HIGH POSIBILITY OF DEFLATION

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_Pixabay

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In the next two to three years, there is a chance that we will experience both good and bad deflation. A cyclical deflation is currently underway, with commodity prices falling and even oil prices rising by up to 80%. Because both major China and Europe are experiencing economic downturns, this is the case. Deflation is imminent, and there has been a startlingly large increase in inventory. Nike recently stated that its inventory increased by 44% while its sales increased by 3%.

They stated that their inventory was up by roughly 68% in North America and by 85% while it was in transit. Naturally, this will overwhelm the shop, and the only option to generate strong sales is to implement significant discounts. Innovation causes deflation over the long term, which is a healthy deflation. A decrease in anything will result in an increase in units. Deflation is pervasive if you look at other factors, and the FED is taking unemployment and CPI inflation into consideration.

In terms of employment, businesses found it so difficult to find workers during the epidemic that they decided to keep the workers. The FED will eventually change course because the interest rate hike has been consistent with the FED. Recently, we witnessed a liquidity crisis involving pension funds in the UK. Although it typically takes a very long time to build and mine, lithium is one of the world's most abundant minerals. I believe Tesla has sped up the lithium mining process and has taken a significant risk away from many commodity companies.

As you know already oil price as skyrocketed, and it has been able to find their way around shortages through production and changing chemistry. For instance, Cobalt which is primarily in Congo was very important to the production of batteries, right now Tesla is moving away from Cobalt and Nickel to Lithium Ion phosphate.

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