If It Quacks Like Japan

Today we examine several fundamental and criticaly questions, to see if they give us come clues as to the direction of the economy and the stock markets:

"Why do we have no inflation since the Fed has been growing the money supply at very high levels for a very long time?"; the ever popular, "Is the Fed pushing on a string?" and "Is the United States headed down the same path as Japan?"

My analysis will be controversial in many circles, especially the doom and gloom circuit, but will not make market bulls happy either. As usual, I will fall in the Muddle Through Middle, which is precisely where you should be.

I first wrote seriously about deflation in the fall of 1998. It has been one of my more enduring themes these last four years. There are deflationary pressures everywhere: too much capacity, Japanese…