Is a Deflation Shock Coming?
23 Minutes, 22 Slides
John discusses his two latest articles: 'Deflation Shock Coming? May 9th and Deflation Shock Coming? Part 2: Even Here May 15th in the context of the Inflation or Deflation debate and the implications for:
- Asset prices (especially stocks and real estate which look highly vulnerable here) and
- Policy in 2015 (when most of the major economies should be back to aggressive QE).
Paradox of Inflation
We have two worlds. One in the emerging markets and developing economies who are fighting inflation and in the developed economies who have signs of continued deflationary pressures. Now we are seeing inflation falling rapidly in China and Europe while producer prices just jumped in the US? What is going on?
Gord suggests we will have both in a specific sequence with regional counter-currents with his biggest inflationary worry being food.
Food price increases are politically destabilizing and bring predictable social unrest. The recent rapid rise in food prices should now be a concern.
There is no sure outcome to the debate but many of the signals that give us directional clues are now emerging. Join Gordon and John as they explore the subject.
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Thesis Paper: Financial Repression
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