it was that actually wrote the article before trying to make lemons out of everything. You couldn't be more wrong in your post.

    Parent

    Hmmm...as I read the BLS stats, (none / 0) (#66)
    by Anne on Wed Apr 15, 2009 at 02:30:30 PM EST
    and the accompanying narrative, I see an awful lot of the word "declined," and its synonyms.

    "Overall" is a nice thing to hang your hat on, but none of us is such an average consumer that we can claim to have been affected by every item and category the government measures in order to come up with an "overall" increase/decrease number.

    I realize that you hold yourself out as some kind of expert on all-things economic, but maybe it hasn't occurred to you that you could be using your knowledge for good - taking the time to educate in a non-confrontational way - instead of using it to belittle and disparage.  If you believe you have already tried that approach, to no avail, I don't really understand why you keep weighing in with such derision.

    Just sayin'.

    Parent

    What's up with you (none / 0) (#70)
    by Catch 22 on Wed Apr 15, 2009 at 03:20:19 PM EST
    You can cherry pick all the "declined" you want to but that doesn't change that the CPI was up 0.2 percent in March.

    You can also ignore all the "increase" citations in the BLS report as you did if you want to make as inaccurate of a post as you just did.

    Really, what is up with posters like you? Do you really think editing out of reports the increases and only mentioning the "declined" really changes reality? Obviously you do or you wouldn't do it. But then doing so makes you unrealistic, but doesn't change reality itself.

    As for your last paragraph there have been plenty of posters call myself and others lovers of the banks and not of the common person and other such smears. I haven't read you go after them for being confrontational. When you do let me know and maybe I'll take your last paragraph seriously. Until then I will take it as biased if not hypocritical.

    Seriously I don't need to be lectured when others with an opposite view get carte blanche from you and others to be as nasty as they please without a word of protest spoken to them.

    Just sayin'.

    Parent

    I am a bit surprised that given your (none / 0) (#71)
    by inclusiveheart on Wed Apr 15, 2009 at 04:19:54 PM EST
    expertise in this area you haven't noted that there is a fairly standard convention in economic reporting where numbers like these are characterized as expected or unexpected.  One I think can safely presume that when a reporter calls an analyst and asks for a comment on what these statistics mean one of the questions they ask is "Do you anticipate that the number would be in this neighborhood?" in some form or another.

    Lines like "analysts predicted", "analists expected", "analysts did not expect", "Analysts say", "worse than expected", "better than expected", "what was expected" are fairly typical fare in these articles.  I was just saying that I've seen and hear the word "unexpected" used a lot lately in the stories about these types of statistics.

    Parent

    Yeah and the article (none / 0) (#74)
    by Catch 22 on Wed Apr 15, 2009 at 05:16:17 PM EST
    linked to said nothing of analysts. So you just layer on BS to an article that said nothing about them. More importantly the actual BLS report said  nothing about analysts but it did say the CPI was up 0.2 percent, as did the article itself, which everyone of you doomsday'ers ignored. You'd rather talk about 'demand being down' as the reason for prices being lower when in fact prices on average (CPI) are higher. It's nonsense.

    And if was not for oil, which was way down from last year, as everyone already knew months ago, the CPI would have been even higher!!! But no! You guys are posting here that prices dropped and it is because of less demand. Like oil and gas prices had nothing to do with anything - in this case keeping the price INCREASE as low as it is! How about I am a bit surprised you haven't noted that? Where is the credibility?

    Seriously the cherry picking complaining that goes on here accomplishes what exactly? Do you have to ignore half the facts to be able to find something to complain about?

    You guys just keep cheerleading against anything working. You say you want things to improve but you seem very happy to say they aren't. There has been good news. But when was the last time any of you brought it up? Some posters have but when they  do they get shouted down by the doomday'ers. You doomsday'ers don't want to hear and talk about good news...

    Or even the real news as it is reported. Let's just gloss over the parts that don't support our complaining. Maybe no one will notice.

    Parent

    Actually, I am just talking about (none / 0) (#75)
    by inclusiveheart on Wed Apr 15, 2009 at 05:41:14 PM EST
    the frequent use of the fairly frequent use of the word "unexpected" in conjunction with what is presented as "bad news" in a lot of the economic reporting lately.

