prudentinvestor

Inflation on 'Sale' as Deflation Dominates Markets

While I am not in the "deflation camp", I must add that deflation can still occur despite unbridled printing of money by central banks. The easy money policy of the past decade has accelerated a portion of the normal demand that should have been ocurring now, and compressed it into the excessive demand of the past decade of hyper-consumption.

After the incredible shopping binge of the past decade, many younger consumers are satiated, now realizing that they don't need 10 handbags or 8 pairs of shoes, etc.

Demand can be also be stiffled simply by demographics. Retiring baby boomers are downsizing their houses to simplify their lives, so regardless of financial means, they don't have the demand for cars, appliances, furniture, remodelling, etc, that they had a few years ago.

Thus, I think that easing money does not necessarily rekindle hyperdemand, and I suspect this is akin to what happened in Japan.