Shiller: US could likely to fall into deflationary spiral ala Japan

[Arraya]

Here is a good piece to understand the deflationary side of the argument where TAE takes on John Williams of shadowstats call for hyperinflation. Conversely, Rich’s article is definitely one of the most complete and clear to the layman, articles on inflation.

Differences:

-Though, their basic definitions are the same, deflationists expand their definition of money

-Power of the bond market to curtail serious “printing”

-effectiveness of printing

http://theautomaticearth.blogspot.com/2010/08/august-8-2010-stoneleigh-takes-on-john.html

It is indeed pushing on a string. Trying to stuff more credit into a system that is already choking on it will do nothing to increase the money supply in circulation. It cannot -even possibly- be inflationary. We are already in monetary contraction, as Williams has noted, and the contraction of credit makes the situation considerably worse than it appears from traditional money supply measures. Contraction is being aggravated by a fall in the velocity of money, as people, companies and banks hang on to what cash they have.

snip

There is no chance that the money injected by the Fed will find its way into the real economy, and no chance that it will ignite a wage/price spiral in an era of credit contraction and rising unemployment. Employees will have no pricing power at all under such circumstances, which means that wages will fall rather than rise. Prices will also fall, as the withdrawal of credit will remove price support across the board.

snip

Without the ability to expand consumption, there is no price support even at current levels, let alone a chance for prices to rise. Credit expansions are based on Ponzi dynamics – the creation of multiple and mutually exclusive claims to the same pieces of underlying real wealth pie, as opposed to cutting the pie into a larger number of smaller pieces as currency inflation would do. The Ponzi nature of credit expansion is the determining factor in the ultimate fate of all bubbles.

snip

Governments do not have the power that people imagine them to have. They cannot overcome the power of the collective, when that power is focused like a laser beam in one direction. Governments are going to find that the number of claims on their resources skyrockets, even as their tax receipts fall dramatically and their ability to borrow is curtailed by rising interest rates as a reflection of rising sovereign debt risk. Debt-junkie governments will be caught in a liquidity trap until the power of the international debt financing model is finally broken, as it will eventually be.

However, this does not happen overnight. Until it does, the power of governments to print will be sharply limited. We would expect this to remain the case through the era of deleveraging, which should last for several years. While inflation may be a long term threat once the power of the bond market is broken, that threat lies much further down the line. It is deflation that is today’s threat, and deflation that people must prepare for right now.

[Rich Toscano]

[quote=Arraya]
Differences:

-Though, their basic definitions are the same, deflationists expand their definition of money

-Power of the bond market to curtail serious “printing”

-effectiveness of printing
[/quote]

That is an excellent summary of the differing assumptions between me and the long-term deflationists. As you might expect given where I land on this issue, I think their assumptions are incorrect.

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).

2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.

3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.

[Rich Toscano]

[quote=Arraya]
Differences:

-Though, their basic definitions are the same, deflationists expand their definition of money

-Power of the bond market to curtail serious “printing”

-effectiveness of printing
[/quote]

That is an excellent summary of the differing assumptions between me and the long-term deflationists. As you might expect given where I land on this issue, I think their assumptions are incorrect.

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).

2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.

3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.

[Rich Toscano]

[quote=Arraya]
Differences:

-Though, their basic definitions are the same, deflationists expand their definition of money

-Power of the bond market to curtail serious “printing”

-effectiveness of printing
[/quote]

That is an excellent summary of the differing assumptions between me and the long-term deflationists. As you might expect given where I land on this issue, I think their assumptions are incorrect.

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).

2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.

3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.

[Rich Toscano]

[quote=Arraya]
Differences:

-Though, their basic definitions are the same, deflationists expand their definition of money

-Power of the bond market to curtail serious “printing”

-effectiveness of printing
[/quote]

That is an excellent summary of the differing assumptions between me and the long-term deflationists. As you might expect given where I land on this issue, I think their assumptions are incorrect.

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).

2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.

3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.

[Rich Toscano]

[quote=Arraya]
Differences:

-Though, their basic definitions are the same, deflationists expand their definition of money

-Power of the bond market to curtail serious “printing”

-effectiveness of printing
[/quote]

That is an excellent summary of the differing assumptions between me and the long-term deflationists. As you might expect given where I land on this issue, I think their assumptions are incorrect.

