Knocking at Deflation’s Door

Today we are going to examine a war going on in the central banks of the world. The central banks of the world continue to do what is necessary to make their respective nation's products attractive to the American consumer, doing the best they can to make their currencies cheap. There are increasing calls for the US to let the dollar fall as a weapon in the war against deflation. Both can't happen at the same time. You don't want to let your investments get caught in the crossfire. There will be casualties.

I am working later than usual on this letter, as thinking through the implications of a number of reports I have read this week is giving me some cause for concern. I am somewhat envious this evening of Roman soothsayers. I think it would be easier to analyze sheep entrails than the conflicting economic data coming out this week. At least we would have lamb chops afterward.

However, difficult data has never prevented us from trying. I hope today's letter will help you understand why interest rates and the stock market keep going down, and will continue to do so.

Even the Pros have Trouble

The investment climate and the rules associated with them have changed. If you are still investing under the old investment rules, you are having trouble.

You can take some small…