Let's check definitions first? 1. Inflation/Deflation as in MONEY SUPPLY + NET CREDIT GROWTH? or 2. Increase or Decrease of consumer prices (e.g. as measured by BLS CPI) In the case of 1. I expect SIDEWAYS grinding over the next 5 years. Falling credit offsetting growth in money supply. In the case of 2. I'd go with what TIPs are implying http://www.bloomberg.com/apps/quote?ticker=USGG5Y5Y:IND ~2.2%
Excellent debate on the topic here http://globaleconomicanalysis.blogspot.com/2009/09/daniel-amerman-vs-mish-reflections-on.html 45+ minute audio: http://www.financialsense.com/Experts/2009/Shedlock.html
There will be inflation is what most sheeple owes (as in texes and costs) There will be deflation in what most sheeple owns (as in assets) Does not sound good to me
I see perpetual inflation with, like what we saw in the crash, shocks/corrections of deflation to counteract over investing and the derivatives market. Unless you are a trade wizard, volitility is not your friend as with every flux there is a huge transfer of wealth with some winners and a hord of losers. Higher end luxury items inflate (what rich people buy), lower end luxury items deflate (what poor people buy when they think they are rich). Basic needs items should follow a similar pattern of inflation as we see with the general market as world population grows, possibly having periodic deflationary shocks. Look at the price of milk at the store. Interests rates up. Someone has to buy the bonds, with few buyers Fed has no to compete the rates down. probabaly in the same boat as Ash.
I have voted severe deflationary pressures, as uneployment and personal income will be suffereing on a broadbased manner, in the 2018 ar around it may swing around to become a severe inflation but it hard with a nation broke.....and in debt....and jobless...
Not so great on one point, IMO. The author tries to make a case that housing prices should be included in the CPI calculation, comparing houses to rice. Not a good idea - housing prices are crazy. They move all over the place. Would you say that inflation is sky high in one area just because the housing prices are soaring? Take some farmland. Flood it to build a dam, build houses on the lake. Average cost of a shack predam? 50k. Average price now? 1.5mm. Man, that's inflation from countries that start with Z. You can't even compare historical prices because of so many variables. And then there's all those inverse reactions to sales that makes it even more crazy. Food and energy costs are like boring, plodding blue chip stocks with no growth paying out 3 points a year compared to house prices.
Inflation is not likely to return until the employment situation improves. Whatever inflation does occur will be choked off by weak demand. Large deficits don't typically lead to inflationary times but strong consumer demand does. The key will be employment and a rise in wages.