Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (22624)	2/1/2005 7:25:27 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

The idea that deflation is inevitable is a virtual religion with a few posters here. We will not see sustained deflation or even disinflation IMHO until inflation has become so bad that the public sees it -- not unemployment --as the main problem. It is no more a religion than the viewpoint you expressed. You also have the advantage (or do I mean disadvantage) of having every economist on the planet agreeing with you. That last sentence is one more reason why I think I am right. As for disinflation, we have been in disinflation ever since interest rates peaked at 18%. We are about to go into K-Winter of deflation, a period where stocks, homes wages, etc decline. Disinflation is the period stocks do best in. Deflation is the period stocks do worst in. In the K-cycle of life we have spring (reflation), summer (inflation), autumn(disinflation), and winter(deflation). You see to want to skip from autumn to summer or perhaps from autumn to spring without ever destroying the excesses of the past booms. Not likely IMO. History is on my side, as is Greenspan being wrong at every major turn (declaring victory over deflation), as is universal hatred of treasuries, as are a number of other factors that I have discussed at end. Greenspan did not defeat K-winter, he induced a fake spring. K-winter is coming after Autumn and before Spring and the cycle will be complete. You completely ignore the affects of a housing crash and conclude that inflation will occur as housing and the stock market crashes. Not likely. The idea that deflation is impossible with a fiat currency, in spite of the fact that Japan proved it can happen, is much more of a religion that what I profess. Mish