    I am not one of the "you guys" that actually invests a lot in these reports as they seem to be too often revised afterwards too for me to put a lot of stock in them when they are released.

    But I do see a drop in activity in retail and I think most analysts do.  I come from a retail families on both sides and retail is a valid indicator I think in our present economy.  When you factor in sales and deeply discounted inventory, the situation doesn't look very good at all at them moment. In that context perhaps you might understand why I do not have a particularly sunny outlook at the moment.  Sorry if that offends your sensibilities.

    Parent

    Yes (none / 0) (#76)
    by Catch 22 on Wed Apr 15, 2009 at 08:09:41 PM EST
    I addressed your use of the word "unexpected" already and pointed out that it was not an analysts that used it as you erringly implied it was.

    Because you tend to believe your own double-talk spin let me say it again: I addressed your use of the word "unexpected" already.

    Oh and you see a drop in activity in retail. What a visionary. It has only been reported for several  months since the beginning of the recession which took hold before the banking crisis that retail sales have been down. I don't think anyone suggested otherwise. What I said was prices were up and not down during this period which you erringly said otherwise.

    You just keep shoveling don't you? Sadly it is somewhat entertaining to view the spectacle. You are more interested in spin than actual facts. Have you once during your posts acknowledged that the CPI was up 0.2 percent. NOT ONCE. FINGERS IN THE EARS. U.N.O.C.R.E.D.I.B.I.L.I.T.Y.

    Parent

    I've been trying to have a calm (none / 0) (#77)
    by inclusiveheart on Wed Apr 15, 2009 at 08:26:34 PM EST
    reasonable exchange with you and every post you've put up just gets more and more hostile and personal.  I am sorry I upset you so much.  You might want to see someone about that.  I'm no longer going to respond to your insults even if you perceive them to be substantive.  If you want to talk about this stuff and you are willing to check the ad hominem attacks at the door let me know.  I will be glad to listen and learn.  Although I suspect that you've decided that I am worthless as your posts suggest which begs the question - why are you engaging me?  Why not just skip it and do your own thing?  There is no blogging rule that says that you have to stalk people that you disagree with.  Best!

    Parent
    Well that makes two of us (none / 0) (#79)
    by Catch 22 on Wed Apr 15, 2009 at 09:22:27 PM EST
    Because I find it insulting that what you call a reasonable exchange is you totally ignoring what I said in my posts and totally ignoring the facts as was in the article itself.

    If you think ignoring and then launching into one of your spins is reasonable exchange then you have a problem.

    To spin is to insult my intelligence as if I am dumb enough to take the bait.

    So don't lecture others on insults when you do your share of insulting.

    Parent

    asdf (none / 0) (#80)
    by inclusiveheart on Thu Apr 16, 2009 at 07:55:45 AM EST
    Consumer prices: Drop over last 12 months fastest in half-century

    Consumer prices dipped unexpectedly in March, leaving prices over the past year falling at the fastest clip in more than a half-century.

    ...

    ...economists had expected a 0.1 percent rise in the consumer price index

    Core inflation... was slightly higher than... economists expected.

    ...

    ... the Fed said that production... dropped...  worse than the 1 percent drop analysts expected...



    Parent
    I hope the (none / 0) (#81)
    by Catch 22 on Thu Apr 16, 2009 at 02:08:08 PM EST
    time spent in culling through articles was worth your time. It convinces me of nothing other than verify what I already said. You ignore other peoples posts and what they said. You are not an honest poster.

    I won't reiterate how many things you have been wrong on in regards to your original post. I'll just say trying to make your point after the fact as you are trying to do does nothing for your original error in everything you originally said.

    You are trying to win a battle when you have already lost the war.

    Parent

    So lower prices are bad (none / 0) (#1)
    by reslez on Wed Apr 15, 2009 at 08:20:26 AM EST
    because it shows we're in a depression?

    I'd rather have lower prices and be in a depression than higher prices and be in a depression.

    Both are possible.

