Our 30 year Treasury yield ‘Continuum’ chart indicates that deflation is the dominant trend, but…
Steve Saville has written a post that got me thinking about carts and horses and more precisely, which comes before which. Is the inflationary horse pulling the deflationary cart uphill or is the deflationary cart leading the horse to drink from the shrinking liquidity pool periodically?
See The Crisis-Monetisation Cycle
In conclusion to this short post, Steve asserts…
“The crisis-monetisation cycle doesn’t end in deflation. The merest whiff of deflation just encourages central bankers and politicians to do more to boost prices. In fact, the occasional deflation scare is necessary to keep the cycle going. The cycle only ends when most voters see “inflation” as the biggest threat to their personal economic prospects.”
And over the course of decades now that is exactly the case. Every damn time that the public becomes terrified of declining asset (especially equity) prices the Fed springs into action.
On March 19, 2020, we asked… Continue reading "The Inflation/Deflation Debate Wears On"