What are your thoughts? Housing going UP or DOWN?

[Rich Toscano]

[quote=Arraya]Consumer credit has contracted 15 of the last 16 months. Bernake was just out telling lenders to make it easier for small businesses to get credit.

Credit is a money “equivalent” but not measured in M2. Some say credit is the vast majority of “money” supply. Depending on definitions.

Here’s Mish, from 2008;

”Although Japan was rapidly printing money, a destruction of credit was happening at a far greater pace. There was an overall contraction of credit in Japan for close to 5 consecutive years. Property values plunged for 18 consecutive years. The stock market plunged from 40,000 to 7,000. Cash was hoarded and the velocity of money collapsed.

These are classic symptoms of deflation that a proper definition incorporating both money supply and credit would readily catch. Those looking at consumer prices or monetary injections by the bank of Japan were far off the mark. Yes, there was deflation in Japan. Furthermore, if deflation can happen in Japan, then there is no reason why it cannot happen in the US as well.”[/quote]

Credit is not the same thing as money and the two cannot be “summed” as if they are the same thing. Quoting once again from the article I ALREADY LINKED TO in this thread:

Some people argue that the “credit deflation” — the reduction in lending and borrowing — will overwhelm any money-printing the government can undertake.

We’ll begin by once again pointing out that the government can create as much new money as is needed to stoke inflation.

Additionally, this argument blurs the distinction between money and credit. Credit and money are not the same thing. Imagine a desert island where the money supply consists of a single $10 bill. There is, to put it another way, $10 worth of ability to purchase. The $10 belongs to Alice, but she lends it to Bob. Bob turns around and lends it to Charlie, who lends it to Dave. There is now $30 worth of credit in the economy, consisting of three separate $10 loans. But there is still only that one $10 bill. All the lending has moved the $10 around, but it hasn’t created any new ability to purchase.

Outside the fractional reserve banking system, lending does not create purchasing power. For every borrower who gains purchasing ability, as in our example on the island, there is a lender who had to forfeit that purchasing ability.

It’s different for banks. They can actually lend money into existence — but in so doing, they are creating credit and money at the same time. The money they create will become part of the money supply.

So it’s really money, not credit, that is the proper measure of society’s aggregate ability to purchase.

With that said, there are some ways in which a credit contraction can put downward pressure on both prices and new money creation.
Credit doesn’t increase aggregate purchasing power, unless it also leads to the creation of new money, but it does tend to move that purchasing power from “strong hands” to “weak hands.” The money is being lent by someone who doesn’t want to spend it to someone who does. So credit is an accelerant to monetary velocity, and a credit contraction can accordingly induce a price-deflationary effect.

Reduced willingness to lend on the part of fractional reserve bank could also slow the rate at which new money is lent into existence. Money supply could theoretically deflate if old loans were called in and not replaced by new money growth — but the money supply charts above show that this is clearly not happening.

So as with asset price declines, credit contractions exert price-deflationary pressures via decreases in velocity and banking-sector money creation. But while credit contractions have deflationary elements, it is simply not valid to compare the amount of money being created by the government to the amount of credit being destroyed.

As far as Japan, that’s a strawman because they just didn’t print that much money. I’ve documented before that their money creation was extremely muted throughout the first decade of their deflation, and stark contrast to our own.

Sorry for the impatient tone on this guys, I just get frustrated with the constant going in circles on this topic. I wrote the above articles a year and a half ago, and have revisited the topic many times since, and yet people still keep trying to draw me into the same arguments I have addressed many times. (It adds to my frustration that all I did was correct a simple misapprehension about money supply and that once again launched all the same old tired questions).

If anyone wants to discuss the inflation/deflation topic with me, I would request that you first read both articles linked to in this post:

No Deflationary Spiral Forthcoming

…as well as all the comments in the post, as I think the vast majority of the topic has already been covered in the articles or those comments.

Thanks.

[patientrenter]

“I wrote the above articles a year and a half ago, and have revisited the topic many times since, and yet people still keep trying to draw me into the same arguments I have addressed many times.”

You are very patient, Rich.

People need certainty. So they want to believe that only one outcome is possible. Anything that gets in the way of that belief tends to get brushed aside – over and over again. At some point, it’s best to just ignore it.