    No both are not possible (none / 0) (#4)
    by Big Tent Democrat on Wed Apr 15, 2009 at 09:12:17 AM EST


    Parent
    Once inventories fall to a level (none / 0) (#6)
    by inclusiveheart on Wed Apr 15, 2009 at 09:24:33 AM EST
    where the deeply discounted sale prices we are seeing now are no longer necessary to move products I think you can see price inflation even when a market is depressed can't you?  Because producers will make less stuff and sell their smaller inventory for a price that is not discounted or even inflated in order to cover their operating costs.  

    So for instance right now there is a glut of inventory in the automotive sector.  Right now you can get a very good deal on a car because they need to move the inventory, but one assumes that in anticipation of even more decline and with the current glut the car companies are going to make fewer cars for the coming years so that they aren't under pressure to sell the way they are now - and that the price of each car will have to cover their operating expenses and a greater percentage of that cost will go into the price of each car - possibly driving the retail price up not down.

    Parent

    No (none / 0) (#7)
    by Big Tent Democrat on Wed Apr 15, 2009 at 09:27:09 AM EST
    Low inventory would lead to increased production.

    Parent
    But if you have low demand (5.00 / 1) (#14)
    by inclusiveheart on Wed Apr 15, 2009 at 09:50:03 AM EST
    because only a limited number of people can afford to buy a product there is no need to increase production - in fact production is deliberately kept low because people don't want to find themselves with more inventory than they can sell at full price.  So certain things don't necessarily drop in price, they just become less and less accessible to a greater number of people.

    Parent
    If inventory is cleared (none / 0) (#16)
    by Big Tent Democrat on Wed Apr 15, 2009 at 09:51:17 AM EST
    That means demand went up.

    Given fixed costs, increasing output is what they will do.

    Parent

    no again (none / 0) (#62)
    by Catch 22 on Wed Apr 15, 2009 at 01:59:47 PM EST
    Inventory does not necessarily clear in a recession because demand went up. Inventory clears over time. By design a manufacturer will slow production to the point that a percentage of existing inventory is cleared. You obviously have never been involved in the running of a hard goods business.

    Parent
    You seem so positive (none / 0) (#12)
    by Cream City on Wed Apr 15, 2009 at 09:48:07 AM EST
    that it must be so, but I read yesterday that stores now have brought down their inventories to better weather the depression.  What people won't buy, stores won't sell -- or stock -- so why would there be orders for more to be made?

    Parent
    And the moment demand increases (5.00 / 1) (#17)
    by Big Tent Democrat on Wed Apr 15, 2009 at 09:52:09 AM EST
    so will output.

    This is not a new concept.

    Why do you think I harp so much on aggregate demand?

    Parent

    Sure. But (none / 0) (#25)
    by Cream City on Wed Apr 15, 2009 at 10:20:50 AM EST
    that's when the economy recovers.  Consumers buying again means consumers have jobs and income again.

    I thought we were talking about a depressed economy.

    Parent

    In a depressed economy (5.00 / 1) (#32)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:37:52 AM EST
    price rises do not occur because people will not buy goods that cost more.

    Parent
    Exactly. On that, we agree. (none / 0) (#37)
    by Cream City on Wed Apr 15, 2009 at 10:46:34 AM EST
    The inventory problems are interestingly reminiscent of the 1920s, btw.

    Parent
    One scenario (none / 0) (#39)
    by reslez on Wed Apr 15, 2009 at 10:55:47 AM EST
    Btw, I hope you won't interpret my comments as being targeted at you personally. That's not my intention at all. I'm just interested in the discussion. Talkleft's readership has more of a "everyday Joe/Jane" vibe and I enjoy the back and forth.

    So here's a thought exercise. Let's say a country is a net importer and finances its imports via debt. Let's say (1) credit markets freeze or interest rates rise and financing becomes more expensive, or (2) the country's currency becomes less desirable for whatever reason, or (3) other countries become more attractive as importers because, for example, their economies are taking off while this one's has slowed. The net effect will be an increase of prices for imported goods.

    Depending how much this country imports, that could be extremely painful for consumers. It could also spell doom for retailers that rely heavily on imported goods. And it could happen in the middle of a plunge in demand.

    Parent

    This seems true (none / 0) (#43)
    by Big Tent Democrat on Wed Apr 15, 2009 at 11:11:39 AM EST
    How does that undermine my point?

