Mish Shedlock Explains Why We Have Deflation and Gold is Going Up

www.KerryLutz.com ^ | 01/19/2012 | Kerry Lutz

[appeal2]

Mike "Mish" Shedlock finally made it on to FSN's distinguished guest list. While Mish is often controversial and frequently derided by other members of the prognostication class, he has a unique perspective, which is entitled to some respect. As he explains it, the massive destruction of assets, such as real estate and debt backed securities has actually led to a shrinking of the money in circulation. Even though the Monetary Base M0 has greatly expanded in recent years, none of these newly created dollars have found their way in to the money supply. The reason is simple, banks aren't lending because of the lack of credit worthy borrowers.

As a result, while governments have greatly stepped up borrowing, inflation, as he sees it, has remained subdued. Nonetheless, he believes that the declining confidence in government and the global monetary system is leading to ever increasing gold prices. He's a big gold proponent and believes that it's the place to be. While some may take issue with his take on inflation versus deflation, he appears to arrive at the right place--gold is going up.

He's got a blog at http://globaleconomicanalysis.blogspot.com/ and is a registered investment advisor representative for Sitka Pacific Capital Management.

Listen to Mish

[appeal2]

Inflation or deflation, that is the question.

[whitedog57]

BS. Fed has been fighting deflation for years. We have selective deflation, not the Great Depression deflation, yet,

[qam1]

As a result, while governments have greatly stepped up borrowing, inflation, as he sees it, has remained subdued

LOL!

I guess this guy hasn't been to the supermarket lately

Real Estate isn't deflating, it was artificially over priced for years and it's still over priced.

A good video why America won't have a lost decade of deflation like Japan

Japan: America's Lost Decade

[freedomfiter2]

The thing is, it’s not just M1 and M2 that affect inflation. Given the collapse of the real estate values, there really hasn’t been a great influx of “money” to drive up prices.

[aaCharley]

Anyone who follows the advice of Mikey Sh*tluck, the Windy City Whiner, will be a loser in the long run. He has NEVER provided any return data for any account he manages. The blog is simply a cut and paste job with his various derogatory comments. His analysis has been consistently wrong, with an occasional stopped clock successful call. Three or four years ago he was certain that the outcome was going to be inflation, not deflation. He has espoused every nut job investment theory you can find. Now he believes in reading the tea leaves of Elliot Wave theory.