Today's Producer Price Index was worse-than-expected, 0.8% vs 0.2% in September. Also this morning, England announed their consumer inflation was running 5.2%, which is worse-than-expected. In addition, China announced their GDP growth rate dropped from an incredible 9.5% to a worse-than-expected but still incredible 9.1% . . . because they are fighting inflation.
Inflation is good! For a country that is trying to de-leverage or reduce its debt, inflation makes the money you owe cheaper & easier to payoff. It causes interest rates to rise, which is good for savers and those who depend on bond income. Inflation causes the value of hard assets, like homes, to appreciate.
Inflation is bad! It causes long term rates to rise, making it more difficult to finance a new home. It hurts those on fixed income but with inflating living expenses. Some companies benefit from inflation while others get hurt.
Inflation is like heroin! It may feel good in the short run but can destroy you in the long run. Nonetheless, I am hoping for inflation now and trusting Bernanke to keep it controlled later. If it does get out of control, Bernanke can repeat the success of Paul Volcker and raise interest rates enough to kill it, perhaps creating a recession but one with less debt in real terms, which is still a better place than we are now.
Bring it on . . . embrace it . . . we need it!
Inflation is good! For a country that is trying to de-leverage or reduce its debt, inflation makes the money you owe cheaper & easier to payoff. It causes interest rates to rise, which is good for savers and those who depend on bond income. Inflation causes the value of hard assets, like homes, to appreciate.
Inflation is bad! It causes long term rates to rise, making it more difficult to finance a new home. It hurts those on fixed income but with inflating living expenses. Some companies benefit from inflation while others get hurt.
Inflation is like heroin! It may feel good in the short run but can destroy you in the long run. Nonetheless, I am hoping for inflation now and trusting Bernanke to keep it controlled later. If it does get out of control, Bernanke can repeat the success of Paul Volcker and raise interest rates enough to kill it, perhaps creating a recession but one with less debt in real terms, which is still a better place than we are now.
Bring it on . . . embrace it . . . we need it!
