Deflation, the Dollar and the Consumer Price Index (CPI)
(May 23, 2012)
Are we entering a deflationary era? Two charts suggest "yes".
Are we entering an era in which prices stagnate and the purchasing power of the U.S. dollar rises? Our Chartist Friend from Pittsburgh has kindly provided two charts which suggest we have entered such a deflationary period.
Long-time readers know I have presented technical evidence for over a year that the U.S. dollar appears to be in a long-term uptrend, at least relative to other currencies. These charts suggest the uptrend is not just nominal but in purchasing power.
Here is Chartist Friend's commentary on the charts:
After the bombshell disclosure by JPM there is no doubt in my mind that the financial system is in the process of relentlessly deflating. If they by themselves have the tens of trillions of derivative bets that they are alleged to have, then God help us if that bank blows up.
Thank you, Chartist Friend, for the eye-opening charts and commentary.
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We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.
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