Wednesday, September 30, 2009

The Looming Era of Inflation?

Last week at an economic briefing sponsored by Toronto accountants Hogg Shain & Scheck, economic forecaster Brian Beaulieu of the New Hampshire based Institute for Trend Research shared his view of the post-recession world.

The thrust of his presentation was that the recession may be ending, but a new era of renewed inflation and higher interest rates could be right around the corner.

Beaulieu made the cast that inflation will ooze back, fuelled by higher commodity prices, labour cost increases, and the need to service the huge government deficits rung up to deal with the recession.

By 2012, Beaulieu says the U.S. consumer price index could be increasing 6% a year, which would be the highest inflation rate in the past 25 years.

And yes, interest rates will jump - dramatically.

Beaulieu joins the ranks of doomsayers, like this blog, who have been echoing this theme for the better part of the year.

But as we scan the pages of the North American media, so many still warn of deflation and the threat of a decade long morass similar to what Japan is experiencing.

Why is that?

A follow up tomorrow.


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  1. I think people looking for inflation in the next 3 to 5 years will be deluding themselfs. The most probable senario will be deflation a la Japan in my mind and very low interest rates are here to stay. People looking at a reason for real estate prices to fall should stop hoping that higher interest rates are around the corner. They are not.

  2. It's easy to say that interest rates will go up. Only an idiot would think that the pendulum will never swing back.

    Most people are intelligent. They know when they borrow at a historical low, the rates will likely go back to at least the historical norm; if not higher. Those people have more than likely determined that they can still handle the debt at those higher rates. If not, they are indeed fools. But like you say, you have been going on and on about this for the better part of a year. Can you not find something better to write about?

    Here's a couple of ideas.

    1. Use spellcheck, it'll impress others.
    2. Suggest solutions to the problems you present.
    3. Resist twisting facts to support your views.
    4. Tell us how to judge your ideas by giving us your credentials (are you involved in real estate? how much have you owned? did you sell out to avoid this "bubble"?) or are you a financial planner?
    5. What is the size of your company or team? I must assume you have a team because you use the term "we" much like royalty.

  3. Thanks for the comments and welcome to the blog.