How To Survive It
Important warnings about deflation from
June 11, 2010
Telegraph.go.uk, May 26: "US money
plunges at 1930s pace… The M3 money supply
U.S. is contracting at an accelerating rate that now
the average decline seen from 1929 to 1933, despite
interest rates and the biggest fiscal blitz in
Deflation is suddenly in the news again. It's a good
to catch up on a few definitions, as well as strategies
to beat this rare economic condition.
And who better to ask than EWI's president Robert
He predicted the first wave of deflation in the
crunch" and has written on this topic extensively.
We've put together a great free resource for our Club
a 63-page "Deflation Survival Guide eBook," Prechter’s
most important deflation essays. Enjoy this excerpt —
details on how to read the eBook in full free,
What Makes Deflation Likely Today?
Bob Prechter, Deflation Survival Guide, free
Following the Great Depression, the Fed and the U.S.
embarked on a program…both of increasing the creation
money and credit and of fostering the confidence of
borrowers so as to facilitate the expansion of credit.
policies both accommodated and encouraged the
of the ’Teens and 1920s, which ended in bust, and the
larger expansionary trend that began in 1932 and which
over the past half-century. Other governments and
have followed similar policies. The International
the World Bank and similar institutions, funded mostly
U.S. taxpayer, have extended immense credit around the
Their policies have supported nearly continuous
particularly over the past thirty years. As a result,
financial system is gorged with non-self-liquidating
Conventional economists excuse and praise this system
erroneous belief that expanding money and credit
growth, which is terribly false. It appears to do so for
but in the long run, the swollen mass of debt collapses
own weight, which is deflation, and destroys the
economy. A devastated
economy, moreover, encourages radical politics, which is
The value of credit that has been extended worldwide is
Worse, most of this debt is the non-self-liquidating
of it comprises loans to governments, investment loans
stock and real estate, and loans for everyday consumer
and services, none of which has any production tied to
a lot of corporate debt is non-self-liquidating, since
of corporate activity these days is related to finance
Figure 11-5 is a stunning picture of the credit
wave V of the 1920s (beginning the year that Congress
the Fed), which ended in a bust, and of wave V in the
which is even bigger.
…it has been the biggest credit expansion in history
huge margin. Coextensively, not only is there a threat
but there is also the threat of the biggest deflation in
by a huge margin. …
the rest of this important 63-page deflation study now, free!
what you'll learn:
- What Triggers the Change to Deflation
- Why Deflationary Crashes and Depressions Go Together
- Financial Values Can Disappear
- Deflation is a Global Story
- What Makes Deflation Likely Today?
- How Big a Deflation?
- Much, Much More
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