Inflation needs to happen first before deflation can take over. This is because there’s too much momentum. Look at weimer. We’re actually in hyper inflation right now imo. They are desperately using lockdowns and supply bottlenecks to prevent price discovery from occurring.
Deflation has to win longterm too many forces pushing on it:
I think we have to focus macro to get predictive due to complexity. Case study: lumber prices. They shot up and collapsed due to transit issues. At the time all the excuses were noise: first fires, climate change, trump tariffs, etc. it only matters if quantity demanded marches supply and if it doesn’t then either price or timelines have to change. Both occurred: increased delays and 4-6x prices. Long term the scarcity effect takes over and causes reduction in velocity and then deflation.
Also: just because prices go up does not mean total revenue increases. Prices going up is inflation. Revenue going up is growth. Inflation can exceed growth ie hyper inflate
Inflation needs to happen first before deflation can take over. This is because there’s too much momentum. Look at weimer. We’re actually in hyper inflation right now imo. They are desperately using lockdowns and supply bottlenecks to prevent price discovery from occurring.
Deflation has to win longterm too many forces pushing on it:
I think we have to focus macro to get predictive due to complexity. Case study: lumber prices. They shot up and collapsed due to transit issues. At the time all the excuses were noise: first fires, climate change, trump tariffs, etc. it only matters if quantity demanded marches supply and if it doesn’t then either price or timelines have to change. Both occurred: increased delays and 4-6x prices. Long term the scarcity effect takes over and causes reduction in velocity and then deflation.
I think equities keep marching up until Dec
Also: just because prices go up does not mean total revenue increases. Prices going up is inflation. Revenue going up is growth. Inflation can exceed growth ie hyper inflate