The Inflation is Coming! Really?

The Inflation is coming! The inflation is coming! The inflation is coming! It’s all over the news and the bond speculators are fanning the inflation hype like Billy Mays wannabees.

I have to ask the dumb question: What planet are they living on?

In my world, Wal-Mart and Amazon are in a price war on books with best sellers going for $10 per copy. Home prices continue to fall as properties fester on the market. U.S. unemployment figures stick around 10 percent, but smart guys like Dan DiMicco, head of Nucor, says if you include discouraged workers who don’t show up on the charts it is over 16 percent.

Commodities like oil have rebounded because Wall Streeters are playing games again, but the real demand for petroleum and natural gas is far weaker than supply. There is no more on-land capacity to store oil so 125 million barrels are now floating in slow moving tankers headed nowhere.

In the machine tool world, auction prices are still trending soft, supply is huge and distributors are discounting like crazy. I recently heard of a Nakamura CNC lathe listing at $360,000 being sold for $217,000. Prices are inconsistent but we hear that 20 percent discounts off quoted prices are common.

The classic definition of inflation is “too much money chasing too few goods or services.” Excuse me, but whether it’s golf clubs or Renoirs, prices continue to fall.

Ten year U.S. Treasuries are around 3.5 percent, which hardly portends inflation. I was astonished to see my real estate taxes on my home are going down and my dentist is dealing on cavities.

Inflation? Yes, if you are talking about balloon hoaxes in Colorado.

Question: Are you raising prices now when you bid for jobs?


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