Higher threat of deflation leads to more chance of inflation

By Peter Boockvar - May 20th, 2010, 1:19PM

Coincident with the sharp drop in bond yields and commodity prices over the past few weeks, the implied inflation rate over the next 10 years as measured by the TIPS has fallen to 1.95%, the lowest since Oct ’09 and is down 25 bps just over the past 3 days. This action obviously feeds the disinflation/deflation argument but the inflation side of the debate is predicated on the belief that this short term behavior leads to more money printing and cheap money for longer to combat it. This encapsulates the inflation camp, the continued threat of deflation for now leading to the ever increasing fight on the part of central banks to combat it.

PERMALINK
Category: MacroNotes.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “Higher threat of deflation leads to more chance of inflation”

Abhishek Says:
May 20th, 2010 at 2:39 pm
One thing is for certain is that the benign inflation scenario of the last 20-25 years is not going to be seen again in the next 10 years.Whether we suffer from deflation or high inflation will be decided by a complex set of factors and actors which is difficult to predict right now.
X on the MTA Says:
May 20th, 2010 at 3:07 pm
ugh. more mal-investment in the making. I <3 Koo, but his ideas in the hands of pork-loving politicians are going create what I can only describe as a gigantic SAD FACE scenario.
boatman Says:
May 20th, 2010 at 7:40 pm
i second that abhishek, the chances of helicopter ben sticking a low inflation landing is zip-zero-nada, if he’s even alive to do it.
wisegrowth Says:
May 20th, 2010 at 7:46 pm
There is more threat of deflation than many think… some know how probable it really is…
subscriptionblocker Says:
May 20th, 2010 at 10:58 pm
Haven’t seen much turn out as Ben intended. Wish he would just stop.

Reminds me of one of those obnoxious kids you just wanta shove into a straitjacket and velcro to the wall.

Wouldn’t give two cents for anyone’s “predictions” as to our inflation/deflation fate. Predictive “god” of the millisecond (yawn).
RodgerMitchell Says:
May 21st, 2010 at 9:17 am
For the past 50 years, inflation has followed oil prices. See: http://rodgermmitchell.wordpress.com/2009/09/24/is-inflation-too-much-money-chasing-too-few-goods/

Rodger Malcolm Mitchell