    Parent
    To explain (5.00 / 1) (#44)
    by Big Tent Democrat on Wed Apr 15, 2009 at 11:14:21 AM EST
    Aggregate demand in the nation will transfer to non-imported goods in your scenario - which will spur demand for domestic goods, which will spur local employment, etc.

    Again, nothing happens in a vacuum.

    Is it optimal policy? Of course not. I am a free trader for a reason.

    But the inflation you describe will lead to an increase in domestic production and employment and thus domestic demand.

    Ergo, no inflation without increased demand.

    Parent

    I guess I should point out (5.00 / 1) (#50)
    by reslez on Wed Apr 15, 2009 at 11:29:36 AM EST
    that I am not trying to refute your main point that lower demand leads to lower prices.

    What I am saying is that (1) price increases can and frequently do happen in depressions, (2) there are a variety of mechanisms by which this can occur, and (3) I would rather see price decreases than increases because it means we are not experiencing hyperinflation (at which point all bets are off) and it is better for consumers.

    At this point in time, price inflation would not be a sign the economy is turning around. It would simply mean added misery for consumers.

    We have just gone through a period of demand hyperinflated by excessive credit. Prices rose to match. We are now reverting to the mean. Price deflation is necessary.

    Parent

    Careful (none / 0) (#65)
    by reslez on Wed Apr 15, 2009 at 02:19:48 PM EST
    "No inflation without increased demand" confuses cause and effect. You eventually end up with more demand, but the inflation came first and for entirely other reasons. Saying higher demand -> higher prices is fine, but higher prices can occur without it.

    As for how relevant this all is, we saw it two years ago with skyrocketing commodity, gas, and food prices. You can't argue increased consumer demand because there wasn't any: the economy had already fallen off the roof.

    Parent

    The "core rate of inflation" (none / 0) (#64)
    by Catch 22 on Wed Apr 15, 2009 at 02:08:16 PM EST
    actually went up 0.2 as stated in the article you linked to. So yes prices can rise in a depressed economy, and did in March by that measurement.

    Many times a manufacturer has to raise prices in a down economy because they no longer have the volume to cover fixed overhead and must raise prices to meet that overhead on less sales volume.

    Parent

    The automakers can only (none / 0) (#13)
    by Anne on Wed Apr 15, 2009 at 09:49:07 AM EST
    hope - and pray - for low inventory; I read or heard somewhere that there is 2 years' worth of new inventory already out there.  And cars are still rolling off the lines, so "glut" is probably an understatement.

    Not a pretty picture.

    Parent

    They're producing models that are selling (none / 0) (#55)
    by cal1942 on Wed Apr 15, 2009 at 01:34:37 PM EST
    The inventory is in models that haven't been selling.  The unsold inventory is in foreign as well as domestic makes.

    Parent
    No (none / 0) (#59)
    by Catch 22 on Wed Apr 15, 2009 at 01:54:22 PM EST
    in a down economy people reduce their inventories and keep them low. It's like why tie up money is stuff that isn't moving!

    Parent
    Both are in fact possible. (none / 0) (#8)
    by Abdul Abulbul Amir on Wed Apr 15, 2009 at 09:30:08 AM EST

    Witness tobacco prices.

    Parent
    Heh (none / 0) (#10)
    by Big Tent Democrat on Wed Apr 15, 2009 at 09:44:15 AM EST
    you got me there.

    Let me say this then - absent tax increases, demand can not drop and prices rise.

    Parent

    Not just tax increases (none / 0) (#29)
    by Abdul Abulbul Amir on Wed Apr 15, 2009 at 10:34:59 AM EST

    Regulations such as the NRA, NIRA, and minimum wage can do the same.  Likewise burning food in creosote bins during the depression can reduce supply faster than demand.

    Parent
    Hmm (none / 0) (#30)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:37:01 AM EST
    I'll skip the NRA silliness and grant you that a minimum wage does not increase productive capacity, but I think you must concede that it does increase demand.

    Parent
    Only for those earning it (none / 0) (#41)
    by Abdul Abulbul Amir on Wed Apr 15, 2009 at 11:11:02 AM EST
    For persons priced out of the market (typically those with the fewest skills) it represents poverty and reduced demand.  For jobs priced out of the market it represents reduced capacity.  

