Deflation in prices from the massive write-off of business and real estate loans and bank failures was the hallmark of the 1930s.
We should expect the same going forward.
Writing of loans contracts the money supply even as the Govt. tries to inflate the economy with lower interest rates and liquidity.
Everybody will be focused in inflation/ hyper-inflation but the surprise will be from the coming deflation.
We are now witnessing the chatter over the coming inflation via the Fed and other Central Banks, the hyper inflationary scenarios people are discussing due to the liquidity in $ and the debasing of the USD etc.
This is a consensus and a crowded trade.
This wont happen.
What we will see is deflation.
Credit contraction can happen at a much faster rate than money printing. And this will cause the deflation in 2011-2016.
Crime and unemployment have a very high correlation.
We should expect the same going forward.
Writing of loans contracts the money supply even as the Govt. tries to inflate the economy with lower interest rates and liquidity.
Everybody will be focused in inflation/ hyper-inflation but the surprise will be from the coming deflation.
We are now witnessing the chatter over the coming inflation via the Fed and other Central Banks, the hyper inflationary scenarios people are discussing due to the liquidity in $ and the debasing of the USD etc.
This is a consensus and a crowded trade.
This wont happen.
What we will see is deflation.
Credit contraction can happen at a much faster rate than money printing. And this will cause the deflation in 2011-2016.
Crime and unemployment have a very high correlation.
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