Get that out of your head right now because is completely wrong.
I hope you’re right. Still, there are two possible ways this can play out — inflationary or deflationary. Right now it is headed towards the deflationary scenario with each fed rate cut. But an inflationary scenario is always possible. Remember that salaries increase only nominally in an inflationary environment, and that companies will be receiving inflated nominal values for their products as well. In a high-inflation environment, salaries and prices can be constant or even decreasing in real terms. Inflation is an easy and ever-popular way for governments to get rid of debt, by reducing the value of the currency the debt is denominated in. That’s why I’m so suspicious that the guys running the show will choose that old favorite from the playbook…
