What Is Deflation?
https://www.investopedia.com/terms/d/deflation.asp
Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. During deflation, the purchasing power of currency rises over time.
Key Takeaways
Deflation is the general decline of the price level of goods and services.
Deflation is usually associated with a contraction in the supply of money and credit, but prices can also fall due to increased productivity and technological improvements.
It’s deflation of productivity and wages.
We are using less oil today than 2019. We use less energy today than 2019. We consume less ‘stuff’ today than 2019.
Yet it’s all more expensive because lower productivity = less supply = shortages = less margin = price rises.
Meanwhile money is exiting certain economic industries at a rate of knots and moving to areas of growth like shares and commodities.
2022 is going to be a year of agony. The govts give money to people to buy products and inventory ends up being drained which further creates strain on the supply chain and feedbacks into poor economic data.
The reality is you will begin seeing things like vehicle tyre shortages. Then the price will go from $1,000/set to $3,000/set and people will go apeshit. It isn’t demand pull inflation, it’s the collapse of the global supply chain which is man made.
