Do you really think we'll see deflation when food prices are increasing on nearly every continent?
Look at the inflation number just reported in China- up another 5.4%. Australia also continues to raise rates because of inflationary pressures. The WSJ reported today that food prices are rising in Europe with items like butter due to go up 50% in the next year alone in Germany.
I don't disagree that deflation could be one of the results of a housing crash, but the economic indicators are not pointing towards that- even if housing prices drop 30% in the United States.
Tracey,
I admit that I am predicting a very rare financial event, deflation. My understanding of the level of debt and the extremes that world asset prices have been pumped up makes deflation more likely.
I will admit that a good deal of this is dependent on the psychology of the crowd so that they need to become expectant of falling prices. For the time being we are only seeing that in home prices but I would expect that to spread to consumer goods in the near future.
Tony C 's Elliott Waves show Oil dropping to $40 per barrel.
http://stockcharts.com/def/servl...606987&
cmd=show[s90853045]&disp=O
Check the stock chart for crude. $40.00 per barrel would be interesting. Of course Tropical Storm worries probably helped prices rise today. But 2-3 years out it would be an interesting scenario for oil to drop so much.
Commenting by HaloScan
