How Much Inflation Can The People Tolerate, as Central Banks Fight Deflation

The enemy of the Banks is Deflation and tools such as zero interest rates (ZIRP or low rates) and increasing inflation are used to keep deflation at bay.
BANKER’s WAR:
Thus the currency wars continue and the reminder from past currency wars is military wars followed as national economies faltered. ~Ron

The European Central Bank

Unpalatable choices

Keeping deflation at bay may involve controversial new policies this year

Jan 4th 2014

SINCE the financial crisis the European Central Bank (ECB) has ploughed a solitary course, reflecting its unique status as a monetary authority without a state. While other big central banks, notably America’s Federal Reserve, adopted quantitative easing—buying government bonds by creating money—to stimulate recovery, the ECB relied mainly on lowering interest rates and providing unlimited liquidity to banks on longer terms and against worse collateral. But as the Fed phases out its asset-buying programme in 2014, it may be the ECB’s turn to become unorthodox.

Under Mario Draghi the ECB has taken bold steps. Two years ago it provided banks with €1 trillion ($1.3 trillion) of cheap three-year variable-rate loans to avert a funding crisis. In September 2012 it countered euro break-up fears by pledging, if necessary, to buy unlimited amounts of government bonds for countries besieged by the markets. But the threat now is a slide towards deflation, a worry in the euro area because debt is high in many states and deflation raises its burden in real terms.

Read More:
http://www.economist.com/news/finance-and-economics/21592645-keeping-deflation-bay-may-involve-controversial-new-policies

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Bernanke: ‘Even Low Inflation Can Create Problems’

Low U.S. inflation poses risks to the economy by leaving it vulnerable to shocks, Federal Reserve Chairman Ben Bernanke said on Friday.

Asked about whether the goal of Fed policies was to raise inflation or lower interest rates, Mr. Bernanke emphasized the latter.

The Fed in 2012 established a long-run inflation target of 2%. Inflation has been running well below that level this year [As the Fed erroneously measures inflation; REAL INFLATION IS MUCH HIGHER].

Referring to the Fed’s second round of bond buys in 2010, he said then “the goal was to avoid deflation. Deflation is not a zero sum thing. Even low inflation can create problems.” He said, “inflation then, like today, was very soft but even more so.

Read More: http://blogs.wsj.com/economics/2014/01/03/bernanke-even-low-inflation-can-create-problems/
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Inflation is Already Here… But It’s Being Masked

VIA: http://www.zerohedge.com/contributed/2014-01-03/inflation-already-here%E2%80%A6-its-being-masked

Since 2007, the world’s Central Banks have collectively put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.

This kind of money printing is literally unheard of in modern history. And it has set the stage for a roaring wave of inflation to hit the financial system. Indeed, the first signs are already showing up… not in the “official” Government data (which is bogus) but in how those who run businesses around the globe are acting.

Most people believe that when inflation hits, prices have to go higher. This is true, but higher prices can be manifested in multiple ways. Firms usually do not simply raise prices in nominal terms as price elasticity can kill revenues because it would hurt sales.

Instead, companies resort to a number of strategies to maintain profit margins without hurting their sales. One of them is to simply leave part of a package EMPTY, thereby selling LESS product for the SAME price (a hidden price hike).

Food manufacturers, like the politicians currently debating health reform, may have a solution to the obesity crisis: Feed Americans a lot of hot air. But this heated air is not just a figure of speech for packaged goods companies including Ralcorp Holdings’ (RAH) Post Foods and PepsiCo (PEP) subsidiaries Frito-Lay and Quaker.

In many packaged products, as much as 50% of the contents is just empty space, an investigation by Consumer Reports reveals. And we consumers are buying that nothingness every day.

http://www.dailyfinance.com/2009/12/08/how-much-for-the-air-as-much-as-half-of-food-packaging-is-empty/

Another tactic corporation use is to simply sell smaller packages for the SAME price (another means of selling less for MORE= a price hike).

U.S. Companies Shrink Packages as Food Prices Rise

Large food companies have recently announced that they will raise the prices they charge grocery retailers for commodities-based products. For example, a chocolate bar will cost more soon: Hershey last week announced a 10% increase for most of its confectionery goods.

