Deflation

Deflation is when prices decline across an economy. Deflation is different than disinflation, which is when inflation is decreasing but still above zero. Deflation occurs when prices are actually moving into negative territory. Once deflation occurs, it is extremely harmful to an economy, as citizens and businesses hold off on purchases as they watch the prices continue to fall. Deflation creates an incentive to not be an active participant in an economy.


Crashing energy prices have dramatically altered the landscape for the energy industry, leaving some industry stalwarts struggling to catch up. But according to the latest oil price forecast by one leading economist, it’s about to get a whole lot worse.…

Billionaire hedge fund manager, Bill Gross, says the Federal Reserve needs to raise interest rates to prevent deflation in the global economy. Gross is famous for steering Pacific Investment Management Corp. through the financial crisis, so much so that Wall…

In the first five months of the year, data from the Bureau of Labor Statistics (BLS) says that the U.S. economy had inflation of just 0.2%—that’s two-tenths of one percent. (Source: Bureau of Labor Statistics, last accessed June 18, 2015.)…

Inflation drives gold prices higher. If the general level of prices increases, the yellow metal rises. It’s that simple. Look at the chart below. It plots the price of gold (golden line) and the Consumer Price Index (CPI) (black line),…

Ask even an amateur economist, and they will tell you this: an increasing money supply eventually leads to inflation. It’s a simple concept; the more paper money there is in the system, the less it’s worth and the less it…

The Bureau of Labor Statistics (BLS) reports inflation in the U.S. economy increased by 0.1% in February from the previous month. (Source: Bureau of Labor Statistics, March 18, 2014.) As usual, these numbers have again brought up the theory of…

There are so many esoteric good businesses out there, but very few attractive investment opportunities for new money right now. In equities, I search for consistency from a company—consistency of corporate operating performance, diligent management in good times and bad,…

Can you believe this? The Bureau of Labor Statistics (BLS) reports the U.S. economy experienced deflation in October. The Consumer Price Index (CPI), a widely followed government measure of inflation, declined 0.1% in October. The Producer Price Index (PPI), which…

Central banks around the global economy are involved in a race that will not end well. Of course, I’m talking about the race to the bottom of currency devaluation, which is being achieved through the printing of more and more…

When gold bullion prices fell just below $1,200 an ounce on June 28 of this year, the general consensus was that buyers had run out. After all, why would someone buy an asset that was declining in value so fast?…

One of the most common questions I hear these days: “Is the U.S. headed in the same direction of the Japan economy of 1990s?” The big fear is that we are headed to 10 years of deflation, as Japan experienced…

“U.S. inflation rises by most since March,” flashed the headlines across the newswire last Thursday. Turns out, consumer prices in America are rising at an annual rate of 3.6%—sharply higher than the Federal Reserve’s “target rate.” Hold on a minute.…

The end of this year will make the ninth consecutive December 31 when the price of gold bullion was higher than the previous December 31. Gold has risen from approximately $300.00 in 2002 to $1,380 per ounce today—a gain of…

Gold has edged higher in each of the past nine years, and it is set to close off its decade-long bull market. Buying has been driven by a combination of speculative trading in physical gold, gold ETFs, and buying as…