[patientrenter]

“I wrote the above articles a year and a half ago, and have revisited the topic many times since, and yet people still keep trying to draw me into the same arguments I have addressed many times.”

You are very patient, Rich.

People need certainty. So they want to believe that only one outcome is possible. Anything that gets in the way of that belief tends to get brushed aside – over and over again. At some point, it’s best to just ignore it.

[patientrenter]

“I wrote the above articles a year and a half ago, and have revisited the topic many times since, and yet people still keep trying to draw me into the same arguments I have addressed many times.”

You are very patient, Rich.

People need certainty. So they want to believe that only one outcome is possible. Anything that gets in the way of that belief tends to get brushed aside – over and over again. At some point, it’s best to just ignore it.

[patientrenter]

“I wrote the above articles a year and a half ago, and have revisited the topic many times since, and yet people still keep trying to draw me into the same arguments I have addressed many times.”

You are very patient, Rich.

People need certainty. So they want to believe that only one outcome is possible. Anything that gets in the way of that belief tends to get brushed aside – over and over again. At some point, it’s best to just ignore it.

[patientrenter]

“I wrote the above articles a year and a half ago, and have revisited the topic many times since, and yet people still keep trying to draw me into the same arguments I have addressed many times.”

You are very patient, Rich.

People need certainty. So they want to believe that only one outcome is possible. Anything that gets in the way of that belief tends to get brushed aside – over and over again. At some point, it’s best to just ignore it.

[Arraya]

Sorry, just re-read our article and I agree with almost everything you said. Also, I think it is probably the most complete argument for inflation that I have read, which is a lot over the past few years. However, an area that I think is unclear is how *credit* acts in the economy. And this is probably your biggest divergence with the deflationist argument.

I think Steve Keen’s take on it is interesting. It’s the difference between theoretical and real life. I’m not sure if he is correct, but brings up some interesting points not to be dismissed.

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredi
t/

If neoclassical theory was correct, this increase in the money supply would cause a bout of inflation, which would end bring the current deflationary period to a halt, and we could all go back to “business as usual”. That is clearly what Bernanke is banking on:

snip

The only way that Bernanke’s “printing press example” would work to cause inflation in our current debt-laden would be if simply Zimbabwean levels of money were printed—so that fiat money could substantially repay outstanding debt and effectively supplant credit-based money.

Measured on this scale, Bernanke’s increase in Base Money goes from being heroic to trivial.

or TAE

http://theautomaticearth.blogspot.com/2009/07/july-5-2009-unbearable-mightiness-of.html

An understanding of the scale of the inflation we have lived through requires far more than looking at CPI or even casting an eye over conventional money supply measures. It is necessary to appreciate the role of credit and the massive scale of a credit expansion that largely took place in the unregulated shadow banking system. Credit is the critical factor, as the ‘moneyness’ of credit in a myriad different manifestations drove the expansion of the effective money supply

snip

Now that credit is contracting, that ‘free money’ has turned into unpayable debts and illiquid asset markets, which will eventually have to be marked-to-market. Now balance sheets must be rebuilt and neither borrower nor lender is willing to dig themselves into an even deeper hole. The velocity of money will inevitably fall dramatically as risk aversion rises, reserves are held again looming defaults and cash is hoarded. The scale of the bad debt in our global economy is gargantuan. The Fed cannot midwife credit creation under those circumstances, and things will get much worse before they get better.

Second, you mentioned that if the Fed wanted to they could issue everybody debt cards to inflate. They could, but I think there is a line the won’t cross, at least not while the international debt financing model is still in place. I also think their is a line in government spending that is getting fought on the political front as I write this and the elections coming up could put a damper on. Which would feed into Prechter’s theory. They already blocked unemployment benefits. The 787 billion stimulus is almost spent as well.

Third, Is behavior on the consumer front, which officialdom can’t force. They sure can encourage, but that is about it. A dramatic example would be consumers, en masse, not taking on new debt, spending very little and paying down old debt. Herding behavior is a very powerful force not to be over looked. Panics can change behavior on a dime and probably would render a printing press useless at least in the short term. I’ve been deflationary for at least 5 years.

Lastly, just by looking at the macro and I’m not talking about prices or charts or anything. It certainly looks like there is less money in circulation regardless of what M2 says, people are not paying their debts, states can’t pay their bills, 8 million people are not paying their mortgage, restricted supply is keeping RE values level, wages and tax receipts are stagnant or down, etc..

