At first I dismissed this article. Common snese economics suggests that pumping manufactured money into an economy causes inflation (whether by printing or lending). You can’t have inflation and deflation at the same time can you? Maybe so....
I have to admit I have been curious about how prices continue to climb in comodities (inflation and currency value drop?) while the typically appreciating asset values are stagnant or dropping. With interest rates low, money has no value in savings Vs. inflation. Still, there is cash on hand for investments in the stock market (because it’s better than savings?). I don’t understand the confidence in future returns for the investment market.
The stock market reminds me of 1999. It’s bullish nature does not reflect future economic expectation. That is, corporate performance expectations do not have a consistent or common thread that would justify universal expecations of higher investment returns (Are people “storing” money in the market?).
This article may suggest that runnaway inflation is already occuring and is (oddly and simultaneously) countering deflation. Maybe an economist can help here. Shouldn’t these two curves be in line with each other? Is this even possible? How do they come back together and what are the consequence? It can’t be good.
I remember blog posts from the day that nothing could stop the stock market run. Transition years later and you hear comments like the 4th quarter -.1% GDP drop was the best negative drop ever. It has since been revised upwards to +.1%.
There is lots of cash sloshing around in various areas. People with crappy credit and no savings can buy homes and cars at relatively low interest rates. It got tight for a while, but it is back to SNAFU. If the s**t goes sour, the FED will buy the bad paper..