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).

2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.

3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.

[Arraya]

[quote=Rich Toscano]

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).
[/quote]

No doubt, they expanded the definition and it muddies things. Whether it makes sense, is what is muddied to me. As I said before, Steve Keen did some interesting work on this subject. Under their reasoning we could have inflation, under your stricter definitions, but it still would look and feel like deflation i.e equities and commodities price collapses. If true, then it makes sense.

Steve Keen’s DebtWatch No 31 February 2009: “The Roving Cavaliers of Credit”

As of now, very little deleveraging as taken place. Which is important in regards to job growth. I believe, if we don’t get a good bit of genuine job growth more deleveraging has to take place, which, triggers deflationary pressures.

Steve Keen’s Scary Minsky Model

Steve Keen’s Scary Minsky Model

And TAE partially bases assumptions on that, which is originally based on Hyman_Minsky’s models, if we wanted to track the derivation. Basically, stating debt bubbles inherently create a ponzi dynamic.

http://en.wikipedia.org/wiki/Hyman_Minsky

[quote=Rich Toscano]
2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.
[/quote]

Agreed, I think this is beyond all of our pay grades to assess and is reserved to geo-political back room deals that we are not privy to. The bond market is close to 100 trillion dollars, so, I’m sure they have some say. It’s more than double the size of equities. If I had to guess, there is a limit at some point, of which I have no idea.

[quote=Rich Toscano]
3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.[/quote]

Agreed, they did stop deflation and “righted” the ship, for now. However, it looks like they will have to keep up the “interventions” for years to keep it from falling and also combat consumer and lender behavior. Which is another subject all together.

Aggregate deflationary behavior is hard to combat with a printing press.

http://www.zerohedge.com/article/here-simple-reason-why-qe-unnecessary

As the following chart from David Rosenberg demonstrates, consumers are retrenching, and “just saying no” to both residential and consumer loans. Earlier, we also showed that Small Businesses also contracted, demonstrating that credit demand is collapsing at every vertical of US society. As such, QE, or ever cheaper money, has and always will be a “push” phenomenon, for which there is simply no demand, in a society that has trillions more of deleveraging to undergo. And banks realize that with retail investors not participating in the stock market, and thus having nobody to offload risky exposure to, using reserves to bid up risky assets will merely result in more pain down the road once profit taking time comes and everything goes bidless. As such, as debate over the utility of QE is moot. The only question is what the Fed’s persistent desire to debase the dollar will do the perception of monetary aggregates (i.e., the stability of the dollar) and whether the demand for alternatives (such as gold) will offset the need to liquidate said alternatives as a last-ditch source of capital to cover margin calls in a deflationary vortex. Everything else is smoke and mirrors.

[Arraya]

[quote=Rich Toscano]

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).
[/quote]

No doubt, they expanded the definition and it muddies things. Whether it makes sense, is what is muddied to me. As I said before, Steve Keen did some interesting work on this subject. Under their reasoning we could have inflation, under your stricter definitions, but it still would look and feel like deflation i.e equities and commodities price collapses. If true, then it makes sense.

Steve Keen’s DebtWatch No 31 February 2009: “The Roving Cavaliers of Credit”

As of now, very little deleveraging as taken place. Which is important in regards to job growth. I believe, if we don’t get a good bit of genuine job growth more deleveraging has to take place, which, triggers deflationary pressures.

Steve Keen’s Scary Minsky Model

Steve Keen’s Scary Minsky Model

And TAE partially bases assumptions on that, which is originally based on Hyman_Minsky’s models, if we wanted to track the derivation. Basically, stating debt bubbles inherently create a ponzi dynamic.

http://en.wikipedia.org/wiki/Hyman_Minsky

[quote=Rich Toscano]
2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.
[/quote]

Agreed, I think this is beyond all of our pay grades to assess and is reserved to geo-political back room deals that we are not privy to. The bond market is close to 100 trillion dollars, so, I’m sure they have some say. It’s more than double the size of equities. If I had to guess, there is a limit at some point, of which I have no idea.

