deflating expectations 2

DEFLATING EXPECTATIONS 2

After some time of decreased costs which was probably a surprise to most experts, especially after gold went from $1900 to $1,000 so quickly ( which should have proved to everyone that the big bank players controlled the entire Western civilization [ the Russians for now aligning with the Eastern bloc ] economy and manipulated it electronically, because the demand for gold was going up as supply fell ), a few folks begrudgingly admitted that inflation was not our only future.  Henceforth and forever more, they proudly triumphed with the same fervor once reserved for warnings of hyperinflation, basic needs would see inflation and luxuries would see deflation.  There!  Problem solved with those pesky crashing prices questions.  Now, I’ll be the first to admit that I was firmly in the hyperinflation camp.  Just as I was in the Immediate Crash With Peak Oil Camp.  And I had no problem with the Insane Food Inflation idea.  I’ll readily admit it.  But I think I have a good excuse.  I tend to over-panic.  I’m a bit of a Cassandra.  I think assuming the worse is a prudent sound strategy ( since Timing The Collapse is a fools game, I preach the Prep Yesterday In Case The Crash Is Tomorrow point of view ).  But I have to say now, just because I absolutely loath the idea of running with the pack, any pack, damn herbivore sum-bitches, just to be different and play the Devil’s Advocate, I’m kind of liking the new idea of Rollercoaster Prices For Everything.

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Remember how the Doomer Peak Oilers, myself included, assumed that scarcity would bring high prices?  Yet instead what happened was that as one price hike decimated demand and industry participants, the price crashed down.  Then repeated.  Despite less oil ( total BTU‘s delivered, not total barrel count ), being available, scarcity did not always get higher and higher prices.  After oil went over X amount, companies went bankrupt, driving down demand, workarounds were found at the surviving companies to decrease demand, consumers finding they lost half their household income cut back, etc., and that demand never reappeared when prices went back down due to demand destruction.  When a company is wiped out or a consumer loses employment, even if the oil price falls in half or to a third, there is one less customer with ANY money to buy at the cheaper price.  And I submit to you, my loyal minions, that the exact same thing is going to happen to essentials such as food.  There is SOOOO much Value Added price elasticity to food that consumers can keep downgrading and bankrupt food supply companies, causing the remainder to drop prices in a panic as they are one loan payment away from insolvency.  People don’t just buy wheat and potatoes and raw meat, but pizza and specialty loaves of bread and French fries and pre-cooked deli items and eat out meals.  Consumers can keep downgrading price-wise as they back away from luxury foods.  And each food company panic to profit will cause a drop in prices prior to the next surge as the next wave of shortages hit ( caused by the next drought, the next animal disease, etc. ).  Next article, I’ll cover other Inflation Forever items such as rent and college and cars.

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