This Is What Deflation Looks Like

I have made it clear for two years now that we are in a highly deflationary environment occurring within the backdrop of a purely fiat monetary system that is governed by “experts” whose ideological framework is based upon the false economic religion known as Keynesianism. So for people that are actually trying to preserve their wealth an intellectual debate on inflation or deflation might be interesting but is not particularly productive. I can understand why many in the financial services industry see the greatest risk to be deflation. Why? Because for them it is. Stocks, bonds and real estate will perform horribly in the environment that we have. Even if they go up for periods, over time they will not make up for the cost of living increases in the things that we need. This is the major disconnect happening right now between “Wall Street” and “Main Street.” Wall Street has been coddled and pampered for two and a half decades by the natural forces of a secular bull market in financial assets as well as the Federal Reserve Chairman and a D.C. establishment that refuses to allow the free market to function. So when a money manager of financial assets looks into his future and sees deflation he is correct. When the majority of “Main Street” looks into their future they also correctly see inflation. That is because when you have 40 million Americans on food stamps I am sorry but they have much bigger issues to deal with than the S&P500. So the world we are looking at is where a BLT sandwich could cost $12 and home prices drop another 20%. Investment professionals have a very hard time getting the heads around this concept for some reason but that is the reality we are looking at. Goods that are wanted around the world will rise in price in debased dollars while non-essential items deflate. The Chinese want pork but they could care less about some McMansion in Ohio. There is nothing anyone can do to change this. It is a natural cycle as simple, powerful and inevitable as any cycle in nature. If it must happen, it will happen.

via Guest Post: If This Is What Deflation Looks Like… | zero hedge.

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