My recent comments on deflation have prompted some interesting responses. Here's one from Gary Tanashian, proprietor of www.biiwii.com ('Not bullish or bearish, just dealing in what is!'). 'I couldn't agree more with most of the ideas put forth, and I am one of those inflationists. I think those of us talking about inflation or hyperinflation, at least those who bother to think out the details, know that the whole argument revolves around how we get to our final destination, which is of course a deflationary reckoning of levels of excess layered one over the other for decades. [Those 'levels of excess' include a derivatives market valued at over $200 trillion ' an outlandish sum when you consider that global GDP amounts to less than $40 trillion per year. RA] 'In my view, the inflation game is played against the deflationary impulse or need to correct. It is the Fed and other forces pushing on a string, and one day they will find the string simply goes limp and all the inflated chickens will then come home to roost. [I agree, of course. Credit cannot expand unless there's an asset that can be used as collateral, and we've pretty much exhausted the big one: real estate.] The 'Good' Deflation 'I am a friend of [a well-known guru whom you also know], so you may guess where some of my influence comes from. But also, I am a manufacturing guy, and I have witnessed productivity first hand in the form of automation and other progress through technology and ideas. The crux of the way I see things is that deflation (at least in capital flowing to the US manufacturing sector) has been a good thing, driving progress and productivity; but it has been perverted in recent years/decades to the point where it
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