I Dream of Genie

In what continues to be a completely baffling love affair with inflation, the head of the IMF recently commented on the state of deflation. She stated that ” If inflation is the genie, then deflation is the ogre that must be fought decisively”. She also added that she looked forward to stronger growth and was sure that ” the world could create more jobs before we would need to worry about the global inflation genie coming out of its bottle”. Coincident with these comments have been discussions on the exporting of excess U.S. crude oil. Some of the arguments against such exports have been based on the fear of some kind of deflationary spiral should these excess barrels hit the global market. The common thread between the two deflationary postures is the belief that deflation is something to be tamed and controlled, while inflation is something to be stoked and maintained. We believe that such a mindset is tainted by the fact that the developed world has not had to deal with any real pricing pressures for 30 years, and our capacity to understand the unintended consequences of such pressures is limited. If in fact, this inflation genie does get out of the bottle, one of the three granted requests will be: How do I protect myself from thee? Unfortunately, by the time this request is made, it will be too late. Get Genie Protection, Buy Stuff

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