1 00:00:02,360 --> 00:00:05,720 Speaker 1: Bloombo Business News twenty four hours a day at Bloomberg 2 00:00:05,800 --> 00:00:08,880 Speaker 1: dot com, the radio plus mobile app, and on your radio. 3 00:00:09,200 --> 00:00:12,920 Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow. 4 00:00:12,920 --> 00:00:15,920 Speaker 1: The updates brought to you by Osner Amper. When entrepreneurs 5 00:00:15,960 --> 00:00:19,479 Speaker 1: face challenges like choosing a business structure or access to capital, 6 00:00:19,720 --> 00:00:22,599 Speaker 1: they call the accountants and advisers at Eisener Amper connect 7 00:00:22,600 --> 00:00:26,560 Speaker 1: with them Eisner Amper dot com. Slash tech times small 8 00:00:26,640 --> 00:00:29,760 Speaker 1: size isn't stopping it from pursuing an acquisition of Yahoo's 9 00:00:29,800 --> 00:00:32,080 Speaker 1: core business People familiar with the matters stay. The one 10 00:00:32,120 --> 00:00:34,760 Speaker 1: and a half billion dollar magazine owner has heard a 11 00:00:34,800 --> 00:00:37,560 Speaker 1: presentation from City Group bankers on pursuing a deal to 12 00:00:37,640 --> 00:00:39,880 Speaker 1: merge with Yahoo. Home Depot up two and a half 13 00:00:39,880 --> 00:00:43,760 Speaker 1: percent after fourth quarter profit topped analysts estimates. SNP EVENI 14 00:00:43,760 --> 00:00:45,920 Speaker 1: future is it will change now down a point, Dowie 15 00:00:45,960 --> 00:00:49,560 Speaker 1: Mini futures up three Nasadachimny futures down seven and a half. 16 00:00:49,640 --> 00:00:52,199 Speaker 1: That acts in Germany's down eight tens percent. Pen your 17 00:00:52,240 --> 00:00:55,320 Speaker 1: treasury down y seconds, the yield one point seven eight percent. 18 00:00:55,680 --> 00:00:57,640 Speaker 1: NIMEX s crude oil up three ten per cent or 19 00:00:57,640 --> 00:01:00,080 Speaker 1: eight cents at thirty three forty seven a barrel, go 20 00:01:00,200 --> 00:01:02,960 Speaker 1: make school up six or six dollars seventy cents to 21 00:01:03,040 --> 00:01:06,520 Speaker 1: twelve announced and the Euro at a dollar oh nine 22 00:01:06,600 --> 00:01:09,280 Speaker 1: nine seven at the end one twelve point oh nine. 23 00:01:09,560 --> 00:01:12,800 Speaker 1: That's a Bloomberg business flash, Tom and Mike Karen. Thanks 24 00:01:12,800 --> 00:01:16,360 Speaker 1: so much. Michael. I'm gonna have you bringing our esteem guest, 25 00:01:16,840 --> 00:01:20,280 Speaker 1: But unfortunately his pocketbooks a little thin, so I've got 26 00:01:20,280 --> 00:01:24,640 Speaker 1: to flog his book. It is coming up on the 27 00:01:24,840 --> 00:01:29,520 Speaker 1: twentieth anniversary of this single most important book on price 28 00:01:29,640 --> 00:01:33,039 Speaker 1: change ever written. It is what I call the blue Book. 29 00:01:33,640 --> 00:01:37,399 Speaker 1: It is called Deflation. Why it's coming, whether it's good 30 00:01:37,480 --> 00:01:41,160 Speaker 1: or bad? And how will it affect your investments, business 31 00:01:41,319 --> 00:01:45,120 Speaker 1: and personal affairs. I have put children to school on 32 00:01:45,200 --> 00:01:49,960 Speaker 1: my royalty checks from Gary Schilling. On flogging this book, Mike. 33 00:01:50,120 --> 00:01:54,400 Speaker 1: It is clarity personified on everything we get right and 34 00:01:54,480 --> 00:02:00,080 Speaker 1: wrong about this pernicious and strange thing read Deflation. I 35 00:02:00,160 --> 00:02:01,760 Speaker 1: just put it out on Twitter and will flog it 36 00:02:01,880 --> 00:02:06,440 Speaker 1: to death this morning as well. I Gary Cooper was 37 00:02:06,480 --> 00:02:11,000 Speaker 1: in the movie It's Become a Collector's I suppose we 38 00:02:11,000 --> 00:02:14,200 Speaker 1: should ask, are are we going to get to deflation? 