Deflation vs. Inflation

“Surely, it is academically interesting to discuss for hours whether we are in a ‘deflationary’ or ‘inflationary’ economic environment. The different views on this issue have become extremely polarized with the deflationists maintaining that equities and commodities will collapse and that government bonds will rally. The believers in higher future inflation rates on the other hand argue that large fiscal deficits and expansionary monetary policies will boost selected asset prices and eventually flow into rising consumer prices and lead to higher interest rates. But, as I have tried to show by comparing oil with natural gas prices, in an economic system some prices may be rising, while others decline. This process is continuous and particularly evident in the price movements of various asset classes when there are massive excess capacities, which constrain new capital investments, and zero interest rates, which force cash holders to ‘speculate’ in one, or the other, asset class.” - Marc Faber


Related ETFs: SPDR GOld ETF (GLD), Powershares DB SPDR Gold ETF (GLD), Newmont Mining (NEM), Barrick Gold (ABX), GoldCorp (GG) Agriculture Fund (DBA), ProShares UltraShort 20+ Year Trea (ETF) (NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE:TLT) United States Oil Fund (USO), SPDR Gold ETF (GLD), Powershares DB Agriculture ETF (DBA) SPDR S&P 500 ETF (NYSE:SPY), SPDR Dow Jones Industrial Average ETF (NYSE:DIA), iShares Russell 2000 Index (ETF) (NYSE:IWM), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ)
Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.