Dust flux, Vostok ice core

Dust flux, Vostok ice core
Two dimensional phase space reconstruction of dust flux from the Vostok core over the period 186-4 ka using the time derivative method. Dust flux on the x-axis, rate of change is on the y-axis. From Gipp (2001).

Friday, January 9, 2015

What hath QE wrought?

First off, let's see how our deflation indicator is playing out.

The latest trend of rising gold and USDX is in its third month.

The last time we had a similar trend was in 2009. That ended with a massive blowout of QE. But a funny thing happened on the way to the bank. After four-and-a-half years, we wound up back where we started.

The ineluctable march of deflation.

And for context, a look at the bigger picture.

One lesson of all this is that if the system needs to deflate, the bankers and politicians who think they are in control can delay it, but not stop it. A little over four years later, we have picked up where we left off.

I would expect the central bankers of the world will try for another inflationary push at some point in the future. Maybe they will let deflation to run for a time to ratchet up the pain enough for the public to scream for more stimulus. I can't help but think that they decided to let deflation run for a bit just to chase out some of the 99.9% who were perhaps betting on continued inflation.

Deflation's the same in a relative way, but you're older;
Shorter of breath, and four years closer to death.


  1. Promote the market highs, get the retail investor, home owners, etc to buy the assets.Hold cash. Let the markets crash. Leave the public holding the bag on the assets. Buy back in the bottom. Demand stimulus. Rinse. Repeat.

  2. I guess you must love Germany then, Mickey. They refuse to inflate, and thus have now locked their continent into a deflationary collapse.

    The only thing that'll save them is if they watch Greece leave the EZ, devalue, and then go off on a growth tear.

    1. It isn't that I love deflation--it's how I am interpreting what I am seeing.

      In Ghana, we used to see cycles of inflation (40% per year) and deflation play out once or twice a decade. The strategies used to preserve wealth during inflation did not save you from starvation when deflation hit.

    2. Anonimo, Gahana MenanaMarch 29, 2015 at 5:01 AM

      Might it be important to tell this story more fully or point to where you have?