The debate over deflation/inflation continues as some of our most astute economic observers take sides. Frankly, I think that both sides are missing part of the picture. The debate concentrates on the after shocks of inflation/deflation: prices instead of the money supply and the demand for it. Words: 721

James Turk believes hyperinflation is ahead. Bob Prechter believes massive deflation is coming. An interesting discussion between the two takes place in this audio. Ultimately, both lead to Depression. Only the route taken differs, but that is important.

The pendulum towards deflation has swung too far, and investors should at least consider, and be prepared for the opposite outcome, which is the rise of inflation.

While I believe that the U.S. is heading towards a Weimar style hyperinflationary depression there are several developments that point to the possibility of another deflationary depression, similar to the 1930’s. Let me explain.

According to the Atlanta Fed’s closely watched “Deflation Probabilities” indicator, overall prices in the U.S., as determined by the Consumer Price Index, now have exactly 0% chance of dropping over the next 5 years, down from a probability of 14.1% in May last year.

Might our Inflation-Deflation Watch be suggesting a breakout in asset price inflation is about to take place? Could it, in fact, be presaging the start of John William’s hyper inflationary depression in which prices rise exponentially even in light of massive unemployment and bankruptcies? This article analyzes the situation.

At the end of last year virtually every every single economist expected interest rates to rise this year as the Fed tapered their purchases and the economy improved but, in fact, interest rates on the 10 year U.S. Treasury have been going down year to date (from 3% to 2.5% after rising from about 1.6% to 3% last year). The masses, going along with this crowd, got fooled but we have been calling for a decline in interest rates for some time now due to world-wide deflation and it couldn’t be clearer to us that this is the most likely scenario for the United States. Let us explain.

Are we headed for rampant inflation or crippling deflation? I believe that we will see both. The next major financial panic will cause a substantial deflationary wave first, and after that we will see unprecedented inflation as the central bankers and our politicians respond to the financial crisis. [Let me explain why I think that will unfold.] Words: 1025 Charts: 3

The coming economic collapse (Depression) is inevitable but the route taken to this ending is uncertain. The road has parallel routes, either a deflationary collapse or a hyperinflationary collapse. Which route is taken depends upon government so, which will it be? Words: 1350

A look at the status of the economy, and in particular money supply, shows that deflation is starting to show up. Below are 7 charts that support that view. Words: 370