Been really busy boating, eating lobster and avoiding politics. Concerned about what I see as a deepening economic state of stagnation. Following the disasterous and extremely costly wars, I fully expected a period of stagnation and inflation like that which followed the Vietnam war. Looks different this time. The trillions of dollars thrown away in Iraq and Afganistan should have resulted in an inflationary spiral as the true costs (much of which is buried in secret budgets) eventually had to be paid with borrowed money.
Been really busy boating, eating lobster and avoiding politics. Concerned about what I see as a deepening economic state of stagnation. Following the disasterous and extremely costly wars, I fully expected a period of stagnation and inflation like that which followed the Vietnam war. Looks different this time. The trillions of dollars thrown away in Iraq and Afganistan should have resulted in an inflationary spiral as the true costs (much of which is buried in secret budgets) eventually had to be paid with borrowed money. But the effects of the GLOBAL recession are exacerbating and prolonging our domestic problems. Real prices are falling across the board as businesses strugle to increase their sales. Normally this would be considered a healthy "adjustment" to a previously over heated economy. But too much deflation can have negative effects that can further deepen an already stagnate economy. The general public is not confident enough to spend even with falling prices. Safe investment (CDs and Treasuries) are paying little. Business keeps lowering prices but the consumer is afraid to spend or can't afford to spend as jobs are lost and even employed workers feel fear of being laid off. If the economy continues to deflate, small businesses will feel the impact first, but larger industries will eventually too. I am seeing major reductions in existing home prices wherever I go. Cash really talks now (I bought a large boat at a very low price). Its definitely a buyers market if you have the cash. But until the average person regains confidence, jobs and job security, the downward spiral of deflation could be a major risk to the economy. Many investment strategies involving stocks and real estate are based on protection against inflation. My personal opinion is delation is the more important risk at least until the economy stabalizes and improves.
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