    As an aside IIRC, the last year that black unemployment was lower than white unemployment was the year before Davis-Bacon.  Once you have an artifically high wage the employer that discriminates no longer pays a price for economocally irrational discrimination.

    The theory that restrictions on economic activity are a good way to promote economic activity does not seem to have much of a track record of success.

    Parent

    When (none / 0) (#58)
    by cal1942 on Wed Apr 15, 2009 at 01:54:21 PM EST
    specifically was black unemployment lower than white unemployment?

    Enlighten us.

    My direct experience with minimum wage is that consumption increases and grows the economy, expanding employment. Setting wage standards helps increase demand and demand drives the economy.

    I've heard your tired arguments all my life. They are tired indeed.

    Parent

    1930 (none / 0) (#78)
    by Abdul Abulbul Amir on Wed Apr 15, 2009 at 09:15:52 PM EST

    In 1930, the ratio of black to white unemployment was 92:100; in 1940, it was 118:100; in 1949, it was 160:100; by 1954, it was 2:1 and has remained that way.

    Have you no interest in when the difference in black and white unemployment rates came into being, and the policies that promoted that difference?

    Parent

    Consider economics of scale (none / 0) (#34)
    by reslez on Wed Apr 15, 2009 at 10:41:34 AM EST
    in manufacturing. Demand drops and prices increase.

    Let's say demand for iPods fell off a cliff. It would still be possible to manufacture iPods in a boutique setting, but because efficiencies of scale are no longer in place the price would increase.

    Parent

    That's true (none / 0) (#38)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:47:29 AM EST
    But in terms of aggregate demand and aggregate pricing, inflation simply would not go up.

    You are speaking in micro terms while my reference is to macro.

    Parent

    Thank you for clarifying. (n/t) (none / 0) (#42)
    by reslez on Wed Apr 15, 2009 at 11:11:24 AM EST


    Parent
    Let me spell it out for you. (none / 0) (#19)
    by reslez on Wed Apr 15, 2009 at 10:07:05 AM EST
    Currency devaluation.

    There are others.

    Parent

    Currency devaluation? (5.00 / 1) (#21)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:12:48 AM EST
    An unanticipated event that will not spur production, employment, et al?

    Nothing occurs in a vacuum. Should the dollar go down in value, US exports will increase, spurring job growth and aggregate demand.

    We should be so lucky as to have currency devaluation.

    Parent

    Exactly (5.00 / 1) (#23)
    by andgarden on Wed Apr 15, 2009 at 10:17:02 AM EST
    With the threat of deflation real, now is not the time to crucify America on the cross of a strong Dollar.

    Parent
    Great (5.00 / 1) (#60)
    by cal1942 on Wed Apr 15, 2009 at 01:58:16 PM EST
    WJ Bryan suited to our times.

    Parent
    Don't be dissing the currently favorable (none / 0) (#52)
    by oculus on Wed Apr 15, 2009 at 11:50:47 AM EST
    USD/Euro and USD/British pound exchange rates.  Very stimulating to those considering travel abroad.  

    Parent
    Come on oculus (none / 0) (#56)
    by cal1942 on Wed Apr 15, 2009 at 01:44:16 PM EST
    'travel abroad'

    Get real. People are out of work and many are out of unemployment insurance - not income at all.  

    That "favorable" currency factor benefits only those who can afford to travel abroad while hurting the millions upon millions who can't afford to travel across town.

    No sympathy whatsoever for people who can still contemplate travel overseas. That's like some super rich guy who complains about a tax increase that prevents him from buying an EXTRA BMW.

    Parent

    regarding travel (5.00 / 1) (#67)
    by CST on Wed Apr 15, 2009 at 02:38:24 PM EST
    I understand that complaining about exchange rates is whining.

    But comparing travel to buying a second BMW is ubsurd.  Flights are actually really cheap right now and if you know people abroad or are willing to stay in cheap places you can do it very reasonably.  Not to mention the cultural and experience benefits that you do not get from buying a BMW.

