Falling wages, sub par employment, productivity rise and disinflation are signs of deflation – stocks and gold have trouble ahead
Sam Adelton
Feb. 4, 2007

The economists agree productivity of U.S. workers grew at a faster clip last quarter and labor costs stabilized, a sign that wages may not become a source of inflation. The stock market players first took it with great joy. Next they realized, when you multiply negative with another negative, it becomes positive.

Falling wages, sub par employment, productivity rise and disinflation are signs of deflation. Disinflation is the starting point of deflation. Once the deflation starts, it is very difficult to stop it. The heavy public and private debt burden will make deflation ugly like never before. The Federal Reserve loses control over the monetary policy once deflation starts.

The effects on gold and stocks are real bad. The gold can collapse. The stocks can crash in the beginning and then slowly drift down over decades.

The burst in bubble in the real estate is the start of the deflation triggered by inability of the investors in servicing the debt.

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Falling wages, sub par employment, productivity rise and disinflation are signs of deflation – stocks and gold have trouble ahead
Sam Adelton
The heavy public and private debt burden will make deflation ugly like never before. The Federal Reserve loses control over the monetary policy once deflation starts.
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