"If this analysis is correct, it means a big deflationary spiral is dead ahead that will see market participants wide-eyed with fear. However, there should be a significant rally before then which will allow many to get their houses in order."
"And once this deflationary spiral has run its course, an inflationary bang of epic proportions should commence that will go down in history as one for the ages."
Wait ‘till they cut off the QE boondoggle.
And of course the Fed will raise rates because with a Republican Congress, all bad things will be blamed on it. Not saying they shouldn’t be raised, but just that anything that was being avoided like the plague will now be done.
Inflation due to low energy prices goes against my reasoning
The oil price drop is not inflationary. It will cause other prices to rise but that is not in itself inflation. There is a lot of inflation in the system but most of that monopoly money has gone into the stock market. Some prices rising while other prices fall is absolutely NOT inflation, unless, of course you got your economics education from a Keynesian survey course on the way to getting your MBA.
When the stock market bubble bursts then all prices outside of that will rise rapidly as the inflation that is already extant flows out of the NASDAQ and NYSE into the general economy where we actually buy stuff like food and clothes.
The big push for minimum wage increases is to support price inflation. The FedGov needs it to do a little debt monetizing, even if in small increments.
The Fed has no intention of raising rates anytime soon. They can barely service the debt now. Raise the rate and they will really struggle. They are like a hamster on a wheel at this point. No way out.
Goldbug ping.