YOU CAN'T PRINT MONEY AT THE RATE CENTRAL BANKS ARE WITHOUT CAUSUING....DEFLATION:

Deflation fears are back (Chris Isidore, 9/26/11, CNNMoney)

Prices of copper, oil and other commodities have been plunging on worries of reduced demand for those basic raw materials. Gold, traditionally a safe haven in volatile markets, suffered its largest single day price decline since 1980 on Friday.

The difference in yields on Treasuries and the inflation-adjusted bonds known as TIPS also has narrowed sharply in the past two months. On July 1, the spread pointed to a 2.3% inflation rate over the next year, a level above the Federal Reserve's target for acceptable inflation. Now, the expectation is for less than 1% inflation over the next year.

That suggests that the drop in bond yields to record lows last week wasn't just because of Federal Reserve's so-called "Operation Twist" or a flight to quality on Europe fears. It may also be due to a change in investors' inflation expectations.

Economics is not an evidence-based discipline.

Posted by oj at September 26, 2011 3:31 PM
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