This is why the recent rally in risk assets (equities) is nothing more than a vicious Bear Market rally. This is why you must expect deflation... and why inflation is impossible."Americans Spent $1.5 trillion that should have been saved." Page 11/34, slide 10.
Read the full article The Age of Balance Sheet Recession: What Post 2008 U.S., Europe and China Can Learn from Japan 1990 - 2005.
Are you still of the opinion of deflation first then runaway inflation, or now only deflation?
ReplyDeleteWhy not both at the same time:
ReplyDeleteCrushing deflation in asset values and the value of investment portfolios - pensions f.ex.:
Combined With
Rapid inflation in living costs and taxes combined with rising unemployment squashing any possibility of salaries keeping up.
I've been reading about this balance sheet recession idea lately.
ReplyDeleteIts implications are that the economy will nosedive as everyone tries to pay off their debts simultaneously.
That's why fiscal policy can stimulate the economy. It is not tied to the business cycle, so can provide a floor for demand, along with other businesses not tied to the business cycle.
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ReplyDelete