Not Stagflation?

Economy to Weaken Next Year: Merrill's Rosenberg

"People talk about 'stagflation,'" he said. "I don't think they're using the right term. The actual true definition of stagflation is not higher inflation and slower growth, it's actually higher inflation and slower potential growth."

I'm certainly not acting like a pure stagflationist would. I'm a paper stagflationist in TIPS and I-Bonds. I have no great desire to hoard oil, gold, and silver these days. On the other hand, I still see value in toilet paper and other items which have not seen huge price increases. I'm not sure what that makes me. Confused? Why is there a disconnect?

In this instance, he says, the American economy has actually imported its inflation.

I would argue that we laundered our 'flation. We exported inflation (our primary export is paper dollars and has been for years) and imported deflation (cheaper goods). Lately, our money launderers are being overwhelmed. There is only so much inflation they can launder for us. The free lunches are getting expensive for everyone now. We pushed our luck.

"We've imported this commodity inflation," he said. "Outside of commodities, when you go to the CPI, you'll see a whole swath of stuff that's still running negative year-on-year, that was running 10 to 15 percent price growth rates back in the 1970s."

I do believe that. There is a disconnect. I keep bracing for the commodity inflation to spill over in a major way but it sure is slow going. It may not come in my lifetime (which would be fine by me as a saver). Who knows? There are just so many deflationary forces (excess debt, excess banking capacity, excess restaurant capacity, excess mall capacity, excess consumer capacity, excess Chinese capacity, excess workers, ...) offsetting it.

Money laundering

Money laundering is the practice of engaging in financial transactions in order to conceal the identity, source, and/or destination of money...

Since we seem to think we're now importing inflation and there's nothing the Fed can do about it, I'd say our money laundering [Ponzi] scheme worked out rather well. Wouldn't you? Too bad people can't seem to remember we exported it first. They are using US dollars to buy oil aren't they? Where'd they get them?