watch out for more deflation

http://pointsandfigures.com/2012/06/26/watch-out-for-more-deflation/

Maybe we should all buy some long dated out of the money puts on the S&P ($SPY, $ES_F)? The whole world has become Japan.





The government stimulus had a multiplier effect of 0. It did nothing for job growth or GDP growth in the US. Combine the inefficiency of US fiscal policy with the continued implosion of Europe, and you have a world wide malaise. In China, because of macro economic effects, wages are rising, costs to produce are increasing. Companies are also wary of both the poor property rights system and the lengthened supply chain. China is slowing down.




The economies of the world aren’t going to contract because of government spending decreasing. They are going to contract because the continued machinations of the world’s central bankers have screwed up the costs of capital normally paid by the markets. The money that they have printed hasn’t gone into the productive marketplace. Instead, it went to shore up balance sheets and sits.



Money isn’t turning over. There is no velocity.