Where You Find Inflation in a Deflationary World

Deflation or inflation? It’s the ongoing debate that Dr. Duru tackles in tracking creeping inflation throughout the economy. Sure, deflationary fears have been stoked by credit destruction, but he believes quantitative easing and stimulus are causing inflation to rear its ugly head, “here and there.”

And far beyond “here and there,” his biggest concern is of inflation “here, there and everywhere.” He cites Bill Fleckenstein to explain…

“[I]n a period where fears of deflation rage and too much capacity exists for so many products, it is possible for government policy and money printing to produce inflation here and there. The only question is, when will we finally evolve to the point where inflation is here, there and everywhere?”

A sampling of recent inflationary developments he’s tracked:

* A 15 percent increase in health insurance premiums for small businesses

* A 50 percent increase in car rental costs

* A 15 – 25 percent increase in long-term care insurance rates for California retirees

This inflation is likely to continue and grow in the long run. When that’s the case, it’s gold, silver and other similar assets that can offer appreciating value and a useful defensive hedge.

Duru describes why he finds the Consumer Price Index (CPI) inadequate and offers more insights in Real Clear Markets’ coverage of inflation here, there, and everywhere.