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Drunk as I am, I just came up with an analogy on how to think about inflation/deflation/stagnation/whatever tendencies you might have.
(Pinging @SantiagoAuFund, @amlivemon, @chigrl, @JeffSnider_AIP and others on this.)
(Pinging @SantiagoAuFund, @amlivemon, @chigrl, @JeffSnider_AIP and others on this.)
Consider you are a skiing area. Not just one small town nearby a mountain but a whole region depending on good, stable snow conditions.
Now, you may think global weather/snow supply stopped, so central banks are starting to blow up a mountain just to provide you with snow. You see a whole avalanche of snow coming to your direction.
And it's true. The closer one lives to the mountain, the more they'll get hit by the landslide and the more damage they'll receive by the sheer amount of snow masses coming to them.
So it's perfectly legal to fear the avalanche.
So it's perfectly legal to fear the avalanche.
Yet, what you haven't paid attention to: it's 40°C (104°F) outside!
On medium terms, your problem is not the damage done by the avalanche, nor the exaggerated amount of snow supply in general, but the dramatically more massive, vast amount of snow evaporating right under your nose!
The environment that lead the central banks to blow up the mountain in the first place is exactly the one you should focus on: it's 40° outside!
It's not the snow you think is coming to you that you should be worried about, it's the snow you thought you have and that's melting away in the current environment.
(So yes, IMHO, deflationary.)
