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No. The government is injecting tons of cash into the market. This props prices up and causes inflation, or at very least avoids deflation.

option 6y ago
this. The cash is basically on fire now with all the money printing. Thus inflated asset prices
- charwalker 6y ago
  It's not what is reflected in data though, just hype.
raziel2701 6y ago
The economic data (https://fred.stlouisfed.org/series/CPILFESL#0 https://fred.stlouisfed.org/series/CPILFESL#0 ) is showing deflation. The quantitative easing has so far been deflationary. The Fed can lower interest rates, but it cannot make people spend. People are unemployed and scared, they are not borrowing money, and it shows in the lending data as well (https://www.federalreserve.gov/releases/h8/current/default.htm https://www.federalreserve.gov/releases/h8/current/default.h...) where we can see falling numbers in consumer loans and credit cards. I think people have rushed into stocks because they think that that's the safe haven for their money against inflation as they think the Fed is "printing money" and causing inflation, but the data is showing deflation. If deflation continues, bonds would be the safer place to be.
- landryraccoon 6y ago
  I am speaking anecdotally here but.. Deflation? I can’t think of a single product that has gone down in price and numerous things are more expensive. In particular, virtually every single food item at the grocery store is more expensive than it was in March. Am I the only one who has experienced this? It seems like basic staples (milk, eggs, flour) are substantially more expensive than a few months ago.
  - soared 6y ago
    Real prices lag behind deflation. Short term deflation is really only visible in market/financial metrics/prices. But your other point is probably more correct - supply/demand swings in the short term affect the prices you see more than deflation/inflation. Technically a gallon of milk should go up in price like 6-10 cents a year, which you might not notice.
  - dman 6y ago
    You are correct - I moved and thought the store in the new area was a ripoff before realizing that food prices are up everywhere. I buy a fair amount of Indian groceries and the prices of many staples is up ~25-30%.
  - ls612 6y ago
    Some food products have increased in price since the pandemic mostly due to production and distribution chain issues. However, the basic staples you mention are such a small proportion of the budgets of people that even a significant rise in their price won’t move the inflation needle much compared to other categories.
  - guenthert 6y ago
    Oil/Gasoline went down in price early this year quite dramatically. This (as energy cost) is included with a heavy weight in the price index calculation.
    - coolspot 6y ago
      Not in Southern California. Regular costs $3.5/gal
  - charwalker 6y ago
    You need to consider the whole basket that the CPI is based on including other factors like housing, utilities, and oil/gas. We probably won't see any specific store bought items drop in price but trends overall will reflect deflation. Part of that is the cash injection is not spread over just the US population but anyone that relies on the USD for transactions or backing their currency. Being the default currency has perks.
raincom 6y ago
Well, the Fed is buying corporate junk bonds (bond ETFs) through special vehicles. We are not in the Japan territory where their central banks owns 80% of stock ETFs. This is why no one wanna sell any stocks in the states. Just a psychological boost, not direct stock purchases.

option 6y ago

this. The cash is basically on fire now with all the money printing. Thus inflated asset prices

charwalker 6y ago
It's not what is reflected in data though, just hype.

raziel2701 6y ago

The economic data (https://fred.stlouisfed.org/series/CPILFESL#0 https://fred.stlouisfed.org/series/CPILFESL#0 ) is showing deflation. The quantitative easing has so far been deflationary. The Fed can lower interest rates, but it cannot make people spend. People are unemployed and scared, they are not borrowing money, and it shows in the lending data as well (https://www.federalreserve.gov/releases/h8/current/default.htm https://www.federalreserve.gov/releases/h8/current/default.h...) where we can see falling numbers in consumer loans and credit cards. I think people have rushed into stocks because they think that that's the safe haven for their money against inflation as they think the Fed is "printing money" and causing inflation, but the data is showing deflation. If deflation continues, bonds would be the safer place to be.

landryraccoon 6y ago
I am speaking anecdotally here but.. Deflation? I can’t think of a single product that has gone down in price and numerous things are more expensive. In particular, virtually every single food item at the grocery store is more expensive than it was in March. Am I the only one who has experienced this? It seems like basic staples (milk, eggs, flour) are substantially more expensive than a few months ago.
- soared 6y ago
  Real prices lag behind deflation. Short term deflation is really only visible in market/financial metrics/prices. But your other point is probably more correct - supply/demand swings in the short term affect the prices you see more than deflation/inflation. Technically a gallon of milk should go up in price like 6-10 cents a year, which you might not notice.
- dman 6y ago
  You are correct - I moved and thought the store in the new area was a ripoff before realizing that food prices are up everywhere. I buy a fair amount of Indian groceries and the prices of many staples is up ~25-30%.
- ls612 6y ago
  Some food products have increased in price since the pandemic mostly due to production and distribution chain issues. However, the basic staples you mention are such a small proportion of the budgets of people that even a significant rise in their price won’t move the inflation needle much compared to other categories.
- guenthert 6y ago
  Oil/Gasoline went down in price early this year quite dramatically. This (as energy cost) is included with a heavy weight in the price index calculation.
  - coolspot 6y ago
    Not in Southern California. Regular costs $3.5/gal
- charwalker 6y ago
  You need to consider the whole basket that the CPI is based on including other factors like housing, utilities, and oil/gas. We probably won't see any specific store bought items drop in price but trends overall will reflect deflation. Part of that is the cash injection is not spread over just the US population but anyone that relies on the USD for transactions or backing their currency. Being the default currency has perks.

raincom 6y ago

Well, the Fed is buying corporate junk bonds (bond ETFs) through special vehicles. We are not in the Japan territory where their central banks owns 80% of stock ETFs. This is why no one wanna sell any stocks in the states. Just a psychological boost, not direct stock purchases.