“Wednesday’s with Axel” Inflation or Deflation?

In our continued series from our Private Client Round Table with Axel Merk, founder of the Merk funds, this week we discuss Inflation or Deflation as a possible path to repair, growth, and prosperity.  This question was presented from you in advance (here for complete list of questions) and also discussed in great length.

Deflation

According to Axel, the people want deflation as a way out from much of the debt the world has accrued. (Especially speaking of the Greece and Cyprus’ of the world.) Deflation means a severe belt-tightening, most likely an economic recession/depression but is essentially hitting the reset button and wiping the slate clean.

Inflation

The governments of the world, want inflation as it is the smoother way out of debt and throws much of the burden on each country’s trading partner. Inflation will extend the problem for years if not decades, according to Axel, but will be the easier path to follow.

So what will it be?

Axel, admitting that no one knows for certain and any curve ball could change the outcome, his very strong belief is that inflation will win out. Read Japan! (Japan is attempting to inflate their way out of a two decade slowdown) Since the governments want inflation and it is the easier, but longer way out, this high road so to speak will be the winner, again according to Axel (If correct….Gold or hard assets anyone?)

So there you have it, another Wednesday with Axel!

Hope your week is going great!

John Kvale