Seven Faces of “The Peril” of Deflation

clipped from allamericaninvestor.blogspot.com

In this paper I discuss the possibility that the U.S. economy may become enmeshed in a Japanese-style, de‡ationary outcome within the next several years.

To frame the discussion, I rely on an analysis that emphasizes two possible long-run outcomes (steady states) for the economy, one which is consistent with monetary policy as it has typically been implemented in the U.S. in recent years, and one which is consistent with the low nominal interest rate, de‡ationary regime observed in Japan during the same period.

Original content Bob DeMarco, All American Investor

Roubini on the Credit Crunch, Global Recession, and Deflation (Part Two)

Part two of Nouriel Rubini's speech at the 2009 CBOE Risk Management Conference. He discusses several topics including: the credit crunch, global recession, and deflation.

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Stagflation on the Horizon?

The Fed could soon be facing both accelerating inflation and a slowing economy. And, this is my expectation.

Real disposable incomes (inflation-adjusted and after taxes) increased 0.1%, matching December with the lowest in nine months. A puny gain for sure and a possible sign that it could be negative next month. A sign of Stagflation?

Real (inflation-adjusted) consumer spending growth slowed to 0.2%, the weakest gain since August. Spending had risen 0.3% in January. Another potential bad sign.

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