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Winds of Deflation?

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biglentil's Avatar Feb 23, 2021 | 13:02 1 Does this look like deflation to anyone here other than Errol?

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Feb 23, 2021 | 15:01 2 Sure does. I see deflation in the value of the currency relative to all those tangible assets.
You just have the axis switched, so it looks backwards.
Graph it by showing how many bushels of soybeans it takes to buy 1 dollar. Reply With Quote
Feb 23, 2021 | 15:18 3 It's only a six month trend showing. I wouldn't make a lot of long term bets on that.

Here's a 25 year corn price chart. There are several spikes, but most of the time they are relatively short lived.

This fits with the declining interest rate theory: overall, commodity prices in a declining interest rate environment tend towards either being flat or trending downward. But it's not a straight line down.

Name:  Corn Price 25 year.jpg
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ajl
Feb 23, 2021 | 16:36 4 If one looks at gold, silver, and live cattle as indicators then yes. To put things into perspective, it took cropping problems all over the work and printing of currency everywhere to get the good grain prices we see right now. This means that now could be the time to sell three years worth of crops. Another thing to pay attention to is rising rates. Interest rates really is the most manipulated market in the world. Reply With Quote
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  • Feb 23, 2021 | 17:43 5
    Quote Originally Posted by Austrian Economics View Post
    It's only a six month trend showing. I wouldn't make a lot of long term bets on that.

    Here's a 25 year corn price chart. There are several spikes, but most of the time they are relatively short lived.

    This fits with the declining interest rate theory: overall, commodity prices in a declining interest rate environment tend towards either being flat or trending downward. But it's not a straight line down.

    Name:  Corn Price 25 year.jpg
Views: 563
Size:  13.2 KB
    Sorry for the hyjack but that chart nicely shows the new trading range that was established after the short term price spike. The lows are higher than the previous highs.
    Hopefully we see that in the present situation. Reply With Quote
    Feb 23, 2021 | 18:18 6
    Quote Originally Posted by ajl View Post
    If one looks at gold, silver, and live cattle as indicators then yes. To put things into perspective, it took cropping problems all over the work and printing of currency everywhere to get the good grain prices we see right now. This means that now could be the time to sell three years worth of crops. Another thing to pay attention to is rising rates. Interest rates really is the most manipulated market in the world.
    I can't emphasize enough how important it is to pay attention to interest rates. With the world drowning in debt, what would be considered small jumps in the rate of interest only a few years ago could cause an avalanche of defaults today.

    I saw a headline today hinting that the 10 year Treasury could go to 3%. If it does, that will most assuredly put an end to the equity boom and it will bring commodity prices down with it.

    I doubt that it needs to get that high before trouble erupts. Reply With Quote
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  • ajl
    Feb 23, 2021 | 18:38 7
    Quote Originally Posted by Austrian Economics View Post
    I can't emphasize enough how important it is to pay attention to interest rates. With the world drowning in debt, what would be considered small jumps in the rate of interest only a few years ago could cause an avalanche of defaults today.

    I saw a headline today hinting that the 10 year Treasury could go to 3%. If it does, that will most assuredly put an end to the equity boom and it will bring commodity prices down with it.

    I doubt that it needs to get that high before trouble erupts.
    That is the big question: will government allow rates to rise or trigger a currency crisis? Either way you will have a depression which results in government folk suddenly becoming unemployed. Depressions are not all bad. Reply With Quote
    Feb 23, 2021 | 19:04 8 Ajl, don’t hold your breath. The day a Trudeau reduces bureaucracy, I will be shocked. Reply With Quote