Friday, June 5, 2009

The Case for Continued Deflation

After Marc Faber said he gives a 100% guarantee that we'll have hyperinflation, and many other commentators singing from the runaway inflation songsheet as well, I have been waiting to see Mish's counter-argument for continuing deflation.

Without even using the word, Mish has provided pretty stunning evidence for deflation at least in the short-term. Specifically, here is the first paragraph of an article entitled "Benefit Spending Hits $2 Trillion, Highest Percent Since 1929; One Dollar Out of Every Six From Vouchers":

As economic conditions deteriorate and unemployment continues to soar, one in nine Americans are now on food stamps. Moreover, a staggering one of every six dollars of Americans' income is now coming in the form of a federal or state check or voucher.

Ouch.

Note: I believe we will eventually have hyperinflation, and even Mish doesn't discount the possibility. Just not yet.

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5 comments:

  1. John LockeJune 5, 2009 at 4:07 AM

    This is an excellent chance for all moral people to benefit. We are moral, because we know the truth and don't believe governments lies. I'm buying gold and food in preparation for the inflation. If each of us plays our cards right we can come out of this ahead. This statement here is a very motivating take on facing an apparantently impossible battle:
    Fighting a hopeless battle

    ReplyDelete
  2. Laura Lee - Grace ExplosionJune 5, 2009 at 9:15 AM

    I'm posting a link to your different blog posts on facebook. People are picking you up. There are 200 million people on facebook. I hope you have a facebook account and link to your blog here. If not, please consider. You can join large groups of thousands, etc. You have very good information here. Thanks.

    ReplyDelete
  3. UnknownJune 5, 2009 at 8:05 PM

    Ravi Batra believes there will be inflation not hyperinflation and I believe that it will mostly depend on the value of the dollar. Since we import such a large percentage of everything including food , if the dollar sinks as lots think and looses reserve status prices of necessity things like food will go much higher.

    The result of all this is a return to food and some manufacturing returning to this country.

    ReplyDelete
  4. AnonymousJune 7, 2009 at 12:49 AM

    Grace, what a great idea, I hope he listens to your advice about Facebook!

    ReplyDelete
  5. roger jJune 7, 2009 at 9:00 AM

    Here is another argument against hyperinflation. David Rosenberg (w/ comments from Zero Hedge's Tyler Durden) put it beautifully:
    http://zerohedge.blogspot.com/2009/06/household-driven-deflation.html

    ReplyDelete

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