    In fact, I know a number of people who just got laid off and are overseas because they planned the trip in advance and it made no sense to cancel.  So really the BMW - travel comparison doesn't work at all.

    Parent

    Thanks. (none / 0) (#68)
    by oculus on Wed Apr 15, 2009 at 02:48:13 PM EST


    Parent
    Actually, that's an old paradigm (none / 0) (#72)
    by inclusiveheart on Wed Apr 15, 2009 at 04:34:11 PM EST
    from when we made a much greater percentage of what we consumed in this country.  We import a lot of stuff now and so if the dollar is strong, it does have a greater impact on the non-traveling public's pocketbook.  I don't know if you have followed any of those stories about families who tried to buy American (and especially avoid Chinese products), but they were doing without some very basic stuff.

    Parent
    BTD, clearly you are not familiar (none / 0) (#24)
    by reslez on Wed Apr 15, 2009 at 10:18:36 AM EST
    with depression economics. I wish you would avoid blanket statements like "price increases do not happen in a depression". Price deflation and hyperinflation are both common events in a depression. So is currency devaluation.

    I will not get into whether currency devaluation is good or bad. There your position in the economy matters enormously.

    Parent

    Hyperinflation in a depression (none / 0) (#26)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:21:20 AM EST
    I am indeed not familiar with such an event. Could you point to such an occurence?

    Parent
    Germany after World War I. (none / 0) (#27)
    by tigercourse on Wed Apr 15, 2009 at 10:24:54 AM EST


    Parent
    Reparations n/t (5.00 / 1) (#61)
    by cal1942 on Wed Apr 15, 2009 at 01:58:46 PM EST


    Parent
    Not a depression (none / 0) (#28)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:27:03 AM EST


    Parent
    A depression (none / 0) (#31)
    by reslez on Wed Apr 15, 2009 at 10:37:30 AM EST
    It sounds like you prefer to apply the word depression solely to the Great Depression of the 1930s. I am using the word in the economic sense.

    A depression is an economic downturn more severe than a recession which lasts multiple years. Many countries have experienced a depression paired with hyperinflation. Argentina, Zimbabwe and Chile are recent examples.

    Parent

    Zimbabwe has to be the gold standard (none / 0) (#33)
    by tigercourse on Wed Apr 15, 2009 at 10:40:35 AM EST
    at this point.

    Parent
    And clearly irrelevant (none / 0) (#36)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:46:17 AM EST
    to the US. I think so anyway.

    Parent
    This guy disagrees (none / 0) (#45)
    by reslez on Wed Apr 15, 2009 at 11:15:53 AM EST
    The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government--a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. (link)

    It's not helpful to discard potentially useful examples out of hand.

    Parent

    You know (none / 0) (#46)
    by Big Tent Democrat on Wed Apr 15, 2009 at 11:22:29 AM EST
    I hope Simon Johnson's argument is not solely based on the Zimbabwe experience.

    Parent
    I heard Johnson interviewed (5.00 / 1) (#48)
    by Cream City on Wed Apr 15, 2009 at 11:26:22 AM EST
    and read more of what he has to say.  No, his comment is not based on Zimbabwe; he cited several other countries as emerging markets.  (I gather that Zimbabwe is not much of a market now?)

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    Well, there are still people there (none / 0) (#73)
    by inclusiveheart on Wed Apr 15, 2009 at 04:49:50 PM EST
    who are trying to eat.  Zimbabwe has a five million dollar note.

    I remember the first time I went to Italy and I was using like 5,000 lira notes to ride the bus - actually I don't really know how much I was paying for most things because the numbers were so huge on the notes that on our $30/day budget I just couldn't compute anything rationally in my head.  Mostly, we'd get on a bus and fan out our bills and the little old ladies would all figure out how to break our bills down to the exact fare between them.  I figured that if they took a 1,000 lira here or there in the deal - I don't think they did - but if they did I figured they'd earned it for being so helpful to us.

