Itokuda – I agree completely. The Austrian school definition of inflation is what Mish talks about. Money available to be utilized in some manner. And we’ve definately had lots of it since 2002. But it does not always translate into “price inflation”.
Many consumer items produced in Asia over the last 10 years were very inexpensive due to very low costs of production and high volumes of production.
I’ve always favored that “price inflation” is too much money chasing too few goods or assets. The key word here is “chase”. There has to be adequate demand (Availability of money and desire to spend it) and restricted asset supply, in order to drive up a price.
If one studies the various recessions over the last 50 years, there’s a strong indication that prices will deflate due to heavy demand destruction. Even when the supply is reduced, employment is decreased and the demand destruction continues. Deflationary cycles are very destructive in this way.
The prime position to be in right now is to have liquid assets and a steady income. As credit is constricted more every month and unemployment is increased, many people will be in a dire financial position if they did not prepare for this situation properly. If you’ve been living on the financial edge, you will be falling off the cliff sometime in 2009.
Even if we experience price inflation in some consumer goods, it’s nothing compared to the asset deflation taking place right now and for most of 2008! I think that from 2010 to 2015 there will some absolutely amazing deals on assets.
Why risk the craziness in the markets right now?! Time is your friend right now if you’re positioned correctly. For those people that are in liquid assets and employed, there will be opportunities that may be once-in-a-lifetime.
I’ve parked my money in US$ and gold. If history repeats itself….after a huge credit bubble bursts, senior currency and gold rise in value for a few years, these are the places to be.
Check out Bob Hoye and Marc Faber as well as Steve Keen for other ideas. They have great track records and always lean towards safety rather than risk. This is how wealth is built, IMO.
