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What’s the Difference Between Deflation and Hyperinflation? Why do you ask?
If we look back 7 years to 2002, we see a nasty three-year tumble in the markets after the 2000 Jubilee peak. It may have been a warning shot.
If we look back 50 years, we were just entering Sputnik Cuban missile crisis babyboomer markets that went nowhere in real terms for a long time.
While history never repeats exactly the same way again, these generational themes are worth noting to preserve wealth.
Japan’s demographics peaked and their markets went nowhere for 20 years, the so-called lost decades.
America’s demographics are peaking with baby boomers retiring. Babyboomers may want or need medical and retirement services from government programs that are unfunded like a Ponzi Scheme.
The President of the Dallas Fed figured America has unfunded agency mandate liabilities of $104 Trillion and growing.
People were sandbagged by falling pension plans and home equities.
Financial alchemists created $452 Trillion of derivatives with losses and potential defaults in coming years and decades. Derivatives are not a zero sum game. They are a net disaster for the economy if they default.
Since producers are two thirds of the economy, and government ultimately gets its money from producers by borrowing and taxing, maybe we should look at deflation more closely.
For two Jubilee generations, we have not had deflation in government or overall economy. Now here it is, with GDP down -12% the last year.
Is this a fluke?
Going back Two Jubilees, 100 years, an entire generation lived through the Panics and Great Depression to became the Greatest Generation.
If we go back Ten Jubilees, a Jubilee of Decades, 500 years, we saw global changes with the discovery of New World gold. Gold actually fell in price because supply was so abundant relative to demand.
So what exactly is deflation, anyway?
