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To: Mark Fowler who wrote (123270)	4/9/2001 2:25:01 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 164684

yes, i do think so. we are imo at the onset of the 'winter season' of the Kondratyev Longwave, which comes after the disinflationary 'autumn' (the period of '81 - roughly now) and invariably is characterized by outright deflation. even the current cyclical uptick in inflationary pressures is consistent with the theory, it is referred to as the 'false spring'. the reason why the disinflation boom turns into a deflationary bust is that the Central Banks tend to hold interest rates too low during the disinflation stage, thereby inciting a credit and asset bubble. private sector debt has globally exploded to never before seen levels, especially so in the US. the process of weeding out the debt and the associated malinvestments and industrial overcapacities (well underway in Japan for the past decade) is painful, drawn out and usually results in endemic deflation. one way of gauging the market's long term inflation expectations is the yield spread between TIPS (Treasury Inflation Protected Securities) and normal t-bonds. according to this spread, which has shrunk precipitously in recent months, the cyclical inflation episode is close to ending.