Barry doesnt even try to understand how the economy works. ****************************************************************************** Deflation Bonanza! (And the Fools Mission to Stop It) . by Mike Mish Shedlock, registered investment advisor representative for SitkaPacific Capital Management ****************************************************************************** Deflation Bonanza! (And the Fools Mission to Stop It) ********************************************************************* Of all the widely believed but patently false economic beliefs is the absurd notion that falling consumer prices are bad for the economy and something must be done about them..... . One widely recognized big loser is the tourism industry. For sure, hotel prices in Switzerland rose as much as 40% overnight compared to prices elsewhere. But Swiss grocery shoppers buying food imports from France, Spain, and the rest of Europe benefit mightily. Which of those is more important? I suggest the benefit to Swiss shoppers is more important, at least in the grand scheme of things. Moreover, those consumers will have more money to spend on other things ... like restaurants, travel and hotels. .....Shopping Bonanza! ********************************* On Monday came a Wall Street Journal story that exactly matched my prediction: Soaring Franc Creates Bonanza in Swiss Stores. The soaring Swiss franc that caused howls in financial markets is creating a bonanza in stores, where shoppers are suddenly getting discounts on everything from vegetables to party dresses. On Monday, Basel-based Coop said it was cutting prices on more than 200 types of fruit and vegetables imported from the European Union. The supermarket chain, Switzerland’s second-largest retailer behind Migros, said further price cuts for imported fish, poultry and cheese were also in the works. Coop isn’t the only retailer going into bargain mode. Furniture chains, travel agencies and fashion companies are among the retailers slashing prices to rope in shoppers. “For us housewives, this is welcome news for our daily shopping,” said Anita Mueller, who was perusing sales on Banhofstrasse, Zurich’s main thoroughfare, on Monday morning. Even luxury stores are passing on the savings. The window of Grieder & Cie., a high-end department store in Zurich’s shopping district, bore a message informing shoppers their money would go further. “Due to the sudden rise of the Swiss franc against the euro and to give us time to adjust our prices to the move, we are now offering a 20% discount on all of our non-reduced goods for an indefinite time,” the message read. Swiss consumers are also taking advantage of their improved buying power by crossing into Germany. BVB, the transportation authority in Basel, added more trams to the border town of Weil am Rhein to accommodate the rush of Swiss bargain hunters looking to take advantage of their muscular Swiss francs. TUI Suisse, one of Switzerland’s biggest tour operators, cut prices by 15% on vacation packages to sunny destinations around Mediterranean Sea. Tours of Greece, Spain, Turkey, Italy and Portugal are all included in the sale, which is dubbed the “euro discount.” TUI Suisse, which has branches in many shopping malls across Switzerland, is also lowering prices on trips to Morocco and Egypt for departures through the summer. Dont Cry For Exporter Yet **************************************** In Swiss Peg Removal: Did Anyone Win? I also commented ... Conventional wisdom is that Swiss exporters will be crucified and importers will benefit. Certainly there is an initial shock. But long-term, look at it this way: The price of materials used in exports (metals in watches and Swiss-made machinery) will get cheaper. ... So, dont cry for exporters just yet. US Dollar vs. Swiss Franc ************************************ Last Thursday, the value of the Swiss Franc related to the US dollar soared as much as 28 percent. About half of that has been recovered. Swiss exporters will find they can import commodities about 14% cheaper than early last week. They do lose out on current inventories of goods, but this is not the widely-believed export disaster story except for the initial stock market carnage. Guess What? *********************** Shoppers are shopping! They are even booking extra trains to Germany to do so. Fancy that! Other travel is up as well. Gee who coulda thunk? The widespread belief is that when prices fall, shoppers will wait and wait and wait. I Have been mocking that view for years. Economic Challenge to Keynesians Lets once again review my Challenge to Keynesians Prove Rising Prices Provide an Overall Economic Benefit Challenge to Keynesians ************************************ I challenge Keynesians and Monetarists to prove rising prices provide an overall economic benefit. Sure, those with first access to money benefit (the banks, the already wealthy, and government bodies via taxation). But that is at the expense of everyone else. The absurd underlying notion behind the battle cry for inflation is that if prices fall people will stop buying things and the economy will collapse. Reality Check Questions ************************************ If price of food drops will people stop eating? If the price of gasoline drops will people stop driving? If price of airline tickets drop will people stop flying? If the handle on your frying pan falls off or your blow-dryer breaks, will you delay making another purchase because you can get it cheaper next month? If computers, printers, TVs, and other electronic devices will be cheaper next year, then cheaper again the following year, will people delay purchasing electronic devices as long as prices decline? If your coat is worn out, are you inclined to wait another year if there are discounts now, but you expect even bigger discounts a year from now? Will people delay medical procedures in expectation of falling prices? If deflation theory is accurate, why are there huge lines at stores when prices drop the most? Bonus Question **************************** If falling prices stop people from buying things, how are any computers, flat screen TVs, monitors, etc., ever sold, in light of the fact that quality improves and prices decline every year? Read more at globaleconomicanalysis.blogspot/2015/01/deflation-bonanza-and-fools-mission-to.html#cmWhoH5KiKc724Ig.99 *********************************************************** PERNELL ROBERTS PER..........RO *** GOD works in mysterious ways ******************************************** linked from freedomsphoenix globaleconomicanalysis.blogspot/2015/01/deflation-bonanza-and-fools-mission-to.html https://youtube/watch?x-yt-ts=1421914688&v=mjdRgBAY278&x-yt-cl=84503534&feature=player_embedded#t=0
Posted on: Sun, 25 Jan 2015 04:36:58 +0000
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