Friday, June 26, 2009


ANSWER...hehe its a trick question. We are in ASSET DEFLATION not real deflation. Answer the question ...when you go to the grocery store is your bill cheaper ...when you eat out gas your car up pay your utility bills your taxes your college tuition your dentist your doctors bills........ARE your essential goods and services declining in cost........NO .......your house your boat your commercial property....deflating ....This is an essential question when investing in this market.....if we go into true REAL DEFLATION your gold mining stocks will decline....everything will except well played short positions.....but even these can be ground up if your timing is off . This is the real issue and NO ONE knows for sure where we will wind up. Our government has made a decision to reinflate at ALL COSTS and not allow true deflation. SO you have to watch the dollar if it falls below 80 when P3 hits we are in STAGFLATION......and not true deflation. And if that is not clear enough just look at the prices of essential goods and services...Hows that Joe.


  1. Good column KLI. Mind if I e-mail it to CNBC?

  2. kli,

    good points, many folks are losing their jobs, their 401ks have taken a real beating, housing which is one of our main assets have lost value, credit has gone thru contraction. I thought these are deflationary signs and they are but now I understand what you are trying to say. Although we are in asset deflationary phase, what's required to turn that into full and real deflationary phase which is meaningful reduction in essential cost of goods/services has not happened.

  3. jay E mail it and tell kudlow to explain it hehehe

  4. kli,

    Are you implying that if essential cost of goods/services do not come down, we will face stagflation and continue with asset deflation?