[quote=briansd1]I’m with Arraya. His post is very reasonable.
The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.
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I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.
We’ve experienced a long counter-trend rally from March 2009 low. It looks to be reversing about now. The next phase will be longer and more brutal than the first. Good thing they cleaned up the banks balance sheets because they are going to need it to handle the next phase.
[quote=briansd1]
The truth is that deflation makes debts harder to pay, not easier. [/quote]