[quote=Rich Toscano]
3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.[/quote]

Agreed, they did stop deflation and “righted” the ship, for now. However, it looks like they will have to keep up the “interventions” for years to keep it from falling and also combat consumer and lender behavior. Which is another subject all together.

Aggregate deflationary behavior is hard to combat with a printing press.

http://www.zerohedge.com/article/here-simple-reason-why-qe-unnecessary

As the following chart from David Rosenberg demonstrates, consumers are retrenching, and “just saying no” to both residential and consumer loans. Earlier, we also showed that Small Businesses also contracted, demonstrating that credit demand is collapsing at every vertical of US society. As such, QE, or ever cheaper money, has and always will be a “push” phenomenon, for which there is simply no demand, in a society that has trillions more of deleveraging to undergo. And banks realize that with retail investors not participating in the stock market, and thus having nobody to offload risky exposure to, using reserves to bid up risky assets will merely result in more pain down the road once profit taking time comes and everything goes bidless. As such, as debate over the utility of QE is moot. The only question is what the Fed’s persistent desire to debase the dollar will do the perception of monetary aggregates (i.e., the stability of the dollar) and whether the demand for alternatives (such as gold) will offset the need to liquidate said alternatives as a last-ditch source of capital to cover margin calls in a deflationary vortex. Everything else is smoke and mirrors.

[Arraya]

[quote=Rich Toscano]

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).
[/quote]

No doubt, they expanded the definition and it muddies things. Whether it makes sense, is what is muddied to me. As I said before, Steve Keen did some interesting work on this subject. Under their reasoning we could have inflation, under your stricter definitions, but it still would look and feel like deflation i.e equities and commodities price collapses. If true, then it makes sense.

Steve Keen’s DebtWatch No 31 February 2009: “The Roving Cavaliers of Credit”

As of now, very little deleveraging as taken place. Which is important in regards to job growth. I believe, if we don’t get a good bit of genuine job growth more deleveraging has to take place, which, triggers deflationary pressures.

Steve Keen’s Scary Minsky Model

Steve Keen’s Scary Minsky Model

And TAE partially bases assumptions on that, which is originally based on Hyman_Minsky’s models, if we wanted to track the derivation. Basically, stating debt bubbles inherently create a ponzi dynamic.

http://en.wikipedia.org/wiki/Hyman_Minsky

[quote=Rich Toscano]
2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.
[/quote]

Agreed, I think this is beyond all of our pay grades to assess and is reserved to geo-political back room deals that we are not privy to. The bond market is close to 100 trillion dollars, so, I’m sure they have some say. It’s more than double the size of equities. If I had to guess, there is a limit at some point, of which I have no idea.

[quote=Rich Toscano]
3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.[/quote]

Agreed, they did stop deflation and “righted” the ship, for now. However, it looks like they will have to keep up the “interventions” for years to keep it from falling and also combat consumer and lender behavior. Which is another subject all together.

Aggregate deflationary behavior is hard to combat with a printing press.

http://www.zerohedge.com/article/here-simple-reason-why-qe-unnecessary

As the following chart from David Rosenberg demonstrates, consumers are retrenching, and “just saying no” to both residential and consumer loans. Earlier, we also showed that Small Businesses also contracted, demonstrating that credit demand is collapsing at every vertical of US society. As such, QE, or ever cheaper money, has and always will be a “push” phenomenon, for which there is simply no demand, in a society that has trillions more of deleveraging to undergo. And banks realize that with retail investors not participating in the stock market, and thus having nobody to offload risky exposure to, using reserves to bid up risky assets will merely result in more pain down the road once profit taking time comes and everything goes bidless. As such, as debate over the utility of QE is moot. The only question is what the Fed’s persistent desire to debase the dollar will do the perception of monetary aggregates (i.e., the stability of the dollar) and whether the demand for alternatives (such as gold) will offset the need to liquidate said alternatives as a last-ditch source of capital to cover margin calls in a deflationary vortex. Everything else is smoke and mirrors.

[Arraya]

[quote=Rich Toscano]

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).
[/quote]

No doubt, they expanded the definition and it muddies things. Whether it makes sense, is what is muddied to me. As I said before, Steve Keen did some interesting work on this subject. Under their reasoning we could have inflation, under your stricter definitions, but it still would look and feel like deflation i.e equities and commodities price collapses. If true, then it makes sense.

