I have the impression that way too many folks have bought into to “inflation” scenario, the buy gold etc scenario without consideration of much much bigger factors.
How’s that Gold working out for you?
Virtually every major economy around the world and their central bankers are desperately trying to stop this “deflationary” cycle with the only tool that they have. Lower rates and some form of QE. QE is basically printing money, and while that is without a doubt inflationary and is exactly what these Central Bankers want. The only tool they have to fight deflation is to try and create inflation.
If you consider that the efforts have had the intended effect on some sectors (CPI), and has still been unable to generate the type of capital flows needed in new investments to generate any real economic growth then we are in deep deep trouble.
I’ve posted this many times before, but it’s worth repeating.
Deflation is a Bitch.
It’s like an endless stream of zombies that suck the life from whatever life still exists and you are (the FEDS) and have run out of ammunition, but the zombies still keep coming.
The only thing that can stop this is a REAL technological Breakthrough.
If and when it happens, the money will flood into that technology and all its constituents so fast that it will make your head spin.
If people took a closer look at the economic expansions that have occurred in the western world, they would see a series of “Bubbles”.
Technological breakthrough followed by a flood of money and its over investment followed by recession while the original breakthrough becomes a part of everyday life.
How many PC makers existed in 1987 vs the number today?
How many auto manufacturers existed in the 1920s vs today?
The world is flooded with cash and apparently it’s more concerned with its return OF investment vs. its return ON investment.
There is a reason for this.
I prefer the Dave Ramsey approach. Pay off a 4% mortgage, and you have a guaranteed 4% rate of return on your money plus lowered monthly overhead rates from there on out.
Give me some examples of deflation. Where are prices falling?
The interesting paradox as that real goods are being inflated because of the race to the bottom through currency devaluation, while the means to pay for it is being crushed in a deflationary death grip for the average person. QE to infinity and beyond was great for the top of the economy because they have the means to take advantage of asset appreciation and zero percent debt for capital investment. It did not work out for anyone else. They need to pump money into the bottom of the economy if they want to save it. Once people get used to living on less, it also becomes a mental barrier to convince them it is safe to not curl into fetal position.