A Timely Lesson for Today’s Stock Market Investors

Setup for a deflationary crash

“The names may change, but the psychology remains the same.” By Elliott Wave International Have you ever compared chart patterns from history with financial markets today? Elliott Wave International can show you the unique value of doing exactly that. Why? Because patterns on market charts repeat themselves. It happens across the globe, regardless of time period. When a still-unfolding pattern in the present looks a lot like a chart from the past, the price action to come may well remain on that earlier path. Which means you can anticipate what’s next. [Ed. note: this video link shows you an example] […]

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An “Unprestigious” Preview of Debt Deflation

Carillion PLC Deflation

An “Unprestigious” Preview of Debt Deflation By Elliott Wave International Evidence: Your Bond Fund Is Riskier Than You Think Debt deflation has taken down a huge multinational builder. Pitfalls in the bond market are growing too risky for bond investors to ignore. Learn what you need to know in a free, new report from EWI’s Murray Gunn — “Your Bond Fund: It’s Riskier Than You Think.” Learn more and register for free! This article was syndicated by Elliott Wave International and was originally published under the headline An “Unprestigious” Preview of Debt Deflation. EWI is the world’s largest market forecasting […]

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The Size Of The Financial Avalanche Coming Grows Larger

Inflation vs deflation. The true economic definition of “inflation” is the rate of increase in the money supply in excess of the rate of increase in wealth output. Inflation is monetary in nature. Rising prices are the manifestation of inflation. Someone I follow on Twitter posted an ingenious example from which to conceptualize the true concept of inflation using the game of Monopoly: The players all start out with reasonable amounts of money to speculate on real estate. As the game proceeds, players collect $ 200 by simply passing Go and use this money to speculate on real estate. By […]

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Deflation Basics Series: The Quantity Theory of Money

Here’s our challenge. In order to be aware of the investment pitfalls and opportunities that deflation can bring, we must first understand the basic elements of why it occurs. So our challenge is to try and make monetary economics, a subject that most people would find duller than watching paint dry on a wall, understandable and, dare I say it, fun! It’s a big ask but we like a test, and so here is the first in our Deflation Basics Series — The Quantity Theory of Money. The Quantity Theory of Money (QTM for short) is the very essence of […]

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What Happens When the Fed FINALLY Reduces Its $4.5 Trillion Balance Sheet?

Bloomberg Barclays Global Aggregate Credit index yield spread

So, there we have it. Deflation has started. The Federal Reserve announced last month that they would start to reduce their $4.5 trillion balance sheet in October, thereby starting the process we call Quantitative Tightening (QT). As expected, they are aiming to do it gently and quietly, by not reinvesting bonds as they mature, starting with sums of around $6 billion of Treasuries and $4 billion in Mortgage-Backed Securities (MBS). The scale of non-reinvestment will gradually increase. Once in full swing, the Fed’s balance sheet could reduce by up to $150 billion each quarter. Conventional analysis might conclude that the […]

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Why Oil Prices Can’t Bounce Very High; Expect Deflation Instead

Economists have given us a model of how prices and quantities of goods are supposed to interact. Figure 1. From Wikipedia: The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product. Unfortunately, this model is woefully inadequate. It sort of works, until it doesn’t. If there is too little a product, higher prices […]

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Inflation Continues to Trend Downward in May

The inflation rate in a core CPI excluding shelter has been -0.2 percent over the last three months. Inflation in both the overall and core Consumer Price Index (CPI) showed evidence of slowing in May. The overall CPI actually fell by 0.1 percent in May, driven by a 2.7 percent drop in energy prices. The overall CPI is now up by 1.9 percent over the last year. The core index rose by 0.1 percent. It has increased by 1.7 percent over the last year. Both indices are showing lower rates of increases in May than they had earlier in the […]

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Deflation: There’s an App for That

Once in a while I see a financial news headline so obviously ridiculous, I feel I should look at the writer with pity in my eyes and pat them on the head, the way you might comfort a child that just dropped his ice cream cone on the floor. “Inflation is Right Around the Corner, Yellen Insists.” Of course it is… In defense of the columnist who wrote the story, these weren’t necessarily his views. He was simply relaying the Fed Chair’s comments from Wednesday. My real pity is reserved for Ms. Yellen herself. If she actually believes that inflation […]

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The Great Deflation, Gold, and the Dollar

The coming GREAT DEFLATION will impact the value of Gold and the Dollar much differently than what most analysts are forecasting. Unfortunately, most analysts do not understand the true underlying value of gold or the U.S. Dollar, because they base their forecasts on information that is inaccurate, flawed or imprecise. This is due to two faulty theories: monetary science supply-demand market forces While some aspects of monetary science and supply and demand forces do impact the prices of goods and services (on a short-term basis), the most important factor, ENERGY, is totally overlooked. You will never hear Peter Schiff include […]

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HARRY DENT: Our Money Velocity Sucks

Harry Dent Dr. Lacy Hunt has been featured more than any outside speaker at our IES conferences. Why? Because he’s the only classical economist I fully admire and he is a successful bond investment manager in the real world that understands the trend towards deflation, despite unprecedented money-printing. I love the gold bugs for being realistic and honest about the debt and financial asset bubble we’re in, especially when most mainstream economists and analysts are blind to it. What kills me about the gold bug types is that they always see hyperinflation from unprecedented money-printing, and they don’t go back […]

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