Steve Keen’s DebtWatch No 31 February 2009: “The Roving Cavaliers of Credit”

As of now, very little deleveraging as taken place. Which is important in regards to job growth. I believe, if we don’t get a good bit of genuine job growth more deleveraging has to take place, which, triggers deflationary pressures.

Steve Keen’s Scary Minsky Model

Steve Keen’s Scary Minsky Model

And TAE partially bases assumptions on that, which is originally based on Hyman_Minsky’s models, if we wanted to track the derivation. Basically, stating debt bubbles inherently create a ponzi dynamic.

http://en.wikipedia.org/wiki/Hyman_Minsky

[quote=Rich Toscano]
2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.
[/quote]

Agreed, I think this is beyond all of our pay grades to assess and is reserved to geo-political back room deals that we are not privy to. The bond market is close to 100 trillion dollars, so, I’m sure they have some say. It’s more than double the size of equities. If I had to guess, there is a limit at some point, of which I have no idea.

[quote=Rich Toscano]
3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.[/quote]

Agreed, they did stop deflation and “righted” the ship, for now. However, it looks like they will have to keep up the “interventions” for years to keep it from falling and also combat consumer and lender behavior. Which is another subject all together.

Aggregate deflationary behavior is hard to combat with a printing press.

http://www.zerohedge.com/article/here-simple-reason-why-qe-unnecessary

As the following chart from David Rosenberg demonstrates, consumers are retrenching, and “just saying no” to both residential and consumer loans. Earlier, we also showed that Small Businesses also contracted, demonstrating that credit demand is collapsing at every vertical of US society. As such, QE, or ever cheaper money, has and always will be a “push” phenomenon, for which there is simply no demand, in a society that has trillions more of deleveraging to undergo. And banks realize that with retail investors not participating in the stock market, and thus having nobody to offload risky exposure to, using reserves to bid up risky assets will merely result in more pain down the road once profit taking time comes and everything goes bidless. As such, as debate over the utility of QE is moot. The only question is what the Fed’s persistent desire to debase the dollar will do the perception of monetary aggregates (i.e., the stability of the dollar) and whether the demand for alternatives (such as gold) will offset the need to liquidate said alternatives as a last-ditch source of capital to cover margin calls in a deflationary vortex. Everything else is smoke and mirrors.

[Arraya]

[quote=Rich Toscano]

1. They have actually radically changed the definition of money to include all money AND credit. Money and credit are two completely different factors and summing them into one monolithic statistic makes no sense (not to mention hopelessly muddying up the debate by unilaterally fabricating new definitions of terms).
[/quote]

No doubt, they expanded the definition and it muddies things. Whether it makes sense, is what is muddied to me. As I said before, Steve Keen did some interesting work on this subject. Under their reasoning we could have inflation, under your stricter definitions, but it still would look and feel like deflation i.e equities and commodities price collapses. If true, then it makes sense.

Steve Keen’s DebtWatch No 31 February 2009: “The Roving Cavaliers of Credit”

As of now, very little deleveraging as taken place. Which is important in regards to job growth. I believe, if we don’t get a good bit of genuine job growth more deleveraging has to take place, which, triggers deflationary pressures.

Steve Keen’s Scary Minsky Model

Steve Keen’s Scary Minsky Model

And TAE partially bases assumptions on that, which is originally based on Hyman_Minsky’s models, if we wanted to track the derivation. Basically, stating debt bubbles inherently create a ponzi dynamic.

http://en.wikipedia.org/wiki/Hyman_Minsky

[quote=Rich Toscano]
2. So far, the Fed has printed about a trillion and a half dollars, and the bond market has not objected at all.
[/quote]

Agreed, I think this is beyond all of our pay grades to assess and is reserved to geo-political back room deals that we are not privy to. The bond market is close to 100 trillion dollars, so, I’m sure they have some say. It’s more than double the size of equities. If I had to guess, there is a limit at some point, of which I have no idea.

