August 8, 2011

Stealthflation Awareness Check


But I must grudgingly concede that Scott Bradford used the term more than six months before me and Forbes magazine four months ago.

Manipulating the CPI is a game government plays to help solve its fiscal problems through increased inflation. It is a tax on wealth and can be imposed without public debate or a legislative vote. While inflation is beneficial to government in the short term, its long-term effects are always negative. Hence, it must be done in secret--call it stealthflation. What this means for fixed-income investors is that long-term interest rates are going higher, as they have since last August. Look for a ferocious rise after June 30, when the Fed's QE2 program comes to an end.

(He doesn't say how long after June 30.)

Economics and Markets Shameless Self Promotion Posted by JohnGalt at August 8, 2011 3:21 PM

Like "Climate Change," it does not pick a direction. You may claim victory after inflation or deflation!

Posted by: jk at August 8, 2011 3:53 PM

The "flation" in Stagflation is universally understood to be in-flation and Stealthflation is no different. I hereby irrevocably declare that Stealthflation is a stealthy inflation.

Besides, I'm beginning to think deflation is an imaginary concept that makes the math work, like infinity and imaginary numbers.

Posted by: johngalt at August 8, 2011 4:14 PM


Posted by: jk at August 8, 2011 6:53 PM


Posted by: johngalt at August 9, 2011 2:53 AM

It happens I believe in deflation (cf. 1836, 1873, 1907, 1931), infinity (without which 1 + 9/9 != 2), and imaginary numbers (Isaac Asimov, call your office).

Posted by: jk at August 9, 2011 9:50 AM | What do you think? [5]