DEFLATION: Comin-in strong

[AlbertaFarmer5]

I don't think this will be as simple as saying all asset classes are facing deflation.

There will be a huge discrepancy between needs and wants going forward.

The shortages and supply chain issues for the necessities of life aren't going to be rectified overnight, especially not in the face of lower prices and higher interest rates. Whereas all of the things that we wanted, and used the cheap credit to buy, and caused the pent-up demand all at once has already run its course.

But first, apparently we will throw the baby out with the bathwater, what an excellent way to demotivate energy suppliers and farmers and miners etc from increasing supply to meet The chronic shortages going forward.
None of the factors which caused these shortages have gone away. Some markets may have got ahead of themselves.

[SmallTimeOperator]

Asset values are about to get a whole lot cheaper. The central bank induced debt crisis is now breaking inflation like a twig. Equities, cryptos, commodities, retail, real estate now under heavy pressure. Central bankers and markets may not know what just hit them.

Human emotion cycle of greed, hope, fear, panic and sell is now in fast motion.

Keynes economics at-its-finest . . . .

I agree a debt crisis that what we have not seen in decades is unfolding before our eyes. The more the Bank of Canada hike it’s rate, the worse it’s gonna get.

The central bankers think that cranking up the interest rates will stop all inflation. But this time, I’m not so sure. Real Estate will deflate. Equities, crypto’s all taking a shellacking. Commodities, if there remains demand for them, could stay the course. But if demand ever goes over the cliff, then they will too.

But I think this time it’s different because the inflation of a lot of our goods is being driven by the price of oil. And that is not going to change no matter what interest rates are. As the cost to transport goods increases, the cost of said goods goes up. People are not going to stop eating, or buying the things they need to stay alive.

I see a triple whammy in the oil situation.

1) Carbon Tax - continues to increase every year. This drives up the cost of all goods because fuel prices increasing means cost of goods transported goes up. This is like mandated yearly inflation by the government.

2) Russia / Ukraine - the sanctions on Russia will increase European demand for oil and LNG from other sources, North America being one of them, for years to come. Many of the sanctions haven’t even kicked in yet so this is only going to get worse. USA will be the exporter to Europe. Canada will be of little help.

3) North American Politics - And I say North American because both Canada and the USA have regimes in place that are anti-oil development. There will be little increase in oil infrastructure while Biden/Trudeau are in charge. Increases in pipeline capacity, new pipelines, new tar sand development, and new oil exploration that are badly needed will not happen. The cancellations of the big projects already happened (Keystone XL, Tech Resources). We have a hard time building pipelines, and possibly no new pipelines will ever be built. Companies will be shy to invest the big dollars needed at this point to expand production. And the investors (ie. pension funds) who once had the oil industry’s back have left the building. The oil industry is moving towards self financing. Investors want to invest in green energy.

The central bankers and the governments of North America have not acknowledged that oil is a big driver of inflation and until they decide to do something about it, I think we are in trouble.

Just my opinion…

[fjlip]

Totally AGREE! Bang on STO, regime is accurate description of the devil bastards running us into disaster.
Energy/oil/gas needs to be abundant and affordable. Or the shit hits proverbial FAN....as we see currently.

[Austrian Economics]

As interest rates fall, asset prices will rise. As they fell close to zero in the last few years, asset prices predictably skyrocketed.

Now the reverse is occurring. I don't think it will last a year, but in the meantime, asset prices will fall.

The problem with falling asset prices is that you can find yourself insolvent in short order.
Assets < liabilities.

It doesn't matter that you may still be able to service the debt. Even if lenders are OK with that, they will be reluctant to loan you any more.

Not everyone is going to be able to simply renegotiate their loans. If the answer was that simple, why didn't millions of homeowners in the U.S. do just that in 2008?

Even if they could, the effect on the economy would be disastrous. When a creditor makes a loan for 10 years, it's because they have plans for that money 10 years down the road. They put into place investments that rely on that timely repayment in order to proceed. If everyone decided that they would not pay up for 20 years, then all those investment plans get postponed or cancelled. That's a guaranteed way to ensure a recession or depression.

