Deflation – what is it, and what to do in a deflationary environment

Those interested in the definition of deflation, analysis of whether we will see (or are already seeing) deflation in the US, and how markets react in a deflation – here are what I’ve found to be valuable explanations.  Click through to links, and please feel free to suggest additions, etc. in comments.  Neither this page, nor any other part of this website, is intended for use as investment or legal advice, and obviously is for informational and research purposes only.

Collapse of Fictitious Capital – whys and wherefores:  The Wicked Witch of the West: I’m Melting:  http://wallstreetexaminer.com/blogs/winter/?p=1448 

Ambrose-Pritchard is afraid (of deflationary spiral):  http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/03/ccview103.xml&page=2 

Excellent summary including also real-world effects of deflation, as well as explanation of the alternatives (inflation/stagflation/hyperinflation):   http://www.atimes.com/atimes/Global_Economy/JB21Dj02.html

Gold performance during credit deflation:  http://globaleconomicanalysis.blogspot.com/2007/01/gold-and-k-cycle.html 

Credit markets “frozen”:  http://ftalphaville.ft.com/blog/2008/02/04/10660/spectre-of-corporate-defaults-rises-amid-tight-lending/ 

Greed and Fear latest comment:  http://ftalphaville.ft.com/blog/2008/02/01/10639/greed-fear-on-the-brink-around-the-world/ 

 Market Oracle (UK) says pick physical gold over gold stocks:   http://www.marketoracle.co.uk/Article3469.html

Roubini says “Stag-Deflation” possible:   http://www.rgemonitor.com/blog/roubini/238726/

Deflation American Style:    http://globaleconomicanalysis.blogspot.com/2008/01/deflation-american-style.html

Money Supply Trends are Deflationary:  http://globaleconomicanalysis.blogspot.com/2008/01/money-supply-trends-are-deflationary.html

How to Invest during Deflation (vs. Inflation): http://globaleconomicanalysis.blogspot.com/2007/12/how-does-one-invest-for-inflation-and.html

If there is a deflationary credit crash, there may be an incentive to store wealth in gold: 

http://globaleconomicanalysis.blogspot.com/2007/09/is-gold-safe-place-to-hide.html

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8 responses to “Deflation – what is it, and what to do in a deflationary environment

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