Peter Schiff makes a great point about why deflation needs to occur and why it would actually benefit our economy. We all know that our level of inflation is artificially high because, for some reason I don't understand, the govt and The Fed sees rising inflation as a sign of progress. So, prices are high for no fundamental reason whatsoever. www.youngandopulent.com
In my opinion, deflation would in fact be beneficial. I do believe QE and low interest rates are the problem. Only thing I can see happening as a result is stagflation.
There is a BIG reason why the government supports inflation... because it LOOKS like growth.... if you don't look too deeply. GDP is based upon the final price of goods and services. If prices are inflated 5%, looks like "5% growth" when there really was none. Yes, they calculate an "offset for inflation", but they fudge it to be less than it really is. More government "lipstick on the pig".
Totally agree. The question is: what will the equities and commodities markets do as a result of this ? 1) hard down 2) slight down 3) agonizingly sideways Certainly at these levels there's little upside.
First I must admit Ed, that I find you difficult to read. Perhaps that is because we come from different views. That's great though, I can learn from you. I would like to know what you mean by private credit in the above quote. Are major banks and the FED private credit agencies? Are you implying that the FED policy was correct but 'joe publi'c screwed it up by not increasing their debt? Do you have a graph of something that is deleveraging currently?
I made the same decision back in 2007 when this all started off. Even if you have a good idea of what is going to happen all you need is a goverment or central bank to make a competely stupid decision and it throws any kind of logical sense out of the window. Now the markets are unpredictable for two reasons the general fluctuations in the market and decisions governments and central banks make. It is double the uncertainty there is no way to predict things.
Do either of you two guys who are arguing here allow for the possibility that the collateral held on the Fed balance sheet may have been mispriced, priced way too low that is, when they acquired it? If so, is it possible that Bernanke and company will have the last laugh when 20 years from now they turn out to be geniuses.