Global Inflation 'Disaster' Coming, Economist Xie Warns

International Business Times ^ | March 23, 2012 8:34 AM EDT | Hao Li

[DaxtonBrown]

What we are really in is a global biflationary depression. Money printing causes not only inflation, but pockets of deflation as trust in the system is lost and velocity V plummets. We’re still screwed (even worse than just inflation) but it can look benign as the numbers cancel out. Wages down, margins down (deflation) but food, gas up.
http://www.futurnamics.com/biflation.php

[arthurus]

no exception to rapid monetary growth leading to inflation,

It does not lead to inflation. Rapid monetary growth is inflation.

[snowsislander]

There is little reason, then, to believe these regulators will see the coming global "inflation disaster," independent economist Andy Xie warns in a recent commentary.

Certainly the Fed is aware of the inflation that they have ignited. That's the Fed's plan.

They are trying to push inflation because deflation worries them a lot more than inflation.

[fish hawk]

Oh, they see it, they just don’t give a damn.

[RegulatorCountry]

I'm not so sure I give this too much credence, for the simple fact that what he's positing, global inflation, would produce no notable distortion. It's sort of like the dire predictions of global currency collapse. If they all collapse, how would anyone really know. Currency valuations are relative to other currencies.

Yes, we're in a very dangerous, unprecedented situation, but what the future holds is far from simple or predictable. What we've seen thus far is deflationary, interspersed with commodity bubbles. Where in a deflationary economy, is the money coming from, to fuel the bubbles? Government stimulus.

Beyond that, well, there they be dragons, anyone who claims to know is trying to sell something.

[OldArmy52]

Zimbabwee economics is how the U.S. Govt avoids fiscal problems in the short term...just monetize the deficit (i.e. conterfeiting).

[meatloaf]

“... no ntaoble distortion.”? All you have to do is look at food pricing and packaging to see the distortion.

[RC one]

sounds like stagflation

[RC one]

Rapid monetary growth is inflation.

absolutely correct.

[RC one]

US sells 10 year TIPS at record negative interest rate

It looks like Xie isn't the only one anticipating inflation however. Follow the money.

[RC one]

as well as the overall diminished quality of basic goods. Less quality for the same money distorts the picture of inflation. Packaging does too for sure.

[meatloaf]

Less for more.

[djwright]

Just look at a true commodity....like beer. Have you purchased a 6-pack of bud lately?

[blam]

"It looks like Xie isn't the only one anticipating inflation however. Follow the money. "

Is it safe to say that, that (TIPS) is 'scared' money?

[RC one]

I home brew so no. ; )

[onona]

Blam,

Scared money is exactly how to put it ! The perfect expression.

[trebb]

It does not lead to inflation. Rapid monetary growth is inflation.

Yep - but the actual effects of inflation lag the excessive printing of "money" by some months. Inflation hasn't caught up with the glut the Fed has poured on the markets, so we can expect the pain to get worse even if they stop the madness right now.

[RegulatorCountry]

If inflation is being anticipated, what fool would lock themselves in for ten years, essentially paying a fee for return of capital?

If inflation is being anticipated, you'd instead see rate of return increasing, dramatically if the author is correct.

A negative rate of return on TIPS indicates anticipation of deflation.

[blam]

"A negative rate of return on TIPS indicates anticipation of deflation. "

Okay.

Why then would someone anticipating deflation even consider TIPS?

Wouldn't that be like buying hurricane insurance in Idaho?