[quote=Rich Toscano]
3. If the Fed monetizes assets, that can get money into the real economy (eg, if it buys Treasuries, that gives new money to the govt which then spends it into the economy). Also, as with #2, the data says otherwise: they printed money in 09 and the consumer price deflation ended. Printing money isn’t “effective” in terms of making things better, but it can most certainly be “effective” in terms of ending deflation.[/quote]

Agreed, they did stop deflation and “righted” the ship, for now. However, it looks like they will have to keep up the “interventions” for years to keep it from falling and also combat consumer and lender behavior. Which is another subject all together.

Aggregate deflationary behavior is hard to combat with a printing press.

http://www.zerohedge.com/article/here-simple-reason-why-qe-unnecessary

As the following chart from David Rosenberg demonstrates, consumers are retrenching, and “just saying no” to both residential and consumer loans. Earlier, we also showed that Small Businesses also contracted, demonstrating that credit demand is collapsing at every vertical of US society. As such, QE, or ever cheaper money, has and always will be a “push” phenomenon, for which there is simply no demand, in a society that has trillions more of deleveraging to undergo. And banks realize that with retail investors not participating in the stock market, and thus having nobody to offload risky exposure to, using reserves to bid up risky assets will merely result in more pain down the road once profit taking time comes and everything goes bidless. As such, as debate over the utility of QE is moot. The only question is what the Fed’s persistent desire to debase the dollar will do the perception of monetary aggregates (i.e., the stability of the dollar) and whether the demand for alternatives (such as gold) will offset the need to liquidate said alternatives as a last-ditch source of capital to cover margin calls in a deflationary vortex. Everything else is smoke and mirrors.

[ucodegen]

[quote Rich Toscano]
We’ve had a couple months of falling headline (but not core) CPI, but as far as long term prospects are concerned nothing has changed — so the sudden fascination with deflation, and the rehashing of the same old arguments, is pretty puzzling to me and sometimes I get a bit impatient with the topic. Nothing personal!
[/quote]

I don’t pay too much attention to the current ‘headlines’. I have noticed a pattern of ‘herding’ the ‘Joe6Pack investor’ back and forth (creates churn for the investment firms, as well as opportunities for short term traders). A lot of the investment ‘market’ has turned more into speculation as opposed to taking the time required for investment. As a result – headlines alternate between inflation worries and deflation worries.

[ucodegen]

[quote Rich Toscano]
We’ve had a couple months of falling headline (but not core) CPI, but as far as long term prospects are concerned nothing has changed — so the sudden fascination with deflation, and the rehashing of the same old arguments, is pretty puzzling to me and sometimes I get a bit impatient with the topic. Nothing personal!
[/quote]

I don’t pay too much attention to the current ‘headlines’. I have noticed a pattern of ‘herding’ the ‘Joe6Pack investor’ back and forth (creates churn for the investment firms, as well as opportunities for short term traders). A lot of the investment ‘market’ has turned more into speculation as opposed to taking the time required for investment. As a result – headlines alternate between inflation worries and deflation worries.

[ucodegen]

[quote Rich Toscano]
We’ve had a couple months of falling headline (but not core) CPI, but as far as long term prospects are concerned nothing has changed — so the sudden fascination with deflation, and the rehashing of the same old arguments, is pretty puzzling to me and sometimes I get a bit impatient with the topic. Nothing personal!
[/quote]

I don’t pay too much attention to the current ‘headlines’. I have noticed a pattern of ‘herding’ the ‘Joe6Pack investor’ back and forth (creates churn for the investment firms, as well as opportunities for short term traders). A lot of the investment ‘market’ has turned more into speculation as opposed to taking the time required for investment. As a result – headlines alternate between inflation worries and deflation worries.

[ucodegen]

[quote Rich Toscano]
We’ve had a couple months of falling headline (but not core) CPI, but as far as long term prospects are concerned nothing has changed — so the sudden fascination with deflation, and the rehashing of the same old arguments, is pretty puzzling to me and sometimes I get a bit impatient with the topic. Nothing personal!
[/quote]

I don’t pay too much attention to the current ‘headlines’. I have noticed a pattern of ‘herding’ the ‘Joe6Pack investor’ back and forth (creates churn for the investment firms, as well as opportunities for short term traders). A lot of the investment ‘market’ has turned more into speculation as opposed to taking the time required for investment. As a result – headlines alternate between inflation worries and deflation worries.

[Author]

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