Lacy Hunt is one of the few economic seers out there predicting deflation, but he’s put together a sterling record through the years and can’t be dismissed out of hand. From Tyler Durden at zerohedge.com:
Earlier this month, Wealthion (a new YouTube channel featuring interviews with today’s top experts in money & the markets) hosted its first online conference, at which economist Dr Lacy Hunt made a strong case in his keynote presentation that deflation — not inflation — will win the day going forward.
He predicts that much of the sudden sharp rise we are seeing in input prices will indeed be transitory. And he presented a parade of econometric data that show many historical precedents why this is likely to be the case.
Of course, the current debt, demographic and technological trends are very deflationary. To those who think that the flood of new $trillions in monetary and fiscal stimulus will trump these, Dr Hunt shows how much of that money just isn’t making it out into the real world.
Instead, it’s pooling up within the banks as massive excess reserves and the banks aren’t lending enough of it out, as shown by the plunge in the Total Loan to Deposit ratio: