Great Essay on the Threat of Hyper-Deflation

Yesterday in our weekly column, we kicked around the possibility that the hyperinflationists are wrong...or at least early to the party.

My piece was also picked up by Seeking Alpha, and you should check out the comment stream from livid gold bugs and monetary purists!

I get a kick out of folks that truly believe they "know" what's going to happen in the world of finance. In reality, we've all got something in common - none of us have a damn clue! I've learned to enjoy the banter between various opinions, and try to factor all reasonable points of view into my outlook. If there's one thing that can lead to ruin, it's being wed stubbornly to one point of view.

On that note, yesterday was fun, as we jumped sides and started waving the flag of the deflationists...much to the consternation of the commenters over at Seeking Alpha!

If yesterday's piece was up your alley, here's another deflation argument that's a beauty - courtest of Bill Bonner at The Daily Reckoning. I think Bonner's essays are works of art - the guy can absolutely write, and his contrarian views are always extemely intriguing. Here's a quick excerpt, with the full essay here:

Deflation is the immediate problem. Our guess is that it will be deeper and more vexing than even they believe. The feds’ money machine is broken. They can add reserves. But they can’t turn the reserves into price inflation at the consumer level. Result: deflation…maybe hyper-deflation. But far from eliminating the danger of hyperinflation, falling prices practically guarantees it. In other words, it’s not inflation we worry about; it’s the lack of it.

Related reading: Is Deflation "So 2008"? Hyperinflation Trade Looking Crowded