Web Wealth: Inflation or deflation? Some online resources offer views
Are we in for inflation or deflation? The question continues to pester us as the economy wobbles. These sites explain the pitfalls of each, and how wary investors might guard against them.
Are we in for inflation or deflation? The question continues to pester us as the economy wobbles. These sites explain the pitfalls of each, and how wary investors might guard against them.
Buying power. The loss of money's buying power to inflation, and its increasing power due to deflation, are described here at Money-zine.com. Noted are the basic ways inflation is officially measured - via the Consumer Price Index, or CPI, and other price-tracking indexes. Can you invest to beat inflation? Advice here is to buy securities pegged to inflation rates, such as Treasury Inflation Protected Securities (TIPS), I Bonds, and certain corporate bonds. Buying gold at its current high prices is discouraged here.
Push-pull. This link to 18 articles on inflation and deflation at About.com includes explanations of why deflation is rare, even in a recession, and why, when it takes hold, deflation is scary. The inflation articles tell what economists mean by such terms as "inflation-adjusted" prices, and they get highly technical in describing inflation's many supposed causes, with terms like "cost-push" and "demand-pull" inflation.
Inflation music. Performer Merle Hazard says his song "Inflation or Deflation?" was well received at a performance for the International Monetary Fund. But how does it play in Paducah? It is catchy, in a down-home-global-disaster sort of way: "Inflation or deflation? Tell me if you can. Will we become Zimbabwe, or will we be Japan?" No answers given.
CPI questions. An FAQ page at the Bureau of Labor Statistics' site on the Consumer Price Index tries to address issues in the much-watched index that make some wonder if there are tricks in it for masking inflation - such as the use of "rental equivalence" to determine what a homeowner could get if she rented out her house, while somehow still living in it, and the mysterious "hedonic quality adjustment." BLS swears it all adds up to an accurate number. August CPI data are due out Sept. 17.