In our ongoing effort to judge whether to position our long term portfolios for inflation or deflation, we take note of the recent post at Pragmatic Capitalism.
There has been, over the past couple of weeks, an elevated amount of noise in the rumor mill regarding impending US fiscal and monetary policy actions. The early indicator here may well be the Dollar, which has been sliding rather markedly through the summer.
PragCap’s observations are timely in this regard. We’ve been repeating ourselves here to the point of tedium, but will throw it out there once again: Dr. Bernanke, who is (was?) utterly convinced that the central bank could produce inflation at will, has failed to do so. Hence the rumors about new and heretofore untried initiatives coming out of Washington.
Once again, we seem to be turning a little bit – perhaps more than a little bit – Japanese here. I happen to know and am quite fond of several Japanese expats on a personal level, and find many admirable traits in them, as I find their nation admirable in many respects. Economic policy doesn’t happen to be one of them. Their financial markets, definitely not.