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There is a good discussion about inflation and deflation. Here is some my thoughts.
Reasons for deflation.
1) Unemployment rate will go higher;
2) Consumers do not have money to spend;
3) Deleveraging will reduce wealth among all kind of assets;
4) Economy is in recession;
5) This recession will be a bad one
6) Money velocity slows down significantly;
Reasons for Inflation:
1) Inflation is the only solution to solve US high debt issues;
2) Fed would print money to stimulate economy;
3) High Deficit effcts;
My personal opinions:
1) Cash could be a good choice in short term;
2) Investment better has cash flow incomes;
3) Gold could be a good choice in both inflation and deflation period.
4) We would have a deflation first, then inflation late. |
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