Alan's Finance Blog

Ben Bernanke Ready to Print Still More!

Dear Subscriber,

The “grand compromise” between the Obama administration and Congressional Republicans to extend the Bush era tax cuts will have two extremely severe repercussions:

First, it means that the federal deficit will EXPLODE beyond the worst estimates of the most pessimistic deficit prognosticators. And in response, interest rates are already soaring, with 10-year Treasury yields jumping nearly a quarter of a point just yesterday!

Second, it means that Fed Chairman Ben Bernanke will be under even greater pressure to run the printing presses.

Never forget his famous speech of early 2002, “Deflation: Making Sure It Doesn’t Happen Here.”

I have quoted this seminal speech ever since to make sure my readers understand the most basic monetary credo of the most powerful and influential central bank on the planet — one which still serves as a role model for the international central bank community.

I’m sure you’ve read it before. But given the latest rush of events, it behooves you to read it again:

“…the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Since then he has delivered as promised. Take a look at the following chart of the U.S. monetary base:

Source: St. Louis Fed

A Race for the Title “Worst Central Banker of All Time”

In my 2004 book, Das Greenspan Dossier, I predicted that history would identify Alan Greenspan as the worst central banker ever. Well, I’m not so sure about that anymore. Mr. Bernanke has become a serious contender for the title.

First, he fully supported Greenspan as a Fed governor. Both were reluctant to recognize the huge stock market bubble and had no clue regarding its true implications. Both deemed it the right policy to fight the aftermath of the stock market bubble by creating an even bigger bubble, this time in housing … which again both central bankers failed to discern.

When it came time for Greenspan to retire, Bernanke easily stepped into his shoes. He seamlessly continued with the same reckless policy and does so to this very day.

They followed the same reckless script Greenspan had written before, only with far higher stakes. Bailouts and money printing have been hailed as the proper remedy for a disease that would never have existed without bailouts.

Talk about “Quantitative Easing”
Obfuscates the Truth

Instead of directly talking about the government’s monetary printing press, Mr. Bernanke talks euphemistically about “quantitative easing.” He obviously wants to sound more scientific and veil the reckless core of his policies. But he keeps his track record intact.

Currently, he is on a public relations crusade to sell the second round of quantitative easing (QE2) to the public. Only a few days ago he stated for the record that if he feels the need to embark on QE3, he will not hesitate to do so.

Unfortunately, he is not alone. The entire global community of central bankers seems to agree that there is no alternative to this policy. Last week, the president of the European Central Bank (ECB) Jean-Claude Trichet made it clear that he will follow the same road Mr. Bernanke has already taken so decisively.

Bottom line: No end in sight to the money printing, the surge in gold and the profits that investors can make from that surge.

Best wishes,

Claus

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

Bernanke’s Monetary Policy Is Doomed!

Last week Ben Bernanke wrote an article for The Washington Post to justify the Fed’s decision of another round of quantitative easing. Here’s his core argument:

“Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment.

“And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

It looks to me like the world’s most powerful central banker hasn’t learned anything from recent financial history. He seems to resist the overwhelming evidence that the Fed’s bubble-blowing policy since the second half of the 1990s has failed miserably.

And he seems convinced that the current economic malaise can be remedied by more easy-money.

I was critical of Greenspan’s stock market bubble policy of the late 1990s. And in 2004 I wrote the book, The Greenspan Dossier, where I described the state of the housing market and predicted the severe consequences of its unavoidable bursting:

“When the U.S. real estate bubble bursts it will not only trigger a recession and a stock market crash, but it will endanger the entire financial system, especially Fannie Mae and Freddie Mac.”

These predictions were clearly spot on. Now, here we are two burst bubbles later, and the Fed chairman maintains his bubble-creating policies! And in his Washington Post article he clearly tells us he wants to create another stock market bubble to boost consumer spending and the economy.

With unemployment high and inflation very low, Bernanke defended the Fed’s $600 billion bond-buying program.

I think Bernanke’s policy is doomed, mainly because …

The Markets Can Be Stronger
than the Manipulators!

Many stock market participants remember the past decade’s roller-coaster ride when the market lost half its value … twice! And they just might not be willing to be led into the same trap a third time.