[Arraya]

Sorry, just re-read our article and I agree with almost everything you said. Also, I think it is probably the most complete argument for inflation that I have read, which is a lot over the past few years. However, an area that I think is unclear is how *credit* acts in the economy. And this is probably your biggest divergence with the deflationist argument.

I think Steve Keen’s take on it is interesting. It’s the difference between theoretical and real life. I’m not sure if he is correct, but brings up some interesting points not to be dismissed.

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredi
t/

If neoclassical theory was correct, this increase in the money supply would cause a bout of inflation, which would end bring the current deflationary period to a halt, and we could all go back to “business as usual”. That is clearly what Bernanke is banking on:

snip

The only way that Bernanke’s “printing press example” would work to cause inflation in our current debt-laden would be if simply Zimbabwean levels of money were printed—so that fiat money could substantially repay outstanding debt and effectively supplant credit-based money.

Measured on this scale, Bernanke’s increase in Base Money goes from being heroic to trivial.

or TAE

http://theautomaticearth.blogspot.com/2009/07/july-5-2009-unbearable-mightiness-of.html

An understanding of the scale of the inflation we have lived through requires far more than looking at CPI or even casting an eye over conventional money supply measures. It is necessary to appreciate the role of credit and the massive scale of a credit expansion that largely took place in the unregulated shadow banking system. Credit is the critical factor, as the ‘moneyness’ of credit in a myriad different manifestations drove the expansion of the effective money supply

snip

Now that credit is contracting, that ‘free money’ has turned into unpayable debts and illiquid asset markets, which will eventually have to be marked-to-market. Now balance sheets must be rebuilt and neither borrower nor lender is willing to dig themselves into an even deeper hole. The velocity of money will inevitably fall dramatically as risk aversion rises, reserves are held again looming defaults and cash is hoarded. The scale of the bad debt in our global economy is gargantuan. The Fed cannot midwife credit creation under those circumstances, and things will get much worse before they get better.

Second, you mentioned that if the Fed wanted to they could issue everybody debt cards to inflate. They could, but I think there is a line the won’t cross, at least not while the international debt financing model is still in place. I also think their is a line in government spending that is getting fought on the political front as I write this and the elections coming up could put a damper on. Which would feed into Prechter’s theory. They already blocked unemployment benefits. The 787 billion stimulus is almost spent as well.

Third, Is behavior on the consumer front, which officialdom can’t force. They sure can encourage, but that is about it. A dramatic example would be consumers, en masse, not taking on new debt, spending very little and paying down old debt. Herding behavior is a very powerful force not to be over looked. Panics can change behavior on a dime and probably would render a printing press useless at least in the short term. I’ve been deflationary for at least 5 years.

Lastly, just by looking at the macro and I’m not talking about prices or charts or anything. It certainly looks like there is less money in circulation regardless of what M2 says, people are not paying their debts, states can’t pay their bills, 8 million people are not paying their mortgage, restricted supply is keeping RE values level, wages and tax receipts are stagnant or down, etc..

[Arraya]

Sorry, just re-read our article and I agree with almost everything you said. Also, I think it is probably the most complete argument for inflation that I have read, which is a lot over the past few years. However, an area that I think is unclear is how *credit* acts in the economy. And this is probably your biggest divergence with the deflationist argument.

I think Steve Keen’s take on it is interesting. It’s the difference between theoretical and real life. I’m not sure if he is correct, but brings up some interesting points not to be dismissed.

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredi
t/

If neoclassical theory was correct, this increase in the money supply would cause a bout of inflation, which would end bring the current deflationary period to a halt, and we could all go back to “business as usual”. That is clearly what Bernanke is banking on:

snip

The only way that Bernanke’s “printing press example” would work to cause inflation in our current debt-laden would be if simply Zimbabwean levels of money were printed—so that fiat money could substantially repay outstanding debt and effectively supplant credit-based money.

