Trouble is, the liquidity is flowing into those few commodities with reliable demand and the rest is deflating anyway. Adding pain to misfortune, salt on the wound, insult to injury is how it appears from this vantage point.
I suppose an argument could be made that price uncertainty and supply constraint due to price in certain areas prevents the full blown onset of a deflationary mindset.
But food? That’s just evil.
Food price increases are due to supply and demand unbalances not monetary policy.
From John Mauldin:
“Absent some new piece of data that I can’t see now, we are in for lower bond yields in the US. Rates are going lower and are going to stay low for longer than any of us can imagine.
I think the Fed will respond to the government acting in a fiscally responsible manner, which is inherently deflationary, by fighting that deflation with the only tool it has left; and that is outright monetization of debt. They will call it something else, of course, but that will be the actual outcome.
And they will be able to monetize more than you think they can without causing a repeat of the 1970s. Eventually it will catch up to us, as there is no free lunch, but they are betting they will be able to reduce some of the threat of actual inflation by cutting back on the money supply and raising rates. But we are years off from that. So, yes, at some point inflation will be back.
Anybody who says they know the timing is a lot more confident in his/her crystal ball than I am. Mine is rather cloudy on this topic. But I think I can see out a year or so, and it looks like continued low rates and deflation. By the way, just to appease the gold bugs among my readers, given my deflationary call, I will note in passing that solid gold stocks were up hugely during the deflationary Great Depression of the ‘30s. Even with the dollar on the gold standard. Just saying.”