Asset Category Specific Inflation/Deflation

Hugo Salinas Price has some great ideas for Mexico to escape the USA Hegemon, and Price is a devotee of Antal Fekete, whom Mish reviews:

Antal Fekete: Certainly, with some reservations. It does not assign a very high IQ to businessmen in the field. Why don't they learn from experience and factor into their calculations the distortion in the rate of interest due to monetary policy? I improve on the business cycle of Mises, pointing an accusing finger to bond speculation motivated by risk free profits. Businessmen are the brightest people we have. They are being victimized through the insane monetary policy of the Fed.

Mish has a tool many miss, the credit inflation/deflation dynamic.  Yes, the bond speculators (speculators, or just picked insiders?) rock this credit aspect at usury to lay waste the middle class.  Sometimes you must accept the results reveal the intentions.

Mush seems to be missing that inflation and deflation can appear in specific asset categories, as igs vaguely recognized in the principle no asset class booms serially.  Says Mish...

I expect another round of deflation when various asset bubbles pop. Meanwhile, and as long as asset bubbles are expanding, I do not believe deflation is the best word to describe current events. However, I would describe the current setup as highly deflationary looking ahead.

Well, we are in deflation in some categories, like credit...  which Mish should see, but I don't think he sees deflation like inflation can be asset-category specific.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post