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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (239378)	2/25/2010 11:50:47 AM
From: GraceZ	Read Replies (1) \| Respond to of 306849

Just though you might have an opinion on deflation vs hyperinflation over the next 3-5 years? Inflation short of the level of hyperinflation. Inflation is a given. As long as there is a Fed, there will not be monetary deflation in this country even while portions of the economy will always be subject to falling relative prices (forever giving Mish something to point to as evidence for his deflation scenario). I expect a rise in the rate of change in inflation. A rise in the rate of change is something we haven't seen in decades as we were subject to the dis-inflationary effect of having to compete with the rest of the world that is considerably poorer than we are and willing to work harder for less. We won't see the runaway rise in the roc inherent in hyper-inflation because this requires significant policy mistakes on the part of government to accommodate rising prices (see Israel circa 1980s where they indexed salaries to the CPI which took away the last remaining friction needed to keep prices from rising). Here in the US, initially this rise in the rate of change will be seen as a good thing, as it was in the early sixties. People will be lulled into thinking things are getting better for them, the same way they were lulled into thinking RE inflation was good for them. What will create this situation? The inverse of what kept it at bay, restrictions on trade in the effort to protect American jobs and wage levels.