Deflation

lisyloo

At the moment we are in deflation

What definition are you using?
I would use the normal CPI and RPI which are both positive right now i.e. inflation.

The-Joker

The true definition is deflation is a contraction of the currency supply and inflation is a expanding currency supply. Prices are the result of either increasing or decreasing currency supplies. When QE7 or whatever they call next hits they will try to fight the deflation because more debts are being defaulted on or written off than new currency being created.

Inflation means debtors win and savers lose.

At the moment we are in deflation where debtors lose and savers win. 2015 will see more deflation as more debt is written off or bailed out than is being created. Wait for QE7 or whatever we are unto now, but they need to create a lot of currency to match what is being bailed out or defaulted on.

You can't argue with falling food and fuel.

Generali

The-Joker wrote: »

You can't argue with falling food and fuel.

Those are one-off repricings, that is not deflation.

If you want to find evidence of potential deflation it is there. The M4 definition of the money supply is falling quite quickly now. Seasonally adjusted using the broadest measure it fell at a rate of ~5% this year.

To say that oil prices falling proves deflation is laughable though, it shows a systematic inability to understand what is going on.

You were wrong on inflation and you're equally wrong on deflation:

https://forums.moneysavingexpert.com/discussion/3978833

antrobus

The-Joker wrote: »

The true definition is deflation is a contraction of the currency supply and inflation is a expanding currency supply. ....

You are confused. The 'currency supply' has been contracting for some years now, and yet prices continue to rise in general.

Generali wrote: »

.... The M4 definition of the money supply is falling quite quickly now....

As far as I can see M4 growth has been negative/flat in recent years

2010 -1.5%
2011 -2.5%
2012 -1.0%
2013 +0.3%

and is currently (Oct 2014) at -2.6%

Generali

antrobus wrote: »

You are confused. The 'currency supply' has been contracting for some years now, and yet prices continue to rise in general.



As far as I can see M4 growth has been negative/flat in recent years

2010 -1.5%
2011 -2.5%
2012 -1.0%
2013 +0.3%

and is currently (Oct 2014) at -2.6%

IIRC, the YoY change for the broadest M4 measure is ~5% . Happy to be corrected as I'm almost as fallible as the next man especially if the next man is The-Joker

TickersPlaysPop

Is house price inflation part of the 'inflation' that is mentioned in economy debates, on the news etc?

If so, is this yet another motivation at this point in time, to put policies in place and takes actions to support high HPI? By promoting and increasing HPi would that stop us falling into deflation?

CLAPTON

TickersPlaysPop wrote: »

Is house price inflation part of the 'inflation' that is mentioned in economy debates, on the news etc?

If so, is this yet another motivation at this point in time, to put policies in place and takes actions to support high HPI? By promoting and increasing HPi would that stop us falling into deflation?

why don't you bother to find out for yourself and present your finding here for consideration?

The makeup of the CPI is freely available on the ONS website.

antrobus

Generali wrote: »

IIRC, the YoY change for the broadest M4 measure is ~5% . Happy to be corrected as I'm almost as fallible as the next man especially if the next man is The-Joker

Well, I got my numbers from BoE, Table A2.1.1, Growth rates of M4 and M4 lending (seasonally adjusted) - I was quoting the figures for M4, but M4 lending is down 4.9% year-on-year.

antrobus

CLAPTON wrote: »

why don't you bother to find out for yourself and present your finding here for consideration?

The makeup of the CPI is freely available on the ONS website.

Perhaps he could start here ....

http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/november-2014/stb---consumer-price-indices---november-2014.html

.... and learn the difference between CPI and CPIH.:)

Thrugelmir

TickersPlaysPop wrote: »

If so, is this yet another motivation at this point in time, to put policies in place and takes actions to support high HPI? By promoting and increasing HPi would that stop us falling into deflation?

BOE sees no immediate deflationary issues. Over next 2-3 years expects inflation to rise back close to the 2% range.