Deflation Hits Hard

Those who still do not believe we are in deflation might want to read this:

“The cost of living in the U.S. probably fell in November by the most on record, as the value of oil plunged and retailers slashed prices to boost sales before the holidays, economists said ahead of a government report today. Consumer prices probably dropped 1.3 percent last month, the most since record-keeping began in 1947….”

  • Top financial advisor Agora Financial says “Filter out adjustments, and CPI dropped 1.9%, the greatest fall since 1932.”
  • U.S. producer prices fell 2.2% in November, much more than forecast
  • Barclays reports that base metal prices have fallen at least as quickly as during the Great Depression.
  • The velocity of money is slowing, even with the massive injections of cash by the fed:

(Click here for full chart).

(Click here for full chart).

Even though the fed has injected trillions into the economy, banks are hoarding rather than lending, so the money isn’t slowing down the destruction of credit and wealth.

Deflation has already hit hard.

Of course, hyperinflation is probably coming next. And see this.

Charts courtesy of the Fed, GaveKal and John Mauldin, all as reprinted here.

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