Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: ild who wrote (6621)	5/19/2004 12:23:34 PM
From: valueminded	Read Replies (1) of 116555

Ild: I think we have differing views of deflation. In my thinking, deflation is when cost of goods decreases, ie the dollar becomes more valuable in buying power. I just do not see this as a possibility - ie See my email on cost of doing business, etc. Everything has gone up in price significantly over the past several years. In terms of assets, there will be adjustments. I think stocks and to some extent real estate are significantly overvalued. They will be reallocated when other investments become more compelling or the risk is viewed to be excessive. I stand by my earlier prediction that inflation is the likely endgame. Yes with inflation and reluctantly higher interest rates (long term will sky rocket and short term will stay relatively low) real estate will fall. I would expect that if we were to get 9%- 10% interest rates, real estate would decline significantly. I just don't consider that as deflation as I wouldn't expect food, energy, medical costs, insurance etc to necessarily decline in tandem.

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