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First Deflation, Followed by Inflation?

Is this a sign?

Two days a go General Motors (GM) announced that they were slashing prices on certain vehicles. Some amounts as high as 6500-7500 dollars! They needed to move inventory by January 4th.

I called Memphis, St. Louis, Nashville and other cities to inquire about a car. ALL of the advertised vehicles that I was interested in were GONE!

They sold the cars. They moved the product.

Is this what we can expect to see more and more of?
Will this be followed by inflation, perhaps, hyper inflation?

Can we, should we, ignore the obvious of what is happening around us?

I'd like to hear your thoughts.

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SteveMT's picture

Now, I think that you will have a wide choice of Toyotas....

including the Prius also. All made in America. Will Toyota offer incentives for these models like GM did? Sit tight and see what happens.


in our part of the U.S. . . . stores are carrying fewer products

high end department stores are drastically cutting prices on medium quality clothing, etc.--

but . . . utility costs and food costs continue to increase dramatically--

wages are not rising, but cost of living is rising.

many services are also increasing--

especially food costs are rising--

it's hard to be awake; it's easier to dream--


Here is a very interesting forecast



pennies and nickels will be worth something again someday.

2Chronicles 7:14 If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sin, and will heal their land.

: )


I Too Have Been Surprised

By the failure of the dollar to melt as it should have happened big time by now. Until we see new printed money, it won't occur. It will be proclaimed that old bills need to go and just might make a lot more. Keep an eye on bills. I haven't seen any issue later than 2006--mostly 20004.

Of course since we don't know what the FED owes or has, we can't ever know the manipulation that is going on. I guess it will happen slowly.

Monetary inflation has happened.

You won't see massive price inflation till money begins to be spent.

First deflation, then the debauchery of our money

Peter Schiff and many other pundits have been projecting massive inflation for the past 3-4 years and we now know they were wrong.

END the FED before it ENDS US

It may not have been "hyper,"

It may not have been "hyper," at least not yet, but we have experienced a significant amount of inflation. Check out this chart:



you don't know jack ....

you don't know jack ....

“Defiance of God’s Law will eventually bring havoc to a society.” - Dr. Ron Paul

Republicae's picture

You mean pundits like Dr. Ron

You mean pundits like Dr. Ron Paul?


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Can you say that with a straight face?

Is the cost of living where you are becoming more or less of a burden to people on average incomes?

3-4 years? More like 10-15

3-4 years? More like 10-15 years.

"Ehhh, What's ups Doc?" B.Bunny "Scwewy Wabbit!"E. Fudd
People's Awareness Coalition: Deprogramming Sequence

And inflation is just what we have had

as opposed to the never-seen unicorn of modern deflation and fiat currency appreciation. Compared to the dollar's loss of over 96% of its purchasing power since the Fed was created, you deflationists are laughable in trying to scare us with, at most, a 1 or 2% deflation rate, which would by your own admission be a fleeting situation in any event.

This is like somebody warning me about the fly coming at my nose, while a rhino is charging at me from behind!

I'm sorry...

Can we at least, for the sake of debate, agree on what you are calling deflation?

I'd roughly go with... Deflation … “A fall in the general price level or a contraction of credit and available money.”

Is that your unicorn, or have you some other definition?

~Live life to its fullest, with an open heart, open arms and most important... an open mind~

Government says no inflation,but------

tomorrow Postal rates are INCREASING !!
The rates were just raised last May and the May before that !!

Oil up 10% in a WEEK

All grain is up and you ain't seen nothin',yet. Yields were off globally
due to rain,drought and pestilence.A
while back Walmart and others were

On and on--the IMPORTANT things are more
expensive. Does anyone shop and personally
take note of what's going on?


I caught your interpretation on your other Deflation post.

So the big debate here is what color the bus is that we got thrown under...

Fascinating.. ~wanders off~

~Live life to its fullest, with an open heart, open arms and most important... an open mind~



that runner hasn't come

that runner hasn't come yet... still waiting see-thru..

