No More Carrying On in the Markets - Up and Down Wall Street Daily - R. Forsyth - Barrons.com

DEFLATION?: No More Carrying On in the Markets - Up and Down Wall Street Daily - R. Forsyth - Barrons.com

Deflation or not deflation?

Trichet has already blinked at the idea of the European Central Bank taking Greek debt at par as collateral. For all intents and purposes this is equivalent to monetizing debt.

With all of these developed countries running big deficits (includes the US), it would seem far more likely that we'll have inflation with a stagnant or less economy.

After all, the one thing all developed economies have had in common is a shifting of the 'labor' component as a production input to an unnaturally high expense.

As a result, capital and raw materials are substituted. In developed countries, as shown in another article in Thursday's WSJ, another labor substitute is 'outsourcing'.

What populists and politicians loathe to confront is that they've mispriced labor and, as such, unemployment results.