39 00:02:16,480 --> 00:02:19,600 Speaker 1: I think so there's just so much excess supply in 40 00:02:19,639 --> 00:02:23,160 Speaker 1: the world. And if you look historically in this country, 41 00:02:23,760 --> 00:02:27,240 Speaker 1: if you are in peacetime, and that's arguable, of course, 42 00:02:27,680 --> 00:02:31,440 Speaker 1: but in peacetime deflation is a norm. We've looked at. 43 00:02:31,560 --> 00:02:34,360 Speaker 1: We've looked at every year going back to seventeen forty nine. 44 00:02:34,440 --> 00:02:36,919 Speaker 1: I don't know about seventeen forty eight, but from seventeen 45 00:02:38,560 --> 00:02:41,800 Speaker 1: if you if you divide him into war, wartime, and 46 00:02:41,840 --> 00:02:45,000 Speaker 1: peace time, what you find in in wartime that the 47 00:02:45,040 --> 00:02:47,800 Speaker 1: average inflation rate was five percent and in peace time 48 00:02:47,840 --> 00:02:51,160 Speaker 1: it was a negative one point two percent. Now you say, 49 00:02:51,200 --> 00:02:54,240 Speaker 1: why is that. Well, in wartime you have access spending 50 00:02:54,400 --> 00:02:57,120 Speaker 1: led by government, too much, too much demand relative to 51 00:02:57,200 --> 00:03:01,800 Speaker 1: supply results. But in peace time, the natural productivity, growth, 52 00:03:02,040 --> 00:03:05,680 Speaker 1: the other factors expansion the economy. Uh, it tends to 53 00:03:05,720 --> 00:03:09,240 Speaker 1: be deflationary. And and they'll say that's a lot of history, 54 00:03:09,360 --> 00:03:12,919 Speaker 1: and and it's fairly consistent throughout that time. How are 55 00:03:12,919 --> 00:03:16,680 Speaker 1: you measuring deflation then? Because I know there's a lot 56 00:03:16,720 --> 00:03:18,440 Speaker 1: of people out there who heard what you just said 57 00:03:18,480 --> 00:03:23,480 Speaker 1: about in peacetime we have deflation, um saying, what the 58 00:03:23,560 --> 00:03:26,520 Speaker 1: hell is he talking about? Well, um, these are these 59 00:03:26,560 --> 00:03:30,079 Speaker 1: are measured by wholesale prices, um. And that's the most 60 00:03:30,120 --> 00:03:32,880 Speaker 1: consistent numbers going back. Of course, the government data doesn't 61 00:03:32,919 --> 00:03:36,200 Speaker 1: really go back before World War Two, but there are 62 00:03:36,200 --> 00:03:38,960 Speaker 1: a lot of academic studies that piece things together based 63 00:03:39,000 --> 00:03:43,200 Speaker 1: on commodity prices, and they tend to be uh, they 64 00:03:43,240 --> 00:03:45,840 Speaker 1: tend to be wholesale prices, producer prices that that go 65 00:03:45,920 --> 00:03:49,240 Speaker 1: back that far. Uh. But you know, I think I 66 00:03:49,280 --> 00:03:53,480 Speaker 1: think there's enough consistency to say it probably does measure it. 67 00:03:53,840 --> 00:03:56,200 Speaker 1: And of course there's always lots of problems with measuring 68 00:03:56,240 --> 00:04:00,240 Speaker 1: inflation deflation. I mean, for example, uh, Thomas Tomas showing 69 00:04:00,240 --> 00:04:03,120 Speaker 1: me either a cell phone and the powerful cell