Dr. Gary Schilling as become the new Judo Master of the World of Deflation. His new book The
Age of Deleveraging is a classic book in the field of forecasting. The problem is that the book
outlines a strategy for a long term deflation that will last from 2010-2020. The primary problem
with this analysis is that it rests upon the following premises: (1) the historical foundations of deflation
which started in 1982 - 2020 will last a period of 48 years; (2) The theory goes against your
typical analysis of K- Waves and American History; (3) American Historian view this period
as the baseline for a 23 year inflationary period lasting from 2004 to 2027; (4) The role of
commodity prices contradicts the idea that prices will decline 2% to 4% for period of
10 years; (5) the gold indicator has started its ascent from a low in 2005 around $280 to
high of 2010 at $1,300.00; (6) Dr. Schilling has the theory of deflation to explain the
collapse of the housing prices as a major indicator of deflation; (7) The current crisis is caused
by the derivatives crisis that was created by Investment banks, Commerical Banks and Real
Estate propaganda; (8) the concentric collapse around the real estate market and Investment
banks are a function of storing risks for maximum gain; (8) The real problem is that deflation
is a plateau phase of creative destruction and it appear that it is creating a new supercycle;
(9) The inflationary cycle is K waves based and we are in the early stages of low inflation
which benefits everyone and no one pays the price for this change; consequently it appears
harmless and even beneficial to everyone; (10) Dr. Schiller's advice may have a 5 year
life span and needs to be corrected for massive changes coming; (11) Catepelliar Corporation
has invested 8 billion in the consolidation for a inflation wave of commodity growth and
not commodity deflation; (12) Consumers will see the massive tidal wave of price changes
at the end of the commodity cycle and not the beginning of this cycle; (13) The oil industry
has 10 years left before massive inflation hits the American dependence on energy whereas
the Green revolution requires about 137 year before it impacts the American Economy; (14)
Where does this leave us? An investment compromise 3 years of Dr. Schlling advice and
17 years of inflationary portfolio restructuring for the New UPWAVE!
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