Of course, straightforward price hikes could cause consumers to buy less of those products or to choose less costly store brands. So in many cases, food companies are trying a different tactic: Keeping the price of an item the same while decreasing the amount of food in the package. The company recoups the costs of the rise in commodities and hopes consumers don’t notice that they’re getting less of the product for the same price.

http://www.dailyfinance.com/2011/04/04/u-s-companies-shrink-packages-as-food-prices-rise/

However, perhaps the most scandalous policy employed by companies looking to engage in stealth price hikes is to swap out higher quality ingredients for lower quality/ lower cost alternatives. One bigname coffee maker was caught doing this just a few years ago.

Reuters is reporting that many of America’s major brands have been quietly tweaking their coffee blends. While most coffee companies consider their blends trade secrets, and are loath to disclose exactly what goes into them, both circumstantial and direct evidence suggests they’re now substituting lower-grade Robusta beans for some of their pricier Arabica, and degrading the quality of our coffee…

At least one coffee roaster has admitted it. In November, Massimo Zanetti USA, which roasts for both Chock full o’Nuts and Hills Bros., publicly confirmed upping its Robusta usage by 25% this year.

Why the switcheroo? Prepare to not be shocked. The answer is: price.

Last year, a shortage of Arabica caused prices of the premium bean to spike as high as $3 a pound — $2 more than what a pound of Robusta would cost. This compares to a five-year historical trend of Arabica costing closer to 70 cents more than Robusta. In recent weeks, the trend has reversed, with Arabica prices falling to just a 62-cent premium over Robusta.

http://www.dailyfinance.com/2012/06/19/noticed-that-your-coffee-tastes-funny-heres-why/?a_dgi=aolshare_twitter

In simple terms, inflation is already around us, though it’s not yet showing up in LITERAL price hikes. Instead, we’re all paying MORE for LESS. And it’s only a matter of time before the situation really gets out of control.

For a FREE Special Report on an uniquely profitable inflation hedge, swing by….

http://phoenixcapitalmarketing.com/goldmountain.html

Best Regards

Graham Summers

_____________________________________________

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4 comments on “How Much Inflation Can The People Tolerate, as Central Banks Fight Deflation
  1. RonMamita says:

    The Fed Is Hiring: Lots Of Cops

    http://www.zerohedge.com/news/2014-01-04/fed-hiring-lots-cops
    Some may have forgotten, or not be aware, that the Federal Reserve system has its own police force. Well, it does: “The U.S. Federal Reserve Police is the law enforcement arm of the Federal Reserve System, the central banking system of the United States…. Officers are certified to carry a variety of weapons systems (depending on assignment) including semi-automatic pistols, assault rifles, submachine guns, shotguns, less-lethal weapons, pepper spray, batons and other standard police equipment. Officers also wear bullet resistant vests/body armor. On October 12, 2010 President Barack Obama signed into law S.B. 1132 the “Law Enforcement Officers’ Safety Act Improvements Act”, which states that law enforcement officers of the Federal Reserve are “qualified law enforcement officers” and thus are authorized to carry a firearm off-duty.”

    At last check, there were over 1000 sworn members of the Fed police force. And judging by the recent spike in appearances of such “help wanted” ads as those shown below, that number is too low. We expect many more job postings such as these to appear in the coming weeks and months: in fact, we are willing to predict that the closer we get to a “renormalization” of the Fed’s balance sheet, the faster the hiring of Fed cops…
    .
    miami

    Position Summary:
    Law Enforcement Officer
    The Law Enforcement Officer is responsible for the protection of Bank property, valuables, and staff. Maintains security perimeter at building entrances, and performs routine building patrols to prevent unauthorized entry to premises, provide fire protection, and deter criminal and other irregular activities. Performs public relations functions by answering inquiries and providing direction to employees and visitors. Enforces federal laws and Federal Reserve policies and regulations to protect life, property and assets. Responds to incidents on Bank property and provides emergency services. This position is an essential function of the Bank and may require extended work hours and/or work during emergency or crisis situations.

    * * *

    Police Technician

    It’s about respect and recognition from your peers. It’s you. At the Federal Reserve Bank, we operate a part of the nation’s bank, helping to shape policies that enable people to purchase homes, send their children to school, and to live greater lives. It’s a good feeling, knowing that your work holds such meaning. It’s an even better feeling, knowing that you’re doing so with a team that recognizes the talents that make you unique. Join us today.

