2009 - Inflation or Deflation? 2010? 2011? Share Your Opinion on This Critical Issue

[ByLoSellHi]

With a global deleveraging happening, on a massive scale, with fiat currency being pumped into banks by government central banks (with those banks mainly hoarding said cash, or using it to cleanse toxic assets, and not loaning or recirculating it), with business and consumer credit lines being cut, on a massive scale, with manufacturing activity slowing dramatically, on a massive scale...

...and despite the deflation we've seen over the past 6 months or so....

....will deflation or inflation be the primary concern going forward, and at what point?

How can we have inflation if weak demand continues?

How can we have deflation with massive injections of fiat currency being pumped into every developed and developing economy by central banks?

 

[loza]

For the record - here is what I think will happen. Massive deflation first 5-10 years and then Global Hyperinflation for x number of years.....how is this, strike you?

Quote from ByLoSellHi:

With a global deleveraging happening, on a massive scale, with fiat currency being pumped into banks by government central banks (with those banks mainly hoarding said cash, or using it to cleanse toxic assets, and not loaning or recirculating it), with business and consumer credit lines being cut, on a massive scale, with manufacturing activity slowing dramatically, on a massive scale...

...and despite the deflation we've seen over the past 6 months or so....

....will deflation or inflation be the primary concern going forward, and at what point?

How can we have inflation if weak demand continues?

How can we have deflation with massive injections of fiat currency being pumped into every developed and developing economy by central banks?

 

[clacy]

Quote from loza:

For the record - here is what I think will happen. Massive deflation first 5-10 years and then Global Hyperinflation for x number of years.....how is this, strike you?

I tend to agree, but I would say modest deflation or flat growth for 1-2 years, followed by significant inflation. Just a guess of course.

 

[loza]

Yeah, I admit , my timing always sucked......so you could be right...

Quote from clacy:

I tend to agree, but I would say modest deflation or flat growth for 1-2 years, followed by significant inflation. Just a guess of course.

 

[gnome]

Quote from ByLoSellHi:

".. How can we have inflation if weak demand continues?

How can we have deflation with massive injections of fiat currency being pumped into every developed and developing economy by central banks?

Is this that, "Head in the oven, feet in the freezer.. but on balance, you're comfortable", thingy?

 

[harkm]

It seems likely that deflation may persist for a few months, maybe six. After that, conditions will probably improve slightly and inflation will tick up. Bernanke has implied that he will reverse his monetary stimulus as soon as conditions improve. However, If he reduces the money supply conditions will worsen so he most likely will hold off a while while inflations really gets cranked up. Of course all bets are off it the dollar gets killed suddenly the Chinese currency is forced to depeg. At that point all of our cheap Walmart products might double in price. I don't believe the Fed can simply print money with no consequenses. Something has to give.

 

[clacy]

Quote from harkm:

It seems likely that deflation may persist for a few months, maybe six. After that, conditions will probably improve slightly and inflation will tick up. Bernanke has implied that he will reverse his monetary stimulus as soon as conditions improve. However, If he reduces the money supply conditions will worsen so he most likely will hold off a while while inflations really gets cranked up. Of course all bets are off it the dollar gets killed suddenly the Chinese currency is forced to depeg. At that point all of our cheap Walmart products might double in price. I don't believe the Fed can simply print money with no consequenses. Something has to give.

This is an honest question, not meant to be smartass, but how would the Chinese currency be "forced" to depeg?

It seems that would be THE LAST thing China would want in this environment.

 

[harkm]

Quote from clacy:

This is an honest question, not meant to be smartass, but how would the Chinese currency be "forced" to depeg?

It seems that would be THE LAST thing China would want in this environment.

Maybe they wouldn't, I don't know. So you are saying that if countries around the world lost confidence in the Dollar due to debasing then the Chinese would simply ride the Dollar down? Is China that reliant on the United States?

 

[Daal]

Quote from clacy:

I tend to agree, but I would say modest deflation or flat growth for 1-2 years, followed by significant inflation. Just a guess of course.

That sounds about right