Measured on this scale, Bernanke’s increase in Base Money goes from being heroic to trivial.

or TAE

http://theautomaticearth.blogspot.com/2009/07/july-5-2009-unbearable-mightiness-of.html

An understanding of the scale of the inflation we have lived through requires far more than looking at CPI or even casting an eye over conventional money supply measures. It is necessary to appreciate the role of credit and the massive scale of a credit expansion that largely took place in the unregulated shadow banking system. Credit is the critical factor, as the ‘moneyness’ of credit in a myriad different manifestations drove the expansion of the effective money supply

snip

Now that credit is contracting, that ‘free money’ has turned into unpayable debts and illiquid asset markets, which will eventually have to be marked-to-market. Now balance sheets must be rebuilt and neither borrower nor lender is willing to dig themselves into an even deeper hole. The velocity of money will inevitably fall dramatically as risk aversion rises, reserves are held again looming defaults and cash is hoarded. The scale of the bad debt in our global economy is gargantuan. The Fed cannot midwife credit creation under those circumstances, and things will get much worse before they get better.

Second, you mentioned that if the Fed wanted to they could issue everybody debt cards to inflate. They could, but I think there is a line the won’t cross, at least not while the international debt financing model is still in place. I also think their is a line in government spending that is getting fought on the political front as I write this and the elections coming up could put a damper on. Which would feed into Prechter’s theory. They already blocked unemployment benefits. The 787 billion stimulus is almost spent as well.

Third, Is behavior on the consumer front, which officialdom can’t force. They sure can encourage, but that is about it. A dramatic example would be consumers, en masse, not taking on new debt, spending very little and paying down old debt. Herding behavior is a very powerful force not to be over looked. Panics can change behavior on a dime and probably would render a printing press useless at least in the short term. I’ve been deflationary for at least 5 years.

Lastly, just by looking at the macro and I’m not talking about prices or charts or anything. It certainly looks like there is less money in circulation regardless of what M2 says, people are not paying their debts, states can’t pay their bills, 8 million people are not paying their mortgage, restricted supply is keeping RE values level, wages and tax receipts are stagnant or down, etc..

[Arraya]

Sorry, just re-read our article and I agree with almost everything you said. Also, I think it is probably the most complete argument for inflation that I have read, which is a lot over the past few years. However, an area that I think is unclear is how *credit* acts in the economy. And this is probably your biggest divergence with the deflationist argument.

I think Steve Keen’s take on it is interesting. It’s the difference between theoretical and real life. I’m not sure if he is correct, but brings up some interesting points not to be dismissed.

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredi
t/

If neoclassical theory was correct, this increase in the money supply would cause a bout of inflation, which would end bring the current deflationary period to a halt, and we could all go back to “business as usual”. That is clearly what Bernanke is banking on:

snip

The only way that Bernanke’s “printing press example” would work to cause inflation in our current debt-laden would be if simply Zimbabwean levels of money were printed—so that fiat money could substantially repay outstanding debt and effectively supplant credit-based money.

Measured on this scale, Bernanke’s increase in Base Money goes from being heroic to trivial.

or TAE

http://theautomaticearth.blogspot.com/2009/07/july-5-2009-unbearable-mightiness-of.html

An understanding of the scale of the inflation we have lived through requires far more than looking at CPI or even casting an eye over conventional money supply measures. It is necessary to appreciate the role of credit and the massive scale of a credit expansion that largely took place in the unregulated shadow banking system. Credit is the critical factor, as the ‘moneyness’ of credit in a myriad different manifestations drove the expansion of the effective money supply

snip

Now that credit is contracting, that ‘free money’ has turned into unpayable debts and illiquid asset markets, which will eventually have to be marked-to-market. Now balance sheets must be rebuilt and neither borrower nor lender is willing to dig themselves into an even deeper hole. The velocity of money will inevitably fall dramatically as risk aversion rises, reserves are held again looming defaults and cash is hoarded. The scale of the bad debt in our global economy is gargantuan. The Fed cannot midwife credit creation under those circumstances, and things will get much worse before they get better.

Second, you mentioned that if the Fed wanted to they could issue everybody debt cards to inflate. They could, but I think there is a line the won’t cross, at least not while the international debt financing model is still in place. I also think their is a line in government spending that is getting fought on the political front as I write this and the elections coming up could put a damper on. Which would feed into Prechter’s theory. They already blocked unemployment benefits. The 787 billion stimulus is almost spent as well.

