To: Little Joe who wrote (9915 ) 4/18/2003 8:49:36 AM From: austrieconomist Read Replies (3) | Respond to "inflation/deflation scenario" agreement with you and I am also prone to agree with you on the likely outcome to inflation. The difference in take on this is timing from an investment perspective. Yes, the U.S. banking authorities may be likely to "hand out money on street corners" but the crucial investment information is THAT THEY ARE NOT DOING IT YET! These things take time, stemming from the injection of reserves into the system by purchases of bills or, has been speculated, longer term bonds. This information as to when and if that type of action is taking place is not front page material but it does get publicly reported. If an investor waits to see such action he/she will be ahead of 99% of the investment crowd. Plenty of time to get in at the head of the line, as the impact is not seen for at least a year and my sense is that, even after a year, 70% of the crowd who will hop on the inflation train will not yet be in. In the meantime, by waiting you avoid the possibility of big time losses by guessing wrong on the inflation/deflation question or, as another investment outcome, a long period of time with dead money. The TIPS/10 year bond differential is another indicator from the sophisticated bond crowd which is not as yet screaming inflation, although it is up from its lows last year. ECRI's future inflation gauge has been good in the past and has had 20%+ readings for six consecutive months until it fell to 17% last month. I will be looking at this carefully because its fall off dovetails with the fall off of the CRB Index in January.
