Deflation?
Recent quotation from Prechter.
"Virtually everyone believes that inflation will accelerate. Stock-market bulls think that the economy is going to boom, bringing inflation. Bears expect an inflationary, if not hyperinflationary, monetary crisis. Economists believe that the Fed can inflate at will and is committed to an inflationary policy. The only articles mentioning deflation in recent months have declared the prospect for it “dead.” This consensus is not merely overwhelming but reflects a belief as vast and deeply held as a religion. Against this backdrop of conviction, M3 since September has undergone its largest decline in 60 years (see graph, December issue), which is real, actual, deflation. What’s more, it has declined despite the strongest quarter of economic growth in decades, the lowest interest rates in half a century and a central bank committed verbally and by action to facilitating the expansion of credit! There is no interest rate spike or recession to explain away the decline in the money supply. The PPI has been flat for three years, and now even the CPI has had a down quarter.
"The dichotomy between what is happening and what people think will happen is colossal. Inflation is dead. Deflation is here, now. The money supply might rebound for a quarter or two as the stock market and economy top out, but at the largest degree of trend, the new deflationary trend will persist, and it will accelerate. The monetary trend is no longer close to the edge of the cliff; it is beginning to slide down its face. Participants are so drunk with inflationary certainty that they don’t even know that deflation is happening. They will remain oblivious until well after stocks reverse and turn down, signaling a change in social psychology."
A report of recent money supply data. Imo these have already dropped beyond the point of no consequence. Additionally they don't appear to be changing direction.
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