While we write this (10th March 2009), the next weeks would possibly be marked by “newer concerns” about deflation. China has reported deflation the first time since 2002, there are whispers about India heading to it too, soon.
Are these real concerns? NO! There is something called the base effect – inflation is calculated as a percentage increase/decrease over the last period (week, month, quarter or a year) – and the last few years have been unprecedented for record increases in prices of food, energy, commodities. Much of that has been seen as an “opportunity” to make profits in trading them.
The buck stopped (does it not everytime!!) and the world shall witness low inflation and possible deflation over the next 1-2 quarters followed by rising inflation due to rising deficit financing globally. And then possibly stagflation – rising prices and depressed growth. The cycle shall continue…
Sounds scary? Yes, it does.
So what are the choices to make as entrepreneurs/investors/consumers?
We take this as an opportunity to open up discussions/debates/contributions in the coming few weeks and shall be keenly looking forward to your views. Just click on the “Comment” link below and leave us your messages and let the discussion unfold!
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