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Hussman Now More Concerned About Inflation Longer-Term

The following is a short excerpt from John Hussman's "Weekly Market Comment", Jan 19, 2010, which is particularly thorough this week:

"From a longer-term perspective, however, I believe that inflation will be a major event in the latter part of the coming decade, with the consumer price index roughly doubling over the next ten years...I have not always held such concerns about inflation or commodities...What is different now is that, over time, the massive expansion of government liabilities can ultimately do nothing but undermine the value of the U.S. dollar relative to real goods and services...Ultimately, crude oil above $200 and gold prices above $2000 will likely owe themselves far less to robust demand in China and elsewhere than to sheer deterioration in the purchasing power of the U.S. dollar a decade from now...Transitions between low inflation to high inflation, then, tend to be quite painful for equity investors, while transitions from high inflation to low inflation tend to be unusually pleasant...Presently, the greatest uncertainty for us continues to be the dichotomy between typical post-recession market dynamics and the much more difficult environment that we may very well actually be in, if previous credit crises in history are any guide."