At the risk of committing the solecism of quoting myself (AEIOU, for those who understand!), in this context, I wrote in yesterday’s Capital Letter:-
‘We find it foolish to confuse falls in the price of certain selected items – especially those in temporary oversupply, or those subject to falling unit costs, such as station wagons and semi-conductors – with forced monetary contraction per se.
‘Not when the world’s three biggest central banks alone have provided an extra $170 billion in reserve monies to be pyramided up so far this year – this at an annual pace of 17%.
‘Nor when various measures of broad money supply have risen in Mexico and Canada by 6-7% annualized, in the US, Europe and Brazil by 10%, in South Africa by 14%, in India, Russia, China and Australia by 18-20%, in the supposed bastion of monetary stewardship, Switzerland, by 33%, in Denmark by an eye-popping 55% - and even in supposedly deflation-wracked Japan by 2.6%!’
If that’s deflation, we are also able not only to spend ourselves rich, but to eat ourselves slim, into the bargain! www.capital-insight.com
