A ‘Draw’ in the ’Flationary War

If you were describing the day’s action in terms of our “war” between inflation and deflation…you’d have to say it was a draw. Deflation has been gaining territory – following its massive counterattack, launched a couple weeks ago. But yesterday, the front stabilized. Stocks were up, not down. And consumer price inflation was back in the headlines.

On the other hand, gold’s big drop was clearly a victory for deflation, not inflation. And we got an item from the Wall Street Journal that reminded us that the U.S. economy is still just beginning a deflationary pullback:

“Record Store Closings.”

We were too busy to read the accompanying article. For a second, we thought we might have misread the headline. Maybe it meant that ‘record stores’ were closing. Then we remembered; there aren’t any stores that sell records any more. So, we must have read it right the first time – retail is in trouble.

There is probably nothing surer, dear reader. After a spending spree that saw Americans spend ALL there money…and then some, they are not now going to spend MORE. It’s not possible. Instead, they are going to spend less. And that means the retailers are going to sell less. And it means that they are going to need fewer clerks…and less space.

This is not the time to be holding retailers…or shopping malls – especially those that are far out in the boonies.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

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