"History is a wonderful thing, if only it was true"

Monday, August 09, 2010


First we have the global labor supply (China post cold war), then the de-leveraging post housing bubble ... where's inflation?

Large companies are sitting on cash, small companies can't borrow.
Everybody is cautious due to policies coming out of Washington

Conflicting expectations
2 Top Economists Differ Sharply on Deflation - NYTimes.com


The broader M3, which the Fed no longer publishes but is estimated by Shadow Government Statistics, is shrinking at a stunning 6% annual rate. According to Shadow Stats' chief, John Williams, whenever real (inflation-adjusted) year-on-year M3 turns negative, the economy has always fallen into recession (or if it's already in a slump, the downturn intensifies) six-to-nine months later. Shadow Stats' M3 dropped below the zero line last December, it's not surprising that any number of indicators are faltering, including the ECRI leading indicator.

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