“And if the money velocity stops declining, and god forbid, even increases, what will happen to the mountain of monetary stimulus that has been administered over the past decade?”
So, could Trump end up resurrecting the deflation demon we thought we’d finally exorcised?
The bottom line is that between another powerful hurricane approaching the U.S. mainland, U.S. markets catching up with their global counterparts in terms of pricing in North Korea after the long weekend, the DACA decision which portends more bickering in Washington, and the looming debt ceiling debate (with the specter of a technical default showing up in today’s decidedly poor 4-week bill auction), it was death by a thousand cuts.
“But in April the reflation story began to lose steam (as Trump trades faltered). Such has been the reversal that last month, ‘deflation’ once again surpassed ‘reflation’ as the trending story.”