Yahoo Tech Ticker just interviewed Gary Schilling, one of our “high priests” of deflation. Schilling has been right there along with Bob Prechter in calling for deflation many years before it became fashionable. And like Prechter, he’s getting to be quite the popular dude now that his predictions are coming to fruition.
In this first video below, Schilling describes why slower than normal growth will result in perpetually rising unemployment. He says a 3.3% growth rate is required to keep unemployment at bay – and the 2% growth rate he’s projecting for the next decade will result in unemployment continuing to rise by about 1% per year. And of course this will not be very politically palatable.
He continues on the “small luxuries” that consumers are treating themselves to (the “New Abnormal” we’ve discussed before):
And finally for a pick-me-up, here’s Schilling explaining why deflation is going to clobber the stock market:
Hat tip to Prag Cap!
Also see Schilling (and us!) in Canada’s Globe and Mail talking some deflation investing strategy.