Richard Maybury, one of my heroes, warns deflation is likely to turn into inflation sooner than most expect, perhaps before Obama is inaugurated Jan 20. Richard has been tracking something most poeple don’t: the *velocity* of money.
“The crisis began in August 2007 with a velocity-driven inflation, and about a year later turned into a velocity-driven deflation.
“As far as I can tell, the deflation shows no signs of abating yet. But, I think that when the turn back to a velocity-driven inflation does happen, it will be quick. We will see a V-shaped bottom, not a U-shaped bottom.
“I also don’t think the turn is very far away — weeks or days, not months. Obama is one of the most masterful showmen since PT Barnum. It may be that he will do a spectacular job of convincing the public that his economic team has developed a miracle cure, and the resulting wave of optimism will cause the turn in velocity. We’ll see.
“In any case, when I think the bottom has happened, I will let my subscribers know on the Subscriber Access part of our web site. No guarantees, but I’ll do my best to get it right.” [more]