The case for deflation

Z

Zlatko

I'm no macro analyst, I just look at the charts and trade what they tell me. But recently they have told a strange and unexpected story, and that story is deflation.

Commodities lower - check
USD higher - check
Treasuries higher - check
Stocks lower - check

How plausible do you guys think it is?
 
Credit contraction being larger than monetary infusion = deflation.

Commodities were the last bastion of inflation.

Deflation isn't all bad if you know it is coming.
 
Slow, very slooow deflation in housing and building materials from here out, no deflation in general economy, just an eventual cooling of inflation. This is not Japan, not yet anyway.
 
Alot will depend on how the massive GSE and corporate debt that is up for refinancing from now until the end of Dec is received. If poorly a global deflation scenario is quite possible. Currently cash is really the only safe place to hide.
 
Actually....the case for deflation is rather strong when one considers that the US is a credit driven economy, and that several trillion in credit is being pulled.....

What is going to replace this money....that is no longer going to be factored in to chase goods and services....?

How do prices go up.....when there is a lot less money around ?
 
Quote from libertad:

Actually....the case for deflation is rather strong when one considers that the US is a credit driven economy, and that several trillion in credit is being pulled.....

What is going to replace this money....that is no longer going to be factored in to chase goods and services....?

How do prices go up.....when there is a lot less money around ?
More...

You can make a case for deflation, but i think the need for the US to monetize its debt will overide. (In even less polite circles than ET this is referred to as "inflating ones way out of debt.") Furhermore, it seems the Fed considers deflation a more serious problem than inflation and so i would expect the Fed to do what it can to prevent deflation.
 
Quote from libertad:

Actually....the case for deflation is rather strong when one considers that the US is a credit driven economy, and that several trillion in credit is being pulled.....

What is going to replace this money....that is no longer going to be factored in to chase goods and services....?

How do prices go up.....when there is a lot less money around ?
More...

Hey . . . stop using COMMON SENSE.
You might throw a monkey-wrench into all of the Helicopter Ben "bashers" here on ET!

:D
 
You must log in or register to reply here.
Back
Top