Posts Tagged ‘Mish’

Interview with Marc Faber (inflationist) and Michael Shedlock (deflationist)

Wednesday, August 4th, 2010

A few months ago, we found this interview with Marc Faber and Michael Shedlock (aka “Mish”). Faber once said in an interview that he was “100% sure” that the US will fall into hyperinflation. Mish, on the other hand, is a very staunch deflationist (see Are deflationists missing the elephant in the room? Or are they believing in something more sinister?).

What if you put the two together in an interview? Will they clash? Surprisingly not, as you can see…

In particular, pay attention to what Mish said in the final moments of this video.

The takeaway lesson is this: the unfolding train wreck will be something the world has never seen before (as one of our reader, DavidL said). Whatever ‘flation it is, it would not follow the script of the past.

Are deflationists missing the elephant in the room? Or are they believing in something more sinister?

Sunday, August 1st, 2010

As you scour around the blogsphere, you will see that there are contrarians who still believe that it is impossible for the US to prevail against deflation. The most extreme of deflationists is Robert Prechter (from Elliot Wave International), who is still predicting that the Dow Jones will go all the way down to 1000. Up till March 2009, it seemed that the deflationists’ argument was correct. In the Panic of 2008, deflationary forces were so strong that asset prices were even more oversold than the infamous 1987 crash. Unfortunately for the deflationists, the subsequent rally (reflation) till May 2010 was so enduring that their argument was discredited in the eyes of many.

Our view, on the other hand, belongs to the inflationists’ camp. From what we can see, there is a big elephant in the room that deflationists miss. But as we think about the deflationists’ argument, it suddenly dawn on us that perhaps deep in the soul of the deflationists’ argument is the belief of what some may call a “conspiracy theory.” Of course, we guess not all deflationists hold (or even aware of) such a belief. But the more extreme and strident a deflationist hold on to the deflation argument, the more we suspect that they are holding on to the belief of the “conspiracy theory.” Although we do not know whether that “conspiracy theory” is true or not, it certainly helps to explain the extreme position held by some deflationists.

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