So market forces could turn out to be stronger than the central bank’s market manipulation efforts.

And it’s not the first time that has happened …

Years ago many central bankers learned this lesson in the currency markets when their interventions totally failed to change currency trends. And with the Bank of Japan we have a prime example of failed central bank manipulations of the stock market.

As you can see in the chart below, the Nikkei shot up 22 percent following the BOJ’s quantitative easing announcement in March 2001. But the party was a short one …

From May 1, 2001 through September 17, 2001, the Japanese market lost all of those gains — and more — tumbling 34.1 percent.

It’s really ironic …

When the twin bubbles in Japan burst — a stock market bubble followed by a housing bubble — the Japanese authorities answered in exactly the same way their U.S. counterparts are doing now.

They implemented the same fiscal and monetary policies grounded in the same faulty arguments — and failed miserably. Even more ironic is the fact that the U.S. was Japan’s sternest critic.

Here we go: Same problems, same short-term fixes — yet Bernanke is hoping for different outcomes. But given all that ails the economy, I think Helicopter Ben is in for a very unpleasant surprise.

Best wishes,

Claus

For more information and archived issues, visit http://www.moneyandmarkets.com

There Was a Fed Chairman Who Swallowed a Fly

By: Peter Schiff, Euro Pacific Capital, Inc.

While it’s true that history repeats itself, the patterns should always be separated by a generation or two to keep things respectable. Unfortunately, in today’s economic world, it seems the cycle can be counted in months.

On July 24, 2009, just as the Federal Reserve unleashed its first quantitative easing campaign (now called “QE1″ - an echo of the reclassification of the Great War after still more destructive subsequent developments), Fed Chairman Ben Bernanke wrote an opinion piece in the Wall Street Journal to soothe growing concerns about excess liquidity. He assured the public that the Fed had an “exit strategy.”

In a response entitled “No Exit for Ben“, I called the Chairman’s bluff. I argued that the Fed had no exit strategy, and that Bernanke was trying to fool the market into believing that quantitative easing was not debt monetization.

Just 16 months later, Bernanke is at it again, penning another op-ed to defend his second round of QE. Except this time, instead of feigning an exit strategy, he just outlines a path to expand the program in perpetuity.

In recent months, Fed economists have taken great pains to tell us how much better off the economy is now than it was in the first half of 2009. Given this supposed good news, what prompted the current turnaround in policy? Could it be, perhaps, that perpetual easing was the policy all along?

Should we expect another op-ed in a few months in which Bernanke tries to reassure us that QE3 will not over-liquefy the market? How much longer can the Fed play this game before the public and the markets wise up?

The reason I knew QE1 would fail, and that the Fed had no exit strategy (other than more rounds of easing), is because the remedy is totally flawed. If Bernanke’s predecessor, Alan Greenspan, had engaged in prudent monetary policy, we never would have arrived at the point of desperation that made quantitative easing a palatable option. However, we did, and Bernanke’s understanding of economics is so remedial that making the right choice is essentially impossible for him. Now, we are caught in a vicious circle of spending, borrowing, and easing.

In his most recent op-ed, Bernanke rather envisions a “virtuous circle” in which QE2 causes stock prices to rise, which then “boost[s] consumer wealth, and increase[s] confidence.” The wealth effect, in turn, “spur[s] spending and produce[s] higher incomes and profits,” which finally “support[s] economic expansion and promote[s] increased employment.”

Despite the devastation of the Fed’s previous burst bubbles (stocks in ’99 and real estate in ’08), Bernanke still believes in the virtue of pumping. His current policy is to inflate another stock market bubble to cure the recession that resulted from the bursting of the housing bubble, which was itself inflated to counter the effects of the bursting tech stock bubble. Does the story of the old lady who swallowed the fly come to mind? She eventually tried swallowing a horse, and we know how that ended. It’s hard to decide who is more culpable for the strategy: Bernanke for selling it or the country for buying it.

In the 16 months since Bernanke assured us that QE1 would not jeopardize price stability, oats prices are up 40%, concentrated orange juice up 45%, gold and rice up 50%, corn up 55%, coffee up 60%, copper up 70%, sugar up 90%, and cotton and silver up 100%! (The sluggish Dow Jones Industrials are “only” up 30%.)