“Defiance of God’s Law will eventually bring havoc to a society.” - Dr. Ron Paul

While the purchasing power of

While the purchasing power of a 1913 dollar has indeed lost 94% of it value, most of us don't have any 1913 dollars. Most of us work at jobs that pay probably 25OO% more than the same job was paying in 1913. Most today buy far more square footage in housing than people of 1913 were able to afford. Most families have 2 cars. Far more people have boats, motorbikes, and all manor of toys that those of 1913 would not be able to afford. To continue to quote such a statistic, that has been WAY over quoted without understanding that while the value of each dollar has decreased, there are many more of them in people's pockets.

There is a recent thread on here about Gold not actually falling, but that the instrument that Gold is valued in is what has changed. A similar view is true of the Dollar. If the Dollar has lost 94% of its purchasing value, but now instead of 1 dollar in your pocket you have $25 dollars in you pocket, then you haven't lost anything.

It is the "saver" that hurts from this inflation. But it is only the one who puts their money under the mattress that really is hurt even then.

$1 put in a savings account in 1913, making 3.5% compounded quarterly, is today worth $29.38.

If the Dollar has lost 96% of its value since 1913, then it still has 4% of its value. That $1 invested in 1913, that has now grown to $29.38, multiplied by 4%, is worth $1.17. So putting that money in a low yield savings account, which is the minimum that most would do with their "savings", has resulted in a 17% gain in purchasing power since 1913.

Of course if I'm trying to sell you some Gold or silver, that argument doesn't sound nearly as good as just saying that the 1913 dollar has lost 96% of its value.

"Ehhh, What's ups Doc?" B.Bunny "Scwewy Wabbit!"E. Fudd
People's Awareness Coalition: Deprogramming Sequence

All I know is this... 100,000

All I know is this... 100,000 dollars in 1913 buys what 4000.00 buys today. if you bought 100,000 of gold in 1913 that would be 5000 ounces of gold.. 5000 ounces X 1066.50 = 5,332,500.00 US dollars. I can still do some damage with 5 mill plus.

“Defiance of God’s Law will eventually bring havoc to a society.” - Dr. Ron Paul

And if you had invested

And if you had invested $100,000 at 4.25% compounded quarterly it would be worth $5,788,610. But understand, rates have during that time period generally been above 5%, about a decade above 10%, and only during about the last decade below 4.25%.

From 1913 to 1971, during that entire period of time, you only made 50%. And that was in a one time overnight gain. From 1934-1971 you didn't make ANY gains. And one could even argue that during that period, since gold remained the same as the dollar, that one lost just as much to inflation as did the dollar. But a dollar invested at 4.25% was NOT losing value.

"Ehhh, What's ups Doc?" B.Bunny "Scwewy Wabbit!"E. Fudd
People's Awareness Coalition: Deprogramming Sequence


first know that we are both bullish on gold and negative on the dollar.

That said, the analysis of what dollars would buy in 1913 and what gold would buy then compared to today assumes that a rational man would have not invested (or simply put the dollars he had in a bank account to earn interest), but instead kept it in a jar. This is not realistic to the time.

I did an analysis of this through measuringworth.com and can trace the decoupling of gold from the dollar (with interest) to 1971, the time when Nixon cut the ties.

This is the time when dollars invested, plus interest earned, first failed to keep up with the U.S. dollar price of gold.

The dollar losing 95% or 98% of its purchasing power is not as black and white as some of the folks would like you to believe. What is needed to be added to that statement are the words "in and of itself," the U.S. Dollar has not kept pace with gold since 1913.

Hopefully you can see the point.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

Your point is taken here TxRed

I was the one you were referring to when you were speaking about the fact gold is "not falling."

I also wrote an article regarding addressing your comment above in regards to comparing the 1913 dollar with interest to gold: http://fedupbook.com/blog/inflation/confused-about-gold-and-...

I'll probably go back and revamp that article at some point...when I find the time. But the gist of it is that there is a decoupling between that 1913 dollar with interest and gold beginning in 1971.

The difference IMO is the changing government definition (basket of goods) of inflation changing over time while gold tells the real truth over time. The game changer was Nixon taking us off the gold standard. "Gold is breaking free!"

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

Something is wrong here

About 1913 (don't know the exact year but close enough here since prices changed so slowly) my grandpa got a steak dinner with all the fixens and extras for 25 cents.
That $30 would only buy 1 today.
Nice TV are down but that plastic paint tray I bought last year for 98 cents cost $2.48 plus 24 cents tax yesterday.

