Daily Dose of Deflation 12Nov2008
I’m starting a series of short posts that’ll link to atleast one article that points to upcoming deflation (not your friendly neighborhood dis-inflation).
Why? Because too many people focused on high & rising inflation over the past few months and very few of them will turn around 180-degree and start looking at a deflationary scenario, especially in India.
So, here goes -
MISH: Industrial Bond Yields Strongly Support Deflation Thesis
only AAA rated bonds are performing well. This is strong evidence that we are not in a period of “disinflation” as some claim. In a disinflationary environment, one would expect risk premiums to drop not rise. Action here is consistent with rising default risk, which is what one should expect in deflation.
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