Last week, Kraft Foods reported a 26% rise in third quarter revenue; however, because of steeply rising material costs, profits actually dropped 8.5% over the same period. If Bernanke is correct in assuming that consumer prices will stay low, the only way Kraft shares could go up would be for the market to assign much higher multiples to lower earnings. You can hope that will happen, but it’s not a wise bet.

Given that QE2 will also push down the dollar against foreign currencies, companies exporting to the US will face the same bind as Kraft. If foreign suppliers don’t raise prices, a weaker dollar will cut into their profits.

My guess is that neither foreign nor domestic companies will take the hit, but pass the costs along to consumers. Rising prices will soon became a daily occurrence on Main Street, not just in the stock market.

For all the wrangling over extending the Bush tax cuts, no one seems bothered by the continuation of the Bernanke tax increases. For the typical American wage earner, the inflation tax will more than offset the benefits of slightly lower income taxes. Savers and retirees will suffer the most as the interest paid on their assets continues to fall and the purchasing power of their principal is eroded.

In reality, quantitative easing will produce the exact opposite of its intended result. In the short-run, it may create the illusion of economic growth and temporarily add some service sector jobs, but once the QE ends, the growth and jobs will vanish. Then, the Fed will most likely try once again to douse the fire it started with another round of QE gasoline, creating an even larger and less manageable inferno. Let’s hope we can change policy before the whole economy burns to a cinder.

Peter Schiff is president of Euro Pacific Capital and host of The Peter Schiff Show.

For in-depth analysis of this and other investment topics, subscribe to The Global Investor, Peter Schiff’s free newsletter. Click here for more information.

Bernanke Hallucinating

If Fed Chairman Ben Bernanke honestly believes what he said at Jackson Hole on Friday — that he can save the economy by printing more money and buying more bonds — he’s hallucinating.

Through the first quarter of this year, he printed $1.5 trillion of paper money and promptly bought $1.5 trillion in mortgage bonds, government agency bonds, and Treasury bonds.

But the entire effort was a dismal failure; the U.S. economy is still sinking and most large American banks are still weak.

The underlying reason: While the government has been borrowing massively, nearly everyone else has embarked on unprecedented debt LIQUIDATIONS.

In other words …

While Washington is gorging itself on new debts, nearly every other sector is undergoing massive liposuctions.

How do we know? Because that’s what the Federal Reserve itself is reporting — unambiguously and conclusively.

Based on the Fed’s latest Flow of Funds report (Table F4, “Credit Market Borrowing”), governments are borrowing massively.

But the collapse in private sector credit is so dramatic that among ALL the major categories the Fed tracks, NOT ONE is expanding its debts. Rather, every single sector is in advanced stages of unprecedented and massive debt liquidations!

Specifically, as you can see in the chart above …

• Corporations are cutting back on their bonds at a record pace of $355 billion per year …
• Banks are cutting back on their lending at the yearly rate of $273 billion, and …
• Worst of all, mortgages are being liquidated at a record-smashing pace of $560 billion annually.

In addition, the Fed is reporting net cutbacks in consumer credit ($39 billion), open market paper ($154 billion), agency bonds ($16 billion), and other loans ($174 billion).

And remember: We’re not just talking about a slowdown in the pace of new borrowing — the pattern we used to see in typical recessions of the past. No! These are actual net reductions in debts outstanding — the basic stuff that depressions are made of.

In sum, nearly all the money Bernanke has printed — plus all the money he has supposedly poured into the economy — is going nowhere, except perhaps down the drain. He’s clearly running on a treadmill … pushing on a string.

Whatever you do, do not underestimate the potential impact of this situation. It is …

Huge! Including both the government and private sectors, the total new credit created in 2007 was $4.5 trillion. Now, it’s running at an annual pace of about ZERO! That $4.5 trillion was LOT of money — and it’s all money that’s NOT pouring into the economy any more.

Unprecedented! This has never happened before in modern times — not even during the deepest recession of the postwar era. During the Great Depression? Yes. But in proportion to GDP, the debt buildup before the Depression — as well as the debt liquidations during the Depression — were not as large as they are now.

