• Insider
    Michael Wick/Shutterstock

    What Deflation Means For Investors

    Beware: we're used to investing in an inflationary regime
    by Brian Pretti

    Wednesday, December 10, 2014, 3:21 PM

Enroll Now For enrolled members only. Enroll or Sign in to read the full article.

Executive Summary

  • The 3 reasons why deflation will continue to haunt the global economy
  • The importance of cash flows in a deflationary environment
  • Understanding the deflationary reasons behind the recent drop in oil prices and the material implications this will have going forward

If you have not yet read Part 1: Deflation Is Winning available free to all readers, please click here to read it first.

So an very important question remains despite the trillions in new currency printed around the world in the past few years: Why are deflationary pressures still present?

  1. The debt overhang from the prior cycle has not vanished by a long shot. In fact today there is significantly more debt outstanding globally than was the case at the highs of 2007, primarily driven by global government borrowings.  The following chart is total US credit market debt relative to GDP.  You can see that very little has been reconciled since the peak.  By the way,

 Data Source:  US Federal Reserve       

Additional global debt assumption means additional interest cost burdens, even under an environment of interest rate suppression.  And that means…

Enroll Now
Or Sign In with your enrolled account.

Related content
» More

No Comments on What Deflation Means For Investors

Enroll now or Sign In to read all member comments.