Is Deflation Really a Risk Today?

Due to the overwhelming number of emails I received in response to my earlier article detailing the behemoth that is the derivative market.

 

The primary question I’m receiving is: does deflation pose a REAL risk today?

 

My response is absolutely. Remember, the entire financial system is broken in the US. Until we take our medicine and deal with the hundreds of trillions of bad debts sitting on the banks’ balance sheets, there is ALWAYS the risk of another 2008-type event.

 

The Federal Reserve has attempted to paper over these issues by offering Wall Street an endless stream of Dollars. But this hasn’t addressed the underlying issues in any way. The banks are still insolvent and the derivatives market is still the primary concern for anyone who works in finance whether they know it or not.

 

So yes, deflation is and always will be a potential threat that can erupt at any time. However, should deflation even take hold of the markets again, the Fed and other central banks’ responses will GUARANTEE that it is short-lived and that inflation, then hyper-inflation takes over in a short period of time.

 

Remember, Bernanke has NEVER admitted that he was wrong about anything. The guy literally believes he’s an economic genius who can save the world (thanks Time magazine for buffering his ego). He is 100% positive that his policies are the right policies. So if deflation reared its head again, he would do the same things he’s already done (print money, engage in more QE, etc) only on an even larger, more aggressive scale.

 

This will destroy the US Dollar and insure that we experienced either severe inflation similar to that of the ‘70s or hyper-inflation similar to Weimar. Bernanke’s nearly pushed into the former already and deflation hasn’t been seen in the financial markets in over two years.

 

So you better believe he’d go all out if deflation poked its head up again. Imagine if a grizzly bear got up and tried to attack you after you already brought it down with repeated gunfire. What would you do? You’d blow its head off and then walk up to the body and shoot it until you ran out of bullets to make sure the thing didn’t get up again.

 

Bernanke would do the same thing to deflation. He’d throw so much money at it that he’d not only kill it dead, but he’d also kill the US Dollar and send us straight into Zimbabwe-land without even a moment’s pause.

 

So yes, deflation is a threat. And it will always be. But we might very well not see it again thanks to Bernanke’s actions. And if it does show up again, its presence would be very short-lived.

 

Prepare accordingly,

 

Graham Summers

 

PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.

 

I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).

 

Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.

 

PPS. We ALSO publish a FREE Special Report on Inflation detailing three investments that have all already SOARED as a result of the Fed’s monetary policy.

 

You can access this Report at the link above.

 

 

 

 

 

 

 

 

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