phone. Well, 70 00:04:03,160 --> 00:04:06,160 Speaker 1: you know that a lot of that is not really reflected, uh, 71 00:04:06,320 --> 00:04:08,960 Speaker 1: reflected in the price induseries. In other words, you're getting 72 00:04:09,080 --> 00:04:12,040 Speaker 1: a lot more power there per dollar that you spend 73 00:04:12,080 --> 00:04:13,960 Speaker 1: it buy a new cell phone, but that does not 74 00:04:14,880 --> 00:04:19,760 Speaker 1: shooting deflation. I mean, they're actual numbers that would show this. Well. 75 00:04:19,880 --> 00:04:24,320 Speaker 1: The Commerce Department, Uh, they try to they try to 76 00:04:24,360 --> 00:04:27,960 Speaker 1: impute these things, uh, and whether they're whether they do 77 00:04:28,000 --> 00:04:30,839 Speaker 1: it correctly or not, there's always always a question. But 78 00:04:30,920 --> 00:04:33,280 Speaker 1: you know, the interesting thing is, if you look at it, 79 00:04:33,760 --> 00:04:38,600 Speaker 1: I've got a chart showing expectations of inflation. Uh, surveys, 80 00:04:39,000 --> 00:04:44,520 Speaker 1: and people always overestimate inflation. It's consistent because what happens 81 00:04:44,839 --> 00:04:47,520 Speaker 1: when anything where the price goes up. You say, that's 82 00:04:47,520 --> 00:04:51,240 Speaker 1: a double personified, Uh, giving me a raw deal if 83 00:04:51,240 --> 00:04:53,800 Speaker 1: prices go down. I'm a good bartner boy. I know 84 00:04:53,839 --> 00:04:56,000 Speaker 1: how to shop. I get a I get a good price. 85 00:04:56,080 --> 00:05:01,400 Speaker 1: So people consistently overestimate inflation. Gary, why should we fear deflation? 86 00:05:01,560 --> 00:05:04,640 Speaker 1: Is it about wealth destruction? Does it say something about 87 00:05:04,680 --> 00:05:09,400 Speaker 1: a nation? Well, deflation, you know, and and in the 88 00:05:09,560 --> 00:05:13,320 Speaker 1: net book, UH wrote, you know, deflation, whether it's code 89 00:05:13,360 --> 00:05:15,800 Speaker 1: or bad. You can have good folks. That would be 90 00:05:15,800 --> 00:05:18,640 Speaker 1: the blue Book Deflation wise coming, whether it's good or bad, 91 00:05:18,680 --> 00:05:22,280 Speaker 1: and how it will affect your investments, business and personal affairs. 92 00:05:22,400 --> 00:05:25,480 Speaker 1: It's out on Facebook and Twitter right now. Continue. Thank you, Tom. 93 00:05:25,480 --> 00:05:28,000 Speaker 1: You you're you're roalthy. Just went up on that. Uh, 94 00:05:28,080 --> 00:05:31,360 Speaker 1: you're well, you can have good deflation like you had 95 00:05:31,839 --> 00:05:35,040 Speaker 1: in the nineteen twenties. Uh. Basically it was because of 96 00:05:35,120 --> 00:05:39,560 Speaker 1: huge productivity increases. Two big two big new uh drivers. 97 00:05:39,600 --> 00:05:44,480 Speaker 1: One was mass produced cars and that brought with the roads, bridges, etcetera. Hotels, etcetera. 98 00:05:44,720 --> 00:05:47,960 Speaker 1: And the other was electrificational homes and factories. And you've 99 00:05:47,960 --> 00:05:50,840 Speaker 1: got with that appliances. You couldn't run radio without it. 100 00:05:51,200 --> 00:05:53,600 Speaker 1: And that's that's good deflation. Other words, you have an 101 00:05:53,600 --> 00:05:57,039 Speaker 1: excess supply, uh, you're gonna have a bad deflation of 102 00:05:57,120 --> 00:06:00,440 Speaker 1: deficient demand. And that's what you had in the thirties. Uh. 103 