The Deflation Grinch Seeks Revenge

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The “bubbly” is gone. You drank the whole bottle, got silly drunk and giddy over great Holiday sales, singing Happy Times are Here Again. Well, dream on. They are not.

A sobriety check sees a new reality, and that reality is deflation. Yes, deflation, not inflation. How so? Do not all the Fed and government stimulus programs and low interest rates spur demand and eventually even risk inflation?

No. Not when there is so much – and growing – over-supply that no amount of demand can consume it all. Is that a dark and audacious statement? Yes, but true.

\"TheHave you looked around lately? Everything is on sale all the time and shipped for free. Retailers have shifted their pricing structures (good, better, best), down. Outlet stores are growing faster than full price stores, even in the luxury sector. ‘Flash sales’ and ‘Groupon’ and all other kinds of on-sale online models are proliferating at the speed of light. And, if you wait for two seconds, your smart phone will beep with an ad or a friend telling you where you can get whatever it is you’re thinking of buying, cheaper.

Across the entire marketplace, value is being recalibrated – down.

No amount of stimulus to increase consumption will stop deflating prices, simply because a new paradigm now exists, with an eternal disequilibrium of too much supply driving an unrelenting downward pricing spiral.

The immutable theories from “Economics 101” and Joseph Schumpeter’s theory of “creative destruction” are being reversed and we have no tracking or measuring devices to see such a fundamental transformation.

Beware: the deflation Grinch is coming!

YOU NEED TO KNOW more about this new perspective on deflation for your business and personal financial decision making.  See the entire article in the January issue of The Robin Report.  Subscribe Now!



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