I'm Back ....

Sorry for the length between posts. I went down pretty hard last week with a nasty cold. I've caught up with my emails and am ready to go.

Did anyone read last weeks FOMC statement? I wish they would use plain old english in these transcripts. What caught my attention was this:

"The committee sees some risk that inflation could persist for a
time below rates that best foster economic growth."

Isn't this deflation? Why can't the Fed-heads just say deflation? This may indeed may be the next shoe to drop. Currently the TIPS yields have been skyrocketing higher - signalling the markets belief that deflation is indeed dead and inflation is back in vogue. I don't buy into this at all. First global capacity utilization shows slack in the global economy and it appears no where near abating. It's hard to have inflation with excess capacity in the system. Second, debt is deflationary. The Western World pre-purchased (with debt) everything from bigger houses, more cars, tvs, computers etc. At some point we actually have to pay this back. These future payments will be made at the expense of future consumption. Demand is not coming back anytime soon. Hey maybe tomorrow we will look at the trend in household savings.