I discussed the relative nature of inflation and deflation in September. This chart uses somewhat different symbols but shows that prices are currently in a significantly deflationary spiral.
Chart courtesy of Stockcharts.com
It is very tough to see the inflation that some in the Fed continue to whine about. Sure, the current action to stablize prices could lead to inflation if left unchecked after the stabilization occurs. But it is obvious the problems the economy faces are to the downside. Real problems require real solutions while potential problems may never materialize. Some of those in the Fed see a monster under every bed.
Post Modified: October 10th, 2008 at 9:27 am
Tags: Bonds · Energy · Inflation-Deflation4 Comments
4 responses so far ↓
Andy
Is tomorrow the one year point for the SPX and are you still projecting a change in direction for that day (up)?
Is tomorrow the one year point for the SPX and are you still projecting a change in direction for that day (up)?
Fred - Yes. I expect the markets to turn up in the next few days. But I am often wrong… just ask my wife.
Deleveraging of paper is not necessarily deflation in the physical.