The Most Important Paper Of The Next Decade

Whenever I tell people the next big crisis will come from inflation, not deflation, the looks of disgust are worse than when someone says Justin Bieber’s music is not that bad. And when I try to tell them that the true bubble is in fixed income, not stocks, they look at me as if I just slipped the Biebs into the next-up slot on the Spotify playlist.
‘Where will the growth come from?’ they often ask or, ‘demographics will keep inflation subdued for another generation,’ they retort.
And I must admit, I have always had difficulty articulating how inflation would manifest. Usually, I would go with the classic, ‘throughout the millennia, governments have always resorted to inflating their way out of debt, and this time will prove no exception.’
But that has always left a sour taste in the mouths of the deflationistas who cannot imagine anything but falling prices and moribund growth. These investors need a theory why the trend will change. And it has always been difficult to slap any research in front of them as the Lacy Hunt deflation crowd seems to have the market cornered with their articulate forecasts that the trends of the last 30 years will continue ad infimum, and that interest rates are going to zero throughout the entire developed world.

This post was published at Zero Hedge on Sep 11, 2017.