Getting worse! Despite everything Bernanke has done to try to stop it, the debt liquidations are accelerating — especially in the mortgage area. Consider these basic facts:

Back in 2005, lenders issued $1.4 trillion in new mortgages over and above those that were paid off or went bad — a fantastic amount of fresh new money pouring into the housing and construction markets.

But by 2008, they had cut back their new mortgage lending by a whopping 94 percent. The industry virtually died — an unmitigated disaster for the economy.

At that point, pundits assumed it was the end of the decline. On a net basis, the creation of mortgages in the U.S. was practically down to zero. “So how much further could it possibly fall?” they asked.

Meanwhile, Bernanke apparently assumed that, by buying crazy, unprecedented amounts of mortgage bonds, he could somehow stop the decline — or at least offset its impact. But the decline in the mortgage market didn’t end there in 2008 …

In 2009, it got worse — a lot worse! Not only was new mortgage money largely unavailable but OLD mortgage money was pulled out. Result: We saw net mortgage liquidations of $283 billion!

And for the first quarter of 2010, as I highlighted earlier, the Fed reports net liquidations running at an annual pace of $560 billion, the worst in history.

The Unavoidable Consequences

These forces are more enduring than any monetary policy, bigger than any government. They are unmistakable, unavoidable, and overwhelming.

Bernanke can try to make believe they don’t exist. But you cannot afford to take that risk. You must recognize the truth and consequences that he’s not talking about …

Consequence #1. Bernanke’s nearly powerless. No matter how many more bonds he buys, Bernanke cannot save the recovery. Sure, he could push 30-year fixed mortgage rates down some more. But even the lowest mortgage rates in recorded history haven’t made a bit of difference. In fact, despite low rates, mortgages are being liquidated at an even FASTER clip. Home sales falling even MORE rapidly.

Consequence #2. Double dip. The double-dip recession we’ve been warning you about is now on its way. Meanwhile, administration economists still swear on a stack of Bibles that the double dip is not in the cards; and private economists think the probability of a double dip is only 20 to 30 percent. They must be getting their hallucinogens from the same source as Bernanke.

Consequence #3. More bank failures! As a whole, despite government bailouts and regulatory reform, the nation’s banks and thrifts are no healthier today than they were before the onset of the debt crisis. The big difference: This time the government is unlikely to have nearly as much political or financial capital to bail them out.

What To Do

First, reduce your risk exposure. Sell any stock or investment that may be vulnerable to a double-dip recession and all its probable consequences.

Second, hedge. If you are unable or unwilling to sell, buy some protection. The most convenient vehicle: Inverse ETFs — exchange traded funds that are designed to rise in value as markets decline.

Third, get your money to safety. Despite the near-zero yields, short-term U.S. Treasury bills or Treasury-only money market funds are still the safest parking place.

Fourth, check your bank. Click this link to review our list of the Weakest Banks and Thrifts in the U.S.

This list includes only institutions with a Weiss Rating of D+ (weak) or lower — institutions we believe to be vulnerable to future financial difficulties or even failure. To be sure, many vulnerable institutions will NOT ultimately fail. However, we believe that their risk of failure is high.

For your convenience, we’ve listed them by state, then in alphabetical order. Plus, with each institution, we provide not only the company name, but also their state of domicile and their total assets.

This extra information is important because there are many banks in different states that have very similar names, and we don’t want you to make a critical decision based on a case of mistaken identity. So make sure you’ve got the exact name of your institution. And if you’re still not certain, double-check by asking your banker to identify their state of domicile.

So … is your bank on our Weakest list? Or not?

• If your bank is NOT on Weakest list, it’s because it has received a rating of AT LEAST C- (fair). Now, C is not a good rating. But it means that we believe your bank is stable and not currently vulnerable.
• If your bank IS on the Weakest list, it means we believe your bank is vulnerable.

If so, we recommend you click here to review our list of the Strongest Banks and Thrifts in the U.S.

This list includes only institutions with a Weiss Rating of B+ (good) or higher. We do not guarantee that all of these institutions are completely safe. However, we believe that their risk of failure is very low.

At the top of the page, click on your state. Then, shop among the listed banks in your area.

