Think of it this way- about 10 years ago Starship Enterprises Captain Kirk’s Chief engineer Scotty beamed down multiple BILLIONS of people into the global economies [namely China and India].  All those people needed some of the basic things in life- food, water and energy.  You can figure out the rest!!!!   Some would call the rise in prices inflationary or inflations [certainly speculators have tagged on for the ride but the BASE LEVELS for these three sectors has risen permanently].  I strongly differ.  We entered a new era.

Now before we get some of the laureate economists to respond- would you call it DEFLATION if all of a sudden [God forbid on this Holiest of Days for so many peoples] that we had a pandemic and billions died.  Demand would collapse and you can follow the rest……………again!!!!!!!

So, my simple bottom line is- fighting inflation based on traditional measures is missing the bigger and deeper picture- the underlying effect is deflationary.

So INDEFLATION is the production of  traditionally inflationary observations and reactions causing deflationary results.

So what does that mean for our clients and the markets.

+A resurgence of commodity price increases after the “speculative” aspect  of that bubble are washed away.

+This most recent purging of the commodities markets, unfortunately is only a temporary respite

+A return of interest in ALTERNATIVE ENERGY- I would be very interested in what people think about nuclear energy and Mark Gulley’s prescient thoughts about Ethanol.

+And certainly food and foodstuffs.

+And if the monetary authorities drag their feet then that combined with the financial woes still existent will bring the need for further global ease and accommodation

INDEFLATION BREEDS INDECISION and puts the monetary authorities behind the curve.