Third, Is behavior on the consumer front, which officialdom can’t force. They sure can encourage, but that is about it. A dramatic example would be consumers, en masse, not taking on new debt, spending very little and paying down old debt. Herding behavior is a very powerful force not to be over looked. Panics can change behavior on a dime and probably would render a printing press useless at least in the short term. I’ve been deflationary for at least 5 years.

Lastly, just by looking at the macro and I’m not talking about prices or charts or anything. It certainly looks like there is less money in circulation regardless of what M2 says, people are not paying their debts, states can’t pay their bills, 8 million people are not paying their mortgage, restricted supply is keeping RE values level, wages and tax receipts are stagnant or down, etc..

[Arraya]

Sorry, just re-read our article and I agree with almost everything you said. Also, I think it is probably the most complete argument for inflation that I have read, which is a lot over the past few years. However, an area that I think is unclear is how *credit* acts in the economy. And this is probably your biggest divergence with the deflationist argument.

I think Steve Keen’s take on it is interesting. It’s the difference between theoretical and real life. I’m not sure if he is correct, but brings up some interesting points not to be dismissed.

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredi
t/

If neoclassical theory was correct, this increase in the money supply would cause a bout of inflation, which would end bring the current deflationary period to a halt, and we could all go back to “business as usual”. That is clearly what Bernanke is banking on:

snip

The only way that Bernanke’s “printing press example” would work to cause inflation in our current debt-laden would be if simply Zimbabwean levels of money were printed—so that fiat money could substantially repay outstanding debt and effectively supplant credit-based money.

Measured on this scale, Bernanke’s increase in Base Money goes from being heroic to trivial.

or TAE

http://theautomaticearth.blogspot.com/2009/07/july-5-2009-unbearable-mightiness-of.html

An understanding of the scale of the inflation we have lived through requires far more than looking at CPI or even casting an eye over conventional money supply measures. It is necessary to appreciate the role of credit and the massive scale of a credit expansion that largely took place in the unregulated shadow banking system. Credit is the critical factor, as the ‘moneyness’ of credit in a myriad different manifestations drove the expansion of the effective money supply

snip

Now that credit is contracting, that ‘free money’ has turned into unpayable debts and illiquid asset markets, which will eventually have to be marked-to-market. Now balance sheets must be rebuilt and neither borrower nor lender is willing to dig themselves into an even deeper hole. The velocity of money will inevitably fall dramatically as risk aversion rises, reserves are held again looming defaults and cash is hoarded. The scale of the bad debt in our global economy is gargantuan. The Fed cannot midwife credit creation under those circumstances, and things will get much worse before they get better.

Second, you mentioned that if the Fed wanted to they could issue everybody debt cards to inflate. They could, but I think there is a line the won’t cross, at least not while the international debt financing model is still in place. I also think their is a line in government spending that is getting fought on the political front as I write this and the elections coming up could put a damper on. Which would feed into Prechter’s theory. They already blocked unemployment benefits. The 787 billion stimulus is almost spent as well.

Third, Is behavior on the consumer front, which officialdom can’t force. They sure can encourage, but that is about it. A dramatic example would be consumers, en masse, not taking on new debt, spending very little and paying down old debt. Herding behavior is a very powerful force not to be over looked. Panics can change behavior on a dime and probably would render a printing press useless at least in the short term. I’ve been deflationary for at least 5 years.

Lastly, just by looking at the macro and I’m not talking about prices or charts or anything. It certainly looks like there is less money in circulation regardless of what M2 says, people are not paying their debts, states can’t pay their bills, 8 million people are not paying their mortgage, restricted supply is keeping RE values level, wages and tax receipts are stagnant or down, etc..

[Rich Toscano]

Thanks Arraya. I agree with much of what you say. Some of it comes down to speculation; eg you think that there is a line the Fed won’t cross, whereas I speculate that the Fed WOULD cross that line if the alternative were a multi-year deflationary spiral. But I can respect that people will naturally have different opinions of how far the Fed and govt will push things… I just happen to be on the side of the spectrum that thinks that they will fight deflation at all costs by any means necessary.

One thing I will note though is that while wages are down, if you include government handouts in the picture, personal income has actually grown all along. Consider this chart from the excellent clearonmoney.com site:

Might the government handouts slow down? Sure, maybe (though I personally speculate that they will not do so as long as there is a perceived deflation threat). And are people less willing to spend that money? Yes, for as long as they consider cash a safe haven. So I’m not saying this is the only factor, by any means. However, it does demonstrate the reality that stimulative government policy can, and has succeeded in, growing personal incomes and putting money into people’s hands.