Finally, above all …

Do not believe Bernanke! Given all the facts he has at his fingertips — the same ones I’ve just presented here this morning — I doubt he even believes himself.

Good luck and God bless!

Martin

Breaking news: Bernanke slams U.S. economy! What to do …

A momentous event just occurred this afternoon:

For the first time in many years, the Chairman of the Federal Reserve went before Congress, set aside his rose-colored glasses, dispensed with most of his sugar-coated platitudes and made some hard-hitting statements about the U.S. economy.

Bernanke on jobs:

“This is the worst labor market since the Great Depression.”

Bernanke on housing:

“The market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction.”

Bernanke on fears about the future:

“Most … viewed uncertainty about the outlook for growth and unemployment as greater than normal, and the majority saw the risks to growth as weighted to the downside.”

Bernanke on tight credit for small businesses:

“Bank loans outstanding have continued to contract. Small businesses, which depend importantly on bank credit, have been particularly hard hit.”

And never forget: All this is coming from a man whose job invariably makes him extremely reluctant to admit to negative trends in any sector at any time — if Bernanke is saying things are bad, you can bet your bottom dollar they’re actually far worse.

Our recommendation:

1. Act on our warnings to greatly reduce your exposure to the stock market, especially in the sectors we’ve been pinpointing as vulnerable to a double-dip recession: Housing and construction, retail, manufacturing, banking and more.
2. Keep most of your money safely tucked away in short-term Treasury bills or equivalent. The return on your money (no matter how low) is not nearly as big of an issue as the return OF your money.
3. To hedge against any threat to the purchasing power of your dollars, maintain a core position in gold — through bullion, a gold ETF or both.

1. Above all, stay safe!

Good luck and God bless!

Martin

Bernanke’s Burn Notice – Why Now? Research Reveals Insight Into Fed Chairman’s Popularity

By Elliott Wave International

Like a spy who gets a burn notice, Federal Reserve Chairman Ben Bernanke has suddenly lost his support.

Bernanke has gone from being Time magazine’s Man of the Year in 2009 to … what? A Fed chairman embroiled in a controversial reconfirmation process before U.S. Congress. Why the sudden turnaround in his fortunes?

Robert Prechter, president of the research firm Elliott Wave International, has written about the history of the Fed and its chairmen several times over the years, and his research shows that their popularity rises and falls with social mood, which is measured by the stock market. Here is a compilation of excerpts from Prechter’s monthly market letter, The Elliott Wave Theorist, from 2005-2009 about the trouble he sees brewing at the Fed.

Can the Fed Stop Deflation? Robert Prechter answers this all-important question in his Free Deflation Survival Guide. The guide gives you a 60-page ebook that will help you understand deflation and its effects on society; you’ll even learn how to survive and prosper in such an environment. Download Your Free 60-Page Deflation eBook Here.

(November 2005) The Coming Change at the Fed | Public figureheads have a way of representing eras. This is certainly true of entertainment icons and politicians. The history of Fed chairmanship implies a similar tendency for changes of the guard to coincide with changes in social mood and therefore stock prices and the economy. [The chart below] depicts our social-mood meter—the DJIA—since the Fed’s creation in 1913, marked with the reigning chairmen according to a list on the Fed’s website.

The first chairman, Hamlin, presided over a straight-up boom. As it ended, Harding took over and presided over an inflationary period that accompanied a bear market, exiting just as a new uptrend was developing. Crissinger took over at the onset of the Roaring Twenties, and Young presided over the boom, the peak and the rebound into 1930. Meyer took over just as confidence was collapsing and left the office in early 1933 at the exact bottom of the Great Depression. The next three chairmen struggled through the choppy years of the 1940s. Then Martin presided over virtually the entire advance from the early 1950s through 1969, exiting just before the recession of 1970. Burns and Miller presided over a bear market and exited as the new uptrend was developing. Volcker, after weathering an inflation crisis, presided over the explosive ’80s. Greenspan has presided over the manic ’90s and the topping process. [Ben Bernanke] will have his own era. Given the eras that have immediately preceded the coming change in leadership, the odds are that this new environment will be a bear market.

