"What have these people been smoking?"

Price Deflation: A Great Idea With Low Probability
by Gary North

The debate between those who predict price deflation and those who predict price inflation are debating over two closely related issues:

1. The likelihood of rising U.S. Federal debt to continue to rise;
2. The ability of the Federal Reserve System to continue to purchase as much of this rising debt as the Federal Open Market Committee (FOMC) decides is appropriate.

The debate is basically over the debt clock vs. the money supply statistics.

Some deflationists might argue that the debt question is much broader than Federal debt. It also includes private debt. In response, the inflationist argues that the source of the debt is irrelevant for monetary policy, since the FED can legally monetize any asset, including privately issued debt.

In the 30-year debate between those forecasters predicting more price inflation (99.99%) and those predicting price deflation (0.01%), three facts stand out:

1. The deflationists have been incorrect every year.
2. There is still a tiny niche market for newsletters predicting deflation, and approximately three editors have gotten rich by staking out this market.
3. Those few subscribers who have actually invested for 30 years in terms of deflation have lost most of their wealth.

This niche newsletter market will continue. There is always a market for newsletters predicting the opposite of what most experts predict. Those same three editors will continue to live well and prosper until either death or Alzheimer's brings their publishing careers to a close.

Now, do you not feel screwed?

--WP