Sunday, December 16, 2007

The Dollar and Deflation

Ignore Friday's "inflation" figures. The deflation in credit and housing, and the strength of the dollar indicate that the inflation figures seen in the CPI and PPI, are "transitory." (Unlike the increase in oil prices which Greenspan said was "transitory.")

If these inflation hawks believe that we are in an inflationary environment, ask them if they are speculating in real estate.

Deflation increase the value of the dollar. And last week, we saw the biggest gain in the greenback in two years.

It's time for the economists to get "transitory" back in their lexicon.

At least this time, they'll be right.