Albert Edwards
Are we talking about a 50 percent decline here? When I see a headline like that, I immediately want to find a credible headline that disagrees with it. I am not a “permabear” and I think that standing in front of a huge wave of paper could prove to be somewhat counterproductive, to put it mildly. Besides, what puzzles me is the mostly binary nature of the opinions I hear. Bullish vs bearish. Inflation vs deflation. I reserve the option to assume that the reality may subsist somewhere in the combination of both.
Yes, I know that most new Federal Reserve Notes did not find their way into the broader economy (yet). The velocity of money comes to mind. Fed prints, banks do not lend, boomers buy bonds, and consumers are either unemployed and/or cautious/tapped out. But economies are not hermetic. At some point, assuming a continued and intensive reflationary pressure, paper may start leaking. But how much, how fast, where into? Stagflation, anybody?
Jim Rickards sees 5-7 percent deflation being countered by 5-7 percent inflation. I tend to agree with his assessment. A net effect may be at zero, but this is a very unstable state of affairs.
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