Saturday, November 21st, 2009

Shrinking Money Supply Putting Brakes on Inflation

Sep 17th, 2008 | By Charles Delvalle | Category: Politics & Economics

At the end of last month, Charles Delvalle at Investor’s Daily Edge said what we’re getting ready to see is not inflation at all… but deflation. That’s because in July the money supply grew under the rate of inflation. In real terms, that means the money supply shrank. Charles says data now suggests shrinking money supply is putting the brakes on inflation.

In August, producer prices fell 0.9 percent thanks to the big drop in energy prices. Now, if the prices producers are paying each other are dropping, then we should see a small drop in consumer prices.

Lo and behold, consumer prices for August fell 0.1 percent. Gasoline prices fell 4.2 percent, and fuel oil prices fell a massive 9.6 percent (the most in five years).

As the economy continues to slow, we will continue to see drops in inflation readings. As inflation wanes, the attractiveness of gold and silver will wane with it. And this should give the Fed some more room to continue dropping rates.

While I’m not calling an end to inflationary times (or the bull-run in precious metals), we should see a slowdown over the next 12 months.

Source: The Slow Unwinding of Inflation


AdvertisementNew 5-currency Index CD from EverBank©. Apply today.

The new Debt-Free Index CD is comprised of equal parts Singapore dollar, Japanese yen, Swiss franc, Australian dollar and Brazilian real. Why these currencies? All 5 economies have a strong balance of payments—a factor that could aid performance against the U.S. dollar.

Of the 5 economies, only Australia has a trade deficit—and the gap appears to be narrowing. Concerned about investing in a weak U.S. dollar? Consider this new Index CD, it is available in 3- and 6-month terms with a $20,000 minimum deposit. Apply today here

This CD is FDIC insured against bank insolvency, but please keep in mind that you could lose principal as a result of currency fluctuation.



Tags: , , ,

By Charles Delvalle

Related Articles



About the Author

Charles DelvalleCharles Delvalle is a self-taught market-timing professional and value analyst who's followed and invested in the market for the past ten years. He uses a unique combination of technical and fundamental research to pinpoint rapid profit opportunities with stocks and options. Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering undervalued, cash-rich companies. He frequently mocks government stupidities and points out the "inaccuracies (or lies, take your pick) that government reporting frequently dispels as "truth".

See All Posts by This Author



Abundance is your guide to surviving and prospering in the coming 21st century depression. Learn the secrets of wealth protection and "emergency investing" from fiancial crisis guru James Dale Davidson.

See All Posts from This Publication

Leave Comment