What No One Wants to Tell You About the Economy, Inflation, & Deflation

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Is deflation a dirty word?

Anyway, was invited on a program this morning and they were asking me about some of the recent comments by Xi Jinping and China and how he said, you know, deflation is not so bad. lot of economists are talking about the price spiral in China and how prices are coming down and

This deflation is awful. It’s bad for the economy. And Xi Jinping saying deflation is somehow not a bad thing. Again, he’s basically saying, people can afford to their money. Their dollar goes farther. They can buy more with their money. Anyway, is he right or wrong? Is deflation a dirty word? Now again.

If you think about it, I mean, if you think about it, it’s one of those things it’s brought up. mean, Ben Bernanke gave a speech years ago, I’ll get into that a little bit, where the powers that be, the PhD economists, the talking heads on TV, they will warn you about deflation. It’s a dirty word. my God, we don’t want deflation. That’s what happened during the Great Depression.

It’s what happened to Greater Bay. Prices were dropping like crazy. We don’t want that to happen. Now, you and I who live in the real world, okay? I had question. Raise your hand, raise your hand out there. If you would like your grocery prices to go down, okay? Keep your hand up. Keep your hand up if you’d like to see your restaurant bill prices come down.

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Keep your hand up if you’d like to see the cost of energy come down, coffee come down, gym membership come down, education, higher education come down. Shall I go on? Shall I go on? Anyway, you and I who live in the real world are saying ourselves, well, how could deflation be bad? I wouldn’t it be great if my money went further?

But no, no, no, lo and behold, have PhD economists that are telling you if prices start to drop, ooh, that’s a bad thing.

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Bullshit. It’s not a bad thing. I learned this when I was, I remember this. Again, how my mind works. I’m getting mental picture. Remember having teachers. This was when I was in middle school. Farnsworth Middle School. And we’d be in a class and a teacher would be giving some sort of lesson and they would say something and I’ve been.

That doesn’t seem right. That doesn’t make any sense. And I know we’d be in the library for some other class or whatever it may be. And I would actually research. Yeah, I was a bit of a dork when I was younger. That’s okay. Still a dork now. I would actually look to stuff. said, doesn’t sound, and I’m, again, I would prove the teacher wrong. I learned.

you know, after the fact not to go to the teacher and prove them wrong, okay? Just keep it to myself, knowing that they didn’t know what they were talking about or they were pretending that they knew what they talked about. Anyway, neither here nor there. You have to do that in everyday life, okay? It’s because somebody has a PhD at the end of their name means nothing in many respects. They’ve got theories.

They’ve got theories, they’ve got lots of theories and they’ve got models and they’ve got all sorts of stuff. And again, I pointed this out last weekend and on my radio show, I talked about this. Everything, everything works in theory. Everything. You could come up with a theory, you know, in theory, everything works in theory. And,

did. I made I did it on my radio show. I’ll do it. I kind of was teasing my brother Michael on the radio show. Let’s do it again. When we were younger, my brother Michael got this idea in theory, in theory that he would make cardboard wings and put them on his arm. And we were kids, we would swing on the swing as high as we could and we would jump. And my brother Michael, in theory,

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Thought that if he did that and started flapping his cardboard wings, he’d be able to fly.

Anyway, it didn’t work out. In theory, it worked, but in reality, it didn’t. Anyway, when it comes to deflation, certain goods, and again, we have talked about this for years here on the program. It’s a problem with the bull excrement government numbers that they provide, the various different inflation numbers. There should be an inflation index

that is totally geared toward things that we need to survive on. Things that we need to survive on. Now.

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Energy, insurance for your car, for your house, healthcare, all of these things, everyday items where we would all be jumping up and down if the prices came down. Now what separates these items from other items? Again, their necessities. You remember me? This was a couple of years ago. We did a bit on the program where I started singing from the Jungle Book, The Bare Necessities.

It’s the bare necessities. It’s my bare necessities inflation index. You tell me that those prices coming down, you wouldn’t be happy. It wouldn’t be great for the economy. Wouldn’t allow you to save more money. Maybe go on vacation. Maybe to buy some more discretionary items. Now, the theory out there by the economists is

deflationary spiral. my God, people are going to stop spending. gonna, they’re, you know, they think that prices are gonna drop. They’re not gonna buy stuff. They’re not gonna buy things anymore. And I say, nonsense.

Nonsense. you need an item, and I’m talking about an item that you wouldn’t be buying every single week, every single month, every single year. I’ll just use a television. Television, for example. I just bought some new TVs for my house. I am well aware that the value of the televisions that I put on my wall, again, they’re gonna…

They’re gonna be worth, they’re gonna sell these TVs a year from now, two years from now for a couple hundred bucks. If that. New technology will come out, newer TVs come out, the value goes. But again, I needed a TV, I bought them. I bought them, sure, sure. Will people wait? Okay, will they wait and say, I need, I, you know, my lawnmower is old.

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My lawnmower is old and I’d like a new one. Now, if you think prices are coming down, you will hold off on that item. You might hold off a little bit and then you might wait till it breaks if you’re seeing the prices drop. Yeah, that might affect spending in those areas. But we live in the present. We live in the present. We’re eventually gonna have to buy stuff. Okay? If…

Again, I like buying things on sale. Let’s say I need a, you know, I wanna get some suits or whatever it may be. I need them, okay, I gotta go on, I gotta do this meeting, I gotta do this show, whatever it may be, okay? And something happened to my existing suits. They got wrecked somehow. They got ruined. I don’t have any suits, but you know, I need one at a certain period of time. I’m gonna have to buy those suits.

Even though I’d much rather wait, much rather wait to the friends and family at a Sax or Nordstrom or whatever it may be. I’m going to have to go out and get them at that point in time. These are part of the, the things that these economists, don’t put into their theory and how it doesn’t work. no prices, prices coming down. Okay. deflation.

is not a dirty word. gotta look that up. had that here somewhere before we go. Again, I’m going back to good old Ben Bernanke, another genius there, a genius who didn’t see the financial crisis coming. Didn’t see the financial, even though we did. Yeah, Housing market is solid, Ben Bernanke. This was a speech before the National Economist’s Club.

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I want to join that club anyway. Deflation, making sure it doesn’t happen here. Again, this is 2002. Ben Bernanke laid out measures that the central bank should employ to combat deflation, such as buying longer maturity treasury debt and helicopter money.

Yeah, yeah, no, no, no, no. Again, this is part of the problem. All of these theorists out there don’t have a clue. Watchdog on wallstreet.com.