How Do You Measure Purchasing Power

Where can those stats be found?

Good Question.

You could compile your own stats using "shadowstats" as a base.

Divide a "cost-of-living" index by median income?

And you continue to dig yourself deeper

That has to be the most laughable, disingenuous, shamelessly pro-establishment and intellectually insulting response to, and attempt to excuse, the real and insidious fact of inflation I have ever run across!

What your attempt to minimize and excuse inflation overlooks is that it has likewise been difficult to impossible, again OVER THE LONG TERM, to even come close to holding one's value in savings, as inflation in the real world has worked to negate almost all of your 3.5% compounded growth in savings --- and that compounded growth could only be accrued by putting one's savings at risk, such as the very real risk of bank runs and collapses during the Great Depression, or the more recent and very visible risks in the equities markets in more recent years. That is one of the most malicious aspects of inflation in the USA in recent decades, especially in the last decade: it has essentially forced the average saver to gamble with his savings in the rigged casino of the stock and bond markets. This was NEVER the case in the pre-1933 gold standard era, when one could put one's savings into a simple bank account or long-term bond and earn a REAL 3 or 4% annual interest, something that is utterly impossible today, and has been impossible for decades.

And thanks for your irrelevant and shallowly materialistic attempt to equate today's baubles and oversized homes (purchased with unprecedented levels of personal debt) to the higher REAL personal income and living standards of the past. Most of my parents' and grandparents' generation could live very comfortably with just a single wage earner --- can you say the same today?

You also completely ignore the capital gains and income taxes that would have siphoned off much of that compounded 3.5% growth in that 1913 savings account.

I am astounded and insulted that you even dared try to make such a claim. Daily Paulers, I leave it to you to judge the intellectual and moral integrity of this poster --- his agenda is clear enough to me.

No, the oft quoted "dollar

No, the oft quoted "dollar has lost 96% of it value since 1913" completely ignores that

1)most people don't have 1913 dollars

2)most people either spend their money as they get it, or put in an interest earning account. And 3.5% is a historically conservative figure I used. 5% and higher have been the norm through much of the last 97 years.

And ignoring those two facts completely changes truth of the statement "dollar has lost 96% of it value since 1913".

If I earn a dollar today, THAT dollar is worth a dollar, not 4 cents. I didn't earn ANY dollars in 1913, so it is irrelevent to me how much the dollar has lost since 1913.

"Ehhh, What's ups Doc?" B.Bunny "Scwewy Wabbit!"E. Fudd
People's Awareness Coalition: Deprogramming Sequence

Republicae's picture

No, the purchase value of

No, the purchase value of that dollar has been debased, therefore what you have is a depreciated monetary unit. The fact that you are "earning" more of those units does, to a degree, offset the inflationary depreciation however, in general wages have lagged behind the rate of inflationary depreciation for decades.

If you consider the loss of purchasing power to be a moot point then compare more recent rates of depreciation and see if it is relevant to your life.

For instance, today it takes approximately $1,000.00 to buy what $193.22 bought in 1972, what $380.90 bought in 1980, what $604.17 bought in 1990 and what $796.01 bought in the year 2000. So, I don't know about you, but I think my ability to earn through my labor a wage that provides the ability to gain and grow wealth is very relevant.

What will you say in another 10 years about the relevance of the purchasing power of each dollar you earn...I wonder? Or, more pressing, what relevance do you think a rapid acceleration of inflationary depreciation would have on your life and the dollar that you are earning today? If you awoke to find that the dollar you used yesterday only purchased a small portion of what it purchased today, would that make it relevant?

At the rate this government, via the FED, is inflating the money supply you might just wake up to find that, like others in history, the purchase value, thus the quality of your money is very, very relevant!

Come on TX, you're a Redneck, use Redneck Common Sense and don't be blinded by the face amount of money you have in your pocket, that is the very ruse that allows this government to commit this fiat fraud in the first place. People think they have a more money then they actually do, it is a hidden inflationary tax that benefits big government and their politically connected allies while draining the ability of the working man of his wealth creating abilities.

Adam Smith was correct: "Though the wages of the workmen are commonly paid to him in money, his real revenue, like that of all other men, consists, not in money, but in the money's worth..."


"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun