Rooting for inflation...............................

Actions taken over the past seven years by the Fed, designed to insure the liquidity of our financial system, seemed certain to spur that old economic bogeyman, Inflation. Still hasn't happened.  According to the article cited below, deflation is as much, or more, of a threat than inflation.  As an owner of mortgaged real estate investments, I hope you won't mind if I express a strong preference for inflation rather than deflation. It's almost enough to make one nostalgic for Gerald Ford's W(hip) I(nflation) N (now) campaign, and the subsequent 10% + inflation during the Carter years.

Half the world economy is one accident away from a deflation trap. The International Monetary Fund says the probability may now be as high as 20pc.

It is a remarkable state of affairs that the G2 monetary superpowers - the US and China - should both be tightening into such a 20pc risk, though no doubt they have concluded that asset bubbles are becoming an even bigger danger.

"We need to be extremely vigilant," said the IMF's Christine Lagarde in Davos. "The deflation risk is what would occur if there was a shock to those economies now at low inflation rates, way below target. I don't think anyone can dispute that in the eurozone, inflation is way below target."