(June 2006) Economists are convinced that the Fed can “fight” inflation or deflation by manipulating interest rates. But for the most part, all the Fed does is to follow price trends. When the markets fall and the economy weakens, the price of money falls with them, so interest rates go down. When the markets rise and the economy strengthens, the price of money rises with them, so interest rates go up. The Fed’s rates fell along with markets and the economy from 2001 to 2003. They have risen along with markets and the economy since then. Regardless of the Fed’s promise to keep raising rates, you can bet that the price of money will fall right along with the markets and the economy. Pundits will say that the Fed is “fighting” deflation, but it will simply be lowering its prices in line with the others.

It is highly likely that the next eight years or so will test the nearly universally accepted theory—among bulls and bears alike—that the Fed can control anything at all. The Great Depression made it look like a gang of fools, as will the coming deflationary collapse. We have predicted unequivocally that the new Fed chairman will go down as Hoover did: the butt of all the blame, and if you are reading the newspapers you can see that it’s already started. “When Bernanke Speaks, the Markets Freak” (San Jose Mercury News, June 10, 2006); “Bernanke is being blamed for spooking Wall Street” (USA Today, June 7, 2006); “Bernanke to blame for volatility” (Globe and Mail, Canada, Jun 13, 2006). The new chairman had a brief honeymoon (which we also predicted), but it’s already over.

By the way, I heard his commencement speech at MIT last week, and in it he spoke eloquently of the value of technology and free markets. But he also opined that economists have successfully applied technology to macroeconomics. We believe that the collective unconscious herding impulse cannot be tamed, directed or managed. In our socionomic view, the Fed cannot control the mood behind the markets, but rather, the mood behind the markets controls how people judge the Fed. We’ll ultimately find out who’s right.

Can the Fed Stop Deflation? Robert Prechter answers this all-important question in his Free Deflation Survival Guide. The guide gives you a 60-page ebook that will help you understand deflation and its effects on society; you’ll even learn how to survive and prosper in such an environment. Download Your Free 60-Page Deflation eBook Here.

(December 2009) Bernanke’s greatest achievement was not the measly $1.25t. of debt that he arranged to have the Fed monetize; it was convincing the government to shift the burden of debt default from the speculators and creditors to taxpayers.

(September 2009) Thanks to the Fed Chairman and two Treasury Secretaries, profligate bankers have been cashing checks off the Fed’s and the Treasury’s accounts, and the poor savers and taxpayers who fund these institutions are unaware that their personal bank accounts are being tapped by counterfeiters and thieves.

That lack of awareness may soon change. Declining social mood is fueling the drive to expose the Fed’s secrets. [Ed. note: Bloomberg News has sued the Fed under the Freedom of Information Act; Congressmen Ron Paul, R-Texas, and Barney Frank, D-Mass., are leading a charge to audit the Fed.] Exposing the Fed’s secret deals could lead to scandal and the collapse of major money-center banks. But most important to our monetary outlook, it will serve to curb the Fed’s reflation efforts. As I have written many times, deflation will win. Social mood is impulsive and cannot be stopped. The downtrend will claim its victims by whatever measures it must take to do so.

(August 2009) On July 26, in a speech in Kansas City, MO, Fed Chairman Ben Bernanke declared, “I was not going to be the Federal Reserve chairman who presided over the second Great Depression.” (WSJ, 7/27) We think this implication of a fait accompli is premature. Clearly, the Fed Chairman and the majority of economists are of the opinion that the worst of the financial crisis is past and that the Fed’s unprecedented lending has averted deflation and depression. But wave 3 down in the stock market will dispel these illusions. Years ago, we suggested that Chairman Greenspan quit if he wanted to keep his lofty reputation. He didn’t do it. Now Chairman Bernanke should consider this option.

So will Bernanke serve a second term as Fed chairman? The January 2010 Elliott Wave Financial Forecast says, “Social mood is still too elevated to deny Bernanke reappointment as head of the Fed. … But rising political tension confirms that his next term will be far more stressful than his first.”

Can the Fed Stop Deflation? Robert Prechter answers this all-important question in his Free Deflation Survival Guide. The guide gives you a 60-page ebook that will help you understand deflation and its effects on society; you’ll even learn how to survive and prosper in such an environment. Download Your Free 60-Page Deflation eBook Here.