Then there are others like Harry Dent, Bob Prechter, and Steve Keen (an Australian economist) who make a good case for a 1930's style deflation. (They all have good predictive track records). The U.S. government is pumping out trillions but the contraction in money supply caused by the 25-30 trillion in lost U.S.household wealth and hundreds of trillions in as-yet unrecognised worthless credit default swaps and mortgage backed securities totally swamps out a few trillion. Look at Japan where 20 years of stimulus hasn't accomplished anything but to keep zombie banks and companies barely alive. The Japanese stock market is still 50% below where it was 20 years ago.
I'm thinking the best investing approach is to be inflation/deflation market up/market down agnostic and just do one-month option spreads and re-evalute probable max market move each month.
Jerry
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