It blows my mind that when the last Goods and Services statistics released was reported as “No inflation in site.”

The way they get to this conclusion is by blending export-deflation with domestic inflation to disguise what is really going on.

In the real world, most of my monthly income goes to goods and services produced in the United States.  In spite of a contracting global economy AND deflation, prices are rising dramatically.

1. Food see graph on bottom
2. Gasoline  see graph on bottom
3. Utilities  No data.  Sorry.

Despite diminishing demand and diminishing valuations for capital goods, prices are still rising.  Fiscal and budgetary policies have unleashed massive amounts of money and there’s nowhere for it to go.  So, prices go up for domestic goods.

Best case scenario is 24+ months of punishing domestic inflation.  The common statistics used to measure inflation will still call this a ‘no inflation’ scenario going forward.  Best case scenario is the ‘rampant domestic inflation’ opinion  will be marginalized while the economy sinks into another malaise.

A wonkier version of this opinion and very worth the time and effort to understand is here.