As should be evident from some of his posts, TAFKAS is a reader of the financial review.
He was just having a look at the website before moving on for the evening when he came upon this article – Inflation set for worst quarter on record.
Clicking through, the first paragraph said this:
Economists are bracing for the worst quarter of inflation on record and facing domestic inflation expectations that won’t return the economy to the Reserve Bank’s target band for a decade if financial markets are right.
TAFKAS thought to himself, all this monetary and fiscal stimulus, especially the “quantitative easing”, ie crypto money printing, by the RBA may finally start costing Australians.
Then reading further:
Market consensus for a headline consumer price index contraction of 2 per cent for the June quarter would beat the previous worst quarter of minus 1.5 per cent recorded in 1953, and drag the annual figure to minus 0.5 per cent.
Good greif! The AFR is concerned about deflation and not inflation. Oh for heaven’s sake.
This is why we are in such dire economic straights. Economic ignorance gives us goldy locks governance. Spending not too high or too low, but juuust right. Inflation not too high or too low, but juuust right.
RBC Capital Markets is leaning more bearish than consensus, forecasting deflation of 2.4 per cent for the quarter.
I don’t know about AFR or RBC, but TAFKAS prefers to prices to be lower than higher. He gets more bang from his buck that way. TAFKAS does not dream of $2 per litre petrol but $0.20 per litre petrol.
The only losers from deflation are borrowers, particularly governments, who can’t inflate their way out of debt.
Yeah ok, we all carry the can for the government’s profligacy, but perhaps and hopefully it might instill some discipline.
But hang on. Look over there. Thatcher and Reagan.
Cats. Please repeat after TAFKAS. The problem is not deflation. It is inflation that is the problem. At least it is the problem for savers and responsible spenders.
Don’t believe the Keynesian nonsense that businesses will go broke or won’t invest if there is deflation. It has not happened with cars. It has not happened with computers. It has not happened with televisions.