Deflation V Inflation Mish - are you drinking the four roses again? hehe :)
There simply is no guarantee that equities are going to beat inflation either
Message 22571696
From Dr. Steve Sjuggerud at DailyWealth.com, we find him taking a page from Marc Faber's book Tomorrow's Gold, which he calls his "cheat sheet for the next ten years." From the book he lists the things that gained the most in the 1974-1980 period, which is highly reminiscent of today.
Back then, oil topped the list, rising 1,866% in price in that period of time. The next biggest winner was gold, up 1,458% in price, followed by U.S coins (1,053%), silver (739%), Chinese ceramics (607%), diamonds, farm land, art, followed by housing (164%), stocks (81%), bonds (89%), all of which sounds pretty good until you note that Mr. Sjuggerud includes the fact that inflation (as measured by the CPI) was up 110% in those six years.
the recent drop in retail sales.
321gold.com
If stock and commodity prices have recently commenced intermediate-term declines (we think they have) then the "expected CPI" will probably trend lower over the coming months. This is because most people wrongly associate falling asset prices with an increasing risk of deflation, even though the opposite is generally true since falling prices prompt the central bank to abandon any inflation-fighting pretense and enact policies that ultimately lead to higher inflation.
...The way we see it, the on-going spending commitments associated with the 'unwinnable' war against terror, combined with the costs of re-building New Orleans and the virtual certainty of the Fed adopting a loose monetary stance once asset prices become sufficiently weak, will eventually result in the US$ regaining its lead in the inflation race. |
