04-15-2013 06:49 AM
Happy tax day.
Lots to talk about today but the main overriding theme is DEFLATION. That is a word that will scare every central banker around the world. As they try desperately to inflate their way out of their problems, deflation is an economic killer. Watch this space.
Gold getting hammered. Almost $200 in 2 days. Oil getting hammered off $2.16 at 89.12 and equities slipping lower in sympathy with the Dow set to open 60 points lower. Corn taking it on the chin as well, off over 11 cents. Soybeans off 5 to 14 cents across the curve and wheat the biggest loser of the day off 17 cents. It's going to be and ugly open.
The 10 year yield is testing 1.70% and could break into the 1.60% range if this deflationary feeling lingers.
We need inflation to get out of this mess, not deflation.
04-15-2013 07:11 AM
$200 a piece for pickup tires and $8.50 for a container of coffee or $3.50 lb. for chops - where do you get there isn't inflation out there --- I would suppose the word is " STAG - FLATION " ?
04-15-2013 07:17 AM
Market is very disappointed with China's growth numbers this morning.
I believe that there is inflation in a lot of the things we use in everyday life like fuel and food but if this theme takes hold we are in for a long decline in the prices of those things.
Deflation is dangerous as central bankers don't really have a great way to combat it because it can be largely a psychological thing as well as a monetary thing.
04-15-2013 07:23 AM - edited 04-15-2013 07:24 AM
I;d just like to see some stability in what I use in my farming business. I've had enough of price increases, rent increases, shortages, everything having anything to do with raising corn or soybeans is priced thru the roof, including now land taxes. Everyone with a piece of ground is trying to grow corn or soys, so, demand for it all is driving it. The land taxes are politically driven.
04-15-2013 07:33 AM
deflation isn't a bad thing, its just the "Nuts" that we call economics guys think its bad. Deflation is just the natural process of a bubble, if you don't want an inflated bubble to burst you have to let some air out, deflation. It suprises me that most people involved with economics really have no idea how its suppose to work. Since they don't this is way we have people lose everything.
I don't think this is a major start to a deflation period, this is just a quick look at what is coming in the next couple of years.
We have had very bad decisions made around the world with interest rates the last decade or so, In fact maybe some of the poorest in the history of the modern world. What we have coming is something similar to what happened after the 29 crash a period where there is virtually no interest but yet the banks won't lead you money since they are scared of getting caught.
This leads to a poor economy, or depression. Add to all of this poor fiscial planning by the feds, why do you think they want guns taken away, they are afraid there will be civil unrest in the coming years.
Cheap money long term is the worst thing that can happen to the country. I have heard a lot of people say that Carter did everything wrong in the 70's. I think he did everything right, land did gain 400% or so in those years but he keep interest rates going up, he didn't hide inflation with the numbers like they do now. we have had double digit inflation the past few years but the feds kept it hidden in how they report the numbers. $8 corn, that is inflation. $200,000 tractors, inflation, $3 plus gas with $89 dollar crude? please that is inflation and price control.
04-15-2013 08:00 AM
Infaltion is great until it isn't. The high interest rates destroyed a lot of business. There has to be a balance , not to extreme either way with rates . We are at an extreme low now and they will print more.
04-15-2013 08:23 AM
I got a market email on the weekend and it noted that a farm was sold in Huron County Ontario recently for $18,000 per acre.
Last fall all sales in Huron were going in excess of 20,000 cases at 24,000.
They just asked the question is that a sign of changing values? Or just one sale?
04-15-2013 08:28 AM
A Deflationary Spiral like what we had in the 1930's, scares me more than getting caught cheating on my wife. Bomber Ben will never, ever, allow a Deflationary Spiral to happen.
04-15-2013 09:20 AM