[errolanderson]

How fast can prices drop? Retailers now caught with unwanted inventory discounting prices. Many asset classes now hit by a wave of deflationary pressures. Consumers are simply tapped out.

Once oil prices cave, inflation may be a distant memory. More rate hikes? Central bankers may have to give their collective heads-a-shake. Pause rate hikes? Even rate cuts in 2023? Failure of Keynes in full sight . . . .

[sumdumguy]

Houses selling like crazy in SE Regina. For Sale Day 1, Sold sign 2 days later. Hmmm, doesn’t look too deflationary to me.

[oldjim]

Houses selling like crazy in SE Regina. For Sale Day 1, Sold sign 2 days later. Hmmm, doesn’t look too deflationary to me.

One way to bring down Regina house prices real quick: "Premier Carla Beck."

[errolanderson]

New home prices now coming down the fastest since 2008.

[furrowtickler]

How fast can prices drop? Retailers now caught with unwanted inventory discounting prices. Many asset classes now hit by a wave of deflationary pressures. Consumers are simply tapped out.

Once oil prices cave, inflation may be a distant memory. More rate hikes? Central bankers may have to give their collective heads-a-shake. Pause rate hikes? Even rate cuts in 2023? Failure of Keynes in full sight . . . .

This is the full result of complete failure of far left political gong show in North America

[Guest]

May I remind the leftTards , the budget will balance itself

[Guest]

DEF fluid has gone from $11/jug
To anywhere from $17-$28/jug
Think that would be inflation ?
Just another carbon tax I guesd

[rumrocks]

Well Canada, its time to wash the frying pans, pick the bottles off the floor, get the Harley's out of the living room and repair the holes in the floor and Gyproc, you had a pretty good run . . . . . but its over.

[TOM4CWB]

As interest rates fall, asset prices will rise. As they fell close to zero in the last few years, asset prices predictably skyrocketed.

Now the reverse is occurring. I don't think it will last a year, but in the meantime, asset prices will fall.

The problem with falling asset prices is that you can find yourself insolvent in short order.
Assets < liabilities.

It doesn't matter that you may still be able to service the debt. Even if lenders are OK with that, they will be reluctant to loan you any more.

Not everyone is going to be able to simply renegotiate their loans. If the answer was that simple, why didn't millions of homeowners in the U.S. do just that in 2008?

Even if they could, the effect on the economy would be disastrous. When a creditor makes a loan for 10 years, it's because they have plans for that money 10 years down the road. They put into place investments that rely on that timely repayment in order to proceed. If everyone decided that they would not pay up for 20 years, then all those investment plans get postponed or cancelled. That's a guaranteed way to ensure a recession or depression.

Quantitative easing =Trillions of $$$ that were not real assets. If that currency ever did get repaid... it has no owner or value... they lower the Quantitative balance sheet... the currency goes nowhere and has no value to anyone... puff... dust in the wind. Interesting times... Japan central bank didn't raise interest rates...their currency is devaluing... but they use quantitative easing to defend their currency.

2.4% inflation [April and May] inflation in Japan..."'Different from the US': why Japan does not worry about inflationhttps://www.ft.com › ... › Economy › Japanese economy
May 20, 2022 — After decades of stagnation, workers no longer demand higher wages and companies do not pass on price rises."

The high US$ higher interest rates...will cause deflation... and recession... then what?

Confusion to say the least!!!

[ajl]

Loaded the truck with $26 canola. Hard to sell what is left for $19. Yes deflation is real. Nobody needs to buy commodities as an inflation hedge when there is no inflation. Best investment available right now: 4.75% GIC. www.eqbank.ca We have to keep in mind that central banks exist for the suppression of interest rates below market values. Therefore they never raise rates, they just suppress less which causes them to rise towards the free market level. With excess debt that is out there right now, free market rates would be 8 -10%.

[Old Cowzilla]

Hi-ways full of campers, airports jammed with people , all local lots for sale in two towns sold signs on them within a few days of listing. Seems some people haven't got the memo yet. Local contractors still can't keep up.