00:06:00,480 --> 00:06:02,719 Speaker 1: And and in other ways you you get the deflation 104 00:06:02,800 --> 00:06:05,320 Speaker 1: with supply seating demand. But how do you get there 105 00:06:05,360 --> 00:06:08,400 Speaker 1: to supply go up or demand go down? Now? What's 106 00:06:08,400 --> 00:06:10,719 Speaker 1: happening right now? Well, what's happening right now is a 107 00:06:10,720 --> 00:06:13,200 Speaker 1: little of both. And the reason that central banks are 108 00:06:13,240 --> 00:06:16,159 Speaker 1: so scared of it is because of the of the 109 00:06:16,240 --> 00:06:19,000 Speaker 1: of the bad deflation of the last twenty years in Japan. 110 00:06:19,839 --> 00:06:23,800 Speaker 1: And what happens there is that prices are declining, and 111 00:06:23,880 --> 00:06:28,000 Speaker 1: people say, I'm gonna wait to buy. And when everybody 112 00:06:28,040 --> 00:06:29,719 Speaker 1: waits to buy, you know, let's say you need a 113 00:06:29,720 --> 00:06:32,760 Speaker 1: new car, and you say, well, prices are are declined, 114 00:06:32,800 --> 00:06:36,360 Speaker 1: I'll wait to buy because I can get one cheaper later. Well, 115 00:06:36,400 --> 00:06:40,080 Speaker 1: everybody waits. The the the the cars pile up on 116 00:06:40,120 --> 00:06:43,280 Speaker 1: the dealer's lots. That pushes prices down and suspicions confirmed. 117 00:06:43,680 --> 00:06:46,359 Speaker 1: As a result, you could sow growth. Japan in the 118 00:06:46,400 --> 00:06:49,360 Speaker 1: last twenty years has had real GDP growth of one 119 00:06:49,400 --> 00:06:54,080 Speaker 1: point one percent annually on average, and and they've had 120 00:06:54,120 --> 00:06:58,040 Speaker 1: deflation more years than not. And that's what SCA. I agree. 121 00:06:58,120 --> 00:07:01,360 Speaker 1: I agree that it's about GDP than the wealth construct 122 00:07:01,400 --> 00:07:04,240 Speaker 1: of a NIUE, and it's it's also about debt and 123 00:07:04,240 --> 00:07:06,919 Speaker 1: another and there is another concern of central banks because 124 00:07:06,960 --> 00:07:10,679 Speaker 1: and they talk about this all the time, because debt 125 00:07:10,720 --> 00:07:13,480 Speaker 1: in real terms goes up. In other words, if you 126 00:07:13,600 --> 00:07:16,640 Speaker 1: have a debt, you owe so many million dollars, Okay, 127 00:07:16,680 --> 00:07:19,880 Speaker 1: that is not going to change in deflation, but your income, 128 00:07:20,200 --> 00:07:23,240 Speaker 1: your profits, your ability to service that debt are going 129 00:07:23,280 --> 00:07:26,960 Speaker 1: to go down. So it increases bankrupt seas and discourages 130 00:07:26,960 --> 00:07:30,160 Speaker 1: borrowing garret. Thank you so much, Shilling or this thanks 131 00:07:30,200 --> 00:07:32,840 Speaker 1: for a huge response out on social media to Mr 132 00:07:32,920 --> 00:07:38,000 Speaker 1: Schilling's appearance today. Futures were negative for Shilling lifts the market. 133 00:07:38,440 --> 00:07:47,600 Speaker 1: We're flat. It's Bloomberg's surveillance. Bloomberg surveilancepot you by s 134 00:07:47,680 --> 00:07:49,960 Speaker 1: c n B. The Bank for Business is on the move. 135 00:07:50,000 --> 00:07:52,720 Speaker 1: Are you looking for a right banking partner? Go to 136 00:07:52,880 --> 00:07:55,320 Speaker 1: S CNB dot com to learn more. Now open a 137 00:07:55,320 --> 00:07:57,560 Speaker 1: Long Island city, Get your business movie with st ND.