SOS Economic Experts

There are basically two main group of economic experts:

1. Deflationist Depression

• Robert Prechter @ www.elliotwave.com


• Gary Shilling @ agaryshilling.com


• Micheal Shedlock @ google Mish


• Dr Steve Keen @ www.debunkingeconomics.com


• Harry S. Dent @ www.hsdent.com
  

2. Inflationist Depression

• Peter Schiff @ www.europac.net


• Marc Faber @ www.gloomboomdoom.com
  
• Jim Rogers @ www.jimrogers.com

MyView

If you notice, both schools predicted depression. The only different is the deflationists predicted most prices will fall (assets and consumables) during the deleveraging period and inflation will set it later, hence, they advise to keep cash/liquid until the debt or credit is substatially cleared (takes at least a few years). The inflationists argue that the stimulus will cost hyperinflation, so most would suggest to buy gold, and commodities (hard assets so to speak) and USD currency will sink drastically. Based on my readings, the deflationist school explanations or arguements are more comprehensive. The detailed (omitted by most inflationists) is the significant of debt deleveraging (i.e. consumer will change their mood from overspending to savings and bank do not lent due to toxic assets held and consumer do not borrow due to "unemployment" and inability to gear up further) Signs of deflation:

• US consumption is dropping
• Unemployment rate increases at slower rate
• US saving rates is increasing
• banks are cancelling millions of credits
• 95 banks in US had declared bankrupt
• US reserve for banks has surged

But one cannot deny the inflation sign as well:

• prices of insurance, healthcare, utilities, educations, has increases over last 9 months (although deflationist argue that this is due to intervention by government and it is a lagging indicators, i.e. going forward next 5 yrs, it will drop) but price of gasoline has dropped, so is natural gas, rental has dropped, etc



• US dollar has dropped drastically since Sep 2008 to Sep 2009 (deflationist argue that the deleveraging impact will temporarily wipe off the continue collapse of US dollar)

However, just look at it mathematically: US corporate debt is USD45 trillion vs GDP of USD14 trillion 320%. This is excluding Derivatives of easily USD100 trillion and future government commitment to medicare, social care of another say, USD30 trillion and what about consumer debt? It is very doubtful the printing of money can outpace the deleveraging of the market. This is further proven by Japan crisis in 1990s. Steve Keen did say, the government should give the money to the debtors instead of the banks (proven that it is more effective). Anyway, increasing debt will never be able to solve the existing debt.