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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: GST who wrote (90094)1/4/2008 11:36:13 PM
From: Chaka  Read Replies (1) of 110194
 
The general and extremely persistent trend in price levels across all currencies and all countries has been and continues to be inflation. Present circumstances point towards a sharp upward rise of the rate of inflation. We have enjoyed moderate inflation in the last ten years or more -- but the trend has shifted in recent years and threatens to lead to much worse inflation.

Looking at current milk and gas prices, one might naively think that future inflation will continue to shoot up. But predicting the future of inflation is no easy task. If you want some independent, professional analysis, subscribe to ECRI (http://www.businesscycle.com/). Their future inflation gauge for U.S. has been dropping for several months with the smoothed annualized growth rate at -4.6% in December 2007. Sure, they are not predicting deflation (at least not yet) but, currently they are definitely not seeing "sharp upward rise of the rate of inflation" and they believe the FED has sufficient room to cut rates.

P.S. You may or may not choose to believe ECRI but some points arguing for their merit: they correctly predicted several previous economic turning points well before mass media (and did not mis-predict any), they are an independent entity in existence for several decades and they are entirely dependent on professional subscriptions for their funding.
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