Over the weekend, I posted a link to a Chicago Tribune article with a deflationary subtext about how Americans have been cutting back on lattes and sundry other small pleasures. I copied a few pen-pals on this, including Mish Shedlock, Jas Jain, Bob Bronson and iTulip founder Eric Janszen, the only inflationist in the group. In the e-mail donnybrook that followed, Eric exhausted Mish's patience with his standard schpiel, so in tag-team fashion, I took over for Mish. Immediately below, for your interest, are salient excerpts from the exchange I had with Eric. Please note that the dialogue is not entirely sequential, since all of my comments followed Eric's last e-mail. I have posed some questions below that he therefore has not had a chance to answer. Nor will I provide him with the opportunity to do so in this space, since my debates with Eric have a way of running on forever. I have given myself the last word -- I hope without having edited Eric too punitively. I have also generously embedded links wherever Eric sought to buttress his argument with previously published material. The discussion begins with my rebuke to his notion that Japanese gold bugs fared poorly during Japan's long deflationary wallow. Gold in Japan Rick: Better you should ask how the yen performed relative to all other classes of yen assets. Answer: Just fine. Gold in fact has always done relatively well as an investable during deflationary times. Still, as a hard-core deflationist, I have my doubts that the POG will get to Sinclair�s promised land above $5000 oz. Eric: The yen performed well because the yen is not a reserve currency, the Japanese experienced a hyperinflation after the war, so protecting the yen was more important than preventing deflation. In contrast, the Fed is
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