But the -3% we should have seen with the inverted yield curves never manafested itself. All the deflationary pressure was eaten by foreign investors – as they continue to accept negative returns on their dollar investments. Housing and rents stay disconnected from economic fundamentals, and if they return nominal levels – housing crashes and the banks go with it.
The deflation is in the dollar, but not at home. The 6-10% inflation that should be – isn’t yet. Creating new devalued dollars causes the dollar deflation that China, Mid East, and Europe are eating.