[New post] The Truth About the Coming ‘Disinflation’
User ID posted: " https://www.youtube.com/watch?v=Xxy5Xluzzyc The Truth About the Coming 'Disinflation' by Joseph Brown In this video, we look at the coming wave of the word 'disinflation' which will be thrown around as much as the word transitory is used right now. B"
In this video, we look at the coming wave of the word 'disinflation' which will be thrown around as much as the word transitory is used right now. But just like transitory, most people will misunderstand what disinflation means, and they will expect that it means prices are coming back down. On the contrary, it means precisely the opposite.
I am not a CPA, attorney, or licensed financial advisor and the information in these videos shall not be construed as tax, legal, or financial advice from a qualified perspective. Linked items may create a financial benefit for Heresy Financial.
See Full Video Transcript Below
What's up everybody my name is Joe Brown and this is Heresy Financial. It's no surprise that over the last couple of months we've seen some of the biggest surprises biggest records broken in inflation in decades getting us to the point where inflation expectations are reaching new highs that they haven't seen in over a decade in light of this what looks like might happen over the next couple of months is we might see a period of time where inflation might start to fall allowing mainstream media and the federal Reserve to run victory laps claiming hey it was transitory or experiencing deflation now and so what I want to do in this video is talk to you about what they're actually going to be saying if we do experience a slowdown in inflation what it actually means because just like transitory disinflation is not all that it seems ready let's dive in I've explained in a couple of videos now already what transitory means transitory when they're saying hey inflation is going to be transitory or we're confident inflation is transitory they're referring to the rate of change not to the absolute level of prices meaning if there's no inflation prices are steady and then prices let's say they double and then there's no inflation after that and the price level is permanently higher everything just after that point it doubles once and then never changes again they can still say that that inflation was transitory because inflation refers to the rate of change not the absolute level of prices similarly right now we're experiencing a spike in inflation and they're saying this is going to be transitory Federal Reserve Chairman Powell said explicitly that the rise in prices being transitory does not mean that prices are going to come back down what it means is that the rate of change will go back down to the normal two percent so think of it like you're driving a car you're driving at 60 miles an hour are you going forward or backward well you're still going forward at 60 miles an hour what happens if you slow down to 50 miles an hour are you going in reverse were you still going forward no you're still going forward slower than you were before but you're still going forward so if you're going 60 miles an hour then you jump up to 100 miles an hour then go back down to 60 miles an hour that acceleration was transitory now why am I beating the transitory horse to death well basically it's because of the word disinflation which if we start to see disinflation that's going to be the new buzzword we're going to start seeing that all over mainstream media all over CNBC the Federal Reserve's going to be talking about it because it goes hand in hand with the transitory narrative. Disinflation is referring to the slowdown in the rate of change of inflation so just like the car you're driving 60 miles an hour you go to 50 miles an hour then you go to 40 miles an hour you're still moving forward you still have forward progress you're still moving that direction but your speed you're decelerating you're going from 60mph to 50mph to 40mph, that's not deflation, deflation would be you come to a stop and you go in reverse that's deflation but if you're going from 60mph to 50mph to 40mph to 30mph that's called disinflation that's the rate of inflation right now let's say it's five percent going to four percent going to three percent going to two percent that is called disinflation so if the Federal reserve is anticipating that inflation is transitory that means they expect this rise in prices to happen and then the rate of change in prices starts to slow down instead of increasing at five percent maybe they're only increasing at four percent or maybe they're only increasing at three percent prices are still increasing but they're just increasing at a slower pace than they were previously that's disinflation and it's the other side of the coin if it's hand in hand with the transitory narrative so what we're going to likely see especially if you take these inflation expectations as a contrarian indicator if we've now seen a bunch of inflation and the inflation expectations are extremely high they're at a 13-year high today if we take that as a contrarian indicator then it's likely especially given the year-over-year changes for April, May, June those are going to have be the largest year-over-year changes because that's when we were at the bottom in 2020 when we start to see that the base effects from that start to cool off we're going to start seeing victory laps and the mainstream media and the Federal Reserve running around screaming disinflation so that's all just wanted to clear that up so that over the next couple of weeks next couple of months you start to hear that everywhere you understand disinflation doesn't mean prices are going down disinflation means prices are still going up they're just going up a little bit slower than they were a couple months ago as always thank you so much for watching have a great day
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