    Are you looking for a challenging and rewarding position? Look no further!

    Key Responsibilities:

    Develops and maintains proficiency in areas such as weapons (lethal and non-lethal), first aid, CPR, fire fighting techniques, civil disorders, and public relations, by attending training classes. Must exhibit spontaneous good judgment over life and safety issues (shoot and don’t shoot scenarios, discrete handling of detected weapons and/or explosive devices, when to employ use of life saving and rescue equipment, etc.).
    Controls pedestrian and vehicle access to the facility, patrols building and reports unusual situations or unauthorized individuals. Responds to general alarm, provides emergency service, and follows local response protocol until the alarm or situation has been resolved. Monitors Bank departments for safety or security violation and reports findings to department management. May prepare and/or review appropriate shift reports and distributes as required. Works all posts. Prepares logs and input information pertaining to incident and daily activity reports in prescribed format.
    Monitors metal detectors or utilizes metal detection wands to scan visitors, personal items, and packages for unauthorized items. Monitors and authorizes visitors accessing Bank facilities and records visitor data on appropriate logs. Monitors surveillance equipment, intercoms, telephones, radios, and other specialized equipment. Inspects vehicles entering security sensitive areas for unauthorized personnel or contents.
    Operates as a law enforcement officer pursuant to the authority given the Board of Governors by Section 11 (q) of the Federal Reserve Act. Authorized personnel act as law enforcement officers pursuant to regulations of the Board of Governors and approved by the U.S. Attorney General (Uniform Regulations for Federal Reserve Law Enforcement Officers).
    On an as needed basis may conduct initial investigations into accidents and incidents, make proper notifications to the senior law enforcement officer on duty, and perform follow up duties as directed by supervisor. Could be needed to testify in court in response to a subpoena regarding accidents or incidents.
    Develops proficiency in use of personal computer (PC) and related software, computerized access and control systems, video surveillance equipment, x-ray and metal screening equipment, various alarms systems and Automated External Defibrillators.
    On an as needed basis may participate in special assignments to protect dignitaries of a Reserve Bank or the Board of Governors, this could include escorting visitors, contractors and/or vendors working in high security areas.

    Qualifications:

    Education: High School Diploma or GED
    Experience: Less than two years

    Like

  2. RonMamita says:

    War Rages In Gold As Inflation / Deflation Battle Continues

    source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/3_War_Rages_In_Gold_As_Inflation___Deflation_Battle_Continues.html

    On the heels of continued war in the gold and silver markets, today a man out of Europe who has been extremely accurate with his calls on the gold market sent King World News a fantastic piece which covers the ongoing battle between inflation and deflation, as well as the metals markets. KWN was given exclusive distribution rights to the outstanding piece below by Ronald-Peter Stoferle of Incrementum AG out of Lichtenstein.

    By Ronald-Peter Stoferle, Incrementum AG Lichtenstein

    January 3 (King World News) – War Rages In Gold As Inflation / Deflation Battles Continues

    Monetary Tectonics – The interplay between inflation and deflation

    * The natural market adjustment process of the current crisis would be highly deflationary….
    * The reason for this lies in our current fractional reserve banking system, as the largest part of money in circulation is created by credit within the commercial banking sector. The much smaller portion is created by central banks.

    * As the financial sector in most parts of the world reversed its preceding credit expansion, overall credit supply is reduced significantly.

    * This (credit) deflation, respectively deleveraging, is compensated by very expansionary central bank policies.

    The unintended consequences of these monetary interventions will result in increasing volatility, potentially further disinflationary/deflationary phases and eventually (highly) inflationary phases!

    Read More: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/3_War_Rages_In_Gold_As_Inflation___Deflation_Battle_Continues.html

    Like

  3. RonMamita says:

    Expect INFLATION not DEFLATION in 2014: Here’s Why -By Gregory Mannarino

    The U.S. dollar will buy much less in the future as the devaluation (inflation) of the dollar continues…
    BECOME YOUR OWN BANK with your assets in your possession.

    Like

  4. RonMamita says:

    HOW THE CENTRAL PLANNERS HIDE TRUE [HIGH] INFLATION

    Their ENEMY is DEFLATION.
    When deflation finally wins, the banksters loose and the system collapses…

    Like

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