Thursday, March 17, 2011

The Breaking Point

Google Trends: Stagflation

Click to enlarge.

If you haven't found the exits by the time this chart starts spiking again, then heaven help you. It is just a theory of course.

It's like watching a ticking time bomb. I would bet all that I own that it will explode someday. There will be an interest in "stagflation" again. I just can't say when or whether it will even be in my lifetime.

The outcome probably won't be stagflation though. By the time everyone is talking about it we'll be heading right back into deflation. There's just no way "everyone" can be on the right side of the trade.

That said, one has to wonder why $100 oil isn't enough? See that "B" on the chart? That's Greenspan telling us that he saw early signs of stagflation. It was the very month we slipped into a recession.

December 17, 2007
Greenspan Sees Early Signs of U.S. Stagflation

(Reuters) - The U.S. economy is showing early signs of stagflation as growth threatens to stall while food and energy prices soar, former U.S. Federal Reserve Chairman Alan Greenspan said on Sunday.

That's not the best quote though. Check this one out.

"It's only when the markets are perceived to have exhausted themselves on the downside that they turn," he said. "Trying to prevent them from going down just merely prolongs the agony."

That's just priceless.

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That is certainly my intent!

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