What's the best asset class for the next 1-5 years if we become deflationary?
- Thread starter ultimaonliner
- Start date
I think nobody spotted a contradiction because there was none. If you read my original post again, I ask about a deflationary period occuring AFTER a massive increase in the money supply.
In Japan's deflationary period, those asset classes did quite poorly with commercial real estate losing 99% of its value from its peak, as an example.
The phenomena you speak of may occur only prior to deflation if there is a rapid expansion of the money supply, but I'm asking more of what would occur if further increases in the money supply still cannot offset net deflation, such as in Japan.
About the only "deflation after massive inflation" is "total implosion of the monetary structure"... reissuance of the currency. Bankruptcy for nearly every US citizen. In that case, a warehouse full of shoes and toilet paper would be an EXCELLENT asset class. However, that probably 30-50 years off in the future.
If the fed were reasonable enough to not want spiralling inflation, and decided to not increase the money supply at some moment in the future, is it not possible that we could have a deflationary period?
BTW, I do respect your opinion, Gnome. Anybody who's for a limited, constitutional government has got to be okay
Of course, it's "possible", but HIGHLY unlikely. To take such action would certainly cast us into recession as the current mountain of inflation got wrung out of the economy. The Fed and the then current Adminstration would get the blame and have to endure the wrath of the citizenry. Also, incumbents would be unable to get re-elected, as all the opposition would have to do is claim, "look what those guys did to you... elect me and I'll save you from your misery".
I believe America is on a one-way path to hyper-inflation, currency destruction, and bankruptcy of nearly all of us. The politicos know the process should take 30-50 years or maybe a bit more and by then they will be dead. The mess will be left to our kids and grandkids. It's all quite unconscionable.
Both parties are to blame. (It's not just a Bush Admin. hosing, though he's made things much worse with his huge deficits and "revenge for Daddy war"). Gummint in general is to blame. The Fed is to blame.
Sorry to be such a Gloomy Gus, but I see nothing currently nor on the horizon to make me think differently.
