Jeffrey A. Miller

How Investors Can Profit from the Coming Bear Market in Bonds

Thanks to all for the intelligent discussion; especially Doubelguns who asked my exact question and Simit for his answer. I have been struggling to understand how to connect asset deflation with trillion dollar bailouts that should be highly inflationary.

Clearly a short term deflation is ongoing and while problematic it is necessary in order to complete the deleveraging of financial and hard assets. And it is that same deleveraging process that is the link between current deflation and future inflation.

Once the deleveraging is complete and asset valuations are trusted then lending will gradually resume and inflation will rear its ugly head.

Simit: It may be too early to take the TBT trade. IF the current deflationary, deleveraging is derived from the housing bubble then perhaps the bottoming of the housing market (e.g., builders) is the fundamental indicator to establish a time to initiate inflationary trades.