    When I was in Brasil about ten years ago when they were just coming off a really bad period of inflation, I was trying to buy a soda - which is an incredibly complicated process due to their corruption and theft problem - I was being guided through the process by my Brasilian friend who actually argued with the vendor over the price which she believed to be inflated - and they actually lowered it after calling the owner over - my friend and the owner had something of a heated conversation - my friend was scolding the guy - I didn't know what she was saying, but she was all over him like she was his mother.  Afterwards when I asked about why we were negotiating over the price of a can of soda, she said that the government had told people to haggle inflated prices down when they saw them as a part of their duty in fighting the inflation problem.  It was pretty interesting.

    The funniest part of the story was that after we went through all of that haggling - due to Brasil's retail conventions where you got to a casse to pay for an item and then take a ticket to another place to get the item - if they are out of that specific item you have to start all over again at the casse to get another ticket for a different item.  They didn't have the kind of soda I had purchased so we had to start all over again. lol

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    Well (none / 0) (#35)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:45:10 AM EST
    You'll have to demonstrate the data for me for the depressions suffered in Chile and Argentina.

    Zimbabwe is so unlike anything that the US could face that I simply do not see it as relevant.

    But yes, to be clear, when I discuss depressions, I mean depressions in First world countries, as their economic conditions seem relevant to me while the conditions in Third World countries do not.


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    Argentina and Chile wouldn't (none / 0) (#53)
    by oculus on Wed Apr 15, 2009 at 11:52:21 AM EST
    care for being classified as third world countries.

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    The latter is called (none / 0) (#20)
    by TeresaInSnow2 on Wed Apr 15, 2009 at 10:12:33 AM EST
    stagflation.

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    Not in a depression (none / 0) (#22)
    by Big Tent Democrat on Wed Apr 15, 2009 at 10:14:48 AM EST
    stagnant economic growth can occur in the face of rising inflation when the inflation is caused by consumption of a good that can not be substituted - oil for instance.

    But in a depression, demand for all goods declines.

    Stagflation is not a depression event.

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    Kinda misleading... (none / 0) (#2)
    by kdog on Wed Apr 15, 2009 at 08:37:24 AM EST
    to say tobacco prices have risen...it implies tobacco farmers, cigarette makers, distributors, and retailers are making more money...I see no evidence they are, only the fed is, and the states if they jacked the tax too...local papers report that retailers say legit market demand is down in NY because of the big tax jack...smokers are cutting back or going to the reservation.

    Gasoline is up, milk is back down (none / 0) (#3)
    by DFLer on Wed Apr 15, 2009 at 08:48:47 AM EST


    But that may mean that milk (none / 0) (#49)
    by Cream City on Wed Apr 15, 2009 at 11:28:04 AM EST
    and similar products will go back up; transportation costs count in the price.  My dairy state does not do well when milk prices go down, btw, if the costs have not gone down as well.

    May we not see a return to the Milk Strikes of the 1930s.  

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    It was a mixed report really (none / 0) (#40)
    by DFLer on Wed Apr 15, 2009 at 11:01:14 AM EST
    A 3.0 percent drop in energy prices pushed the overall consumer price index down by 0.1 percent in March. The core index rose by 0.2 percent for the third consecutive month.

    from Price Bytes

    Up were tobacco (because of tax as noted above), new car prices (perhaps seasonally for this report), rents, and slight rise in health care.

    Way down: hotel charges, also down: energy.

    Why the NYT reports no rise in core index is a mystery to me, but probably not to Dean Baker (source) who is always on the NYT for shoddy, inaccurate econ reporting. NYT says car prices were down..which one of these? Nonethless, by anyone's measure, .1 % drop is hardly worth banner headlines. Sigh

    Isn't/wasn't business encouraged (none / 0) (#54)
    by oculus on Wed Apr 15, 2009 at 11:55:15 AM EST
    to have as little inventory on hand as possible?  "Just-in-time":  link

    Just in time (none / 0) (#63)
    by cal1942 on Wed Apr 15, 2009 at 02:04:01 PM EST
    is a strategy to cut production costs by reducing the costs associated with carrying a high parts inventory.

    This is not a reference to the finished product.

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    Ah. Can you tell I used to (none / 0) (#69)
    by oculus on Wed Apr 15, 2009 at 03:10:15 PM EST
    pretty much zone out when my brother would tell me about his work advocating for and implementing this?

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    Consumer Prices Drop In March | 81 comments (81 topical)

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