13 Jul 2009

Mish Should Ditch His Deflation Fears

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So I argue in today’s Mises Daily:

Whatever happens to the absolute levels of various prices, certainly the relative prices of hard commodities and staples will rise, compared to the prices of mortgage-backed securities and commercial paper issued by a coal-based utility company. Even if the “debt deflation” scenario is generally right, the absolute effect could be swamped by the relative effects, meaning that retirees on fixed dollar incomes could still get wiped out when their standard monthly expenses rise. The deflationists like Mish might be right, but they need to make a much stronger case.

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