That said, I agree that there are deflationary forces at work right now and the timing of outcomes is as inscrutable as ever.

I will state though that at this point, I think the most likely “inciting incident” for turning things overtly inflationary will be a US govt funding crisis in which our foreign debtors finally realize they’re not geting paid back in real terms. Of course, that is a speculation as well.

[Rich Toscano]

Thanks Arraya. I agree with much of what you say. Some of it comes down to speculation; eg you think that there is a line the Fed won’t cross, whereas I speculate that the Fed WOULD cross that line if the alternative were a multi-year deflationary spiral. But I can respect that people will naturally have different opinions of how far the Fed and govt will push things… I just happen to be on the side of the spectrum that thinks that they will fight deflation at all costs by any means necessary.

One thing I will note though is that while wages are down, if you include government handouts in the picture, personal income has actually grown all along. Consider this chart from the excellent clearonmoney.com site:

Might the government handouts slow down? Sure, maybe (though I personally speculate that they will not do so as long as there is a perceived deflation threat). And are people less willing to spend that money? Yes, for as long as they consider cash a safe haven. So I’m not saying this is the only factor, by any means. However, it does demonstrate the reality that stimulative government policy can, and has succeeded in, growing personal incomes and putting money into people’s hands.

That said, I agree that there are deflationary forces at work right now and the timing of outcomes is as inscrutable as ever.

I will state though that at this point, I think the most likely “inciting incident” for turning things overtly inflationary will be a US govt funding crisis in which our foreign debtors finally realize they’re not geting paid back in real terms. Of course, that is a speculation as well.

[Rich Toscano]

Thanks Arraya. I agree with much of what you say. Some of it comes down to speculation; eg you think that there is a line the Fed won’t cross, whereas I speculate that the Fed WOULD cross that line if the alternative were a multi-year deflationary spiral. But I can respect that people will naturally have different opinions of how far the Fed and govt will push things… I just happen to be on the side of the spectrum that thinks that they will fight deflation at all costs by any means necessary.

One thing I will note though is that while wages are down, if you include government handouts in the picture, personal income has actually grown all along. Consider this chart from the excellent clearonmoney.com site:

Might the government handouts slow down? Sure, maybe (though I personally speculate that they will not do so as long as there is a perceived deflation threat). And are people less willing to spend that money? Yes, for as long as they consider cash a safe haven. So I’m not saying this is the only factor, by any means. However, it does demonstrate the reality that stimulative government policy can, and has succeeded in, growing personal incomes and putting money into people’s hands.

That said, I agree that there are deflationary forces at work right now and the timing of outcomes is as inscrutable as ever.

I will state though that at this point, I think the most likely “inciting incident” for turning things overtly inflationary will be a US govt funding crisis in which our foreign debtors finally realize they’re not geting paid back in real terms. Of course, that is a speculation as well.

[Rich Toscano]

Thanks Arraya. I agree with much of what you say. Some of it comes down to speculation; eg you think that there is a line the Fed won’t cross, whereas I speculate that the Fed WOULD cross that line if the alternative were a multi-year deflationary spiral. But I can respect that people will naturally have different opinions of how far the Fed and govt will push things… I just happen to be on the side of the spectrum that thinks that they will fight deflation at all costs by any means necessary.

One thing I will note though is that while wages are down, if you include government handouts in the picture, personal income has actually grown all along. Consider this chart from the excellent clearonmoney.com site:

Might the government handouts slow down? Sure, maybe (though I personally speculate that they will not do so as long as there is a perceived deflation threat). And are people less willing to spend that money? Yes, for as long as they consider cash a safe haven. So I’m not saying this is the only factor, by any means. However, it does demonstrate the reality that stimulative government policy can, and has succeeded in, growing personal incomes and putting money into people’s hands.

That said, I agree that there are deflationary forces at work right now and the timing of outcomes is as inscrutable as ever.

I will state though that at this point, I think the most likely “inciting incident” for turning things overtly inflationary will be a US govt funding crisis in which our foreign debtors finally realize they’re not geting paid back in real terms. Of course, that is a speculation as well.

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