Troz

Are We in Deflation or Inflation?

There are two factors that determine the maximum amount of money/credit that can be in circulation at any given time. One is the amount of leverage banks can have which is going to shrink on the whole due to new regulations. The other is the size of the Fed's balance sheet, which has more than doubled since the crisis began and continues to grow at an alarming rate.

In other words, the base money supply (Fed's balance sheet) is growing while the multiplier (leverage) is shrinking. I don't have enough information or expertise to know for sure what the end result will be, but my hunch is that it will be inflation because that is the clearly the bias of the Fed. I am highly skeptical of the Fed's ability to "mop up" excess money before the damage has already been done.

This Market Is One of Opportunity

That should read "in the last 20 years" in the above comment

This Market Is One of Opportunity

Government and private debt went parabolic in the 20 years, with most of GDP growth being debt-fueled. Personally, I wouldn't be making any future predictions based on earnings within that time frame, unless you can model money growth and contraction accurately.